Buy-to-Let Property Investment in Birmingham
Why invest in Birmingham? With the entirety of the UK to consider when searching for Buy-to-Let opportunities, this is an increasingly common question amongst investors. However, the answer is surprisingly simple – the city not only offers affordable properties, but it’s exciting future is offers strong rental yields and endless potential for growth.
As well as being a core city within the UK, Birmingham also ranks as one of the most popular investment locations in Europe. With £billions of investment being injected into infrastructure projects across the city, spanning both commercial and residential spaces, the future of Birmingham is an indication of its potential.
Combined with the growing demand for property, this offers insight into why investors should consider the second city. The continued regeneration, coupled with the 2022 Commonwealth Games and a thriving business district make Buy-to-Let properties in Birmingham a prime investment opportunity for 2022 and beyond.
London vs Birmingham Buy-to-Let Property Investment
While London was always the traditionally popular choice, Birmingham has eclipsed the capital over the last five years. With Birmingham set to rank in a top 10 position for economic output by the end of 2021, the city’s commercial district is resilient to say the least. The 100,000 strong workforce – the largest professional hub outside of the capital – is one of many reasons why people are investing in Buy-to-Let properties instead of London.
Since 2016, Birmingham has been recognised as the fastest growing UK city for property price growth, leading the way for regional cores across the country. This is why many people are looking to invest in Birmingham property in 2022, especially while Birmingham investment is forecasting better returns over the long-term compared to a London investment.
Average rental yields in Birmingham are trending higher than most competitors due to its affordability – the average property value is nearly three times less in Birmingham than London and yet the standard of its amenities means rental values are rising, delivering better returns for investors.
Birmingham Commonwealth Games 2022
Taking place 27th July and 7th August 2022, the Birmingham Games will attract over one million spectators during the event, giving a massive boost to the local economy of Birmingham. It’s expected that the Games will create on average, 4,500 jobs a year until 2022 and then 950 after.
- Birmingham Games 2022 will attract over 1 million spectators
- Provide 12,500 volunteers with training and qualification opportunities
- Viewed by a global audience of up to 1.5bn
- £778m investment into the city and region
- £70m expansion of the Alexander Stadium
- £60m aquatics centre in Sandwell
105 Broad Street, Birmingham
Birmingham’s Hottest Property
Ready Made Investment Opportunity
- Prime Birmingham city centre location
- Achieving up to 5.1% rental yields
- Residents services available & state of the art gym
- 24-Hour Concierge
- Unrivalled, premium location
Investing in Birmingham for Demand
Demand is the lifeblood of any property investment. This is why Birmingham Buy-to-Let properties are such a popular asset with many investors. As the second largest city in the UK – with a population of 1.4 million – Birmingham continues to be a key location for young professionals, students, families and even those leaving the capital. This level of demand is highlighting why so many people are looking to invest in Birmingham property in 2022
The second city is also one of the youngest cities in Europe – 60% of the population are under 35%. Attracted by the career opportunities and amenities available, young professionals are one of the most desirable tenants for Buy-to-Let properties. This demographic makes up the largest % of the UK rental market and many are choosing to rent long-term – highlighting why Birmingham Buy-to-Let properties are ideal for those seeking consistent tenant demand.
Finally, Birmingham is much affordable than the capital, which is attracting many London leavers. Over 18,000 people moved from London to the West Midlands during 2020, highlighting the sustained demand a Birmingham investment can offer vs a London investment.
Investing in Birmingham Rental Yields
The Birmingham property market is one of the most affordable in the country relative to its size. The average property price in Birmingham now stands at £214,696 – over three times less than the average property in London (£648,942) – meaning plenty of people are looking to rent or buy Birmingham Buy-to-Let properties.
This also means that Birmingham rental yields are exceptional, especially when we consider recent rental growth. Birmingham rents have grown by 28% since 2009 and are set to grow by 10% over the next four years. Birmingham’s average asking rent is £1,188 – which means Birmingham’s average rental yield is 6.56% when measured against the average property value.
This is much higher than the lower yields we’re seeing in the South. Data from LendInvest shows that (perhaps unsurprisingly) the city-centre is one of the highest-performing areas. B5, for example, regularly achieves yields between 5% and 6%, while some student areas such as B4 (near the Eastside and plenty of student accommodation) can reach highs of 11%.
Investing in Birmingham Capital Growth
Capital appreciation is often a clear objective for investors and investing in Birmingham Buy-to-Let properties in the city centre has the potential for incredible results. We’ve already mentioned that property in the city is affordable but that doesn’t mean it hasn’t experienced significant growth over the years.
Average property values in Birmingham have grown almost 40% over the past 10 years and saw 16% growth between 2016 and 2020 – making Birmingham property the fastest growing market in the UK during that time period.
Thanks to a vast amount of regeneration and continued demand from movers to the area, these price rises don’t look set to stop either. Savills predicts that Birmingham property prices will rise again by 24% between now and 2025 – good news for those investing in Birmingham already.
Birmingham Investment Guide 2022
Want to get the lowdown on Birmingham investment in 2022? Our guide is filled with the insights you need to make an informed decision.
Discover Birmingham market forecasts for 2022, as well as what life looks like after lockdown for the second city. From prime market performance to the ongoing impact of HS2 and the Midlands Metro Extension, this is your chance to stay ahead of the market and understand why you should invest in Birmingham property today.
Investing in Birmingham for Regeneration
In 2003, the Bullring redevelopment kickstarted a much wider plan of regeneration, officially named the ‘Big City Plan’ in 2010. With the Bullring now one of the busiest shopping centres in the UK, it’s only right that its surroundings are as prestigious. The Big City Plan aims to widen the city’s core by 25%, create over 50,000 new jobs and contribute 2.1 billion to the local economy each year.
Developments such as Paradise and Arena Central are creating exciting mixed-use spaces in the centre of the city, while the Grand Central redevelopment and HS2 project are transforming the cities transport links and bringing London ever closer than before. Finally, future developments such as the £1.5 billion Birmingham Smithfield will revolutionise the city, transforming a 42-acre area into 2,000 new homes, public spaces, leisure attractions and the new home of the Bullring Markets.
Regeneration is often cited as a driver of demand and it’s true for Birmingham property investment. Regeneration shows that further growth is on the horizon and often leads to rising property prices and asking rents. For investors looking to invest in Birmingham property, having these developments on the horizon should be a welcome sight, alongside rising Birmingham house prices and incredible rental yields.
Investing in Birmingham for Business
Global businesses such as HSBC, Deutsche Bank and PwC have all relocated their headquarters to Birmingham, creating a world-class network of career opportunities for residents. In total, the number of active businesses in the city has risen by 13% over the last four years – three times the UK average.
This level of commercial activity has resulted in a higher number of professionals flocking to the city, boosting Birmingham tenant demand far above its regional competitors. Birmingham had the largest proportion of new businesses in the UK during 2019, making the total number of new businesses in the region 173,134, with over 100,000 employees in the financial sector alone.
With the advent of HS2, this number will rise dramatically as those working in London looking for a more affordable home will choose Birmingham. At the same time, HS2 will help deliver 30,000 new jobs while rejuvenating the surrounding area.
Investing in Birmingham for Graduates
One of the most overlooked demographics when it comes to investment is graduates. Students are often more considered because they’re a known quantity but savvy investors will consider where these students go after their studies. The students of today are the young professionals of tomorrow and typically, a young professional tenant will mean longer rental periods and more secure income.
This means that areas with good graduate retention are key locations. Birmingham’s graduate retention has transformed over the last decade and the city now has one of the strongest graduate pools in the country. With over 100,000 students attending five universities throughout the city and an average retention rate of 46% – there’s a vast amount of potential young professionals seeking accommodation – a clear signpost for those looking to invest in Birmingham property in 2022.
At the same time, Birmingham is the third best city in the UK for attracting graduates with no prior links to the city, demonstrating the appeal it holds with the demographic thanks to new amenities and opportunities.
Birmingham’s New Developments
There’s a lot happening on the Birmingham skyline and new developments are appearing every month.
What follows is a selection of the most exciting new developments in Birmingham – from HS2 and Birmingham Smithfield in the Eastside district to Arena Central and Paradise in the city centre.
Regeneration is a vital signpost for investors and should be researched carefully during any property investment due dilligence. You can find a full breakdown of upcoming developments in Birmingham here.
High Speed 2 (HS2)
One of Europe’s largest infrastructure projects, the first phase of HS2 is set to land around 2026. This ambitious project will see travel times between Birmingham and London slashed to under an hour. Aside from offering better access between the two cities for workers, HS2 is set to deliver around 30,000 new jobs via the construction and operation of the line.
Indirectly, HS2 will have a huge impact on the Eastside – where hub station Curzon Street will be based – driving increased footfall and boosting the property prices of the surrounding area. Transport links are always good for demand and savvy investors would do well to consider developments near any HS2 development.
The former home of Birmingham’s wholesale markets, Birmingham Smithfield is a 14-hectare site near the city’s Eastside district set to be a new destination for the second city when it opens. The £1.5 billion development will completely transform the site into a vibrant mix of retail, leisure and residential units.
With more than 100,000 sq.m of floor space, 1,000 new homes, 3,000 new jobs, a £470 million impact on the local economy and supporting the revival of the River Rea, Birmingham Smithfield has the potential to be the largest development for Birmingham since the Bullring in 2003.
As Birmingham’s most significant development in a generation, this £700 million project, which is well underway, will introduce 1.8 million sq ft of new grade A office space, retail, leisure and a circa 250-bedroom hotel into one of the most central parts of the city centre.
Crucially it will also open up the gateway between the city centre and Birmingham’s Westside area of the city, which is home to Brindleyplace and Deutsche Bank, the Library of Birmingham, Birmingham Symphony Hall and ICC and the new Arena Central development.
One of the UK’s ‘big four’ financial services firms, PwC, has already agreed a pre-let for the entire eight-storey building at One Chamberlain Square – the first building set to complete as part of the project in 2019. The wider project is set to complete in 2026.
Arena central sits close to the Paradise development and a stone’s throw from Birmingham’s popular Mailbox district. Another landmark development for Birmingham, this will be the site of the new HSBC UK headquarters and in 2017 earned the city’s biggest pre-let in a decade from the Government – an entire 240,000 sq ft building to house a number of its services, including the Midlands regional hub for HMRC.
Midlands Metro Expansion
The Midlands Metro Expansion – while less talked about – is a vital part of the infrastructure of Birmingham and the wider West Midlands. Providing transport links for many professionals to get in and out of Birmingham, it’s increasing the accessibility of a city that is already one of the most well-connected in the UK.
The expansion is also having the added benefit of driving property prices. According to Nationwide, living within 750 metres of a station can add 6% to the value of a property – which could see average prices in Birmingham rise by nearly £14,000.
This puts postcodes such as B5, B15 and the many other areas near the metro line firmly at the top of the list for expected growth and potential tenant demand, something to consider for investors interested in Birmingham property investments.
- High Speed 2 (HS2)
- Birmingham Smithfield
- Arena Central
- Midlands Metro Expansion
Birmingham Investment FAQs
Why Choose Birmingham over London Property?
While London was once the top investment location in the UK, the landscape looks very different today. Since 2016, Birmingham property prices have been the fastest growing in the UK. While many different regional cities have seen high growth – Manchester and Liverpool being two examples – none have matched the growth, affordability and connectivity that Birmingham can provide.
With London only just starting to show recovery, yields in the capital are still much lower than Birmingham rental yields (3.6% vs 5.1%). Similarly, while developments such as HS2 will help both cities, it’s likely to have a much larger impact on Birmingham, which will effectively become an affordable ‘commuter town’ for London workers overnight.
There’s no doubt that London offers potential for investors focused on a strategy of capital appreciation but for those seeking long-term returns, Birmingham property investment has a much lower initial cost and are set to deliver more consistent, long-term growth through rental yields.
Why Choose Birmingham over North-West Property?
Diversification is one of the most important factors for an investor and there’s no reason why you shouldn’t have a range of UK property investments. That said, if you’re just starting out or you only have scope for one UK property investment, we believe Birmingham offers the best balance of affordability, yield and growth.
Manchester and Liverpool are both popular investment locales but provide different results. Manchester is a more expensive market than Birmingham and thus has lower yields (4.7% vs 5.1%), although over the last five years it has seen slightly better growth (22% vs 19%).
Liverpool, on the other hand, has a lower average property price than Birmingham and offers slightly better yields (5.8% vs 5.1%) but has seen much less growth over the last five years (12% vs 19%).
This highlights that Birmingham property investment can offer the best of both worlds – a balance of above-average yields and capital appreciation. Plus, if we consider other metrics such as entrepreneurship, commercial opportunities, regeneration and new developments, Birmingham typically comes out on top in every category.
Does Birmingham Have a Good Rental Market?
For investors focused on long-term rental yields, a strong rental market is clearly a major positive. To establish a strong rental market you need several things: affordable property, demand and above-average asking rents.
The Birmingham rental market can offer all of these things. Aside from being one of the most affordable markets in the UK, it also has a rapidly rising population. It’s expected that the population will hit 1.24 million by 2030, while rents are expected to rise again by 14% over the next four years.
Finally, with these levels of demand constantly rising, Birmingham is also facing an undersupply of properties. As any investor knows, high demand and low supply typically means one thing – rising prices. With such a competitive market, this can create lucrative opportunities for those interested in Birmingham property investment.