Buy to Let Property: Where to Invest?

Purchasing a buy to let property can be a brilliant investment – but where in the country will give you the best returns on your investment? Recent research from Aldermore Bank reveals the top UK cities for buy to let property…

The top three positions go to Oxford, Manchester and Edinburgh, with London coming in at just number four. 

Oxford pips everywhere to the post, boasting the largest rental market, with 28% of its residents in private rental property and an above-average rental ability, seeing typical room rent at £596 per month. Low levels of vacant property indicate that demand is high, plus, landlords’ investments are secure with property prices increasing 4.8% per year, on average, over the last 10 years.

Aldermore’s research suggested that in Oxford, the local universities and hospitals provide a high number of professional renters who are after long term housing and usually look after properties well. A significant amount of new housing is being built on the outskirts of the city, which are ideal for commuters and are generally slightly more affordable than property in the city centre.

Interestingly, the research also showed that Oxford has one of the lowest short term returns through yields, likely due to higher house prices than some other areas. 

Manchester is second on the list, with 27% of its residents in rented property. However, unlike Oxford, it has higher short-term yields, averaging at around 6%, and healthy increasing property prices. As a lot of previously London based businesses have migrated up to Manchester over the last decade, plus two large universities, the demand for accommodation here has boomed. As a result, there’s been a huge amount of development to meet this demand, which we reported on in an article back in September of this year. It seems that, just like with Oxford, this development is now spreading to the outlying commuter belt areas too – good news for the North West as a whole.

Edinburgh made it to number three, with monthly rents almost as high as those in London. which, while still having the highest average rent rates is, like Oxford, also let down by lower short-term yields.

At the other end of the list, three of Yorkshire’s cities – Leeds, Sheffield and Bradford – were in the bottom six. According to the research, these cities scored low on the rental prices and had below-average yields, making them less prosperous investments for buy to let landlords.

If you’re considering your first or next buy to let property investment for 2020, this list may give you a good idea of the areas where you’re likely to get the most out of your money – you can see the full rankings below.

(Source: Aldermore)

Ranking	City	Region	Overall score
1	Oxford	South East	74
2	Manchester	North West	72
3	Edinburgh	Scotland	72
4	London	London	71
5	Norwich	Eastern	66
6	Bristol	South West	64
7	Nottingham	East Midlands	63
8	Cambridge	Eastern	63
9	Brighton	South East	60
10	Milton Keynes	South East	55
11	Plymouth	South West	54
12	Hull	Yorkshire	49
13	Leicester	East Midlands	49
14	Coventry	West Midlands	49
15	Southampton	South East	48
16	Birmingham	West Midlands	47
17	Liverpool	North West	44
18	Cardiff	Wales	39
19	Glasgow	Scotland	37
20	Leeds	Yorkshire	32
21	Derby	East Midlands	31
22	Sheffield	Yorkshire	30
23	Bradford	Yorkshire	29
24	Newcastle	North East	26
25	Wolverhampton	West Midlands	25

13th December 2019