Which Cities Offer the Best Buy-to-Let Opportunities in 2021?
Which cities offer the best buy-to-let opportunities in 2021?
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There is no doubt that 2020 has been, to say the least, a tumultuous year for the property market in the UK and even more so in London.
The uncertainty and doubt in the market’s future performance fuelled by the global pandemic brought fears of a property crash.
However, that has seemingly been avoided and there are a number of cities across the country offering promising investment opportunities for those looking into buy-to-let properties.
Birmingham has continued to show very strong numbers and an above average performance in the UK property market.
The average rental yield of property in Birmingham is 5.4%, and the average rent is projected to grow by around 15.9% in the next four years. There seems to be a very strong demand for rental property in the city, with the upcoming completion of major projects underway including the Midlands Metro extension and the HS2, as well as being the host of the 2022 Commonwealth Games, Birmingham’s rental market looks to only grow and increase in value, making it one of the best buy-to-let opportunities in 2021.
Manchester presents another investment opportunity with significant potential.
Aldermore Buy to Let city tracker ranked Manchester as the best city for buy-to-let investments in the country. The ranking table took into account factors including average total rent, yield, house price growth over the last ten years, vacancies as a proportion of all housing stock and percentage of the population renting property.
From the research, Manchester showed to be a great investment opportunity as it had a very low rate of void periods. With an average rental yield of 5.37% and an estimated 15.76% price growth over the next 5 years, Manchester offers promising returns for an investment in the local property market.
One of the more unlikely cities to feature on our list is Hull, who won the label of worst places to live in the UK in 2003. Since then, Hull has seen significant overhaul, especially following the finished construction of the Siemens factory in 2016.
More recently in 2017, Hull was named UK’s city of culture, and despite such recent developments and an increase in visitor numbers, house prices in the area have stayed at a very affordable low which offers investors the opportunity for large yields – ranking highest at 9.2% rental yield of the 50 cities used in Aldermore’s table, and thus offering prospects of a great return on investment.
Demand for rental property seems to also be on the rise in the area as it saw a 2.3% growth in rental prices in 2020 (compared to an underwhelming 5.2% drop in London). This high demand would not only bring confidence to the local market but also mean that void periods can be largely avoided. The combination of a low purchase price, high yields and a demand for rental property make Hull a brilliant place to invest in buy-to-let opportunities in 2021.
The city has recently seen a rise in the number of property investors backing the local market, given that it is a growing city with a clear plan for its future development. This includes the Liverpool Waters regeneration scheme that is injecting £5.5 billion into an area covering over 60 hectares. The project will look to build a new cruise ship terminal as well as various infrastructure proposed for the leisure and entertainment industries, in addition to the construction of new property.
One of the reasons Liverpool is quite popular with investors is that property prices are relatively low, in comparison to other large cities, while still giving high yields on the property. The prospects of development in and around the city as well as a growing, yet affordable property market make Liverpool a great investment location for buy-to-let property.
Finally, although not the most obvious and promising location on the list, some parts and areas of London, such as Barking or Merton, are worth looking at when considering buy-to-let investment opportunities.
As it stands, according to Rightmove, London is the only area of the country where rental prices are falling, down 6.8% in the last year, and therefore it does not seem like the ideal location to invest in. Nonetheless, there are certain areas, especially in Outer London, including Redbridge and Guildford, who’s rental prices have risen (0.8%), and who still offer a profitable rental yield.
London’s rental market is currently at a low and is bound to bounce back as it regains the confidence of investors, therefore if you invest in the short window between the current market low and its revival, you could be able to make a significant return on your investment through a buy-to-let strategy.