The hottest buy-to-let spots in the UK

March 15, 2023

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Article Summary

Buy-to-let
  • In the last 20 years alone, there has been a 120% increase in people living in Manchester city centre, with the current population of 72,000 expected to grow to 100,000 people in the coming years.

  • The metro area population of London in 2022 was 9,541,000, a 1.22% increase from 2021, when it stood at 9,426,000. London boasts a predicted house price growth of 21%, as well as a rental growth of 14% by 2026.

  • Savills estimated that Leeds has an annual need for 14,900 new homes in 2021, but the Deloitte Leeds Crane Survey 2022 showed that just 2,267 homes were completed in Leeds over the course of 2021.

Buy-to-let has long been a popular investment option in the UK, with investors looking to capitalise on rising property prices and strong rental demand. But with so many cities and regions to choose from, where are the best buy-to-let hotspots in the UK?

In this article, we’ll take a brief look at the cities of Manchester, London, Leeds, Liverpool, and Brighton & Hove highlighting key statistics on property prices, rents, and population to help you make an informed decision if you’re mulling over where to invest in the UK.

 

Manchester

Manchester is one of the fastest-growing cities in the UK, with a population of over 2.8 million people. The property investment opportunities that the city presents to investors are attractive and bring in high, attractive yields. There are numerous regenerations in the works in the Northwest city, with Manchester making use of previously derelict areas.

In the last 20 years alone, there has been a 120% increase in people living in Manchester city centre, with the current population of 72,000 expected to grow to 100,000 people in the coming years. Amongst the major local companies and employers are ITV, BBC, PWC, KPMG, Deloitte, Google and Amazon.

The city’s property market has been booming in recent years, with average house prices increasing by 4.8% in 2022. Buy-to-let opportunities in the city are endless as rental demand remains high, with rental yields averaging around 5.5%. According to Zoopla, the average property price in Manchester is currently £232,645, with rents averaging at £1,167 per month.

 

London

London is one of the world’s leading cities, in many aspects of the title. It is the UK’s capital and therefore a leading cultural centre as well as a global economic hub. Global businesses have offices and bases in the city due to its huge population, outstanding infrastructure, its world-leading universities and more. These factors, in addition to several more, make London’s property market one of the most desirable and profitable in the world.

London is undoubtedly one of the UK’s most popular buy-to-let hotspots, with high demand from renters and strong capital growth potential. Despite the high property prices, rental yields can be strong, with the average rental yield for London properties at around 4%. The average property price in London is currently £672,564, with rents averaging at £1,754 per month.

The population growth in London is exponentially increasing; the metro area population of London in 2022 was 9,541,000, a 1.22% increase from 2021, when it stood at 9,426,000. London boasts a predicted house price growth of 21%, as well as a rental growth of 14% by 2026.

 

Leeds

Leeds is a popular buy-to-let destination, with a population of over 800,000 people. With a thriving student population, home to over 96,200 students, Leeds is one of the most popular student cities in not only the UK, but Europe. The ratio between the available supply of properties and demand for them stood at 1:5 – creating higher demand for properties, and allowing landlords to increase their rental prices.

In terms of supply and demand of homes, Savills estimated that the city region has an annual need for 14,900 new homes in 2021, presenting an excellent opportunity to investors. The Deloitte Leeds Crane Survey 2022 showed that just 2,267 homes were completed in Leeds over the course of 2021, and that only slightly more than 4,000 were under construction during the 2021 end-of-the-year evaluation, with the supply falling well under the necessary demand.

The city’s property market has been performing well in recent years, with average house prices increasing by 4.4% in 2021. Rental yields in Leeds are also strong, with yields averaging around 5%. According to Zoopla, the average property price in Leeds is currently £252,739, with rents averaging at £895 per month.

 

Liverpool

According to JLL, Liverpool could see additional house price growth of more than 21% and rental growth of almost 14% by 2026. Investors sitting on the fence about investing in the city should be looking to invest now or risk missing out on benefitting from the high ROI and yields properties here would bring.

The Cities Index from Hometrack showed that Liverpool had the largest house price growth in the UK from 2021-2022. Its average increased by 10.7% in 12 months, which is more than 3% higher than the national average for the same time period. It highlights the increase in demand for property, and investors should act quickly before the prices sky-rocket even further.

Liverpool is a city that has seen significant regeneration in recent years, especially on Liverpool’s Central Dock, making it an attractive buy-to-let hotspot. The city has a population of over 500,000 people, and rental demand is strong, with rental yields averaging around 6% per annum. Average house prices in Liverpool increased by 4.6% in 2021. The average property price in Liverpool is currently £191,321, with rents averaging at £801 per month.

 

Brighton & Hove

Brighton & Hove was voted as one of the UK’s top places to live in 2022 by the Times. Whilst typically considered a city of young creatives, Brighton has also been identified as one of the top UK cities for business in recent years, due to its close proximity to the Capital.

The city contributes more than £7bn to the national economy, with the tourism industry leading the way. There is a real shortage of housing in Brighton, while more people are moving to the area every year to enjoy the fantastic lifestyle on offer. Demand is through the roof and rents rose by 8.2% in the last year as a consequence.

Nationwide data showed that house prices in the city went up by 12% in the first quarter of 2022 alone, highlighting the soaring demand. Despite the city’s growth by 6% in recent years, the housing supply only increased by 3%, highlighting the lack of supply once again with investors looking to take advantage of the chance to invest in the coastal city.

As the rental demand is high, rental yields are rewarding too, averaging around 4%. According to Zoopla, the average property price in Brighton & Hove is currently £445,637, with rents averaging at £1,413 per month.

 

Conclusion

When it comes to buy-to-let hotspots in the UK, there are many cities and regions to choose from. However, Manchester, London, Leeds, Liverpool, and Brighton & Hove are all popular destinations, offering strong rental demand and potential for capital growth. Property prices, rental yields, and population statistics should all be considered when making a buy-to-let investment decision, and we hope this article has provided you with some valuable insights.

To learn about the property investment opportunities above, or to find out more about how property investment works, get in touch with the experts at North Property Group today.

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