Where are the best places to invest in buy to let properties?
Landlords have taken a few hits in the recent past. Both in financial and regulatory terms. The reduction in mortgage tax relief and a rise in interest rates hit many landlords in the pocket. Regulations and red tape increased with minimum energy efficiency standards and selective licensing.
But, despite the knocks the buy to let property market is still one of the best long-term investments you can make. Especially with the demand for privately rented accommodation continuing to rise. And that applies whether you are looking for your first rental property or already have a portfolio.
Where to invest?
If you are looking for a buy to let property there are, naturally enough, areas which are better to invest in than others.
The south of the country has traditionally seen the biggest capital growth and highest rents. And whilst the level of rent is still undoubtedly higher in the south, the north and midlands have strong claims to be the better value for landlords.
According to a recent report, the current buy-to-let hotspot in the UK is Manchester. But the report issued by LendInvest also revealed there are great opportunities throughout the country for landlords who are looking to invest in a buy-to-let property.
The top ten locations included Manchester and Hull in the north, Leicester in the Midlands, Ipswich and Norwich in the east and Southend, Luton, Colchester and Rochester in the south.
But other areas also offer landlords excellent investment potential. Ian Boden, Sales Director at LendInvest, said: "Cities such as Leicester (#10), Birmingham (#11), and Nottingham (#24) have also made significant gains in the Index, signalling a clear fuelling of the Midlands engine.
"Our biggest climber for the year was Hull. Since becoming ‘City of Culture’ back in January (2017), Hull has received a new wave of confidence in the form of increased investment in the area.
"Elsewhere in the list, it’s great to see towns like Slough, Leicester and Cambridge ascend the list with such gusto. The location of these high climbers, ranging from Cornwall to East Yorkshire, shows how dynamic and ever-changing UK property investment can be across the country."
The other side of the coin
The LendInvest report also highlighted the worse performing locations. Nine of the bottom ten are in the north. Enfield was the only southern location in the bottom ten buy to let locations.
Assessing an area
When looking to buy a property, landlords will look at three key areas; yield, capital growth and rental price growth. The best areas to invest will show growth in all three areas.
A healthy local economy will see strong rental price growth. In other words, rents will be rising. Manchester is a great example of this. The city is the capital of the northern powerhouse and is enjoying a booming economy. It saw a rental price growth of 5.76%. Compare that to Enfield which had a decrease of 3.06%.
The yield on buy-to-let properties continues to be strong right across the country. Yield is the gross annual return a landlord can expect on their investment. It is a calculation expressed as a percentage based on a year's rental income compared to the cost of the property.
Landlords tend to be concerned with capital gains and this is very much dependent on local factors. Colchester landlords enjoyed a huge gain of 11.96% whereas Sunderland saw -1.30%.
Choosing a property
It is important to realise that the figures quoted in this article are general trends. Individual properties can perform better or worse than the figures enjoyed by the location as a whole. By picking the right property at the right price, buy to let landlords can make a profitable investment in areas right across the country.
Managing your property
Whether you chose to invest in a local property or one further afield MakeUrMove can find the right tenant for you. Take advantage of our free trial by clicking here. For absent landlords, we provide a full property management service.