Almas Uddin
Founder and Mortgage Advisor
16 Nov 2023
Are you pondering the possibility of embarking on a journey into the world of buy-to-let investments in the UK during this year of opportunity? If such contemplations reside within your mind, prepare yourself for an exhilarating odyssey! In the month of March 2023, Zoopla unveiled a comprehensive market report, unfurling a vivid and intricate tapestry that offers profound insights into the intricate landscape of buy-to-let investments. Let's dive into it and explore what's happening in a way that's as friendly and informative as chatting with a knowledgeable friend.
Rising Rental Premiums - A Promising Start
According to Zoopla's report, the UK's buy-to-let rental market has been on a remarkable upswing. Overall rental inflation has reached 11.1%, which is impressive. While this number reflects a minor decrease from its 12.3% position in mid-2022, the true narrative emerges from the fact that premiums have surged by a substantial 20% in the past three years.
Now, this might sound like music to the ears of existing landlords. However, there's a twist in the tale. Zoopla's report also predicts a slowdown in rental inflation by the end of the year, with estimates hovering around 4% to 5%. This change is expected to be more pronounced in areas that have traditionally experienced the highest rent growth – think inner London and other bustling city centres.
The Search for the Best Returns
Now, what does this divergence in regions signify for individuals in pursuit of their next (or maiden) buy-to-let investment venture? It implies that you must be prepared to delve into diligent research, ascertaining the optimal locations within the UK where you can anticipate the most favourable returns on your investment.
Top 10 UK Cities and Towns for Rental Yields
If you're all about chasing those rental yield figures, we've got some pointers for you. Consider exploring the following areas:
What's common among all these locations, with the exception of Southampton? Their average house prices are below the current national average of £257,122. In cities like Glasgow, Middlesbrough, Dundee, and Preston, they are significantly lower. Investing here not only offers promising rental yields but also represents excellent value for money when it comes to property prices.
Taking a Deeper Dive - Aldermore Bank's Buy-To-Let City Tracker
But wait, there's more to consider than just rental yields. Aldermore Bank's Buy-To-Let City Tracker index takes a comprehensive look at various indicators to evaluate towns and cities across the UK. These include:
- Average overall rent (per room per month)
- Short-term rental yield returns
- Long-term house price increases
- Vacancy rates versus housing stock
- The current population in the rental market
After analysing these factors, Aldermore's most recent tracker index update (as of January 2023) arrived at the following top ten locations for buy-to-let investors:
Manchester claimed the top spot, primarily due to its long-term property value growth (a 5.6% increase) and a substantial rental market share (31%).
London scored high thanks to its impressive average overall room rent (£660 per month) and a healthy percentage of the population (29%) active in the rental market. However, short-term rental yields in the capital are relatively steady at 5.1% compared to other top-ten areas.
Places like Peterborough, Milton Keynes, Southend, and Cambridge, while being within commutable distance from London, offer cost-effective alternatives for both renters and buy-to-let investors seeking more budget-friendly property prices.
What's Your Next Move?
Researching the ideal spot for your buy-to-let investment can be quite the task. With a constantly changing landscape, it's not always easy to be sure if you're making the right decision. That's where a smart move comes in – seeking the guidance of an experienced buy-to-let mortgage broker.
Our free broker-matching service is here to connect you with a specialist in this field. They not only help you identify the best buy-to-let mortgage brokers options but also possess the knowledge to pinpoint the most promising areas for your investment. It's like having a wise friend by your side throughout this exciting journey. So, are you ready to explore the world of buy-to-let investments in 2023? Your adventure starts now!
.webp)
.webp)
.webp)
