Where is currently the UK's best city for buy-to-let investment?

Posted on Friday, February 23, 2024

Aldermore’s latest Buy to Let City Tracker has analysed five key indicators to find the best city for landlords to invest in for 2024

Aldermore’s research revealed that this year's best UK city for buy-to-let investment has climbed up two places from last year and that a Scottish city made it into the top ten for the first time.

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.

Bristol offers the best all-round investment for buy-to-let investors

With good rental prospects, a high proportion of long-term private renters available and a low number of properties currently vacant, Bristol jumped to the top of the leaderboard this year.

Growth on returns is also an attractive lure for landlords with an annual increase of 6.6%.

However, investing in Bristol isn’t for those looking to make a fast investment with short-term yields sitting at 4.4%.

Manchester dropped one place this year from the top spot, although the average rent per room is lower at £461, and the proportion of vacancies in properties is lower at 0.9% compared to the national average of 1.2%, long-term returns are very appealing for landlords at +6.1% with a healthy market of tenants available (31%).

Other cities in southern England also provided positive prospects for landlords including Brighton, London and Reading with higher average rents per room and strong demand from renters.

Scotland climbs into the top rankings

For the first time since the City Tracker was launched five years ago, a Scottish city has entered the top ten with Glasgow now in 8th place. The city provides good rental returns for landlords at £471 and offers one of the highest short-term returns of 8.6%, higher than the average of 5.5%.

Tracker reveals average rent increases

The City Index Tracker shows the average rent per room has steadily increased, in 2021 the average room for rent was £423, while in 2022 it was £432 and this year increased to £455. Research by Aldermore2 found that nine out of 10 landlords (94%) increased the rent they charge in the last 12 months.

With the current position of the rental market, the research also revealed just under three quarters (73%) of landlords have seen an increase in tenant demand for their properties in the last year.

Wales continues to stay at the bottom

There was no change at the bottom of the leaderboard with Newport and Swansea remaining in 49th and 50th place. Properties in Newport provided the lowest rent return of £292 per room compared with the average of £455, although long-term yields looked more promising at +4.9%. However, Cardiff did climb a few places higher to make 40th place, helped by a good proportion of private renters 25% available (compared to an average of 22%) and a low number of vacant properties, 1.0%.

Jon Cooper, head of mortgages at Aldermore, comments: “Landlords have experienced an unprecedented year with rising interest rates, rising inflation, all while navigating their way through property legislation changes.

"Yet, the demand for rental accommodation has never been so high. Landlords play an important role in the UK economy, providing homes for those who are yet to get on the housing ladder or want to rent.”

“Usually, a few regions dominate the leadership board, but this year we see for the first time a wider range of areas making it into the top 10. We can see that each region is made up of multiple smaller markets with their own unique conditions and challenges.

"Landlords continue to do their research, working with their brokers to review their portfolios and ensure they are getting the best value for their properties, whatever obstacles may come their way.”

Via @PropertyReporter