Should you build a residential property investment portfolio in Hull?

Affordable house prices, excellent yields and a thriving rental market.

No wonder Hull is a property investment hotspot.

Since enjoying its reign as UK City of Culture 2017, our wonderful home city is enjoying a real renaissance.

If you’re looking for an affordable route into property investment, this guide will explain:

Hull’s history and regeneration
Why property prices are affordable
Average rental values in Hull
Potential yields
The best areas to invest

Hull’s history and regeneration

Kingston upon Hull usually has its name shortened to Hull - the river on which it is situated at the mouth of the Humber estuary.

Historically, it was a busy port city known in its heyday for its trawlers and healthy fishing industry.

With 13 million tonnes of cargo passing through its docks every year, it still enjoys the economic and employment benefits of its port operations.

However, in recent years Hull has worked hard to reposition itself as an ambitious and modern city with the largest renewable energy hub in Europe - Siemens’ new £310m UK production & logistics HQ.

As part of its ongoing regeneration, City Plan Hull aims to use Hull’s strong fishing history to become a maritime city – investing more than £27m to transform its significant historic maritime assets, architecture and priceless collections into a world-class visitor destination.

Private investment in new office, retail, living and leisure facilities continues to transform the city skyline – particular in the Fruit Market area – and is helping to create new long-term employment opportunities.

In 2017, the Office of National Statistics suggested the number of people living in the city to be 260,240 – the highest figure since 1997.

For anyone who is looking to buy investment property in Hull, this is the perfect indication that the city’s residents are confident about its regeneration and future aspirations.

Hull’s affordable property prices

Boasting some of the lowest house prices in the UK, and plenty of buying options, property investors in Hull can quickly gain a return on their investment.

According to Zoopla, the average price for property in Hull was £141,178 in August 2019 – an increase of 0.60% compared to 12 months earlier.

Compared to 2016, sold prices in Hull were up by 9% when the average house price stood at £127,920.

To put this average price into perspective, RightMove data shows the average in the Kingswood area was £169,683 compared to £193,653 in Cottingham and £212,633 in Anlaby, two suburbs which lie in the East Riding.

In 2018, the average price for property sales in Hull were:

• Flats and apartments - sold for an average of £105,422
• Terraced properties - sold for on average of £108,404
• Semi-detached properties - sold for an average of £150,891
• Detached properties – sold for an average of £245,379

From an investor’s perspective, it’s clear to see why Hull is a favourable place to put your money – with the average property prices almost 40% lower than the 2019 national average of £230,292.

Average rental values in Hull

Investors are obviously interested in buying affordable property.

In Hull, you can get your hands on a two-bedroom terraced house from as little as £30,000.

But, in our experience, things really become appealing to investors when the rental figures stack up too – which they definitely do in Hull.

In 2019, Hull’s average monthly rental prices are:

• One bedroom - average rent £422 pcm
• Two bedrooms - average rent £492 pcm
• Three bedrooms - average rent £587 pcm
• Four bedrooms - average rent £846 pcm
• Five bedrooms - average rent £1,021 pcm

Potential yields

Snap up a two-bedroom terraced property for the average price of £108,404 and it could deliver a gross rental yield of around 5.4% - an impressive figure you can’t get from any bank or building society at the moment!

But the real opportunities for investors lies in finding a property which can be bought for below market value before being refurbished to modern rental standards.

Install a new kitchen and bathroom for under £10,000 and your property could generate a significantly improved return – with yields of 8% (before tax) definitely achievable.

Targeting long-term leaseholders may even help to push gross returns up to the eight or 10% mark - particularly in areas where there are good local amenities like shops, schools and parks.

Where are the best areas to invest in Hull?

If you’ve ever looked on RightMove, you’ll know Hull has a wide mix of properties. These vary in size and style, ranging from former council houses and terraced homes to ultra-modern developments featuring semis and detached houses.

Having been established in the city since 1996, we believe the best way to build a property investment portfolio in Hull is to focus on three main areas:

• Young professionals
• Students
• Families

The young professional rental market in Hull

In the last 10 years, the young professionals looking for somewhere to rent in Hull have definitely become much more demanding.

They usually want to let a fresh, clean home with a modern interior they’ll be proud to show off to friends.

Clean lines, modern appliances and an area to entertain are all in demand.

Dated flooring, disastrous décor and damp are definitely not.

Thanks to the rising popularity of city centre living, professionals are willing to pay a premium to acquire properties in desirable areas such as the Old Town, Fruit Market and the Marina.

Tasteful conversions like the former YPI building on George Street have also been well received, along with the hugely-popular serviced apartments on offer at the K2 office-retail-leisure space.

The student rental market in Hull

Hull has had a long and proud association with its student population ever since the University campus opened back in 1927.

From an investment point of view, properties don’t need to be as high-spec as those you’d rent to young professionals but they still need to be clean, comfortable and boast excellent Wi-Fi connectivity.

The Cottingham Road and Avenues area continues to be the most popular area for student lets - probably because of the wealth of nearby amenities.

There is so much going on in this area – with a library, swimming baths, boutiques, gyms, charity shops, Tesco, Lidl, late-night coffee shops, bars and nightclubs all just a short walk away.

Princes Avenue lies just a stone’s throw from Newland Avenue, but its identity is quite different dues to its high density of contemporary cafes and independent bars, which makes it popular with students wanting a bit more nightlife.

Cottingham is known for its village charm and, despite being located about two miles outside the city, remains popular with students seeking the quieter life. It’s usually best suited to those who house share, thanks to its nearby Aldi and plenty of coffee shops and village pubs.

From an investor’s perspective, shared houses are definitely more popular than flats in all of these areas. Definitely for those who want to benefit from this extremely profitable market, but expect to face increased maintenance costs and a higher tenant turnover.

The family rental market in Hull

Unfurnished rental properties are always in high demand from families right across Hull.

Orchard Park, Bransholme, Sutton Park, Greatfield and Longhill are all areas with a mix of former council houses and private properties where investors can pick up a property with a realistic yield of between 4% to 6%.

Kingswood, Sutton, Bricknell Avenue and the Avenues are also popular with families looking for more sizeable or modern homes.

In our experience, giving a family the freedom to decorate can often result in a long-term let and minimise the risk of your investment being damaged.

For investors who want stability and would prefer to reduce the risk of void periods, this is definitely the market to target.