Location is key for any property investment. If you’re looking to invest in rental property, it’s worth noting that Manchester has just been named the best UK city for buy-to-let investment.
Manchester topped Aldermore Bank’s Buy to Let City Tracker, beating out 49 other cities across the UK. The city has faced stricter lockdown measures than other areas of the UK. However, the local property market and economy has remained resilient.
Jon Cooper, head of mortgage distribution at Aldermore, says the private rented sector can play an important role in economic recovery.
“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.”
Aldermore’s ranking of the 50 best UK cities for buy-to-let investment was determined by analysing five key indicators. This included average total rent, the lowest number of vacancies as a proportion of total housing stock, short-term returns through rental yields, long-term returns through house price growth and percentage of the city’s population in the rental market.
Short and long-term returns
Manchester performed well across four out of the five key indicators. Strong rental returns and long-term house price growth are some of the main selling points for purchasing a buy-to-let investment in Manchester. Additionally, the city is home to one of the largest rental markets in all of the UK. Out of the entire city, private renters make up 31% of the population.
Jon Cooper says the tracker shows there is still lucrative short and long-term returns for buy-to-let investors. Manchester in particular provides impressive rental yields with room for capital growth as well.
Property prices have increased in Manchester by 4.1% annually on average over the past 10 years. The city in the north-west has also led UK house price growth since the end of the first lockdown earlier in the year. Additionally, Manchester has been named one of the best places to invest in buy-to-let property during the stamp duty holiday.
Throughout the past five years, there has been substantial amounts of investment in commercial and residential developments across Manchester. This had made it an especially desirable city to live in. And more and more people and businesses are being attracted to the city, bringing additional demand to the private rented sector.
Across the UK as a whole, there has been a surge in demand for rental properties. A report from Zoopla shows rental demand is 20% higher right now than in 2019. However, a lot depends on what you’re offering and where.
Some of the increase in demand in the rental sphere is coming as a result of people’s shifting priorities. Many tenants are looking for properties with more space and home offices due to the increase in working from home.
Jon Cooper comments: “There has been a high level of uncertainty for landlords since the Covid-19 outbreak and they have had to continuously adapt to a raft of challenges but, with so many working from home right now, it reinforces the importance of a robust and diverse private rented sector.
“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.”
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