Tuesday, September 29, 2020
Real Estate

Best cities for BTL property investment UK

Property UK

Just because property investment UK isn’t looking promising right now, it doesn’t mean the market will stay the same in future. Several upcoming regeneration projects across the UK are expected to turn things around in 2020. This is apart from the existing property hotspots across the country, which have already shown signs of recovery.

As the UK’s major attraction and one of the world’s most vibrant cities – London – is a bustling cosmopolitan city with endless opportunities, it’s easy to see why investors should be keen to invest in London property. However, the rest of the UK is not far behind and cities in the south have emerged as the hotspots for property investment UK. A number of investors are opting for investments in this part of the country because of the business opportunities at these places as well as the presence of reputed universities in these regions.

However, affordability and demand are also area-specific and vary from one city to another, and an investor needs to consider the potential and return on investment regarding a particular area before taking the step into property investment UK.

For buy-to-let landlords, rental yields are crucial to investment as it may prove to be a long-term income. Rental yields are important as they allow for immediate income and help in paying off the mortgage. Investing at the right property at the right place should ensure high rental yields and high returns on exit.

Though northern cities may be the hotspots for property price growth, those in the south have emerged as rental hotspots.

So, it may be time to look down south as a new analysis claims to have uncovered the best UK cities for a landlord’s buy-to-let investment.

Research by Aldermore suggests that cities in the region are dominating the buy-to-let landscape across the UK.

The research assesses and provides a score for the average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rises over the past 10 years, proportion of vacant properties in a city and size of the private rental market across the UK.

Seven of the top 10 cities for landlords were in southern England while only three northern cities – Manchester, Liverpool and Newcastle – make the top 25.

Yorkshire has three cities in the bottom six while Nottingham was the only city from the Midlands in the top 10.

Nottingham showed impressive short-term yield of 7.3 per cent.

The Midlands was revealed to be a mixed market.

Though short-term rental yields for Oxford are among the lowest, it comes out on top with the highest overall score of 74.

Manchester and Edinburgh follow closely at 72, while London scores 71, the research showed.

Liverpool ranks at the top for best short-term rental yields, whereas London takes the first spot for total rents.

While price growth is highest for Cambridge, Cardiff and Oxford are best for low vacant stock.

Derby, Sheffield, Bradford, Newcastle and Wolverhampton were the five cities with the lowest scores.

 

Ranking City Region Overall score
       
1 Oxford South East 74
2 Manchester North West 72
3 Edinburgh Scotland 72
4 London London 71
5 Norwich Eastern 66
6 Bristol South West 64
7 Nottingham East Midlands 63
8 Cambridge Eastern 63
9 Brighton South East 60
10 Milton Keynes South East 55
11 Plymouth South West 54
12 Hull Yorkshire 49
13 Leicester East Midlands 49
14 Coventry West Midlands 49
15 Southampton South East 48
16 Birmingham West Midlands 47
17 Liverpool North West 44
18 Cardiff Wales 39
19 Glasgow Scotland 37
20 Leeds Yorkshire 32
21 Derby East Midlands 31
22 Sheffield Yorkshire 30
23 Bradford Yorkshire 29
24 Newcastle North East 26
25 Wolverhampton West Midlands 25

 

Damian Thompson, director of mortgages at Aldermore, said: “Aldermore’s Buy to Let City Tracker shows there are still great short- and long-term investment opportunities for landlords.

“The number of people renting in the UK has been rapidly growing, up 1.7m in ten years, so private landlords are an increasingly central part of the housing market as supporting a robust and strong private rented sector becomes more essential.

“There have been numerous regulatory changes recently and persistent economic uncertainty but this affects every region differently. Going forward, landlords will need continual backing and advice from lenders and the wider industry so they can provide choice, diversity of tenure and quality properties for renters.”

Overall, the research named Oxford as the best city for buy-to-let investment in the UK.

The city offers a big opportunity to private landlords as it is one of the largest private sector rental markets in the UK, with more than one-fourth of all its residents – 28 per cent – renting privately.

The average monthly rent for a room in the city is £596 and the average price growth has been 4.8 per cent a year over the past 10 years.

Darren Meehan, director of mortgage brokers, Bright Money, said Oxford’s universities and hospitals meant it had a high level of professional renters, who were attractive because they wanted long term lets and looked after the properties well.

“With the large volumes of new housing stock being built all over Oxfordshire, such as Didcot, there are a lot of new opportunities for investor. These new-builds outside the City Centre are more affordable to investors and they also target the commuters, so Oxfordshire really does have something for all budgets,” he added.

So, there are lots of opportunities for property investment UK only if one knows where to look for the best returns on investment. The BTL sector, in particular, provides a lot of options to the investor as the property can be used for a variety of purposes. However, the aim of property investment UK should be clear on the investor as it determines the type, location and size of the property as well as the way a property is managed. Whether the property is rented out to students, young professionals or families, all can ensure high returns if planned carefully. Marketing of the property is an important aspect as it enhances the value of the property. If marketed rightly, investors should expect high returns on investment and capital appreciation on the property.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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