Manchester Reclaims Top Spot as the Best City for Buy to Let

Aldermore’s new Buy to Let City Tracker reveals Manchester as the best city in the UK for buy to let investment, with London climbing back up the leaderboard to 2^nd, from 6^th last year
New entrants, Peterborough (5^th) and Milton Keynes (6^th) jump up securing a place in the top 10, with Milton Keynes soaring 28 places
Highest drops in 2022 include cities in the Midlands such as Northampton, Leicester and Derby
Sunderland, Newport and Swansea continue to be ranked the least attractive of the UK major cities for buy to let investment

Aldermore’s Buy to Let City Tracker¹ has named Manchester, London, Bristol, Cambridge and Peterborough as the best cities for landlords to invest in for 2023.

The Tracker analyses five key indicators that impact buy to let 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 the percentage of the city population in the rental market.

Aldermore’s Buy to Let City Tracker Top 10 cities:

Ranking	2022	+/- change	2021 ranking	2020 ranking
1	Manchester	+3	Bristol	Manchester
2	London	+4	Oxford	Cambridge
3	Bristol	-2	Cambridge	London
4	Cambridge	-1	Manchester	Oxford
5	Peterborough	+11	Luton	Brighton
6	Milton Keynes	+28	London	Northampton
7	Luton	-2	Northampton	Bristol
8	Reading	+1	Brighton	Swindon
9	Southend	+2	Reading	Reading
10	Coventry	+2	Norwich	Milton Keynes

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

Manchester offers best long-term investment for buy to let investors

With robust property prices and strong rental demand, Manchester looks to be weathering any economic storms well from a landlord perspective, much like London in 2^nd place.

Manchester has jumped back into the top spot for the first time since 2020, due to the long-term return growth of property in the city. Since 2010, the average property price has risen by 5.6% and now stands at £247,341.

It also has a healthy rental market with 31% of the city’s residents privately renting, offering landlords both the benefit of short-term demand and the opportunity to make a good return should they sell the property at a later date. The average rent per room (£454) is also high compared to other cities in the North West such as Warrington, Liverpool and Wigan.

London climbs to its highest ever spot

After falling for the last few years, London has risen up the leaderboard, from 6^th to 2^nd place. The capital continues to offer the highest average room rent for all cities in the Tracker, although shorter term yields remain comparatively low at 5.1%. The demand and size of the private rental market continues to be healthy at 29%, higher than the national average of 21%.

Peterborough and Milton Keynes soar up the rankings

Peterborough and Milton Keynes have stormed into the top 10, with Peterborough jumping 11 places up the leaderboard to 5^th place and Milton Keynes climbing an impressive 28 places to 6^th place. With more people working from home post-Covid and new rail links connecting people around the country, these cities make an attractive base for many commuters.

The longer-term return prospects for these cities have jumped over the last year with property price growth in Milton Keynes rising from 4.6% in 2021 to 5.6% in 2022, and in Peterborough from 3.86% to 5.2% during the same period. Above average rental values have seen these cities become very attractive prospects for buy to let landlords looking to expand their portfolio.

Opportunities in the East rank high but several key cities fall down the leaderboard

The index revealed that seven cities in the East region featured in the Top 20, the highest number compared to other regions. These included Cambridge, Peterborough, Luton, Southend, Basildon, Norwich and Chelmsford. All cities offered attractive long-term returns with Southend seeing the biggest average annual increase in house price of all 50 cities featured, with a rise of 5.9%.

Surprisingly, Oxford dropped significantly from 2^nd place last year to 11^th this year. The main factors for this were a decrease in rental revenue from last year, dropping from £627 to £595 this year, while short-term yield was also lower combined with a drop-in long-term return. Leicester, Northampton and Derby took a dive in the 2022 Tracker, with each performing worse across several categories when compared to how they benchmarked against other cities last year.

Jon Cooper, head of mortgages at Aldermore, comments:

“In its fourth year, our City Tracker highlights how quickly the UK housing market moves across the country. Year on year, we’ve seen the cities offering the best investment for landlords shift consistently. This highlights how landlords really have to be on top of their game to ensure they maximise their investment, looking for areas that offer value not only for the short term but for the longer term too.

“The mortgage industry has experienced a series of testing events with interest rates hikes, uncertainty in the UK economy, as well as stamp duty shifts and looming Energy Performance Certificate changes; factors that are not only affecting landlords but also their tenants, putting both groups under pressure. We encourage landlords to work together with their brokers, reviewing their portfolios to ensure they’re future proofed for further shocks that may lie ahead.”

**Ends**

Notes to editors

¹Aldermore’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.

Aldermore’s Buy to Let City Tracker 2022 Top 50 Ranking Table:

Ranking	City	Region	Overall Score	2021 ranking
1	Manchester	North West	73	Bristol
2	London	London	73	Oxford
3	Bristol	South West	73	Cambridge
4	Cambridge	East	68	Manchester
5	Peterborough	East	67	Luton
6	Milton Keynes	South East	66	London
7	Luton	East	64	Northampton
8	Reading	South East	64	Brighton
9	Southend	East	63	Reading
10	Coventry	West Midlands	63	Norwich
11	Oxford	South East	61	Southend
12	Basildon	East	61	Coventry
13	Norwich	East	60	Edinburgh
14	Brighton	South East	59	Swindon
15	Nottingham	East Midlands	59	Leicester
16	Birmingham	West Midlands	57	Peterborough
17	Glasgow	Scotland	57	Basildon
18	Southampton	South East	56	Portsmouth
19	Swindon	South West	56	Southampton
20	Chelmsford	East	56	Glasgow
21	Edinburgh	Scotland	54	Plymouth
22	York	Yorkshire	54	Derby
23	Portsmouth	South East	52	Chelmsford
24	Northampton	East Midlands	52	Birmingham
25	Maidstone	South East	51	Bournemouth
26	Plymouth	South West	51	Nottingham
27	Telford	West Midlands	51	Telford
28	Leicester	East Midlands	50	York
29	Bournemouth	South West	49	Hull
30	Liverpool	North West	49	Wigan
31	Stoke	West Midlands	48	Maidstone
32	Derby	East Midlands	47	Stoke
33	Wigan	North West	47	Liverpool
34	Hull	Yorkshire	45	Milton Keynes
35	Wakefield	Yorkshire	45	Newcastle
36	Barnsley	Yorkshire	42	Cardiff
37	Newcastle	North East	41	Barnsley
38	Warrington	North West	40	Bradford
39	Leeds	Yorkshire	39	Aberdeen
40	Belfast	Northern Ireland	38	Warrington
41	Doncaster	Yorkshire	37	Dundee
42	Dundee	Scotland	35	Leeds
43	Cardiff	Wales	34	Belfast
44	Aberdeen	Scotland	33	Wolverhampton
45	Bradford	Yorkshire	31	Wakefield
46	Wolverhampton	West Midlands	30	Sheffield
47	Sheffield	Yorkshire	30	Doncaster
48	Sunderland	North East	30	Sunderland
49	Newport	Wales	21	Newport
50	Swansea	Wales	15	Swansea

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