Best cities for buy-to-let landlords revealed

Oxford has been named as the best place in the UK to invest in a buy-to-let property, closely followed by Manchester and Edinburgh.

The world-famous university city offers the best potential for landlords because it has one of the largest private rental markets with 28% of residents being private tenants.

What’s more Oxford also has above average rental ability, with the typical rent for a room per month being £596, and a low level of vacant properties, suggesting demand is high.

According to the analysis by Aldermore Bank, it also offers security in investment with property prices increasing by, on average, 4.8% in the past decade.

In fact, the only downside of being a landlord in Oxford is the short term return through yields is one of the lowest.

It means the city still scores high on four of the five areas on which Aldemore assessed buy-to-let appeal and therefore makes it the most attractive overall.

Darren Meehan, director of mortgage brokers, Bright Money, said Oxford’s universities and hospitals meant it had a high level of professional renters, who were attractive because they wanted long term lets and looked after the properties well.

“With the large volumes of new housing stock being built all over Oxfordshire, such as Didcot, there are a lot of new opportunities for investor,” he added.

“These new-builds outside the City Centre are more affordable to investors and they also target the commuters, so Oxfordshire really does have something for all budgets.”

The rest of the best

Manchester comes in second on the survey scoring particularly high on the size of the market – indeed 27% of the city’s residents are renters offering a healthy market for landlords. Short-terms yields were at 6% and property price increases were buoyant.

Indeed, Richard Ignatowicz, director, Mortgage Savers, said: “Manchester is currently regarded as one of the top buy-to-let hotspots in the UK – it was primarily put on the investment radar due to the BBC moving to Media City in Salford Quays. This attracted a flood of southern and international investors.”

He added: “Having recognised the excellent returns, investors are now seeing other parts of Manchester experiencing a ripple effect, such as Ashton and Oldham.”

Edinburgh, meanwhile, came third on the list scoring particularly well when it came to the cost of rent, which was nearly as high as London. Indeed, the capital – which was fourth on Aldemore’s list – had the highest rents, although short-term yields let it down.

Norwich came in at number five on the list of the best cities for buy-to-let landlords.

Aldermore publishes its Buy-to-Let City Tracker to help landlords identify the best short and long-term investment opportunities.

It believes landlords are an increasingly central part of the housing market not least because the number of people renting in the UK had soared by 1.7 million in 10 years.

The lowest scoring cities

Yorkshire proved the most unappealing region for buy-to-let landlords, it is home to three cities which were in the bottom six on the list.

Sheffield has one of the lowest rental prices and poor short-term investment prospects with below average yields. Bradford and Hull also suffered with low scores.

There was a mixed bag in the Midlands with Nottingham coming out at seventh on the list of the best cities for landlords. However, Wolverhampton was at the bottom, with the smallest rental market – indeed, only 12% of the city’s residents are renters.

Aldermore’s Buy to Let City Tracker rankings table (Source: Aldermore)