Where are the best UK Buy-to-Let property investments?
When we talk about the best places to invest in UK property 2022, there’s a number of factors to consider. While some of these are obvious, it’s important to get a clear idea of what makes a good Buy-to-Let 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 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 at their fastest rate in over seven years – increasing by 10.9% compared to this time last year – highlighting the power that property investment in the UK can have for investors.
The Grand Exchange
Final Off-Plan Units Remaining
- Off-Plan Apartments – Estimated completion 2023
- At the centre of a £770 million Large-scale regeneration project changing the landscape of Bracknell
- Exclusive never seen before resident-only amenities
- 17.5% price growth expected by 2025 (JLL)
- Top location for London leavers – forecasting yields above 5%
Average Property Price: £214,696
Average Rental Yield: 6.56%
Price Growth in Five Years: 17.44%
Birmingham remains one of the top places to invest in 2022, continuing a run of form that started in 2016. As more projects within the Big City Plan come to fruition, demand has never been higher for the second city – just as preparations for the Commonwealth Games 2022 come online. Savills predict that Birmingham will be in one of the fastest growing regions over the next five years, forecasting price rises of 24% by 2025.
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 – the city is attracting and retaining skilled workers that have the income to spend in this rapidly growing city.
Average rents have risen by 30% over the last 10 years and are expected to rise by 12% over the next five, boosted by tenant demand from young professionals leaving London and a rising population set to hit 1.24 million by 2030.
With a market largely made up of one and two-bedroom apartments – at least in the increasingly popular city centre location – rental yields are averaging above 6% for property investors in these asset types, while a solid development pipeline is delivering new standards of quality such as St Martin’s Place.
Finally, some of the strongest connectivity foundations in the UK are being improved with new transport links. The Midlands Metro expansion continues to offer unprecedented access to emerging West Midlands destinations while work has begun on HS2 – a generational development that will revolutionise Birmingham.
Average Property Price: £208,792
Average Rental Yield: 6.53%
Price Growth in Five Years: 20.69%
Manchester continues to be the northern powerhouse it was originally hyped to be – establishing itself as one of the most exciting locations for 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 has led the way for price growth in the North.
Future growth looks set to continue the trend, with property prices expected to rise by 28% according to Savills revised forecasts. 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 employment growth of 84% between 2002 and 2015, the city is now the top destination for young professionals in the North West and only beaten out by Midlands destinations such as Birmingham according to Hamptons International.
In terms of future development, the Great North Rail project is expected to come into effect by 2022 and will allow 40,000 more passengers to travel throughout key cities in the North – increasing tourism for Manchester significantly.
Average Property Price: £230,522
Average Rental Yield: 4.92%
Price Growth in Five Years: 19.26%
A ‘sleeper hit’ for the UK property market, Nottingham has been making huge strides over the last few years and now represents a key investment area.
More affordable than other major cities such as Manchester, Nottingham offered quality yields of around 9% in several city centre postcodes including NG1 (the city centre) and NG7 (the surrounding area which also includes the University of Nottingham) in 2019, although that has slowed since lockdown to an average yield of 4.92%.
Nottingham’s major strength is in its past capital growth and future long-term yield growth, which is set to be one of the strongest in the country according to JLL.
Driven by two major UK universities located relatively close to the city centre, 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.
Average Property Price: £215,355
Average Rental Yield: 5.23%
Price Growth in Five Years: 8.26%
The 8th largest city in the UK by population, 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 NE2 are offering high yields (around 6 – 7%) at the heart of the city and the average yield sitting at 5.23%, Newcastle has faced challenges in terms of capital growth over the last five years.
That said, Newcastle has one of the best graduate retention rates in the country and is 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: £232,617
Average Rental Yield: 5.76%
Price Growth in Five Years: 15.30%
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 2022.
Home to 800,000 people, 73% of the households in Leeds are currently renting, 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. JLL predicts that Yorkshire will see growth of 28% over the next five years, driven by the aforementioned demand as well as a number of Build-to-Rent schemes being delivered.
Economically, Leeds is one of the fastest growing in the country and now rivals 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: £316,791
Average Rental Yield: 5.35%
Price Growth in Five Years: 17.65%
Edinburgh remains a stalwart of the best places to invest in the UK due to its excellent price growth over the last decade.
While prices going up have lowered rental yields somewhat, Edinburgh still remains desirable with tenants, ensuring less turnover in an investment property.
Savills also predicts that Edinburgh’s economy will continue to rise, positively impacting property prices to the tune of 24.4% over the next five years – the third highest growth rate of any UK region.
In terms of future development, there has been an influx of new-build city centre apartment opportunities across the multifamily (build to rent) and private rented sector, despite pressure from alternative markets such as student housing.
Average Property Price: £377,945
Average Rental Yield: 5.48%
Price Growth in Five Years: 2.96%
With London still struggling to recover, 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 a number of globally renowned businesses such as Dell, Microsoft and 3M, it’s also experiencing the kind of large-scale regeneration that attracts incredible demand.
This new town has seen price rises of 249% over the last 20 years and is still nearly half the price of the average London property, ensuring higher yields – 5.48% in Bracknell versus 2.90% in London.
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.
Average Property Price: £215,203
Average Rental Yield: 4.45%
Price Growth in Five Years: 14.54%
Last year we mentioned that Sheffield was at the start of its property cycle and showing incredible potential. This year we see Sheffield start to achieve that potential, particularly in terms of delivering rental yields for investors.
Thanks to around £480 million being spent on developing Sheffield’s shopping district, Sheffield’s local authority continues to create the amenities to deal with rising demand. This has directly impacted central postcodes such as S1 where yields have hit around 7%.
Sheffield has also been one of the top markets coming out of lockdown, where sales were up 20% higher than at the start of the year according to Zoopla.
Average Property Price: £204,007
Average Rental Yield: 5.31%
Price Growth in Five Years: 17.01%
While Glasgow property has always been in the shadow of Edinburgh, the second city of Scotland is starting to emerge.
Glasgow’s economy is set to perform on par with Edinburgh over the next five years and its property market demonstrates this.
Sale prices are expected to rise by 24.4% over the next five years, while rental growth is expected to rise by 10.5% over the same period. This follows five years of excellent capital appreciation and will be welcome news for investors looking to Scotland.
With a solid development pipeline of 4,000 purpose-built rental homes and ‘multifamily’ schemes, the parts are in place to support Glasgow Council’s recent commitment to double the city centre population by 2030.
Average Property Price: £188,948
Average Rental Yield: 4.82%
Price Growth in Five Years: 17.03%
Liverpool remains a clear contender for best place to invest in property 2022 due to the rental yields it can provide. While price growth has been weaker over the last five years than some other alternatives, 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 28% over the next four years, benefitting from the same 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.
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 Next 5 Yrs||Growth Last 12 Mnths|
Source: Zoopla, JLL
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 2022. While the North West is leading the way in future predictions, they haven’t seen the most immediate growth on the list, highlighting their position as long-term alternatives within the best places to invest in UK Property 2022.
Following close behind is Birmingham and Nottingham, representing the Midlands. While these cities are 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.
Finally, Glasgow has seen the best growth over the last year as an affordable alternative within Scotland. With the second highest growth on the list over the next five years, Glasgow represents a clear opportunity for long-term growth, although it isn’t as well connected with the wider country as some others on this list.
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||Est. Rent Growth (’25)|
As you’d expect, some of the more affordable locations on this list are delivering the best rental yields. Birmingham, Manchester and Leeds are some of the more affordable locations, with the two biggest cities achieving yields above 6% on average.
Bracknell is punching well above its weight, delivering yields above 5% despite being in one of the most expensive markets in the UK. This is largely down to its exceptional rents thanks to a high standard of living and new amenities attracting ambitious new residents.
Scotland continues to be a top destination for returns, with Glasgow and Edinburgh offering excellent long-term yields at different price points for investors.