The Best Places in the UK for Investing in Buy to Let Properties in 2021
Mortgage lender, Alderidge, has released the top ten best places in the UK to invest in buy to let properties, with a surprise change in the top three spots from previous years.
The Buy to Let City Tracker, developed by Opinium, using 5 core indicators; average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 yrs, proportion of vacant properties in the city and size of the private rental market. The results of these indicators determines how desirable a city is to renters and investors.
In at number one, with a long term rise in property values and only 0.6% of vacant properties, is Bristol, knocking Manchester off the top spot and down to fourth place. Coming in second and third places respectively, are Oxford and Cambridge, whereas London, taking third place last year, slipped to sixth position. London is still however considered to be attractive to investors with its high rental proportions and long term investment confidence in expected rises in property prices in the capital.
Rising from twelfth place to fifth place, is Luton, a new entry into the top ten. This is thought to be due to the improvement in long term property prices. With a year on year rise of 5.2% in the prices of homes, Luton is recorded to have the strongest growth of all the 50 cities analysed in the report.
Head of mortgage distribution at Aldermore, Jon Cooper commented: “The City Tracker shows the UK housing market is rich with diverse and unique conditions across the regions that are ripe for investment opportunities.
“As we move towards a post-Covid environment, we hope this analysis gives food for thought to many landlords on where to look for those hidden gems and returns that meet their business strategies.
“Private landlords are a central part of the housing market, supporting over 4.5 million households in the UK and, as we emerge from the pandemic, landlords will need to meet the emerging demand for choice and variety from renters.
“With the economy opening up and EPC rating changes coming in 2025, now is a great time for landlords to talk with their broker to review where they want to take their portfolios in the future.”
Taking about the reasons for Bristol’s 2021 rise to the top Alderidge went on to say:
“Bristol has taken the top spot due to the long-term growth of property values in the area, and it has the lowest number of long-term property vacancies out of all 50 cities (at only 0.6% this year).
“With more than a quarter (27%) of residents estimated to be privately renting, creating a large and healthy market.
“Since 2010 property prices in Bristol have grown by 5.1% on average per year, second only to Luton (narrowly ahead with 5.2% annual price growth). This makes it much more likely that any buy to let investor will make a good return on selling any property later down the line.
“The short-term picture, as with many of the cities ranked high in the Tracker, is more mixed. On one hand the average rent per room is £514 per month, up 12% on last year.
“This makes Bristol one of only nine cities in the UK to command a rental value of over £500 per month, and one of only two cities outside of the south and east of England, with the other being Edinburgh (13th).
“However, any investor will need a large amount of money to invest. With the average property price in Bristol at £348,543, likely yield will only be 4.6% on their purchase, well below the 5.9% average across the 50 cities.”
The Top Ten official list: