To say 2020 was a strange year for the UK’s property market would be something of an understatement; the Covid-19 pandemic brought everything to a grinding halt early on and many feared a housing crash was ahead. But, perhaps surprisingly, the reopening of the market brought a surge in both sales and buy-to-let property investment UK, with a clear change in priorities for both groups after months spent cooped up in their homes.
A recent study of 2,000 landlords by the National Residential Landlords’ Association found that on a national basis, most landlords had seen an increase in demand for rental property.
It also revealed that in the third quarter of 2020, 16% of landlords said that they were planning to buy a property in the next year, up from 13% during the same the year before.
Separate research from estate agent Hamptons found that landlords made up 15% of buyers in November, the highest level since December 2016.
Despite the gloomy economic picture being painted due to the outbreak of coronavirus, there’s some good news for landlords, especially if you’re considering buying another rental property.
Due to the current economic uncertainty, some investors have concentrated on moving the bulk of their cash into secure government-backed savings products. But property may still be a good home for landlords’ money, not least because there may be some bargains to be snapped up at the moment.
If you’re among those looking to add to your rental portfolio, where should you be looking?
Here is a list of some of the buy-to-let property investment UK hotspots:
In recent years, there’s been a much-reported shift away from London towards Manchester among foreign investors and it would seem they might be onto something since Manchester was ranked the best city for buy-to-let investors by Aldermore’s Buy to Let City Tracker, released in November.
The bank compared 50 cities across the UK, rating them according to five criteria: average total rent, yield, house price growth over the past decade, number of vacancies as a proportion of total housing stock, and percentage of the population in the rental market.
Manchester is a particularly good choice for those keen to avoid vacant periods, with the Aldermore analysts pointing to the fact it has one of the biggest rental markets in the country and some of the lowest vacancy rates.
But many investors are already well aware of Manchester’s attractions and so it might pay to look slightly further afield, says Rob Bence, co-founder of the Property Hub podcast and forum.
He continues, “we’ve been naming Manchester as a great place to invest for a number of years now on the Property Podcast, even before it really started to grow. I think it’s still interesting but what is more interesting for me is greater Manchester. You’ve got places like Stockport, for example, where lots of investment is planned.
It is only about eight minutes on the train to Manchester, it’s close to Manchester airport and has direct train links to London. There is a lot going on there and the yields are very attractive. There’s also lots of regeneration planned for Bolton, which has quick transport links into Manchester city centre and again, yields are very attractive.”
Hull has come a long way since being named Britain’s “crappiest town” back in 2003 in a book about the worst places to live in the UK. It’s been on an upward trajectory since 2012 when German engineering giant Siemens was granted permission to build a wind turbine factory there, which opened up in 2016.
The city’s tourism industry has also been on the up thanks to Hull being named the UK City of Culture in 2017.
Despite these and other positive developments for the city, house prices remain extremely affordable and therefore yields are high for investors.
Despite coming in at a respectable number 14 in Aldermore’s overall ranking, the city topped the charts for yield with an average yield of 9.2%.
And rental prices are rising, according to Sam Humphreys, managing director at Hull sales and letting agent Lime Property. He cites that “Over the course of the year, we have seen a 2.3% uplift in rental values, in contrast to London, which is on course to see a 5.2% drop for the year.
This is an indication that due to market uncertainty, higher loan-to-value mortgage products being less readily available, and people’s property requirements changing due to working from home, demand for rental properties is starting to outweigh supply within the city. Trends such as the above, along with low purchase prices and high yields – 8-9% is readily available – make Hull and the surrounding areas a great place to invest.”
In recent years, many property investors have flocked to Liverpool, and with good reason, says Richard Hayes, CEO of mortgage broker Mojo Mortgages. Liverpool is extremely popular for property investors. It’s a thriving city and has big plans for the future.
Those big plans include Liverpool Waters, a £5.5bn 60-hectare regeneration project, a new cruise ship terminal and a proposed new waterfront stadium for Everton Football Club.
There are also talks underway about high-speed rail links with other northern cities.
Hayes explains that: “The city is also one of the most affordable for buy-to-let investors. One of the reasons Liverpool is so popular as a buy-to-let investment city is because property prices in Liverpool are significantly lower than those in other UK areas, whilst yields remain high. The L7 postcode area tops the buy-to-let yield table and covers the area of Edge Hill which is close to the city centre.”
Earlier this year Mojo Mortgages analysed data from the Land Registry, Zoopla, On The Market and PropertyData.co.uk to find out which UK postcodes had the best rental yields. Of the top 20, five were in Liverpool.
Although the L7 postcode, which includes part of the city centre, Edge Hill, Fairfield, and Kensington, had the highest average yield in the country at 10.3%, the average house price was just £95,000, so it’s easy to see why Liverpool is particularly popular with first-time buy-to-let investors.
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