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It’s already been an interesting year for buy-to-let investors. Tax changes are just coming in which affect this sector, while the new mortgage interest tax relief rules are also having an effect.

For some landlords, it could mean accepting the fact that their profit margins will be reduced. For others, it means either being forced into a higher tax bracket or finding ways to avoid this, such as putting the property portfolio into a limited business.

These changes are all taking place at a time when decent rental properties are very much in demand. High property prices have put the prospect of buying out of reach for many people and renting is the only option. With the prospect of even more people looking to rent either long term or permanently in the future, the need for good properties in the right areas becomes even more necessary. High rental yields can still be achieved, if investors do their homework.

Peer-to-peer property lender, Kuflink, has done the research to look at rental yields across 50 towns and cities throughout the UK. This study suggests landlords should be looking in the North of England for the best yields.

Properties in Salford produced the highest yields at the start of 2017, with an average yield of 7.08%. This was followed by Manchester, Leeds and Coventry. It will come as no surprise that London is at the bottom of the table, with its high property prices being a major stumbling block for many individual investors. Rents in the capital have not been able to keep up with soaring prices. London returns are an average of 3.45%, but Chelmsford, Essex performed even worse, with a return of just 2.89%.

Kuflink CEO, Tarlochan Garcha, said investors would be wise to look at the regions where robust rents coupled with more affordable property prices make investments more fruitful. In Scotland, investors can enjoy decent yields of 4.88% in Edinburgh and 4.54% in Fife. The south of England does not fare well, apart from Portsmouth, where average rental yields are 4.92%. There are also a few northern areas to avoid such as Carlisle with a yield of 3.47%, Wigan at 3.44%, York at 3.17% and Chester at 3.28%. Generally speaking, the lower prices in the north mean investors can buy more properties to add to their portfolio and, therefore, spread the risk rather than putting all their money into just one or two properties.

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