New reports show the top 10 areas across the UK for buy to let investment. Where should you be looking to invest, and what’s making these areas so successful?
New data from leading buy to let lender Paragon Bank shows that average rental yields have hit a 10-year high of 6.3%, up from a 15-year low of 5.2% in the first half of 2023.
Given this increase, landlords now have a real opportunity to maximise profits from their property investments. Commercial real estate firm, Colliers, has published its latest Top Residential Investment Cities report, highlighting the best-performing locations for buy to let investments.
Top 10 UK buy to let hotspots
- Edinburgh
- Glasgow
- Manchester
- London
- Oxford
- Milton Keynes
- Belfast
- Cambridge
- Leeds
- Cardiff
Why Manchester?
Manchester has climbed to the top three in the latest edition of the Collier’s report, taking first place for the top-performing English city. Manchester had placed fourth in the report’s previous edition, following just Milton Keynes for English cities. Edinburgh and Glasgow held their positions from H2 2023 as first and second, respectively.
Manchester’s rise to third reflects its fantastic economic performance, with a record 33% house price growth over the last five years, much higher than the UK city average of 15%. Furthermore, the hotspot is predicted to have a strong 2.2% GDP growth over the next five years, with unemployment rates forecasted to average 3.7% over the same period.
The city benefits from the second highest student population in Colliers’ report, second just to London. For landlords interested in student lets or HMOs, this makes the city a fantastic opportunity to consider.
Andrew White, the Head of UK Residential & Internation Properties Asia at Colliers, commented:
“As Manchester continues to attract residential investment and experience population growth, the availability of greybelt land for development will support sustainable urban expansion.
"By incorporating these additional areas, Manchester can maintain its economic success and residential appeal, providing much-needed housing while preserving residents' quality of life. Manchester’s top position in Colliers’ report showcases its growth and investment potential.”
How are the regions ranked?
The report, published biannually, analyses and ranks 20 locations across the UK against 24 indicators. Some of these include EPC rankings, leisure facilities, GDP, and population growth.
These indicators are categorised into Economy, Research and Development, Property, Liveability, and Sustainability, reflecting the various factors property investors consider.
How can I calculate the rental yields from my property investments?
You can easily work out the rental yields and overall performance of your own property investments. The calculations are:
Gross yield – The total income from your property before deductions.
Annual rental income ÷ Property value
Net yield – The total remaining income from your property after all deductions
(Annual rent – Operating costs*) ÷ Property value
Capital value – The value or price for a property if it had been bought today
(Annual rent ÷ net yield) x 100
*According to the Bank of England, the average operating costs for buy to let properties are £2,350 per annum.
Securing the right property investment
Whether you’ve found your next property investment or you’re looking to refinance your current portfolio, our experts can help. Our expertise in buy to let, commercial and semi-commercial finance, and home mortgages means we’re best placed to support you with your mortgage needs.
To see how we can help, get in touch with our team on 0345 345 6788 or submit an enquiry here.
