If you’re considering investing in a buy-to-let property in 2023, finding the best areas to invest in should be high on your priority list. You’ll want to determine which areas of the UK have the best rental yield and demand. This will ensure when you find the perfect property, it will be profitable and let quickly.
To help you on your way, we have put together this guide covering the top 5 buy-to-let areas in the UK for 2023 to get you started on your search.
Where to invest in the UK in 2023?
When considering which area to invest in within the UK, you should consider several factors:
- The average total rental for the area.
- The number of vacant properties. A lower volume of vacant properties suggests the location has a high rental demand.
- Short-term rental yield returns.
- Long-term rental yield returns.
- Percentage of the population renting properties vs homeowners.
- Transport and employment in the area.
- Population growth.
So, which areas of the UK have the best rental yield? Let’s take a look.
Greater Manchester is considered one of the best investment property hotspots outside London. Manchester has experienced rapid population growth, 9.7%, in the last ten years at the previous census in 2021. Additionally, the University city has also undergone extensive redevelopment attracting young professionals and over 100,000 university students. All are contributing to its strong and thriving economy. This suggests that Manchester is an excellent location for any investor looking to buy in a flourishing area. The city is also known for being a hive for new business start-ups.
This growth has led to significant demand for rental properties in the area. According to Rightmove, Manchester’s average rental per calendar month has increased by 20.5% in the last 12 months alone.
Currently, the average property price in Manchester is sitting at £221,485. Rental yields in Manchester are between 6-7% and are forecast to increase further along with property prices.
Why invest in buy-to-let in Manchester?
- Property prices have increased by over 20% in the last five years.
- Manchester has a population of over 100,000 students.
- Development and regeneration projects have increased demand for rental properties.
- Strong rental yields and capital price appreciation.
Birmingham is well known as the UK’s central hub for business and is home to many well-known corporate giants. The population of Birmingham is around 1.1 million and growing. In addition, Birmingham is home to over 80,000 students across its four universities. This makes Birmingham appealing to professionals and students alike.
The city underwent extensive redevelopment as the host of the 2022 Commonwealth Games. Additionally, the anticipated HS2 rail link plans have raised the city’s profile as a commuter hotspot.
According to JLLs Q4 2022 report, Birmingham house prices are set to increase by 19.2%. This means Birmingham’s housing market will outperform the rest of the UK over the next five years by 8.9%.
The average house price in Birmingham over the last 12 months was £256,137. The monthly rental has now reached an average of £1,037 PCM which is an increase of 17.6% in the previous 12 months. For investors, there is a wide selection of property available to let. From city centre apartments, perfect for professionals, to HMO houses on the outskirts more suited for students.
Rental yields in Birmingham are typically between 3-5%. Yet, if you pick carefully, some properties can achieve a yield of over 6% in the area.
Why invest in buy-to-let in Birmingham?
- Property prices are predicted to rise a further 10% by 2026.
- Regeneration projects across the city are planned, which will lead to a greater demand for housing.
- Rental properties are in high demand.
- The UK’s largest economy outside of London.
Liverpool remains a popular choice for buy-to-let investors and landlords. Primarily down to its affordability and high rental yields. This is especially true in the vibrant city centre, where you can find some of the best yields and a high demand for rental properties.
Arguably, Liverpool’s price growth hasn’t been the strongest over the last ten years compared to the other cities. However, research suggests prices in the area could increase by as much as 28% in the next four years making it an excellent investment for capital growth. The average house price in Liverpool over the last 12 months is £208,370. The low price point of properties in the area appeals to new investors and those wishing to add to an existing portfolio.
The average expected rental yield in Liverpool is just over 5%. But, within Liverpool’s most popular postcodes, investors can see high rental yields of 8-10%.
The city is another on our list that attracts students and has an excellent reputation for students staying after graduation due to the excellent opportunities in the area. The city has a high ratio of renters to homeowners which means that the demand and competition for the best rental properties can be fierce.
Why invest in buy-to-let in Liverpool?
- Buy-to-let in Liverpool has some of the highest rental yields found in the UK.
- High demand for rentals from locals.
- Affordable property for new and seasoned investors.
- Great growth potential. Liverpool is climbing the list as one of the UK’s best cities to live in and work.
Glasgow is a city often overlooked for its rental property potential compared to its closest competition, Edinburgh. However, that is beginning to change. Glasgow is Scotland’s most populated and arguably vibrant city. It’s more affordable than Edinburgh and offers excellent yields for those looking to invest.
Glasgow is known for its strong manufacturing and industrial foundations. The city’s thriving economy generates around £27 billion annually. The city is also a cultural hub with its wide range of museums and galleries.
The average property sold price in Glasgow over the last year was £199,181 which is a 5% increase compared to the previous year. The average rental yield across Glasgow is 5.31%, and in some areas, such as G51 and G52 high rent yields of over 6% can be achieved.
Why invest in buy-to-let in Glasgow?
- Glasgow is Scotland’s most populated yet affordable city.
- Glasgow is one of the UK’s most significant student locations, with an impressive regeneration of its city campus just completed.
- An impressive development plan is in place that aims to double the city’s population by 2030.
It’s no mistake that our fifth and final location is also in the North of the UK. Leeds has gained a reputation for being an excellent city for those looking for a long-term investment. Economically, Leeds has become one of Europe’s fastest growing cities. It’s managed to entice 10% of Londoners that moved away from the capital since the 2020 pandemic.
The Q3 2022 report from Zoopla shows that rental incomes in Leeds have increased by 11% annually to an average of £859 PCM. As a result, the average rental yield for a buy-to-let is currently 8.7%. This makes it one of the highest yields achievable in the UK rental market.
Leeds has a population of 812,000 people. Although it hasn’t benefited from the same capital growth rates as other regions, its rental market remains strong. This makes it a good opportunity for investors looking for consistent tenant demand in a growing location.
Why invest in buy-to-let in Leeds?
- Leeds offers some of the UK’s best rental yields. Up to 8.7% compared to London’s average of 3.05%.
- Affordable house prices.
- High demand for rental properties.
We hope the above has inspired your buy-to-Iet property search. It’s no coincidence that investors can find some of the highest rental yields in cities that have benefitted from regeneration projects in recent years.
For any new or seasoned investor, the future of the rental market Is looking very bright. As both capital appreciation and rental prices look to grow steadily in the UK property market. The north of England is undoubtedly outperforming other regions when it comes to growth and rental returns.