Wales and the North East are the best areas for hard-hit buy-to-let investors looking for above-inflation returns, new figures show.

Despite a growing tax and administrative burden denting their profits, including rising mortgage costs and higher stamp duty rates, The Telegraph reports that there are still some lucrative parts of the UK to be found.

The proportion of landlord purchases hit a record low in the first half of 2024 at just 10% of transactions, according to Hamptons, while Chancellor Rachel Reeves’s first Budget increased the additional stamp duty rate from 3% to 5%.

Budget

However, data from Hamptons indicates that landlords with a budget of £50,000 to cover a 25% mortgage deposit and stamp duty can still tap into most regional markets and have a choice of investing in a flat or house.

Low property values and rising demand for rural locations since the pandemic have made Welsh locations top buy-to-let hotspots for landlords, with Neath Port Talbot and Rhondda Cynon Taf providing double-digit yields of 10.5%.

A typical flat in Neath Port Talbot costs £89,360 and Hamptons’ research shows a landlord would need just £26,808 in upfront costs – a 25% mortgage deposit and stamp duty – leaving plenty of spare change from £50,000. Typical rent is £784 per month.

Travel

Angela Davey, head of lettings at Welsh agency Peter Alan, says working tenants will travel to Swansea because prices are low and standards are high. She adds: “It is mostly working families here, but landlords and agents will also work with local authorities in these particular areas to house refugees and those on universal credit.”

Meanwhile, South Tyneside has seen plenty of regeneration projects and rising tenant demand driven by access to Newcastle and Sunderland, as well as substantial student accommodation.

With £50,000, a property investor could buy a typical flat in the area for £96,530 and pay upfront costs of just £28,957, receiving an average monthly rent of £827.

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