Top UK markets for property investment

Experience Invest looks at the best UK property investment markets

When considering buying a buy-to-let property, investors should try to look for a balance between low property prices and high rental returns.

London-based property agent, Experience Invest has rounded-up the top UK markets for property investment based on rental returns.

MANCHESTER

Manchester is widely known as the UK’s second city.

It is home to 2.55 million and despite the city’s strong economy, large student population and bustling city centre, property prices in the city remain relatively low when compared to the rest of the UK.

The average price of a property in Manchester is £211,748 (Nationwide) and with house prices rising at a faster pace than London, investors stand a real chance of securing capital gains in the mid-to long-term.  

The BBC’s move from London to Media City, Salford has done wonders to Manchester’s property market. The influx of thousands of jobs has helped boost the city’s private rental market. Many local estate agents place occupancy rates around the 96% mark.

What’s more, the stiff competition from renters has pushed rental prices up. Rents in the city increased by 4% between 2014 and 2015 (HSBC).

The average landlord can secure a rental yield of 7.89% from buy-to-let property in Manchester. This strong rental return led HSBC to name Manchester as the UK’s number one location for buy-to-let returns in 2015.

LIVERPOOL

Liverpool is one of the UK’s most well-loved cities. The city centre is home to almost half a million people and its metropolitan area has a population in excess of 2 million.

Affordability is what places Liverpool in the list of top places for investment returns. The average property price in Liverpool is £160,711 (Rightmove), lower than the nation’s average of £186,553.

Prices continue to rise in the city which will provide investors with ample scope for capital appreciation.

Demand for rental property outstrips the available demand. The city is the home of 4 major universities and has one the UK’s largest student populations – a key target market for the private rental sector. The city also has a large workforce of young professionals.

Landlords can expect a lower entry level onto the buy-to-let market and with average rental returns reaching 6.5% per annum, investors will secure a tidy profit from rental property in the city.

BEDFORDSHIRE

It’s not just the north of England which is providing investors with strong rental returns.

Some towns in the commuter belt – essentially less than an hour outside of London – are producing some of the best rental returns for investors.

For example, Luton in Bedfordshire is making waves among investors in the UK. A new-build opportunity from Experience Invest is currently offering buy-to-let landlords a 9.5% NET return per annum from a student room within a purpose-built development.

Traditionally, student buy-to-lets were considered an ‘alternative asset class’ however, in recent years, the sector’s ability to producer stronger than average returns has propelled the asset class into the limelight.

To highlight the popularity of the sector, $6.5 billion worth of investment has been pumped into the UK’s student property market in the first 9 months of 2015 (Savills).

With an entry level of only £60,000 investors on a budget could generate higher returns from a student property than a traditional buy-to-let.

LONDON

Last but by no means least, London.

London is internationally considered a ‘safe haven’ by property investors however, the average price of a property in the capital will set buyer back by almost half a million pounds.

For those who have their hearts set on owning a property in London, Newham (east London) has been named the capital’s best performing area for buy-to-let returns.

Data from HSBC shows that landlords with property in Newham can generate an average 5.2% rental yield per annum.

Newham is closely followed by Southwark, where buy-to-let landlords can receive an average rental return of 5.18% per year.

Popular property hotspots in London such as Kensington and Chelsea – where average house prices exceed the £1 million mark – provide landlords with a relatively small yields (2.87%).

Due to the high cost of purchasing a property in London, investors may wish to look elsewhere when trying to secure an income from UK property.

This article has been provided by UK property specialist Experience Invest

 

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