Why buy in Nottingham and where
A 2013 study by HSBC revealed that Nottingham provides landlords with one of the best rental yields in the country. Because the average house for sale price in Nottingham is £83,313, and the average monthly rent of a house to rent is £524, landlords can enjoy a rental yield of around 7.55% before tax.
Though some areas of the UK sometimes offer higher rental yields, the house markets are a lot more volatile. However, the prices of houses for rent in Nottingham do not fluctuate much, making it a safe and profitable investment for landlords.
As any good estate agent in Nottingham will tell you, Nottingham is famous, among other things, for its links to the Robin Hood folklore. Nottingham is well connected, providing transport links for both the road and rail. Nottingham can be accessed by the M1 motorway and East Midlands Trains, CrossCountry, Northern Rail and the Robin Hood line.
When it comes to the best place to invest in property and find houses to sell, Nottingham comes top. The city has taken on joint first position rivals Liverpool as the UK’s best performing property investment location. The two cities came joint with average rental yields of 6.2 percent once mortgage costs are taken into account.
The latest edition of Private Finance’s buy-to-let (BTL) hotspots analysis reveals that while Liverpool has retained its position since May 2017 – despite lower rental yields due to falling rental prices in this area – Nottingham has moved up from second position following a £121 increase in average monthly rents.
It’s fair to say that the prices of the real estate in Nottingham have attracted a lot of interest from property investors nationwide. A number of large developments and advances in infrastructure continue to drive demand, and subsequent asking prices at a consistent pace.
One thing is for sure – Nottingham offers a safe haven for those wishing to invest in residential property provided investors buy in the right areas. Knowing what to expect from tenants and then allowing for a reasonable outcome will be the key here.
NG1 Postcode area: the centre of Nottingham
The NG1 postcode area covers most of Nottingham city centre. As of October 2017, a leading online property specialist listed the average value of houses for sale in the NG1 postcode area as £153,497 while the average price paid for a house for sale in NG1 property in the past 12 months stands at £166,694.
With respect to expected rental yield, a one bedroom property in NG1 offers a 7.24% rental yield, a two bedroom property provides an expected rental yield of 6.13% while there is a return of 4.49% for a three bedroom property. For a four or five bedroom property, you can expect a return of 3.71% and 2.22% respectively.
Given that many investment specialists suggest that a return of over 4% is worth considering, there are a number of property types in the NG1 postcode area that are worth considering. The average property rents in NG1 stands at £1,156 per calendar month (PCM) while the average rent for a one and two bedroom property stands at £685 and £864 respectively.
NG2 postcode area offers benefits
Some of the areas featured in the NG2 postcode area include the city centre of Nottingham, Colwick Park, Sneinton, The Meadows and West Bridgford. In October 2017, the average value of property in NG2 is listed as £256,077 while the average price paid in the past 12 months stands at £265,513.
With a one bedroom property in NG2, you can expect a return of 7.23% while with a two bedroom property, there is an expected rental yield of 5.43%. A three bedroom property provides an expected rental yield of 4.72% and there is a return of 2.59% for a four bedroom property while the five bedroom property option offers a return of 2.2%.
Given that the average price of property in NG2 is higher than NG1, it is no surprise that some of the returns are lower however, the returns for a one and two bedroom property are well worth pursuing. The average rents for a house to rent in Nottingham NG2 stands at £1,130 PCM with the average rents for one and two bedrooms coming in at £595 and £874 respectively.
Another option to consider in the Nottingham area is the NG3 postcode area and this represents Carlton, Sneinton, St Ann’s and Mapperley. The average value, as of October 2017, stands at £180,923 for NG3 and the average price paid for a house for sale in the past 12 months is £175,938.
The return for a one bedroom property in NG3 stands at 5.21% while the highest return in the area is the 5.54% for a two bedroom property. For a three, four and five bedroom property in the NG3 postcode area, the expected rental yields are 4.88%, 4.33% and 2.93% respectively.
The NG3 postcode area has an average rental fee of £795 PCM, the average rent for a one bedroom property is £478 and for a two bedroom property, the average rent per calendar month is £600.
Average prices are £220,705 in Lenton (reflecting its popularity for student houses), £184,938 in Dunkirk and £175,825 in Radford. It’s in these districts (based on the NG7postcode) where Totally Money say 8.89% yield is possible if you owned a house.
Given that there are some property types in the heart of Nottingham offering a return of more than 7%, it would be correct to say that Nottingham offers some great investment opportunities.