Rental yield by area in Glasgow: Looking beyond the numbers

By William Hudson (Senior Lettings Negotiator)

 

Working in lettings, I’m asked about rental yield all the time. Where in Glasgow gives you the best return? Is it worth paying more to buy in the West End? What about further out of the city?

The answer, as is often the case with property, is “it depends”.

Glasgow has a really varied rental market. What you pay for a property, what you can realistically rent it for and the type of tenant looking for it can change quite considerably from one side of the city to another. We’ve written before about the fact that Glasgow’s rental market remains very strong, but even within the city, what makes sense for a landlord can differ quite a bit from one area to another.

The West End and city centre are where we’re busiest, but we manage properties right across Glasgow and further out into the surrounding suburbs, the likes of Bearsden and Milngavie. So, rather than getting too caught up in individual streets and postcodes, I thought I’d look more broadly at how rental yield can vary across different parts of the city, and some of the things worth considering along the way.

What is rental yield?

Rental yield is simply the annual rent you receive from a property, shown as a percentage of what you paid for it.

So, if you bought a flat for £200,000 and rented it for £1,200 per month, the calculation would be:

£1,200 × 12 = £14,400 annual rent
£14,400 ÷ £200,000 × 100 = 7.2% gross rental yield

The important word there is gross. That figure doesn’t include your other costs, such as management fees, insurance, repairs, factoring or periods when the property is empty.

What you’re left with after these expenses is your net yield.

What is a good rental yield in Glasgow?

Generally, we see rental yields in Glasgow sitting somewhere around 5% to 10%, although there’s quite a bit of variation within that.

That’s something worth remembering when you’re looking at averages online. Two flats in the same part of Glasgow can have completely different yields simply because one is of a higher specification and therefore cost considerably more to buy, has higher factoring fees or needs more money spent on it.

There’s also no point calculating an optimistic yield based on a rent the property is unlikely to achieve. I’d always rather give a landlord a realistic rental figure based on what we’re seeing from tenants at the time. As Jack has talked about before, achieving the right rent is about looking at the local market and the individual property, rather than simply aiming for the highest possible figure.

Rental yields in Glasgow’s West End

The West End is an area we know well, and demand for good rental properties here remains consistently strong.

We see interest from a broad mix of tenants, including students, professionals, academics, families and people relocating to Glasgow. A well-presented property in the right spot generally isn’t short of interest.

The obvious downside for a landlord is the purchase price.

You’re likely to pay more to buy in the West End than in many other parts of Glasgow, so even when the monthly rent is strong, the percentage yield can be lower.

That doesn’t necessarily put landlords off, though. We’ve got landlords who are perfectly happy with a slightly lower yield because they value the consistent demand, the type of tenant the property attracts and the longer-term prospects of owning a property in the area.

For some landlords, particularly those planning to hold onto a property for ten or twenty years, the longer-term value of the property can be just as important as the return it produces month to month. Capital appreciation in the West End market has typically outpaced that of the wider Glasgow area.

Sometimes the highest yield on paper isn’t the most important thing.

Rental yields in Glasgow City Centre

The city centre is a different market again.

Here, we’re generally talking about apartments rather than houses, with a large part of the tenant market made up of professionals and students who want to be close to work, transport links and everything that comes with living in the middle of Glasgow.

Compared with the West End, the purchase price can sometimes be lower relative to the rent a city centre apartment can achieve, which can make the percentage yield look stronger.

But the headline gross yield is only part of it. Factoring is a big consideration in the city centre and can vary considerably from one development to another. While factoring costs won’t change the gross yield, they’ll affect what actually ends up in your pocket.

One other thing to consider, that’s more common in the city centre, is buildings affected by combustible cladding. You may be exposed to a large remedial liability down the line, not to mention the ongoing risk before a suitable repair is made.

If you’re buying with a buy-to-let mortgage, it’s also worth looking at the rent the property needs to achieve for the numbers to work. Lenders will normally want the expected rental income to cover the mortgage payment by a certain amount, which is worth checking before you buy, particularly with higher-value apartments.

Rental yields in Glasgow’s Southside

The Southside can offer an interesting balance for landlords.

There’s strong tenant demand, but purchase prices can be more accessible than in some parts of the West End. Naturally, if you’re paying less for the property while still achieving a good monthly rent, your percentage yield starts to look quite attractive.

As always, though, I’d look beyond the area name. One property might rent almost immediately while another nearby takes longer, depending on its condition, size, layout and what else is available at the time.

And that time on the market matters. A slightly lower rent with consistent demand and very little time sitting empty can sometimes work out better than holding out for a higher figure and having longer void periods between tenancies.

Rental yields in North Glasgow and the northern suburbs

As you head north and further out towards Glasgow’s suburbs, the type of rental property starts to change.

There are still some flats, but you’ll also find more family homes, larger properties and gardens. That naturally attracts a different tenant market from a smaller apartment in the city centre.

Some of the more popular suburbs aren’t necessarily where you’ll find the biggest rental yields. Purchase prices can be relatively high compared with the monthly rent, particularly for larger family homes. But there’s another side to that.

A family who finds the right home may stay for several years. For a landlord, having a good tenant who looks after the property and wants to stay long term can be worth a lot more than an extra percentage point on a spreadsheet.

Why the property matters as much as the area

The area only tells you part of the story.

Two properties in the same part of Glasgow can achieve quite different rents. Condition, size, layout, natural light, outdoor space, parking and even which floor a flat sits on can all make a difference to the level of interest we see from tenants.

Property type matters too. A two-bedroom flat in the West End and a larger family home in Bearsden might both be rental investments in Glasgow, but they’re aimed at completely different tenants. What makes sense for one isn’t necessarily going to make sense for the other.

The same goes for presentation. A property that’s been well looked after and marketed properly will put you in a much better position when it comes to finding the right tenant and achieving a good rent.

That’s why average yields by area are useful as a starting point, but they only tell you so much.

Is a higher rental yield always better?

Not necessarily. If I was looking at a potential rental property with a landlord, the headline yield would only be one part of the conversation.

I’d also want to know what the factoring costs are, what condition the property and wider building are in, who we think is likely to rent it, how much competition there is locally and what sort of maintenance might be coming down the line.

How consistently it’s likely to rent matters too. A higher headline yield doesn’t look quite as good if the property regularly sits empty between tenants.

Then there’s what the landlord actually wants from it.

Someone building a portfolio and looking for monthly income might have completely different priorities from someone buying one property that they plan to own for the next twenty years. For the latter, longer-term property value might carry more weight than achieving the highest possible yield today.

So, it’s difficult to say that one part of Glasgow is “better” for landlords than another.

Where is the best place to buy a rental property in Glasgow?

There isn’t one part of Glasgow that will make sense for every landlord. If you’re looking purely at headline yield, a lower purchase price relative to the rent you can achieve might point you towards one area. If consistent demand, longer-term value or finding a tenant who is likely to stay for several years matters more, you might come to a completely different conclusion.

That’s why I’d always start with your budget and the individual property and what you want from it, rather than choosing an area based on an average yield.

Before buying, I’d recommend speaking to a letting agent with local market knowledge to find out what the property can realistically achieve in rent, what the likely demand will be and what costs need to be factored in. That’s when you get a much better idea of whether the numbers actually make sense.

Thinking about buying a rental property in Glasgow?

We’re on the ground dealing with the Glasgow rental market every day, so if you’ve got a property in mind, we’re always happy to chat about what we’re seeing.

To get in touch, call us on 0141 248 8726 or fill out the form below.