Investors have been urged to focus on Northern cities if they want to buy properties to rent, which are set to benefit from higher capital appreciation over the next five years, investment firm UOWN recommended.
Meanwhile UOWN named Manchester, Leeds, Liverpool and Sheffield as having high potential.
Cities with the strongest yields currently include Sunderland (8.96%), Glasgow (7.95%) and Hull (7.45%).
Across the UK rents are forecast to rise by 17.6% over the next five years, largely due to dwindling rental stock.
Stamp duty blow
Buy-to-let investors are set to be hit hardest by the upcoming stamp duty hike, with their tax bills doubling on an average property from £8,452 to £16,190.
UOWN warned that the upcoming stamp duty hike, with the surcharge rising from 3% to 5%, could be the final “nail in the coffin” for buy-to-let landlords.
Landlords are already selling off properties at an increasing rate (+37% in December, up from +29% in November), reducing rental stock.
The average newly advertised rent outside London remains high at £1,341 per month, with London rents averaging £2,695 per month.
