Manchester best cities invest property investment HS2

The best cities for buy-to-let landlords to invest in 2023

A new tracker looking at the best cities for property investment for buy-to-let in the year ahead has put Manchester in the top spot, rising through the ranks from 2022.

Choosing an ideal location might be one of the first steps a prospective landlord – or, likewise, a seasoned one – takes on their property investment journey, and it can make a huge difference to the final outcome you achieve in the long run.

The best cities or towns can often be those with up-and-coming niche areas and regeneration projects that are set to transform what it is like to live there. This is why many investors are increasingly thinking outside the box, looking away from the traditionally safe capital and towards other parts of the country.

In Aldermore Bank‘s latest buy-to-let tracker, a range of factors are taken into account in order to rank the best cities for those investing in the private rented sector in the year ahead. These include average total rent, returns through rental yields and house price growth, the lowest number of vacancies as a proportion of total housing stock, and percentage of the city population in the rental market.

The best cities for landlords

In first place for 2023 is Manchester, which scored particularly highly (a total of 73 out of 100) due to its long-term property price growth, with an annual average of 5.6%, and its strong tenant demand with nearly a third (31%) of residents being private tenants.

In a similar vein, also ranked Manchester as one of the best cities in the UK in which to invest in property this year. With the average house price in the city currently £234,841, while the average rental price is £850 per month, rent is 0.362% of the average price of property in the city, meaning strong yields for landlords.

Manchester also came out top in a separate study towards the end of last year looking specifically at new-build markets across the country. It saw the greatest number of new-build completions between 2020 and 2021, with 3,130 private properties built in the time period.

In Aldermore’s survey, London was in second position among the country’s best cities to be a buy-to-let landlord, in joint place with Bristol. Both of these cities have high tenant numbers and strong rents, but with higher starting prices meaning top yields are harder to achieve.

Where are new landlords going?

Simply Business has revealed the best cities in the UK right now attracting the highest number of new landlords, based on the number of landlord insurance policies taken out among those who had owned a property for less than a year.

London ranked in first place in this tracker, with 39,000 buy-to-let insurance policies taken out there last year by new landlords. This was followed by Manchester, Birmingham, Liverpool and Nottingham – all of which have seen an influx of new investors and landlords.

As Simply Business notes, the best cities for buy-to-let tend to be the larger ones of the country, where tenant numbers are the highest and property prices are the most stable compared to other areas. As transport options also improve in these areas, this will prove more of a magnet to investors and tenants.

Alan Thomas, UK CEO at Simply Business, said “The private rental sector houses over 17% of British households, with landlords taking on capital risk to provide the product of housing to those who otherwise might not be able to afford it.

“Though London remains unrivalled for its demand for buy-to-let properties, we are seeing northern cities including Liverpool and Leeds come into the top 10. It is wholly encouraging that our data shows that landlords view a broad spread of regions as attractive areas to invest this year. ”

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