20 Oct, 2019

Where in the UK can you find the best buy to let returns?

2019 10 21 Manchester Wide 2

UK buy to let property is a reliable and profitable investment which is popular with investors from around the world. If you are looking for a profitable, long-term, flexible investment, then an off-plan UK property is the ideal choice. The only question is: where should you invest for the greatest returns?

Regional city centre markets

When building a buy to let portfolio it is vital to make sure you invest in the right location – and the best returns can often be found in city centres. Investing in the UK’s fastest-growing cities is a tried and tested strategy and a great way to future-proof your income.

The latest UK Cities House Price Index from Hometrack confirms this, showing that annual house price growth in cities such as Manchester(4.5%) and Birmingham (3.8%) was at least double the national average in the year to August 2019.

Compare and contrast that to London where the Index shows that property values only grew by 0.2% over the year, mirroring the city’s general slowdown over that period. They are still increasing, but nowhere near as quickly as a few years ago.

Strong house price growth in Manchester and Birmingham reflects the economic strength of both and, furthermore, predictions of continuing growth make it likely that the two cities will remain buy to let hotspots in the foreseeable future.

JLL’s Northern England Research Report 2019 anticipates further house price growth in Manchester of 15.92% by 2023, and rental growth of 16.49% over the same period. Birmingham’s future is equally as impressive, with the same company’s West Midlands Residential Report projecting price growth of 15.30% and rental growth of 13.09% by 2022.

The right time to invest

Whilst there is clearly value to be found in regional city centre markets, is it the right time to expand a portfolio with new investments? A feature of the buy to let market in recent months has been a reluctance form some to invest before the Brexit situation has been finalised. To an extent, this is understandable. However, demand from renters remains stable and is unlikely to shrink in the near future.

The truth is that majority of tenants enjoy renting and have no desire to buy a home of their own. The latest research from Landbay shows that only 42% of tenants are interested in purchasing their own home in the near future, with the other 58% happy to continue renting in the long term.

This trend is most striking among those renters most likely to be able to purchase a home; of those aged 35-44, less than half are interested in buying a home any time soon. This indicates that a significant number of people plan on staying in the rental market in the long-term – good news for buy to let investors looking for a stable base of renters and strong, reliable tenant demand.

Whether this is due to the unaffordability of buying their own home or the nature of the flexibility and freedom offered by renting, it is clear that renting is more popular than ever and homeownership is quite simply not the be-all and end-all for many people as it has been in the past.

The CEO of Landbay, John Goodall, said: “This research suggests the UK’s enthusiasm for homeownership may be waning. Conversations around the Private Rented Sector often assume the bulk of renters are simply biding their time until they can buy a house. However, the changing face of employment and a thirst for flexible living mean renting is more attractive than ever, and landlords should reflect this in their interactions with tenants.”

With the rental market improving dramatically for tenants over the last decade, it is clear that this is the perfect time to invest in UK buy to let property. Markets in the big regional cities – such as Manchester and Birmingham – offer fantastic opportunities for investors, with the potential for strong capital appreciation and growing rental yields in the future.

If you are looking for your next UK buy to let opportunity, browse our available developments today and get in touch with our team of expert property consultants for more information.

Want to know more? Get in touch with our property experts today

Logo footer

Alliance Investments, 21/Floor, The Centrium
60 Wyndham Street, Central, Hong Kong

+852 9244 2880

+852 9244 2880