With the changes in the financial and property markets, buy-to-let is remaining a popular choice for investors. However with more and more people getting into the this area of investment, people are having to look further afield in order to find the best deals with the greatest returns. London was long considered the Holy Grail as far as owning investment properties was concerned, but a combination of decreasing availability and increasing costs means that savvy investors are looking outside of the capital.
You may have heard rumblings about the north of the country and how attractive it has become to people who are looking to expand their portfolio, or those who are just starting out. The Northern Powerhouse agenda is still a subject being talked about by government officials and investors. With this focus on the north promising redevelopment and investment in a number of northern cities, it is understandable how these cities are looking even more desirable to buy-to-let investors. The creation of jobs and a new more efficient infrastructure will only serve to increase that desirability in the coming months and years.
We are going to take a look at some of the cities that are really making a name for themselves as buy-to-let hotspots in 2018. Some of them you may know about, and some may surprise you.
Liverpool has been the centre of a boom in northern property investment over the last few years. Since the city was announced as Europe’s Centre For Culture in 2008, it has seen a lot of major redevelopments; investors have been attracted by the city and what it stands for in terms of culture and commerce. Due to this increase in investment, there have been many new jobs created. With increased jobs bringing more people looking for employment opportunities, rental demand is high.
Property prices are relatively low, which results in great rental yield. In fact in a recent study (source: Totally Money – some good graphs here) out of the top 25 highest rental yield postcodes, Liverpool took the top three spots. L7 was the number one spot with an average rental yield of 12.63%. This postcode area covers City Centre, Edge Hill, Fairfield and Kensington. It is also close to two of the city’s three universities, making it very attractive to students looking for rental properties. As has been shown time and time again, university cities are always a good bet for people looking to invest in property.
Co-founder of The Property Hub, Rob Bence, has been quoted as saying “I think we’ll see it (Liverpool) in the top three cities for capital growth in 2018” showing that it is not just a good location for rental yields, but also capital growth as well.
Liverpool’s thriving economy was worth £29.5 billion in 2015 and has continued to grow. This growth is expected to improve further with the news of Cunard Shipping bringing new opportunities into this city from this year onwards.
All of these factors can guarantee the population will continue to expand, further increasing the demand for rental properties. A city with strong economic credentials and a buoyant property market, make for an ideal environment of opportunity. Liverpool is certainly up there in the list of cities to watch most closely in the UK over the coming year.
Sheffield is the England’s third largest city. It is host to two very popular universities and another large further education establishment, making it incredibly popular with students. Lots of students obviously means high rental demand. It’s central location with great transport links means it is easily accessible no matter where you are in the country. Manchester is just under an hour away by train whereas London is only two hours away. It is also less than an hour’s drive for 4 major airports meaning it is perfectly located for access to overseas locations as well. This location and its transport links mean it is a major player in the Northern Powerhouse agenda.
Sheffield’s economy is thriving and the city was listed in the top 7% of 324 local authorities in England for inward investment, which is vital for economic growth (Source: Grant Thornton’s new Business Location Index – Sheffield Telegraph, October 2015). With so much development over the last decade, the opportunities are exciting as far as this northern city goes.
Sheffield is a beautiful place to live, a growing economy and has a fantastic quality of life. All of these factors mean that people are flocking to live there. The population is expected to grow by 633,000 by the year 2037. In anticipation of this growth, the government are already investing in improving the city’s infrastructure. £328 million has been provided by government authorities to help with redevelopment.
Another fantastic plus is the fact that Sheffield has the highest ratio of trees to people of any city in Europe! In this age of environmentalism, this can only go in the city’s favour, especially amongst young people, students and the environmentally minded.
Long seen as a bastion of northern industry and manufacturing, many investors look to Sheffield with confidence, knowing that it is a vibrant and growing city, with a youthful population and stable investment opportunities. Rental properties are being bought up as quickly as they become available in many cases as the demand is so high so you need to make sure you are quick if you want to be able to take advantage of the opportunities here.
Another promising city for investors is Leeds. With its central location in West Yorkshire, it is one of the most well connected cities in the UK. Transport links are exceptional including road, rail and even air travel.
It is a thriving hub of culture and commerce in The North and another significant city in the Northern Powerhouse agenda. The city’s economy is in fact the largest regional economy outside London and the South East, with a GVA of £60.5 billion. With a high rate of employment and new jobs being created all the time, it is easy to see why Leeds has become so popular.
The city of Leeds is second largest legal centre in Britain and the leading UK city for telephone banking and related financial Services, employing 20,000 people in around thirty call centres.
As with many other popular cities, Leeds plays host to three universities, meaning that it has a high population of students, all contributing to the local economy and looking for rental properties.
House Prices are considerably lower than a city like London but are rising nicely meaning that considerable returns from Capital Growth are very likely, adding to the desirability of the location for property investors. With low costs of living and great quality of life, Leeds has a happy and productive population, all of which adds to its appeal.
An important factor to consider is that while property prices are low, a shortage in rental properties creates a high demand. This demand pushes rents higher meaning that there is the potential for greater rental yields. Leeds in fact has the highest rental yields in the whole of Yorkshire. There are over 30,000 people on the council’s housing list waiting to be re-housed currently. This means that Leeds has an urgent requirement for all types of rental properties. High demand also means that you are less likely to have trouble finding suitable tenants and therefore less likely to have periods where your property is vacant.
Thanks to the Northern Powerhouse Agenda there are many upcoming developments planned in Leeds, and there has already been a great deal of government investment in the city. These projects will attract investors from all over the world and provide a huge boost to an already stable and successful economy. This combination of a growing city, with a shortage of properties creating a high demand for rental properties, means that Leeds is an excellent place to invest in a buy-to-let property.
The cities listed here are some of the most interesting and desirable locations for property investors to consider. Whether you are looking for your first investment property, or you are an old hand wanting to expand your portfolio, these fantastic locations offer a wide range of properties to suit any type of investment plan. If you would like to find out more information about what opportunities are available or you would like advice on how to make property investment work for you, then please contact our team.