If you are planning to invest in buy to let property this year, then you’ll want to know where the likeliest hotspots are. Where in the country is your investment going to show the best return?
If there were any hard and fast answers, then everyone is going to be rushing there. Of course, there is no such certainty, but there are pointers – based on current average returns – that suggest that some towns, areas and regions may prove more lucrative than others:
- although London has probably priced itself out of the buy to let market, there are satellite towns close to the capital where property prices remain more modest, travel infrastructure is reliable, and investment in property to let is a more than viable proposition;
- Bracknell, with its thriving economy and fast connections to London, has an average house price of around £370,000 – about half of what you’d need to pay for a similar home in London, according to Property Investor Today;
- Slough is also within close hailing distance of London, one of the major hubs for commercial investment outside of the capital, the beneficiary of significant regeneration and infrastructure projects, and with many of those leaving London now looking for somewhere to rent;
- whereas official figures put the current national average house price at £232,944, in Slough it is only around £200,000, potentially making it a hotspot for buy to let investors;
- if its high prices mean that you give London a miss, how about England’s second city, Birmingham?
- with a population of 1.2 million – all of whom need somewhere to live – returns on rental property are between 4.4% and 5.3%;
- but you might want to act soon – since 2014, house prices have already risen by 19.3% and estate agents are forecasting a further 12.5% rise by 2022;
- the second-ranking hotspot beyond the London periphery is Manchester in the northwest of England;
- young professionals primarily fuel its economic growth – those most likely to be looking for rented accommodation – and some parts of the city are achieving averages of 7.3% yields on buy to let investment;
- once again, though, house prices are also rising fast – more than 22% since 2014 – so, you might not want to delay making your move;
- demand for private rented accommodation is also high in neighbouring Liverpool, where some parts of the city are enjoying rental yields of more than 8%;
- despite that fact, property prices remained modest towards the end of 2019 and are expected to grow by only around 2% in the year ahead, with some potential bargain purchases in the offing for buy to let investors;
- exceptionally well-connected to the Midlands and London, Leeds is one of the drivers of the Northern Powerhouse, with a population growth currently outstripping that of the capital sevenfold;
- this may help to explain why rental yields are currently a fairly consistent 7.6%, with property prices growing more than 17% since 2014.
A brief roundup of buy to let hotspots can give only the broadest of indications, with wide variations naturally occurring from one district to another – or even from street to street. Investment in a successful buy to let business, therefore, continues to take careful consideration.