While buy-to-let investment is always a safe moneymaker, there are certain areas of the UK that can offer especially promising rental yields for investors.
There is no hard and fast rule as to where you would be best investing in property, as the market is fluid and demand is always changing. But as for current hotspots for buy-to-let investment in the UK, you could do a lot worse than these five locations:
Sheffield is a major student city, situated at the bottom of South Yorkshire. The city centre (S1) is one of the most rewarding investment areas in the country, thanks to low house prices and high demand for rental accommodation, particularly in the student market.
With two massive universities in one relatively small city centre, over 40,000 students are in need of rented accommodation. Back in 2013, it was estimated that the overseas students alone were worth £120m to the city of Sheffield.
Nonetheless, with the larger cities of Leeds and Manchester being close by, Sheffield often gets overlooked for its investment opportunities. It is this very fact that could make Sheffield an even more lucrative investment. Whilst other investors are paying attention to the ‘big guns’, those who focus their attention on the diamond in the rough stand to gain.
The hub of the Northern Powerhouse, Manchester is fast becoming the UK’s second city, with average property prices at a humble £135,000.
A huge push by the government to spread wealth throughout the country (meaning away from London) has led to many large businesses, including the BBC, to set up office in the city. Retailers and investors (both domestic and from overseas) are flocking to Manchester for the opportunities the northern city is offering.
Not only this, but the city is undergoing substantial regeneration, breathing new life into long-neglected areas. The 2040 Transport Strategy for Manchester is well underway, exemplified by the HS2 rail network, with outstanding rail links, both locally and to other cities (including London). And finally, there is huge investment in new property developments in Manchester. The city is absolutely booming.
Prices aren’t as cheap as Sheffield, but rent is also higher. The future of Manchester looks very bright. All signs point to Manchester proving very safe bet for a prosperous investment that will stand the test of time.
Despite house prices shooting up by 6% in the past year, the average house price is still only £150,000. Already a thriving, cultural city, Leeds continues to grow with a £350 million development planned for Leeds South Bank, expected to create upwards of 7000 new jobs.
On top of that, Leeds will be included as a stop on the upcoming HS2 railway. Combine this with its four universities and fourth biggest population in the UK, and Leeds is a great place for a buy-to-let investment.
When it comes to university cities, studies have shown that Sunderland is one of the most profitable options for buy-to-let investments. With an average house price of just £90,000, LendInvest give an estimated annual yield of 6.5%, but Property Partner are slightly more optimistic at 6.9%.
The University of Sunderland was placed top of The Guardian’s Best New University 2001 ranking, and in 2006 it was voted as the best city for overall student experience. The city itself is on the up and, uniquely, offers two beautiful, Blue Flag beaches.
This one takes some courage. Dale Hornidge from property management firm No Agent says that most areas identified as good investment spots are already diluted with investors and therefore yields are low. If you really want to start seeing good profit, you need to look at the more ‘forgotten’ areas of the UK.
According to Zoopla, the average house price in Inverness has rocketed to £184,000. The result of this is that many first time buyers have been out priced by the city and therefore demand for rental properties is on the rise.
Obviously, these five cities are not your only buy-to-let investment options. But they are all locations that have, through studies and research, been proven to offer safe, profitable and future-proof investments. Whether it’s low house prices, high demand or a promising future, these cities are certainly some of the best to consider when looking into buy-to-let investment.