Top 5 UK Property Investment Locations for 2017
When it comes to looking at property investment locations, it’s important to consider that landlords make money in two ways:
- Rental yield: a measure of the rent relative to property value
- Capital growth: speculative and a by-product of economic activity in an area that can provide additional profit on resale but should not be relied upon. If you buy correctly in the first place, you will have already made your capital profit.
To make a profit, landlords need to evaluate not just the property, but the location where they intend to invest.
In its recent Buy to Let Britain report, banking services provider Kent Reliance found that, unsurprisingly, the highest annual returns were in London. Landlords in the capital generated average annual returns of 18.2% in the year to March this year – with virtually no rental yield, this is mostly capital growth, which you cannot spend until you sell.
But the high cost of property in the capital prohibits investment by many new landlords and those planning to grow existing portfolios. It’s also not safe to assume capital growth as some experts think this hotspot has reached its peak.
In the S1 postcode, property investors can purchase properties for under £70,000 and achieve gross yields of over 11%.
Sheffield has a significant student population, and there’s a big demand for rental properties, as seven out of ten students in the city don’t have access to university-provided accommodation. This need is set to rise, with the number of international students in Sheffield forecast to grow between 15-20% over the next five years.
Regeneration schemes in the city such as the one on Liverpool Docks, mean that the L1 postcode is on the up.
Low house prices and high rental values have allowed property investors to maximise their yields and Liverpool’s large student population guarantees there’s always a need for rental accommodation.
Developments such as The Steel, which is in close proximity to several universities, are good investments if you want to capitalise on Liverpool’s 50,000-strong student population.
Manchester boasts a considerable rental sector with 26.85% of housing stock privately rented. This is above the national average of 18% and indicates a high demand for rental property. This may be because Manchester is home to 60% more 25-29 year-olds than anywhere elsewhere in the UK and it’s this age group that’s most likely to rent.
Rental and capital growth increases are also expected as a result of the development of Manchester Airport, connecting South Manchester and parts of Cheshire to growth areas.
Salford in Greater Manchester is another good investment location thanks to the presence of MediaCityUK and a number of businesses moving to the town. Rental demand comes from young professionals and students studying at the University of Salford.
Finance and business services employment growth of 4.4% in Cardiff has surpassed the rest of the UK. This sharp upturn in economic conditions is likely to lead to a steady rise in demand for rental properties as young professionals look for accommodation in Cardiff.
Cardiff is already generating exceptional rental yields due to its relatively low property prices.
Looking even further ahead
With more big businesses taking up residence in cities outside the capital, properties in these economic hotspots are likely to become increasingly more desirable.
Looking to the future, work on High Speed 2 (HS2), the proposed high-speed railway that would link London, Birmingham, the East Midlands, Leeds, Sheffield and Manchester is set to begin in 2017. Long-term investors should take a look at some of the locations on route such as the Nottinghamshire village of Toton, as these places are likely to be attractive to professionals new to the area.
Want to discover more about building your property investment business?
Attracting Property Investment - The SIMPLE way to find money for your property deals
is a two-day event that will show you how to drive your property business forward.
Date: 12-13th November 2016
BOOK NOW – places are limited!
For further information on upcoming courses, please visit www.propertymasteryacademy.co.uk or call Mark on 01252 730040.