Foxtons has snapped up a Birmingham lettings agency, raising the question as to whether Britain’s second city is the next big investment hotspot.

Foxtons – which until now has only purchased agencies in London or its commuter belt – has snapped up FleetMilne.

This is described as “a high-quality, independent lettings agent with a leading market share position in central Birmingham.”

Foxtons tells its shareholders that this unusual move is because Birmingham has significant levels of new homes and Build To Rent developments expected to be delivered over the medium-term.

FleetMilne will also serve as Foxtons’ base in Birmingham and support further acquisitions in the region.

Connectivity with London continues to strengthen, with acceleration expected following the opening of the HS2 rail connection.

The acquisition is costing £3.2m, with a further £0.8m deferred for 12 months and contingent on performance targets being met.

Over the medium-term Foxtons is targeting a total return on investment of 20% in Birmingham.

Guy Gittins, Foxtons chief executive, calls Birmingham “a major market with strong long‑term potential, supported by extensive redevelopment and increasing connectivity with London.”

Meanwhile Nicola Fleet-Milne, FleetMilne’s managing director, adds: “Having built FleetMilne over the past 20 years into a leading lettings business in central Birmingham, it was important to find a partner who shared our ambition for the market and our commitment to outstanding service.

“Foxtons is the right partner for the next stage of our journey.”