Despite the buy-to-let sector seeing a raft of changes in recent years, demand from private tenants continues to grow and the UK remains one of the most stable markets in which to invest globally.
That is according to UK development and investment company SevenCapital, which recently looked into the UK’s top cities for buy-to-let investment in 2020. Below are the top ten places it identified.
The UK’s second city topped the list for 2020 investment hotspots. It has attracted a high number of direct investments from overseas and is home to billion-pound projects either ongoing or in the pipeline.
With 1.2 million existing residents, Birmingham’s growth has outpaced all UK cities outside the capital in recent years, leaving a chronic undersupply of homes. As such, property price growth has hit 19.30% since 2014 and Knight Frank predicts a further 12.5% increase by 2022.
What’s more, the city has rental yields sitting comfortably between 4.4% and 5.3%, according to PropertyData.
This major North West city came second on the list. It has long attracted young professions and is already enjoying a raft of investment which has transformed its skyline.
Manchester also appears to be enjoying a resulting ‘ripple effect’ – a term used to describe the rising wave of house prices outward from a central point of high activity.
Property price growth since 2014 sits at 22.09% and rental yields have remained fairly strong, reaching an average of 7.30% in the Fallowfield area.
Liverpool is one of the highest-performing buy-to-let hotspots, with postcodes L7 and L1 regularly achieving yields of 8.2% and 8% respectively.
While price growth has slowed during 2019 after an outstanding Q4 of 2018, the city remains a top investment destination in the North thanks to exciting developments, exceptional career opportunities and rising tenant demand.
JLL expects that property prices in central Liverpool will rise by 2% and rents by 3.5% throughout 2020.
Sheffield presents a great opportunity for first-time investors, as house prices here sit at the lower end of the scale compared to most UK cities. Despite this, prices have grown by 19.5% since 2014 and a whopping 223% over the last 20 years, which makes it an ideal place for those with one eye on capital gains.
However, its rental yields form the biggest attraction, currently sitting at 7.30% on average. With a £480 million revamp of the city’s shopping district improving its amenities, the city’s appeal is set to continue to grow amongst tenants and visitors.
A key destination within the Northern Powerhouse, Leeds’ population is growing seven times faster than London. The city has seen property prices grow 17.04% since 2014 and 211% since 2000, and its £7 billion of development is set to see the city centre double in size.
Its rental yields have also nearly topped the charts of cities in the UK, hitting an average of 7.6%, according to PropertyData.
With price growth of 250% since 2000 and 7.7% in the last year, Leicester is fast securing its place as a top buy-to-let hotspot.
Like Sheffield, house prices are currently at the lower end of the scale next to other regional cities, meaning there’s significant scope for future growth. According to PropertyData, the city is also generating good rental yields of around 7.20%.
A central location in the UK with direct access to key destinations, Nottingham city centre is a popular choice for investment. The city is already popular with students and professionals, offering an array of amenities, dining and entertainment.
Since 2014, prices have grown nearly 20%, with SevenCapital predicting more growth in the next year.
With its world-famous Oxford University, attractive architecture and one of the strongest economies in the UK, Oxford has held a strong attraction for many investors.
Whilst property price growth has slowed somewhat since 2016, it ranks third in the UK for growth overall in the past 10 years.
The city’s connectivity between London, Heathrow and Cambridge is also set to improve further with the East-West Rail and Crossrail.
Recent regeneration and improvements to infrastructure – namely the new South Wales Metro – have improved connectivity and boosted sector jobs and growth in the Welsh capital.
Average rental yields in many parts of the city already sit between 4% and 6%, and with its population tipped to grow the fastest of any core UK city over the next 20 years, demand looks set to soar.
Despite its popularity waning over recent years, it’s impossible to ignore the capital. Named the number one city in the world for students and ranked second in the world’s top financial centres – behind only New York – London remains one of the best places in the UK to invest.
The capital has seen the fastest growth in the UK since 2009, with property prices sky-rocketing. What’s more, a population of more than 9.1 million means there is no shortage of demand, Brexit or no Brexit.