Aldermore, the specialist finance lender, has researched fifty cities across the UK to establish the best places for buy-to-let landlords to invest in. The lender utilised its ‘Buy to Let City Tracker’ to obtain the results.
Five key indicators were used in the research; average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and percentage of the city population in the rental market.
Despite strict lockdown measures this year, Manchester won the top spot in the City Tracker, due to pre-Covid rapid economic growth and significant investments over the past five years in both commercial and residential developments. With 31% of Manchester’s population being private renters, it has one of the UK’s largest rental markets and some of the lowest vacancy rates. The average rental per room per month is £428, giving Manchester a rental ability that is above average. The city performs well on rental returns and long-term house price growth, making it attractive for private landlords.
Overall, southern England was found to dominate for long-term BTL investments, with 7 out of the top 10 cities in the south. London came in 3rd place with the highest rental price per room at £627, though this was balanced out by some of the lowest yields at 2.9%. Oxford was in 4th place and Brighton 5th, showing good long term returns with property prices increasing on average over the past decade by 5.3%. Milton Keynes had an average yield of 5.2% for landlords, but with only 17% of people privately renting it is one of the smaller markets.
Jon Cooper, head of mortgage distribution at Aldermore, said: “There has been a high level of uncertainty for landlords since the Covid-19 outbreak and they have had to continuously adapt to a raft of challenges but, with so many working from home right now, it reinforces the importance of a robust and diverse private rented sector. The changing needs of renters, whether to move to a new location or a different type of property to fit flexible working demands, has created investment opportunities for landlords.
“Aldermore’s Buy to Let City Tracker shows that across the UK there is still great short and long-term returns to be had for landlords, with a number of cities providing excellent rental yields with room for capital growth. The private rented sector is vital to the economy right now and its recovery from the pandemic so landlords should seek portfolio advice from their lenders to see how they can look at new ways to support the sector.”
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Aldermore recently announced Steven Cooper as its new Chief Executive Officer, effective from May 2021.