In the current property market it is important to consider how the changing economic climate has impacted on the buy to let market. When looking at where best to invest, the first thing you should always consider is who your market actually is. What demographic is more likely to be looking for rental property? With home-ownership being a distant dream for a great many young people and the fact that the majority of students are young people who are looking to rent, it’s a fairly safe bet to consider investing in those areas with high populations of young people and students.
Why are youthful cities a good option for investors?
Over the last two decades, home-ownership amongst young people has more than halved; whereas 46% of young people owned their own property twenty years ago, these figures have dropped to only 20% in 2017. The obvious knock on effect of this is that there are more and more young people looking to enter into the rental market. Many will be renting as students and then will continue to rent as they join the world of full time employment.
The UK’s workforce is becoming increasingly more mobile. Graduates and young people are now less inclined to stick to the traditional path of finding somewhere and settling down young. More and more of them are looking for opportunities further afield and embracing a more transient lifestyle. It is very probable that the increase in this type of lifestyle is a direct result of the increase in property prices.
High prices essentially price the majority of young people who are starting out in their careers completely out of the market. The result of this, as has been said, is a vast increase in those looking for affordable rental properties. To best decide where to invest your money, we should look at what drives these people and what areas and types or properties they are most likely to be looking for.
London is losing popularity
London has long been considered the “Big Money” city as far as investment goes, but this has been changing. Recently there has been a mass exodus of people moving from London to other UK cities, adding up to approximately 350,000 leaving the city over the past five years. If we look into the reasons behind this we can start to see exactly how we can take advantage of this market and where best to look for investment properties in the future.
Two of the main reasons for people leaving London are rising living costs, and better opportunities for employment elsewhere. Running a business with a location in London is becoming increasingly expensive so many businesses are looking outside of the capital for cheaper locations for premises with much lower overheads as well as property values.
The cost of living in London is also higher than anywhere else in the UK and for many young people, it is just too expensive to live and work there comfortably. A lot young people are coming to the same conclusion, and that is that they need to look for cities with better opportunities, more jobs and lowers costs of living. They are however managing to find all of these things, and to find out where we need only look to the North of the country.
The rise of the North
The North is really coming into its own as a hot new place to “set up shop” with excellent commercial properties at much more affordable rates than similar ones that are available in London. Add to that the close proximity to many of the country’s top universities, meaning that access to graduates is plentiful, and you can see just why Northern city locations are such an attractive prospect for businesses to invest in and therefore likely to have high demand for rental properties.
Two great examples of this are Liverpool and Manchester. Employment growth rates in these cities are far higher than those in London, with the cities boasting 19.9% growth rate and 12.8% growth rate respectively.
As expected, many of these booming Northern cities already boast populations with high percentages of youngsters, and these rates are continuing to rise. Take the example of Manchester; 32.9% of its population are aged between 21 and 35, which is the demographic that is most likely to rent. Because of the universities, there are also a lot of students, all looking for affordable accommodation to see them through their studies.
With the cost of living so much lower than cities further south, especially compared to London, it is no wonder that so many people are looking North when considering where to go next in their lives.
Three areas that are certainly worth taking a much closer look at are the great cities of Liverpool, Sheffield and Leeds. Each has their own unique charm; if we look at them individually we can get a greater insight into why they offer such fantastic investment opportunities.
Liverpool is a city rich in history and culture that has benefited from extensive regeneration projects in recent years. Its thriving economy is second only to London, meaning that it is a great place for businesses to invest in. This increased business investment inevitably leads to more jobs, which in turn means more people are looking to move there to live and work.
After being named European Capital of Culture in 2008, it has continually enjoyed great investment and growth. It was named by The Independent as one of the top ten cities in which to invest, and it boasts a fantastic selection of tourist attractions such as museums, galleries and shopping centres.
It has been so popular for investors that in 2014 it broke into the top 20 of a national league table for business start-ups.
With its great quality of life and one of the lowest costs of living in the UK, it is especially attractive to young people looking for new employment opportunities as well as a great place to study.
The city is host to several extremely popular universities which collectively serve around 50,000 students, including many from outside the UK. This rich melting pot of youthful exuberance and culture only add to the city’s appeal.
With its central location and excellent transport links, Sheffield is another promising buy to let hotspot. It was recently declared not only the greenest city in Europe, but according to Home Office data it is also the safest city in the UK.
Sheffield is another city to greatly benefit from regeneration projects and its economy is thriving. Because of this, jobs are on the increase making it another excellent area for businesses to invest in.
The two world class universities have seen a 30% increase in international students coming into the city over the last 5 years, meaning that demand for rental properties is steadily increasing.
According to the Telegraph, Sheffield in fact offers the best returns for buy to let investors in the whole of the UK with gross yields reaching over 11%*.
Leeds is fast gaining a reputation as a leading hot-bed of culture and modernism in the North of England. As home to large music and film festivals, it is a thriving and busy city with many exciting prospects, especially for young people and students.
Tourism is big business in Leeds. Leeds festival is one of the largest music festivals on the UK, attracting many top Indie and rock acts over the years and of course, the fans who want to see them. It is widely seen as the main shopping location in the whole of West Yorkshire and surrounding areas. Great shops and successful music and cultural events are two huge reasons why Leeds remains a popular choice for young people to both visit and choose to live.
Transport links are great, enabling people to visit easily from all over the country. With the draw of the nearby Yorkshire Dales National Park, both local and international visitors keep Leeds at the forefront of vibrant and thriving economies in the North of England. This thriving economy makes the city a very interesting and popular choice with investors for both business and property.
Leeds University has recently been voted by students as the third best University in the UK. Having such a prestigious establishment of education in the city only adds to its appeal for young people and those who wish to invest in them.
As you can see, these three cities are among those which offer fantastic opportunities for investors. If you want to see great returns on your property portfolio then the North of the UK really does have it all. Youth, ambition and a very bright future.