Rental Yields in Derby
If you’re looking to maximise the returns of a property investment over the long-term, it’s important to focus on rental yields. While capital growth can happen organically and benefit you upon sale, rental yields offer flexibility – they can be reinvested, used as a financial safety net or used to pay off the mortgage, giving you leverage.
Despite strong growth over the last five years, Derby house prices means it’s one of the most affordable locations in the UK – a critical signpost for achieving better rental yields. With just 17,800 rental properties in the market but forecasted population growth of 24% in the next 15 years, we’re seeing an increasing disparity in supply and demand.
This level of competition allows investors to start generating much higher rental returns, while also underpinning rising Derby property prices.
At the same time Derby is progressing through their Derby City Centre Masterplan – a phased project that is aiming to revolutionise amenities in the city, simultaneously meeting tenant demands and encouraging population growth.
Average Rental Yields in Derby
Average Property Price: £235,141
Average Rent: £796 / month
Average Rental Yield: 4.06%
The average rental yield in Derby for 2021 is 4.06%, according to a mix of online property data. As property for sale in Derby is relatively affordable compared to the wider UK, it’s no surprise rental yields in Derby are outpacing both London and the UK average.
When we take into account the supply and demand imbalance, plus the long-term regeneration that is impacting the skyline, we can see why Derby rental yields are trending positively for the future. According to Savills, the UK’s average rent could rise by 17% by 2025, which gives Buy-to-Let hotspots such as Derby the potential to see even higher growth during the period.
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House Prices in Derby vs Rental Yields
Average House Price: £221,194
Average House Rent: £1,070
Average House Yield: 5.80%
Average Flat Price: £146,555
Average Flat Rent: £774
Average Flat Yield: 6.33%
Why Invest in Derby?
The East Midlands is on the rise but where should you be investing?
Property for sale in Derby is fast becoming a sought-after asset as investors seek exceptional rental yields off the back of affordability in the market.
Want to know why Derby is a clear Buy-to-Let investment opportunity in the UK? Here’s why you should invest in property for sale in Derby today.
What Will Affect Your Rental Yield?
There are several factors that impact a rental yield – namely supply and demand, the investment’s surroundings, the price of the property that you purchased and the willingness of tenants to pay the rent you’re charging.
Supply and demand arguably have the biggest effect. A more competitive market can easily support rising rents and property prices, especially if the amenities that attract demand are being built.
It’s always a good idea for you to research future development pipelines – whether they’re residential, commercial or public – to see whether you’re investing somewhere with sustainable demand.
Similarly, demand (and thus rental yields) can be positively impacted by the career opportunities nearby. If you’re investing in a big city for example with plenty of high-level employers, you can consider their workers as potential tenants who will have the income to meet higher rental returns – which means better rental yields for you.
At the same time, consider graduate retention. Today’s graduates are tomorrow’s ‘young professionals’ which make up a significant proportion of the UK rental market.
What Rental Yields Can Derby Achieve in the Future?
One of the biggest drivers for rental growth in Derby is the Derby City Centre Masterplan 2030. This large-scale regeneration plan will fund new and exciting developments across the city, building the infrastructure necessary to meet the rising demand we’re already seeing.
It’ll also allow investors to market their properties to a wider tenant base – the better the lifestyle, the easier it is to command higher rents.
In their latest report on the market, Savills predict that by 2025, UK locations (excluding London) could expect an average rental price rise of 15.9% by 2025, highlighting the potential that property for sale in Derby holds.