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Revealed: The top 10 buy-to-let investment hotspots

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23/11/2020
Which Northern powerhouse city is the best bet for landlords seeking strong yields and capital growth?
Revealed: The top 10 buy-to-let investment hotspots

Manchester is the UK’s best place for landlords to invest in property, according to Aldermore.

The challenger bank said the North West city performed well across four out of five key indicators in its Buy-to-Let City Tracker.

The tracker looked at five measures that impact desirability for landlords – rent, yields, long-term house price growth, low vacancy levels and size of rental market – and Manchester came out top overall:

Aldermore said that Manchester has experienced ‘rapid economic growth pre-Covid and significant investment in commercial and residential developments over the past five years’, making it a desirable and affordable city to live in.

It performs well on rental returns and long-term house price growth, but more importantly it has one of the biggest rental markets in the UK, with 31% of Manchester’s population being private renters.

Long-term returns in the South

Southern England dominates for long-term investment, with seven of the top 10 cities for landlords in the region. London has the highest rental price per room (£627) but some of the lowest yields at 2.9% on purchase price.

Oxford and Brighton produce strong long-term returns, with an average 5.3% increase in property prices the past decade. Brighton also scores well for rent, at an average of £544 per room.

Landlords in Milton Keynes achieve an average yield of 5.2%, but it has one of the smallest markets with only 17% of people privately renting.

Yorkshire cities are some of the highest yielding, with Hull producing the highest short-term yield of all 50 cities, at 9.2%. Other high yielding cities included Barnsley and Doncaster, both at 7.9%.

Jon Cooper, head of mortgage distribution at Aldermore, said: “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.

“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.”

The top 10 cities for landlords

1. Manchester
2. Cambridge
3. London
4. Oxford
5. Brighton
6. Northampton
7. Bristol
8. Swindon
9. Reading
10. Milton Keynes

Source: Aldermore

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