Where are the best UK Buy-to-Let property investments?
When we talk about the best places to buy or invest in UK property for 2023, there’s a number of factors to consider. While some of these are obvious, it’s important to get a clear idea of what means there’s serious potential for a good property investment before we jump in. Key metrics we look at are:
Property Prices – Rental Yields – Tenant Demand – Population – Regeneration – Career Opportunities – Tenant Demographics – BTL Opportunities – Transport Links
This allows us to build a complete picture of a location’s potential buy-to-let performance, while also highlighting emerging towns and cities that might not be traditional options for investment. For buyers, understanding these metrics is a great way of figuring out where to consider for a property investment in the UK.
UK house prices have risen to record highs in the last few years, highlighting the power that property investment in the UK can have for investors.
Average Property Price: £231,659
Average Rental Yield: 6.56%
Price Growth in last Five Years: 30.33%
With on-going regeneration works across the city, Birmingham remains one of the top places to invest in 2023. The Big City Plan, a 20-year city-wide transformation project, has surpassed its halfway point and has made huge improvements to the city centre, several suburbs as well as infrastructure and transport.
One of the biggest advantages Birmingham holds is its affordability. Knight Frank research shows that the average income to average property price ratio is much better in Birmingham than across the wider UK. With the fastest growing tech sector and a flourishing financial sector, the city is attracting and retaining vast numbers of skilled workers that have the income to spend. Additionally, Birmingham remains the most popular destination for people moving out of London; and with 40% of the population being under-25 and a student retention rate of 49%, Birmingham has a sizeable potential rental market.
With a market largely made up of one and two-bedroom apartments – at least in the increasingly popular city centre location – rental prices have increased by 17.6% in the last year alone, according to Rightmove.
The Games catalysed significant investment in regenerating Birmingham, with over £25 million worth of city-centre projects with the aim of revitalising public spaces and increasing pedestrian places and a further £778 million pumped into delivering world-class sporting venues.
Our analysis of Land Registry data revealed that previous hosts, Manchester and Glasgow, experienced unprecedented growth in property prices in the five years after hosting the Commonwealth Games (140% and 27% respectively), as well as significant amounts of inward investment into the cities themselves, contributing to an economic increase of at least £1 billion according to The Commonwealth Games Value Framework report.
Finally, some of the strongest connectivity foundations in the UK are being improved with new transport links. The Midlands Metro expansion continues to offer easy access to emerging West Midlands destinations while work continues on HS2 – a generational development that will revolutionise Birmingham and provide faster commutes to the capital.
With so much still in the pipeline, Birmingham is one of SevenCapital’s urban regeneration hotspots and tops the list of best places to invest in UK property for 2023. So, if you’re looking for investment property in Birmingham, discover our property for sale or read our comprehensive Birmingham area guide, here.
Average Property Price: £241,113
Average Rental Yield: 6.50%
Price Growth in Five Years: 36.66%
Another major force in the North, Leeds has quickly become recognised as a key city for investors seeking long-term rental returns and a definitive entry in our best places to invest in UK property in 2023.
Home to 812,000 people, Leeds continues to perform incredibly well in the rental market. According to Zoopla’s latest report on the rental market Q3 2022, Leeds is ranked as the UK’s eighth best area for rental growth, with an 11.4% increase on average rental income from Q4 2020 – making this a dream for investors looking for consistent tenant demand.
While capital growth has been minimal compared to others on this list, rental demand in Leeds is gaining momentum quickly. Savills predicts that Yorkshire will see growth of 28% between now and 2025, driven by the aforementioned demand as well as a number of build-to-rent schemes being delivered.
The UK PowerHouse report from Irwin Mitchell also states that Leeds will be in the top ten cities in the country for employment by 2023, creating over 19,000 new jobs compared to 2021 – helping to drive even more people to the city.
There have also been plenty of regeneration developments totalling in excess of £3.9 billion over the last ten years, with an additional £7.3 billion anticipated for the years ahead which will have a proven positive impact on property prices and rental incomes. Because of this, Leeds also makes SevenCapital’s list of top regeneration hotspots for 2023.
Taking all this into account, economically Leeds continues to be one of the fastest growing in the country and rival several European cities. This is having a huge impact on the opportunities available within the city, enticing nearly 10% of those leaving London annually since 2018.
Average Property Price: £407,137
Price Growth in Five Years: 17.27%
With London’s property market experiencing lower growth than other parts of the UK, a number of key towns in the South East have taken the limelight, offering more affordability and still delivering connectivity with the capital.
Bracknell is one of these towns. Home to several globally renowned businesses such as Dell, Microsoft and 3M, it’s also experiencing the kind of large-scale regeneration that attracts incredible demand, with property for sale in Bracknell becoming an increasingly popular alternative to the capital for both homebuyers and those seeking worthwhile property investments.
Bracknell’s property market has seen price rises of 249% over the last 20 years and grown by 17.27% in the last five years alone, according to UK House Price Index data. As of September 2022, property prices are still 25% lower than the average London property.
Furthermore, a £770 million regeneration plan is impacting property prices positively, contributing to Savills forecasting rises of 19.1% on average over the next five years.
For investors interested in targeting the young, commuting professional demographic near London, Bracknell represents the opportunity to take advantage of long-term growth and consistent yields.
If you’re looking for property for sale in Bracknell, find out how life in the town has improved and demand has increased from the mouth of locals, here. Alternatively, you can read our comprehensive Bracknell area guide, here.
The Grand Exchange
Final Off-Plan Units Remaining
- Off-Plan Apartments – Estimated completion 2023
- 181 spacious apartments
- High-spec studios, 1 and 2-bedroom apartments for sale
- Resident-only access to amenities such as a gym, spa treatment rooms and private garden area
- Entrance lobby with 24-hour concierge
- Prime location within the London Commuter Belt with hassle-free travel to the capital and Reading
- At the centre of a £770 million large-scale regeneration project changing the landscape of Bracknell
Average Property Price: £238,253
Average Rental Yield: 5.71%
Price Growth in Five Years: 40.23%
Manchester continues to be the northern powerhouse it was originally hyped to be – establishing itself as one of the most exciting locations for property investment.
With some of the best capital appreciation returns on this list over the last five years – including a huge rise between 2017 and 2018 – Manchester ranks in the top three locations for price growth in the North. Rental earnings have also increased by 19.5% over the course of the last 12 months according to Urbanbubble.
Future growth looks set to continue the trend, with property prices in the North West expected to rise by 17.4% over the next four years according to JLL’s house price forecast. This can largely be attributed to the city’s rapidly growing economy and population, which have both made incredible strides over the last few years.
Across the lettings sector, Manchester remains a clear alternative to London. With a host of career opportunities in global businesses and the second highest economic growth of 30 major European cities in 2021, the city now has one of the youngest populations in the UK with 38.7% between 18 and 35 years old, meaning there is a wide rental market.
The Great North Rail project has also provided better connections and shorter journey times to key areas of the North, with improved capacity allowing 40,000 more passengers to travel throughout the region – increasing tourism for Manchester significantly.
Average Property Price: £195,638
Average Rental Yield: 7.70%
Price Growth in Five Years: 23.81%
The eighth largest city in the UK by population and the most populous city in the North East, Newcastle is one of the most affordable locations on this list and thus, driving some of the best rental yields in the UK.
While postcodes such as NE1 and NE6 are offering high yields (around 8% – 9.2% respectively) at the heart of the city and the average yield sitting at 7.7%, House Price Index data reveals that Newcastle’s average property price still stands at 33.6% lower than the UK average, providing a great opportunity for property investors to make great returns.
That said, Newcastle is one of the leading university centres and has one of the best graduate retention rates in the country. It is also recognised as one of the fastest growing regions for new start-up businesses. This will likely boost demand from young professionals, which will in turn increase rental prices and thus, yields.
Hosting a variety of corporate headquarters, as well as strong education and digital sectors, there is an established standard of career opportunities that assist with driving this demand while supporting the entrepreneurial side of the city.
Average Property Price: £184,642
Average Rental Yield: 7.02%
Price Growth in Five Years: 42.47%
Liverpool remains a clear contender for best place to invest in property 2023, with the latest report from Zoopla showing the city continues to drive strong gross rental yields at 7.02%, the second highest in the north west.
Over the last five years, property price growth has been strong, with Land Registry data showing a 42% increase. However, Liverpool remains relatively affordable for homebuyers, with average prices being 37% lower than the national average. This, coupled with high tenant demand in the area means Liverpool boasts some of the highest performing rental yield postcodes in the country.
L1, commonly known as the Baltic Triangle, is one of Liverpool’s trendiest places to live and has delivered 8.1% annually in the past. Across the city, L7 hosts the Royal Liverpool University Hospital and has been known to deliver annual rental yields of 10%.
JLL predict that property prices in Liverpool will rise by 21% over the next four years into 2026, benefitting from a similar growth as Manchester.
Liverpool also has an excellent income to house price ratio at 4.9, which highlights its affordability when measured against the strength of its workforce.
In terms of regeneration, the Liverpool Waters scheme will be one of the most impactful for the city – a £5 billion, 30-year plan aimed at delivering new spaces, bringing in more tourism and creating nearly 17,000 new jobs.
Average Property Price: £190,485
Average Rental Yield: 6.49%
Price Growth in Five Years: 39.18%
A ‘sleeper hit’ for the UK property market, Nottingham has been making huge strides over the last few years and now represents a great area for property investment in the UK.
Having previously been voted as one of the top places to live by the Sunday Times, Nottingham continues to prove itself in the affordability stakes. Figures from the Zoopla House Price Index June 2022 shows that the city experienced the greatest property price increase in the country at 10.7%, from June 2021 to June 2022, with our analysis of Land Registry data revealing the city has seen the largest price increase in the last five years with 43.28%.
The City of Nottingham still tops the list of locations across the East Midlands for rental yields according to Zoopla, with a gross rental yield of 6.49%, making this a great area for those looking for a healthy regular return from your property. The average rental yield in Nottingham increased by an impressive 13% from March 2021 to the same month in 2022, coming above the UK average of 11%.
According to the Irwin Mitchel and the UK Powerhouse ‘Overcoming Disruption in 2022’, Nottingham ranked 15th out of the 50 cities ranked in terms of economy and growth with a GVA of £9.8 million and GVA growth of 7.4% for Q4 2021.
Driven by two major UK universities located relatively close to the city centre, Nottingham University is ranked 118th in the world and 10th in the country according to the QA World University Rankings 2023. As such, there is a huge amount of tenant demand supporting these yields, alongside a booming creative quarter that is serving the growing graduate pool.
Nottingham is also home to Queens Medical Centre – a ‘super hospital’ in the region and one of the largest teaching hospitals in the country, with over 6,000 medical staff adding to the growing demand for accommodation.
Nottingham’s major strength is in its past capital growth and future long-term yield potential, which positions the city as one of our top property investment hotspots.
Best Areas for UK Property Capital Gains
For those that want to invest in property for capital gains, these are the best areas for property price growth:
|City||Property Prices||Growth Last 5 Yrs||Growth Last 12 Months|
Source: Land Registry UK House Price Index
Here we can see the true impact of London’s decline and how regional markets have steadily become the best places to invest in UK property 2023. While the North West remains strong, cities in the area have also seen the most immediate growth on the list, highlighting their position as long-term alternatives within the best places to invest in UK Property 2023.
Following close behind is Birmingham and Nottingham, representing the Midlands. While these cities are notoriously more expensive then the North West, they’ve seen good growth over the last five years and Birmingham in particular has shone over the last 12 months, with the legacy of the Commonwealth Games expected to significantly increase property prices in the coming years as it has done in previous host cities.
Finally, Bracknell has seen impressive growth over the last year as a more affordable alternative to London. With the second highest growth on the list from the past 12 months with 15.95%, the commuter town represents a clear opportunity for long-term growth, with new property developments – including The Grand Exchange – taking shape across the town.
Best Areas for UK Property Rental Yields
For those that want to invest in property for rental income, these are the best areas for property rental yields:
|City||Property Prices||Current Yield|
Rental yields tend to be stronger in areas that have undergone extensive regeneration and are close to city centres. As evident above, Birmingham, Liverpool and Newcastle generate some of the highest rental yields, with the two biggest cities achieving above the UK average of 4.71%.
The future of the rental market looks bright as low supply continues to push rental prices on an upward trajectory in 2023. Knight Frank’s rental market forecast estimates that there will be a 20.5% cumulative increase over the next 5 years across the UK.