Manchester tops the list for buy to let investment as hidden gems revealed across the UK

POSTED: 23rd November 2020
IN: Newsroom
  • Aldermore’s new Buy to Let City Tracker reveals Manchester ranks as the best city in the UK for buy to let investment, performing well across four out of five of our key indicators
  • Oxford is knocked off 2019’s top spot and now sits in 4th place, while Cambridge has made the biggest jump from 8th in 2019 to 2nd in 2020
  • London now features in the top three, hitting the top spot for average total rent, while Hull, in 14th place, provides the highest yields for landlords
  • The South East remains the best region for buy to let investment with four cities making the top 10 – Oxford (4th), Brighton (5th), Reading (9th) and Milton Keynes (10th)
  • Cities in Wales have fared worst with Newport (49th) and Swansea (50th) sitting at the bottom of the list
  • Northampton (6th), Swindon (8th) and Reading (9th) are new entries into the top 10 for 2020

Aldermore’s Buy to Let City Tracker1, analysing 50 cities across the UK to understand the top places for landlords to invest in, has found Manchester, closely followed by Cambridge, to be the best.

The Tracker, which has been expanded from 25 cities in 2019 to 50 cities, was determined by analysing and assessing five key indicators that impact desirability; average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and percentage of the city population in the rental market.

Aldermore’s Buy to Let City Tracker’s Top ten cities:

Ranking

City

Region

Overall score

1

Manchester

North West

72

2

Cambridge

East

72

3

London

London

71

4

Oxford

South East

70

5

Brighton

South East

69

6

Northampton

East Midlands

69

7

Bristol

South West

69

8

Swindon

South West

67

9

Reading

South East

67

10

Milton Keynes

South East

64

[Table of all 50 cities included in notes to editors]

Manchester leads the way

Although Manchester has experienced stricter lockdown measures than other parts of the country, the rapid economic growth that was seen pre-Covid and the significant investment in commercial and residential developments over the past five years, has made it a desirable and affordable city to live in. This helped them win the top spot in our City Tracker, with good scores on four out of five metrics.

Manchester’s main selling points for private landlords are that it performs well on core factors such as rental returns and long-term house price growth, but more importantly it has one of the biggest rental markets in the UK, with 31% of Manchester’s population being private renters. It also has some of the lowest vacancy rates across any city included in the Tracker. This is combined with above average rental ability (on average £428 per room per month) and security in investment with property prices having increased by 4.1% annually on average in the last decade.

Southern England continues to dominate for long-term investment

Continuing a trend from last year, seven of the top 10 cities for landlords are in southern England. London (3rd), unsurprisingly, has the highest rental price per room (£627) although this does go hand in hand with some of the lowest yields at 2.9% on purchase price of any city in the Tracker.

Oxford (4th) and Brighton (5th) fare particularly well for long term returns with an average 5.3% increase in property prices the past decade. Brighton scores well for rent, at an average of £544 per room. The city also benefits from a high number of residents who privately rent at 29%. Landlords in Milton Keynes will achieve an average yield of 5.2%, however, it has one of the smallest markets with only 17% of people privately renting.

Wales struggles across the board

Wales appears to be a less appealing region to invest in for landlords, with Newport and Swansea appearing in the bottom two (49th and 50th respectively). Swansea has the second lowest available rental returns (£324 per room per month) but has a respectable yield of 6%. Swansea’s long-term return is one of the lowest with an average annual house price growth of 1.5%. However, Cardiff sits higher in the table (27th) achieving respectable rent returns of £418 per room with a short-term yield of 5.6%.

Yorkshire best for highest yield

The Tracker found that Yorkshire cities are producing some of the highest yields, with Hull ranked 12th on the list, producing the highest short-term yield of the 50 cities (9.2%). Other high yielding cities in this region included Barnsley (30th) and Doncaster (36th), both at 7.9%.  However, Wakefield (48th) has one of the lowest room rentals (£337 per room per month) and a low rental market size of only 12%.

Jon Cooper, head of mortgage distribution, Aldermore comments: “There has been a high level of uncertainty for landlords since the Covid-19 outbreak and they have had to continuously adapt to a raft of challenges but, with so many working from home right now, it reinforces the importance of a robust and diverse private rented sector. The changing needs of renters, whether to move to a new location or a different type of property to fit flexible working demands, has created investment opportunities for landlords.

“Aldermore’s Buy to Let City Tracker shows that across the UK there is still great short and long-term returns to be had for landlords, with a number of cities providing excellent rental yields with room for capital growth. The private rented sector is vital to the economy right now and its recovery from the pandemic so landlords should seek portfolio advice from their lenders to see how they can look at new ways to support the sector.”

-ENDS-

Comment on Individual cities available on request

Notes to editors

Aldermore’s Buy to Let City Tracker 2020 Top 50 rankings table:

Ranking

City

Region

Overall score

1

Manchester

North West

72

2

Cambridge

East

72

3

London

London

71

4

Oxford

South East

70

5

Brighton

South East

69

6

Northampton

East Midlands

69

7

Bristol

South West

69

8

Swindon

South West

67

9

Reading

South East

67

10

Milton Keynes

South East

64

11

Edinburgh

Scotland

62

12

Luton

East

62

13

Peterborough

East

60

14

Hull

Yorkshire

60

15

Portsmouth

South East

59

16

Glasgow

Scotland

58

17

Southend

East

57

18

Plymouth

South West

55

19

Telford

West Midlands

55

20

Chelmsford

East

54

21

Norwich

East

54

22

Maidstone

South East

54

23

York

Yorkshire

53

24

Wigan

North West

53

25

Coventry

West Midlands

52

26

Nottingham

East Midlands

51

27

Cardiff

Wales

51

28

Birmingham

West Midlands

48

29

Stoke

West Midlands

47

30

Barnsley

Yorkshire

46

31

Leicester

East Midlands

46

32

Southampton

South East

46

33

Leeds

Yorkshire

43

34

Newcastle

North East

43

35

Bournemouth

South West

42

36

Doncaster

Yorkshire

40

37

Bradford

Yorkshire

39

38

Aberdeen

Scotland

38

39

Derby

East Midlands

37

40

Warrington

North West

37

41

Basildon

East

37

42

Liverpool

North West

37

43

Dundee

Scotland

36

44

Sunderland

North East

32

45

Belfast

Northern Ireland

32

46

Sheffield

Yorkshire

30

47

Wolverhampton

West Midlands

29

48

Wakefield

Yorkshire

28

49

Newport

Wales

24

50

Swansea

Wales

20


Aldermore’s Buy to Let City Tracker rankings table 2019:

Ranking

City

Region

Overall score

1

Oxford

South East

74

2

Manchester

North West

72

3

Edinburgh

Scotland

72

4

London

London

71

5

Norwich

Eastern

66

6

Bristol

South West

64

7

Nottingham

East Midlands

63

8

Cambridge

Eastern

63

9

Brighton

South East

60

10

Milton Keynes

South East

55

11

Plymouth

South West

54

12

Hull

Yorkshire

49

13

Leicester

East Midlands

49

14

Coventry

West Midlands

49

15

Southampton

South East

48

16

Birmingham

West Midlands

47

17

Liverpool

North West

44

18

Cardiff

Wales

39

19

Glasgow

Scotland

37

20

Leeds

Yorkshire

32

21

Derby

East Midlands

31

22

Sheffield

Yorkshire

30

23

Bradford

Yorkshire

29

24

Newcastle

North East

26

25

Wolverhampton

West Midlands

25


1 Aldermore’s Buy-to-Let City Tracker was designed by Opinium and comprises of five core indicators: average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 years, proportion of vacant properties in the city and size of the private rental market. The index uses a series of secondary data sources including the ONS, Census and other official housing statistics.

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