Knowing when and where to add to your UK property portfolio can be a minefield. That’s why we’re starting 2020 by looking at the UK Buy-to-Let market, with a view to finding the country’s best places to invest in UK property for the year ahead.
Where is the smart money going?
It stands to reason that where there’s growth, there’s also opportunity. So, we’ll begin with the safer markets; the places with the most consistent long-term growth over the last six years.
Since 2014, the market in Sheffield has grown by 19.50% yet, with the average property costing £199,000, it still offers prices among some of the lowest of all major UK cities.
Manchester has grown by 22.09% and, with its high profile and strong identity, is an extremely attractive proposition. Recent price rises that could be described as spectacular make it a firm Buy-to-Let hotspot.
But, at 23.92%, the award for the most impressive consistent growth for UK property goes to Leicester. With demand outstripping supply, the Midlands city is home to a highly competitive residential property market, which will only fuel further expansion.
Early signs for capital gains
Next, we examine data by Hometrack, which reveals the three cities achieving the highest growth for UK property in the last three months of 2019. They are Liverpool (+2.60%), Birmingham (+2.10%) and Cambridge (+2.00%). Each has their own regeneration projects either underway or planned for the future, which will only cement their appeal to Buy-to-Let investors.
That’s because, to bring these figures into context, during the same three-month period, London, grew at a comparably lacklustre 1.1%.
UK Property – The towns to watch
While London stalls, five nearby towns to the north, northwest and west of the capital appear to be where investors are finding opportunity.
For anyone wanting to escape the cost of renting in London, Stevenage presents a compelling case for consideration. The town has some of the most progressive business and technology companies around, while the capital is within easy reach.
Known for IT and innovation, Milton Keynes is also home to an impressive number of business start-ups when compared to the national average. These are all qualities fuelling the expectation that the town will double its population to 500,000 by 2050.
With almost 20% of all residential property in Northampton being private rented accommodation, and that figure expected to rise in the next five years, the town’s reputation as a destination for investors is set to grow too.
A combination of comparably cheap property for the region and an ambitious programme of regeneration is helping Slough to stand out to investors. The town’s commuter population tops 48,000 and almost half of all homes are let to people who have left the capital.
Spearheaded by a £770 million regeneration programme, including transport and infrastructure, Bracknell is attracting attention from all quarters. Especially as property here is much more affordable than in the nearby commuter towns of Woking and Guildford.
Take returns into account
When it comes to the deciding factor for where to invest in UK property, you should also consider the rental yield on offer. The greater returns can be found in the North of England, with Sheffield (5.87%) leading Liverpool (5.82%) and Nottingham (5.44%).
The demand for rental property is high and the long-term health of the Buy-to-Let sector looks good, making now as good a time as any to invest. It is clear that there are some interesting opportunities out there, particularly in the North and in the conurbations to the northwest of London.