Buy-to-let hotspots: The best cities for landlords to invest

The Buy to Let City Tracker provides landlords with an insight into the UK’s best investment hotspots by analysing five key indicators which impact the desirability of locations.

Analysis takes in the average total rent, the best short-term returns through yield as well as the long-term return through house price growth over the past decade.

Aldermore also looks at the lowest number of vacancies as a proportion of total average total of total housing stock and the percentage of the city population in the rental market.

The city which emerged as the number one city, taking into account all these factors, was Bristol which has risen to the top spot because of the long-term growth of property values in the area along with the lowest number of long-term property vacancies out of all the 50 locations analysed.

Indeed, only 0.6% of rental properties were vacant in the city.

Bristol knocked Manchester off the top spot and down to position four on the table whilst Oxford and Cambridge took second and third places respectively.

London, which ranked third last year, has moved to sixth place on the list but, according to Aldermore, continued to be an attractive investment due to the long-term outlook for property prices, market potential, and relatively high proportion of private renters.

A new entrant to the top ten was Luton, which has risen from 12^th to fifth place in the rankings because of the relative improvement of long-term house prices.

It recorded 5.2% year-on-year house price growth over the last decade, and now has the strongest property price growth of any of the 50 cities, Aldermore said.

Jon Cooper, head of mortgage distribution, Aldermore said: “The City Tracker shows the UK housing market is rich with diverse and unique conditions across the regions that are ripe for investment opportunities.

“As we move towards a post-Covid environment, we hope this analysis gives food for thought to many landlords on where to look for those hidden gems and returns that meet their business strategies.

“Private landlords are a central part of the housing market, supporting over 4.5 million households in the UK and, as we emerge from the pandemic, landlords will need to meet the emerging demand for choice and variety from renters.

“With the economy opening up and EPC rating changes coming in 2025, now is a great time for landlords to talk with their broker to review where they want to take their portfolios in the future.”

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More about Bristol

Here’s what Aldermore had to say about Bristol’s rise to the top of the buy-to-let charts in 2021:

“Bristol has taken the top spot due to the long-term growth of property values in the area, and it has the lowest number of long-term property vacancies out of all 50 cities (at only 0.6% this year).

“With more than a quarter (27%) of residents estimated to be privately renting, creating a large and healthy market.

“Since 2010 property prices in Bristol have grown by 5.1% on average per year, second only to Luton (narrowly ahead with 5.2% annual price growth). This makes it much more likely that any buy to let investor will make a good return on selling any property later down the line.

“The short-term picture, as with many of the cities ranked high in the Tracker, is more mixed. On one hand the average rent per room is £514 per month, up 12% on last year.

“This makes Bristol one of only nine cities in the UK to command a rental value of over £500 per month, and one of only two cities outside of the south and east of England, with the other being Edinburgh (13^th).

“However, any investor will need a large amount of money to invest. With the average property price in Bristol at £348,543, likely yield will only be 4.6% on their purchase, well below the 5.9% average across the 50 cities.”

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Aldermore’s Buy to Let City Tracker’s Top 10 cities (Source: Aldermore)