Best Places to Invest in the East Midlands (Updated July 2021)
Buy-to-Let (BTL) property in East Midlands cities continues to be one of the highest performing investment assets in the country.
As the geographical heart of the UK, the East Midlands has everything an investor could need: it’s well-connected, affordable and home to a number of well-known, in-demand locations.
With East Midlands cities including Derby, Nottingham and Leicester, there’s plenty of choice for investors that want to build long-term returns in an exciting, relatively ‘uncommon’ investment destination. Here are the best places to invest in the East Midlands in 2021.
Is the East Midlands a Good Place for Buy-to-Let?
According to Savills, rising demand and affordability means the East Midlands is set to be the third highest UK location for capital growth going forward – translating to 24% price growth over the next four years.
The majority of this growth is being driven by the three ‘core’ East Midlands cities – Derby, Nottingham and Leicester – all of which are pushing new amenities to the forefront that are attracting new residents and investment.
Using properties to buy in Derbyshire as an example, while the average UK property price is now surpassing £340,000, the average property in Derbyshire sits at £228,228.
This is a clear signpost for investors for several reasons. Firstly, and perhaps most obviously, it’s an affordable, accessible market. Secondly, this means Derby rental yields are currently between 4.8 and 5% – outperforming the 3.8% UK average.
With growth forecasts suggesting plenty of future potential on the horizon, the East Midlands remains a top location for Buy-to-Let investment.
Download the ‘Derby Investment Guide’ Today
Discover why Derby property investment is on the rise with our Derby Property Investment Guide, as this East Midlands city builds itself as a new investment hotspot in 2021. Inside you’ll find:
Get to Know the East Midlands – Why is this emerging region one of the top UK investment locations in 2021?
Why Invest in Derby? – What makes this core city in the East Midlands a top destination for property investment?
Derby Market Performance – How are property prices, rental yields and new developments driving growth in Derby?
Future Opportunity for Derby? – What does the future hold for Derby and how is it forecasting incredible potential for investment?
Population: 258,000 (516,000 in wider Derbyshire)
Rental yields: 4.8 – 5%
Average property price: £228,228
Growth last 10 years: 53.28%
Well known as one of the cities that kickstarted the Industrial Revolution, Derby is the home of some of the country’s first factories and industrial buildings.
Out of all of the East Midlands cities on this list, it’s the most affordable, which has contributed to some of the best rental yields in the East Midlands. Averaging between 4.8% and 5%, property in Derbyshire is seen as a popular choice for those that want to build long-term rental returns.
With extensive transport links, Derby’s position at the centre of the UK means it is easily accessible with other areas of the country. Alongside Derby Railway Station, a number of major road links and East Midlands Airport just 15 miles away, Derby will also host a major HS2 Hub situated between Derby and Nottingham.
This level of connectivity has made Derby a popular destination for companies to locate their head offices. Key employers in the city include the University Hospitals of Derby, Rolls Royce, Bombardier and the University of Derby – all of which are driving exceptional tenant demand.
The effect this has had on property prices in Derbyshire is significant – Savills predict that prices could rise by 24% over the next four years, while the last 10 years has seen prices rise by 53%. It’s this growth that makes Derby one of the top places to invest in the East Midlands in 2021.
Derby Key Stats
Average Rental Yield:
4.8% – 5%
Growth Last 10 Years:
Population: 278,000 (532,000 in wider Nottinghamshire)
Rental yields: 4.38%
Average property price: £237,242
Growth last 10 years: 53.15%
Nottingham is a core East Midlands city, surrounded by beautiful countryside and with historical links to several manufacturing industries including lacemaking, bicycle and tobacco.
The city has an exceptional transport system, sharing all of the major links of the other East Midlands cities while also being home to the UK’s greenest bus network and a light tram system experiencing £1 billion of investment.
Nottingham is well-known for its educational institutions, home to both The University of Nottingham and Nottingham Trent University. Welcoming over 60,000 students each year, there’s a constant supply of potential graduates and professionals, making the market attractive for both investors and developers.
In terms of property prices, this level of demand made the city one of the leading destinations for growth in the country. The average property price sits at £237,242 and rose by 53% over the last 10 years, driven by the above-average infrastructure and employment opportunities available.
Average Rental Yield:
Price Growth Last 10 Years:
Population: 280,000 (441,000 in wider Leicestershire)
Rental yields: 3.87%
Average property price: £266,027
Growth last 10 years: 59.37%
Dating back to the Roman times, Leicester has a strong historical background with extensive links to the Industrial Revolution.
Population growth over the last ten years for Leicester has been unprecedented, causing a large-scale gulf between supply and demand. As the population has grown, a shortage of rental accommodation has taken hold, increasing rental yields across the city.
Home to the University of Leicester, Loughborough University and De Montfort University, the educational base contains over 43,000 students, creating a youthful population and the potential for even more demand going forward.
With the second largest economy in the East Midlands, Leicester is home to businesses such as Next, HSBC, Santander, British Gas and DHL, highlighting the employment opportunities that are contributing to both graduate retention and increased tenant demand.
Compared to some of the locations on this list, Leicester property is one of the more expensive assets in the East Midlands. This is largely down to its growth of 59% over the last 10 years, although future forecasts suggest it will keep pace with cities such as Nottingham and Derby going forward.
Average Rental Yield
Price Growth Last Ten Years
Rental yields: 3.36%
Average property price: £282,262
Growth last 10 years: 58.88%
Northampton is one of the more ‘emerging’ markets on this list, relatively unknown for investment compared to destinations such as Derby and Nottingham.
Thanks to its extensive network of businesses, Northampton is in high-demand with those moving to the area for work, which has led to some of the highest price growth on this list and property in the town selling in 33 days on average.
With 18.5% of Northampton’s property market living in private rented accommodation – a figure set to rise by 2025 as more people look to rent instead of purchasing – it’s expected that Northampton’s rental prices could increase.
Currently, however, this level of growth means that prices are higher and yields are slightly lower than its East Midlands counterparts, although forecasts do suggest the potential for exceptional growth going forward.
Average Rental Yield:
Price Growth Last Ten Years:
Best Capital Growth Areas in the East Midlands
If you’re looking to invest for capital growth in the East Midlands, based on past performance, Leicester or Northampton would be your best options.
Both cities have seen 59% and 58% growth over the last ten years, closely followed by Derby and Nottingham at 53% each.
That said, based on future forecasts, regeneration projects and affordability, property in Derbyshire represents an opportunity to find an accessible entry point into the East Midlands with exceptional potential going forward.
Northampton, on the other hand, has unprecedented levels of both tenant demand and time to sell. This has pushed prices to the most expensive on this list.
Best Rental Yield Areas in the East Midlands
Rental yields in the East Midlands are generally above the UK average of 3.80%, with only Northampton falling short of the mark.
This is largely down to Northampton’s position within it’s redevelopment cycle. While Derby and Nottingham have started investing money into regeneration, they’re also more highly regarded as traditionally popular investment locations.
At the same time, Northampton’s draw for workers has pushed prices up but rents have remained relatively low. Derby, on the other hand, has the most affordable property prices on the list but is driving higher rents through its new amenities.
This has invariably led to the highest yields, which are equalling anywhere between 4.8% and 5%.
Rental Data Source: https://www.home.co.uk/for_rent/search
Property Data Source: https://www.zoopla.co.uk/house-prices/