Mortgage lender, Aldermore, has analysed the places in the UK which rate highly on five key indicators for buy-to-let desirability to help landlords make the right location choice.
It looked at average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the city population in the rental market.
When taking all these into account the best city for buy-to-let emerged as Bristol. This was followed by Manchester and then Coventry in third place.
Glasgow was the first Scottish city to enter the top 10 since the tracker was launched five years ago. And there were other new entrants – Brighton (4th place), Portsmouth (7th) and Basildon (9th) jump up securing a top spot.
Aldermore’s buy-to-let city tracker – Top 10 (Source: Aldermore Bank)
| Ranking | 2023 | +/-change | 2022 ranking | 2021 ranking |
| 1 | Bristol | +2 | Manchester | Bristol |
| 2 | Manchester | -1 | London | Oxford |
| 3 | Coventry | +7 | Bristol | Cambridge |
| 4 | Brighton | +10 | Cambridge | Manchester |
| 5 | London | -3 | Peterborough | Luton |
| 6 | Cambridge | -2 | Milton Keynes | London |
| 7 | Portsmouth | +16 | Luton | Northampton |
| 8 | Glasgow | +9 | Reading | Brighton |
| 9 | Basildon | +3 | Southend | Reading |
| 10 | Milton Keynes | -4 | Coventry | Norwich |
What does Bristol have to offer?
According to Aldermore, Bristol offered best all-round investment for buy-to-let investors. It has good rental prospects, a high proportion of long-term private renters available and low number of properties currently vacant.
Growth on returns was also an attractive lure for landlords with an annual increase of 6.6%. However, investing in Bristol isn’t for those looking to make a fast investment with short-term yields sitting at 4.4%.
Increases in rent and tenant demand
The tracker also showed the rate at which rents had increased. Indeed, the City Index Tracker showed in 2021 the average room for rent was £423, while in 2022 it was £432 and this year it increased to £455.
Aldermore’s research found nine in 10 landlords (94%) had increased the rent they charge in the last 12 months. With the current position of the rental market, the research also revealed just under three quarters (73%) of landlords had seen an increase in tenant demand for their properties in the last year.
Jon Cooper, head of mortgages at Aldermore, said: “Landlords have experienced an unprecedented year with rising interest rates, rising inflation, all while navigating their way through property legislation changes.
“Yet, the demand for rental accommodation has never been so high. Landlords play an important role in the UK economy, providing homes for those who are yet to get on the housing ladder or want to rent.
“Usually, a few regions dominate the leadership board, but this year we see for the first time a wider range of areas making it into the top 10.
“We can see that each region is made up of multiple smaller markets with their own unique conditions and challenges. Landlords continue to do their research, working with their brokers to review their portfolios and ensure they are getting the best value for their properties, whatever obstacles may come their way.”
