Pensioner buy-to-let hotspots revealed

Brandon in Suffolk is the most profitable location for pensioners to invest in buy-to-let property with an average yield of 8.59%.

This is according to research from community regeneration firm Keepmoat, which worked out the most profitable areas for pensioners looking to take advantage of April's pension freedoms.

To work this out, Keepmoat used government data which suggests that the average defined contribution pot for a 55-year old stands at £35,000.

Assuming a 25% deposit, it set a maximum affordable house price of £212,000. It then used data from home.co.uk, determining that there are 1,059 towns in England, Scotland and Wales with an average house price of £212,000 or under. 

Then, filtering out towns with data for fewer than 30 rental properties available, it worked out the average rental yield in all of these areas.

The top five towns for rental yields is made up by Rutherglen, South Lanarkshire (7.92%), Cambernauld, North Lanarkshire (7.83%), Renfrew, Renfrewshire (7.50%) and Grangemouth, East Stirlingshire (7.45%).

Keepmoat reports that the highest regional returns can be found in the East of England with an average yield of 5.24%. 

The most affordable area for buy-to-let pension investors overall is the North West, followed by Yorkshire & The Humber. 

There were no parts of London with an average house price below £212,000, while only two towns in the whole of the South East qualified for Keepmoat's research.

“This is a really diverse list of locations and it shows that even if you only have a limited amount to spend you can make a great investment in buy-to-let property. All the locations in our top 20 have a potential average rental yield of over 6% and some offer an average house price of less than £70,000,” says Mark Knight, regional managing director of homes at Keepmoat.

“Many first-time investors buy close to where they live, which makes a lot of sense as they obviously know the area. But, if the rental demand is not there, then you should look further afield; don’t be afraid of following the demand, wherever that is in the country.”

You can view the full report here.