Best Places to Invest in Birmingham Buy-to-Let 2020
Looking for our updated list of ‘Best Places to Invest in Birmingham 2021?’ You can find it right here.
Birmingham Buy-to-Let property continues to be one of the best performing investment assets in the UK. The ‘second-city’ has experienced growth of 16% since 2016 – the highest in the country – and demand is growing rapidly as investment pours into the city.
Is Birmingham a Good Place for Buy-to-Let?
According to JLL, rising demand directly translates to Birmingham rental prices increasing by 16.5% between now and 2023.
The majority of this growth is due to the rise of regional cities against the traditionally popular London investment. Birmingham is now the most populous city outside of London and has experienced property price increases of 224% since 1999. It’s also one of the youngest cities in Europe, demonstrating the allure it has with young professionals – 40% of the population is under 25 – that want true city-centre living.
We are seeing unprecedented levels of investment pouring into Birmingham, creating one of the best BTL locations in the UK. From world-class transport amenities such as HS2 and the Midlands Metro Expansion to an exciting development pipeline that includes Arena Central, Paradise and Birmingham Smithfield, Birmingham is creating high-quality, A-grade residential, commercial and leisure spaces designed to accommodate the incredible demand on the horizon.
So where are Buy-to-Let investors identifying as the BTL hotspots in Birmingham for 2020? From key suburbs to prime city-centre postcodes, we’ve put together a list of the best Birmingham hotspots for demand and positive price growth. If you’re looking for an investment market that is delivering consistent yields right now (Totally Money have Birmingham yields at an average of 5%) and forecasting unprecedented rental growth for 2020 according to JLL, Birmingham has huge potential. These are the best Birmingham Buy-to-Let properties in 2020.
Buy-to-Let Property Hotspots in Birmingham 2020
Rental yields: 4.7%
Average property price: £189,400
Growth last 10 years: 38.04%
The creative heart of Birmingham, Digbeth is considered to be one of the coolest and most vibrant places in the city. Sitting a short five-minute walk from the Bullring this contemporary district is home to a variety of bars, cafes, independent shops, a cinema and arts venues. As the ‘home of the future’ within Birmingham city centre, Digbeth is a hub of progressive business, hosting many of the city’s leading art, digital and media companies as well as quality transport links including Digbeth Coach Station and the future HS2 interchange at Curzon Street.
As part of the wider Big City Plan, Digbeth is being transformed via ‘Birmingham Smithfield Masterplan’, a £1.5 billion project that is creating new retail, residential and commercial destinations within the city. This project is set to contribute £470 million GVA to the local economy and nearly 3,000 new jobs for the city.
Digbeth has also seen a huge property price growth of 401% in the last 20 years which isn’t set to slow down and the planned developments will have an even bigger impact on property prices growth heading into 2020 and beyond.
Rental yields: 4.7%
Average property price: £200,300
Growth last 10 years: 37.77%
The city-centre has seen the bulk of the investment over the last 15 years as part of the ‘Big City Plan’. From the redevelopment of New Street Station and Grand Central to HS2, the £700 million Paradise development, £500 million Arena Central, the Bullring and Library of Birmingham, the city-core has transformed and is unrecognisable to how it was ten years ago.
In those ten years, property prices have risen by 37%. A thriving commercial sector has attracted the likes of HSBC and PwC, ensuring Birmingham remains the top business, professional and financial sector outside of London – home to around 120,000 jobs.
With predictions suggesting that the population will hit 1.3 million by 2039, it’s vital that supply increases to meet demand. The competitiveness of the market means any property in the city-centre has the potential to deliver incredible returns, especially if inwards investment continues to transform key amenities.
Rental yields: 4.8%
Average property price: £362,574
Growth last 10 years: 39%
Just outside of Birmingham city-centre, Harborne continues to be one of the most desirable postcodes in Birmingham. Popular with families and young professionals, Harborne offers a relaxed village vibe with the excitement of the ‘second-city’ just ten minutes away.
Combining some of the top performing schools in the West Midlands, incredible access to the city-core and a fantastic retail and leisure sector, Harborne remains a key investment destination and one of the most affluent neighbourhoods in the city.
With a population of around 23,000, Harborne has a significant 63% working at a professional or managerial level, much higher than the UK average. Demand is always high within Harborne because of the amenities and quality of properties on offer, without compromising access to the city-core.
Harborne has seen some of the best property growth over the last ten years with 39% since 2009.
Rental yields: 4.1%
Average property price: £295,700
Growth last 10 years: 39.04%
In a recent regeneration plan, Edgbaston has seen planning granted for new lifestyle and commercial spaces creating the brand new ‘Edgbaston Village’. Edgbaston Village is a vibrant leisure and lifestyle location, home to independent bars and restaurants including Loki Wine – a local award-winning merchant and wine tasting venue – and its very own Michelin Star restaurant, Simpsons.
Running alongside this energetic location is world-renowned sporting venues including Edgbaston Cricket Ground -which recently hosted the Cricket World Cup and Edgbston Priory Club. Ideal for families, Edgbaston is just ten minutes from Birmingham city-centre and is a cultural hotspot in the city hosting Victorian Botanical Gardens, Cannon Hill Park which covers 250 acres and Midlands Art Centre.
Investors may need to consider an initial higher investment for the sought-after Edgbaston postcode but it’s crucial to note that yields in Edgbaston have kept pace with the average rental prices sitting around £1,014. The tenant demand for Edgabaston also remains high for the city and the quality of properties in the suburb offer a higher degree of yield security that other locations may not be able to provide.
Rental yields: 6.5% (based on Aston University tenants)
Average property price: £211,000
Growth last 10 years: 38%
The east of the city-centre, known as Birmingham’s ‘Knowledge Hub’, is a thriving community of businesses and professionals based in the technology, learning and innovation sectors. Eastside has a unique heritage as one of the major industrial quarters within the city, which has been transformed throughout the years and now hosts Birmingham Science Park, Millenium Point and Aston University.
Further regeneration is set to take place across Eastside – creating a new and exciting landscape anchored by the HS2 hub station, Birmingham Curzon Street. This once-in-a-generation project will create cutting-edge connections with the capital and boost investment into the area by an estimated £1.5 billion.
Because of its proximity to the bustling city core, Birmingham Eastside also benefits from any commercial occupiers that take up residence in the city-centre, with incredible career opportunities for Eastside residents just a short walk away. Similarly, being on the doorstep of other major regeneration projects due to be undertaken, namely those in Digbeth and Smithfield, means properties in Birmingham Eastside are set to be a key location in the near future.
Rental yields: 5 – 6%
Average property price: £194,100
Growth last 10 years: 39.05%
One of the more affordable areas in the city, Perry Barr will soon be a prominent Birmingham location as the 2022 Commonwealth Games plans come to fruition. Perry Barr will host the largest Commonwealth Games venue with the Alexander Stadium, a venue expected to see an expansion of its capacity to 50,000, alongside the Athlete’s Village for the event.
With incredible transport links and much more affordable property prices compared to the surrounding areas, Perry Barr has seen growth of 39% and is commanding higher rents as regeneration starts to impact demand.
Rental yields: 4%
Average property price: £212,300
Growth last 10 years: 39.26%
The home of British jewellery with a desirable arts scene and a plethora of bars & restaurants the Jewellery Quarter is a unique destination in Birmingham. Within walking distance of Birmingham city centre and the business district the Jewellery Quarter is a prime destination for young professionals that work in the city but want to live somewhere a little more relaxed.
Locally known as the ‘JQ’, property prices in the area have risen by 28% over the last three years, making the Jewellery Quarter a top performer for growth on this list. Average rental prices have risen to around £930pcm and property in the area includes everything from luxury converted flats to loft-style apartments and townhouses. As Birmingham’s population grows, the Jewellery Quarter will remain heavily in demand.
Rental yields: 4%
Average property price: £344,800
Growth last 10 years: 38.51%
Selly Oak sits just outside of the University of Birmingham and has established itself as a key student destination. With direct access to the city-centre in ten minutes via train, Selly Oak maintains a thriving retail scene with plenty of amenities for residents. The new Selly Oak Shopping Park comprises around 190,000 sq.ft of retail space and hosts a number of high-street names.
Property growth over the last ten years for Selly Oak has hit 38% and rental prices continue to grow. Combined with a strong student demographic as well as demand from medical professionals in the nearby Selly Oak hospital, this area is a key opportunity for Buy-to-Let investors that want to kickstart a property investment strategy focused around student tenants or busy young professionals.
Rental yields: 5%
Average property price: £348,900
Growth last 10 years: 41.67%
Sutton Coldfield is one of the most affluent areas on this list and incredibly popular with families due to the quality of its schools. Just a 20-minute train journey into the city centre, Sutton Coldfield has some of the highest property prices in the city but has also seen some of the highest growth at around 41%.
Sutton Coldfield also has Sutton Park – one of the largest urban parks in England at over 2,000 acres. A national nature reserve as well as a site of scientific interest, Sutton Park is a stunning addition to this Royal Town.
Rental yields: 5%
Average property price: £406,100
Growth last 10 years: 47.94%
Technically its own borough, Solihull is one of Birmingham’s most upmarket residential areas. Home to some of the highest prices in the city, Solihull has experienced growth of 47% over the last ten years and is expected to continue drawing demand as the city’s population grows.
Investors should note that Solihull has one of the most skilled workforces in Birmingham – over 50% are employed in managerial or technical professions and GVA per employee is the highest in the region, demonstrating the quality of tenants.
Erdington – B23
Price Growth Since 2015: 25.79%
Rental yields: 5%
Average Property: £173,438
With its own train station and a direct 12-minute commute into central Birmingham, Erdington is one of the most up-and-coming areas for 2020. Ideal for commuters who want the city centre lifestyle but in a more affordable location. Erdington is seeing impressive investment starting with a new £7.5 million leisure centre – the first of a £40 million city wide plan actioned by Birmingham City Council to improve the city’s sports and leisure centres. All centered around a vibrant high street with 280 local businesses and home to around 23,000 residents, Erdington should be on the radar of every savvy investor.
Properties to watch in Erdington: Nexus Point
Best Areas for Capital Gains in Birmingham
While there are plenty of investment opportunities in Birmingham, Digbeth is a top area for capital gains, buoyed by the local economy, employment market and emerging development. With property prices having increased by 401% over the last 20 years, there’s clear evidence that this is a neighbourhood on the rise.
The main driver of this growth is the regeneration Digbeth is experiencing. Places such as Digbeth are building brand new amenities, accommodation and commercial spaces, encouraging property price increases. When this level of development is combined with Digbeth’s world-class transport links, it’s easy to see how this up-and-coming market is driving incredible growth and attracting both renters and investors.
Best Areas for Rental Yields in Birmingham
B5 is a city-centre postcode and one of the highest-performing areas in Birmingham for rental yields. According to data from LendInvest, B5 is achieving average yields between 5 and 6%, demonstrating the importance of investment into key developments and contributing to higher levels of demand.
Rental yields in Birmingham are performing above the UK average – driven by investment in transport links, major employment opportunities and an exciting pipeline of residential and commercial space as well as improvements to local amenities.
Birmingham’s above-average performance is set to coincide with a general rise in rents of 15% over the next five years, according to the Royal Institute of Chartered Surveyors (RICS). With this in mind, where are the best areas for rental yields in Birmingham?
Best property types for rental yield in Birmingham
The data shows that the best property type for maximising rental yields in Birmingham is a two-bedroom flat, closely followed by a one-bedroom apartment and then three-bedroom apartment. You can read further about rental yield in Birmingham with our article.
When it comes to choosing the best place to invest in Birmingham Buy-to-Let in 2020, your choice should be driven by your goals and strategy. It’s important that you establish what you’re trying to achieve and align this with the right location. For example, if you’re looking to build consistent yields, your best bet is to look at areas that performing similarly to B2.
On the other hand, if you want to build immediate capital growth or target a student demographic, your choice of location should change. It’s all about identifying your main goals and what can best facilitate that strategy.