Property investment is a complex game, particularly for those with tight investment budgets. In a climate of rising costs, it is more important than ever to find the best possible deal as a landlord; Hull could well be the secret to success, emerging as a new northern gem for investment.
A Hidden Gem for Buy-to-Let Investment
Hull’s ‘hidden gem’ status is cemented by its sleeper performance in Aldermore Bank’s annual ‘Buy-to-Let City Tracker’ report, which considers various key indicators in service of ranking cities by their buy-to-let potential. In the report, Hull ranks 34th – above other northern powerhouse cities like Leeds and Sheffield, but below a great many cities with more stable development.
This is because Hull, as a whole, offers relatively low rental yields, and especially so when compared with available rental population. However, for the individual investor, unique growth opportunities enable yields well above buy-to-let leader Manchester’s average yield.
The major incentive for investing in Hull is the relative price of investment. Here, property values are low in comparison to many other regions in England. This makes additional and necessary operating costs such landlord insurance, maintenance and gas safety checks much more palatable.
Hull has also enjoyed an increase in profile, following its cultural revolution and a new phase of industrial investment relating to green energy. No longer the butt of the joke, Hull is a new northern gem through and through.
The Merits and Demerits of Buy-to-Let
Buy-to-let mortgages have become a point of concern for many, including those that hold buy-to-let mortgages, in recent months. This is largely due to developments within the cost-of-living crisis, wherein the Bank of England’s attempts to mitigate inflation have driven mortgage interest rates higher. Coupled with rising overheads in other areas, this has created a squeeze on rental profits – a squeeze that some were less prepared to shoulder than others.
But even with a relative downturn on buy-to-let profit margins, buy-to-let can be a profitable venture. All that is necessary is a healthy approach to any mortgage, and an understanding that property investment always incurs and element of risk.
Managing a New Buy-to-Let
If you’re going to take the risk with a buy-to-let mortgage, you need to know exactly what you’re doing. This does not mean you need prior experience as a landlord, but rather that you have considered the risks and variables from every angle – including your location, your tenants, and your capacity to manage a property portfolio.
With specific regard to Hull, a geographic understanding of the city and its suburbs is necessary to sniff out the best possible rental yield – or more importantly, to balance yield with filling vacancy. For example, Hull has a healthy student population centred around Cottingham; this is not the most lucrative area for yield, offering an annual average of 3%, but nonetheless offers ample opportunity to fill out a vacancy.