Which towns & cities are best for Buy-to-Let?
The buy-to-let market has long been regarded as a particularly resilient sector of the economy, and this shows no signs of changing during 2022, as cities with large student populations continue to offer the best returns to investors.
According to a new study by Track Capital, two postcodes in Nottingham – NG7 and NG1 – have the highest average rental yields in the UK, 11.3% and 11.1% respectively.
These are followed by BD1 in Bradford (10.6%), M14 in Manchester (10.1%) and NE6 in Newcastle (9.8%). The average rental yields in these areas are well above the current average for the UK, which stands at just 3.63%.
At the same time, the study showed that the worst performing rental yields were in the South of England; in particular, postcodes in London and the commuter belt. For example, the GU10 postcode of Guildford offered average rental yields of just 1.9%, and in the HP9 area of Hemel Hempstead, average yields were only 2%.
So what do the figures tell us?
Firstly, higher house prices in the South of England, in particular, in London and the Southeast, makes this part of the country a less attractive prospect for buy-to-let investors.
Secondly, the figures tell us that the best investment opportunities are largely to be found in urban locations in the North, especially in cities with large student populations, such as Manchester, where there is consistently strong demand for rental accommodation from young people.
The Track Capital research is backed up by a separate study from Shawbrook Bank, which found that 34% of landlords are planning to add to their portfolios and buy at least one property in the next year.
Nearly a quarter of these landlords said they were planning to buy in the North, while over a third said they intended to purchase in a town or city, which reinforces the view that urban, northern areas are seen as appealing options to investors.
The potential offered by these locations may explain why the majority of buy-to-let investors are feeling optimistic about the coming months.
Some 67% said they have confidence in the buy-to-let market over the next year, while 14% are considering buying more properties than they had first planned.
Amid the ongoing gloom related to the pandemic, many people looking for domestic investment opportunities will be heartened by the chink of light generated by the buy-to-let market, especially as investors currently active in the market are feeling confident about the opportunities that lie ahead.
The continuing activity in this segment of the property market suggests it will remain resilient in the short term at least, and one for investors to keep an eye on in the future.
As with any mortgage, this arrangement is not without risks, terms and conditions, so you should always take independent financial and legal advice prior to entering into any agreement.
Sam Murphy – 17th January 2022