As we near the end of a whirlwind 2021, many people are considering their plans for the coming year, including potential investment options. If Buy-to-Let (BTL) investment is on your wish list for 2022 - as a new landlord or expanding your existing portfolio - then some recent research might be helpful. An annual BTL city tracker details some key elements property investors look for, giving you a good idea of what kind of price you can expect to pay and also the potential yield you could secure.
It's also interesting to see that while London remains in the top ten, it has dropped down to sixth place. Meanwhile, Luton and Norwich have entered the top ten as long-term property price growth and a good level of achievable rents has made them more attractive to investors. However, no cities in Wales or Scotland feature in the top 10, reflecting a lack of demand in some areas and relatively high purchase prices in others
Bristol Takes Top Spot
Deciding on the right place to invest in property isn’t always easy, however, there is help out there and the latest Buy to Let City Tracker report from lender Aldermore shares some useful information. Analysing details including average rent, yields, house price growth and vacancies, the report highlights which cities provide the most financially rewarding BTL investment opportunities.
Taking all the elements together, Bristol tops this year’s report moving up from seventh in 2020, with former number one Manchester sliding down to fourth. The south west England city is considered the best long-term BTL investment option thanks to its house price growth, low level of vacancies and strong demand from private sector tenants. Although, the short-term investment outlook is a little less positive, mainly due to the average property purchase price of £348,543 which results in an average yield of 4.16%.
Oxford, Cambridge, Manchester and Luton make up the remainder of the top five best cities for BTL investment. For Luton in fifth place, this is the first time it has been in the bank’s top ten with the recent increase in property prices elevating its position in the tracker. Norwich, meanwhile, sits at 10th spot an 11-place climb from 2020, but still below its 2019 fifth spot.
Aldermore’s 2021 BTL City Tracker Top Ten
Source: Aldermore
No Top 10 Spot for Scotland or Wales
While it was welcome news to see some different cities reach the top of the list, for Scottish and Welsh cities, the picture was less upbeat. Just four Scottish cities and three Welsh ones were in the top 50, with Edinburgh gaining the highest rating at 13th, followed by Glasgow at number 20.
Both cities share the benefit of having a high proportion of private renters, something that helps Edinburgh achieve among the highest rental returns. However, the research suggests they both fare better on a short-term investment outlook, with other areas providing a better long-term investment proposition.
For Wales, Cardiff is the strongest performer at spot 36, while Newport and Swansea prop up the top 50 in 49th and 50th, respectively.
“Private landlords are a central part of the housing market, supporting over 4.5 million households in the UK and, as we emerge from the pandemic, landlords will need to meet the emerging demand for choice and variety from renters,” said Aldermore’s head of mortgage distribution Jon Cooper.
This report – among others – highlights there are solid investment options across the country, which is good news for investors and tenants alike.
