With strong economic growth and an ever-expanding population, Leeds is an ideal spot for landlords to invest their hard-earned cash. So if you’re considering purchasing a buy-to-let property in the city, but want to learn more about the rental landscape first, look no further.
In this post, we’ll provide an insight into the Leeds rental market and the kind of yields you can expect based on the latest figures. We’ll also cover some key things for landlords to bear in mind, whether you’re just starting or a current investor thinking of selling up.
What does the Leeds rental market look like?
Home to almost half a million economically active residents and a large student population of more than 65,000, Leeds constantly needs high-quality rental properties.
As an up-and-coming city with a diverse economy, thriving shopping districts, five universities and numerous leisure activities, Leeds draws in thousands of young people and working professionals every year. Many students also choose to remain in the city after graduating.
Moreover, Leeds is currently undergoing some major development works. This includes a £500 million regeneration of South Bank and upgrades to Leeds City Station and the LGI Hospital. Combined, these changes are set to make the city an even more attractive to place to live.
Yet despite Leeds’s relatively low cost of living and decreasing unemployment rates, as house prices continue to rise and inflation booms, many of the city’s workers are having to rent for longer. As a result, 60% of all rental properties across Leeds are let to renters under 30.
Because of this, landlords with smaller 1-2 bed houses or shared HMOs (Houses in Multiple Occupation) located close to the city centre, are faring especially well at the moment. Likewise, affordable family homes with gardens in quieter Leeds suburbs are also in high demand.
What rental yield can investors expect?
How much you’ll earn from your buy-to-let property in Leeds depends on how much you paid for the house (and any repayments), plus the agreed rent rate and the location of the property.
House prices across the city are significantly lower than the national average, with a mean sale price of £225,690 as of Nov 2022 – and flats and terraces are even cheaper. Average monthly rents, on the other hand, have risen to £1447 (or £896 if you include rooms in shared houses).
With that in mind, Leeds is a great place for landlords looking to invest. According to Property Investments UK, you can expect a good rental yield of around 7.2% on homes in LS1, as well-maintained city centre properties are relatively easy to let. Similarly, Property Data found that you can achieve up to 10.9% yield on homes in nearby LS2 – with the UK average just 3.63%.
HMOs and student lets in Headingley and Hyde Park are consistently high earners, as each resident pays for their own room, but tenant turnover is also high. Instead, letting family homes in areas slightly further afield like Kirkstall and Morley promises a decent return with greater security. Meanwhile, homes in northern suburbs are the most expensive and offer lower yields.
How can you become a landlord in Leeds?
There are a number of great estate agents in Leeds available to help you find right investment property for you. Once you’ve struck a deal, you’ll then need to fulfil several requirements in order to become a landlord. This includes ensuring gas and electricity safety certificates are in place, providing a record of energy performance and meeting fire safety laws, as standard.
If you’re planning to convert a larger property into a HMO for 5 or more people, you’ll also need to apply for a license through Leeds City Council for a change of use. The approval of which is subject to a training course. If you’re letting a property in Beeston or Harehills, you’ll also need to check whether your property falls under the council’s selective licensing scheme.
Upon letting your home, you’ll need to place your tenant’s deposit in a government-approved scheme and set up a tenancy agreement with the help of a solicitor. This will outline the conditions that you and your tenant must follow during the lease, and how long their tenancy is assured for – i.e. how long they have the right to live in the property.
Once you’ve met all of the above requirements and the contract has been signed by both parties, you should be good to go!
What happens if you want to stop investing?
If you’re a current Leeds landlord and strict guidelines or difficult tenants are proving hard to handle, you may be thinking of selling up. Or perhaps you’re moving away or retiring? Either way, you’re not alone. Despite the soaring rental market, 20% of landlords in the city are doing the same while house prices are holding steady. But there are some things to consider first.
Most importantly, you’ll need to give your tenants at least two months’ notice of your plans and allow them to remain in the property until their lease ends. You can only evict them early if they break the terms of the lease, such as by damaging the property or failing to pay rent. This may mean you have to wait quite a while before you’re able to put the house on the market.
Alternatively, you could look into selling a tenanted property to another landlord. While this is a great option for long-term tenants who don’t want to move out, it could still mean a lengthy wait for you as the seller. This is because properties in Leeds are taking longer to sell than a year ago and the number of interested buyers will be significantly reduced if there are tenants in tow. If you find yourself in this predicament, We Buy Any Home’s guaranteed home buying service can help to speed things up. Learn how the process works and request a free, no-obligation quote online today to get the ball rolling.