As house prices rise year-on-year and with the uncertainty around mortgage rates, buy-to-let investors are still seeing the value in property investment, they are just shifting their strategy. Many are turning their view to regional cities as a result of the lower prices, better yield and abundant regeneration in these areas. Benham and Reeves found that between 2020 - 2021 and 2021 - 2022, the number of second homes bought in the UK grew by 19.5%. For the North-West of England this number was 26% and for the North-East it was 27%. Landlords are prioritising areas where their capital investment will produce the best returns, and regional areas are providing this opportunity.
The regional cities of England bode a range of investment opportunities, depending on your investment strategy and aims, the location you choose to purchase your buy-to-let will differ. Let’s take a look at what some of these cities have to offer investors…
Leeds
Property prices in Leeds are rising. According to Righmove, they are currently at an average of £252,890, up 1% from last year and 10% from the peak in 2020. A promising sign that capital appreciation remains strong in Leeds and a return that investors can capitalise on if they choose the area for their next buy-to-let. In 2022, tenants flocked back to the city, resulting in a 16% increase in rents.
Leeds has been marked as the “Digital Capital of the North” with the highest number of scale-ups outside of London and hosts the fastest scale-up growth in the North. The business development in the area signals population growth through the increase of job opportunities.
With an economy of £69 billion, a workforce of 1.9 million, and one of the largest student populations in the UK, Leeds is said to be the number one contributor to UK GDP in the Northern Powerhouse. As a region, it has outperformed all UK average economic data across the past 10 years.
The positive economic standing and outlook alongside the growing development and population of Leeds make it a great investment opportunity for landlords. There is an available population of tenants and a strong promise for capital growth as the city continues developing.
Interested in Leeds?
This development is a landmark development situated in one of the most sought-after postcodes in Sheffield. With its premium location next to the Inner Ring Road in the city centre, it has undergone an extensive refurbishment and is now offering 169 newly renovated apartments. Take a look at the return you could expect by investing in this new build.
Birmingham
Birmingham hosts an average house price of £269,346 as reported by Rightmove, this is below the £291,044 national average making it a more accessible option for investors to enter the buy-to-let market. JLL forecast that this value is to grow by 19.3% by 2027, over this time the rents in the region are also set to see a growth of the same amount. Birmingham currently delivers yields from 5 - 7%, both meeting and surpassing the national average of 5.03%.
Being the youngest city in Europe and with rapid population growth, Birmingham is often considered the UK’s second city. With more money being invested into the city through regeneration projects such as the Birmingham Smithfield development, a £1.5 billion project that will enhance the south of the city into a new urban quarter, there is a clear trajectory of growth in the region.
The positive prospect of Birmingham’s continued transformation coupled with 46% of the population being under thirty has resulted in a strong rental demand that results in rental yields as high as 6.9%. These factors make it an ideal choice for new and portfolio landlords alike.
Interested in Birmingham?
These off-plan new builds are set to complete soon, they are both developments that propel the growth and transformation of Birmingham forward. Click through to explore these properties further and to look at anticipated returns.
Manchester
At £293,928, house prices in Manchester have gone up more than any other city in the country over the last two decades. Second only to London in terms of its economy - Manchester is deemed the capital of the North. As a major relocation destination, it’s drawing in more blue-chip organisations, notably the BBC who moved to MediaCityUK in Salford.
A commitment to the area’s growth and development is present with a £1 billion scheme that is planned to evolve over 20 years and create a new neighbourhood. Manchester is also home to five different universities - attracting a major student population - this is further perpetuated by a 46% retention rate after university.
This growth and development present in the city has led to the estimated creation of over 5,000 jobs which will ultimately drive rental demand. Investors can enter the property market in Machester knowing there is a demand for their buy-to-let and also benefit from the transformation of the city as a result of regeneration projects.
Interested in Manchester?
Set in between the greenery of the City River Park and the hustle and bustle of the city centre, this landmark development is home to 634 new apartments and townhouses in Manchester’s emerging Red Bank neighbourhood. Explore this property.
Derby
The Derby market also sits below the national house price average at £235,087. House prices are forecasted to appreciate by 17.5% in the next three years, while rents are expected to rise by 12% in the same period. In fact, year-on-year rental growth in Derby was 8%, the highest UK figure. Rental demand is also set to rise as a result of the growing job opportunities in the area. There were 4,500 jobs created over the past year and 10,000 set to be created in the next 7 years.
It is one of the fastest growing cities in the nation - this is propelled by its manufacturing sector - it delivers over 45,000 jobs the companies such as Toyota, Rolls-Royce and Bombardier Transportation. In addition to this, Derby is on a path to further growth with the complete transformation of the city through the Derby City Centre Masterplan. By leveraging £3.5 billion worth of investments, the project is aiming to be completed by 2030 - resulting in house price growth of 17.5% and rents increasing up to 12% by 2026.
Derby is a city set to see major growth over the coming years and by choosing to invest in the region now, landlords could reap the rewards through both growing rental yields and capital growth by getting ahead of the market.
Interested in Derby?
This development is a collection of sophisticated one- and two-bedroom apartments, carefully curated for modern lifestyles. The residences enhance the interplay of space and light to provide bright and airy interiors that are designed to impress. They also capitalise on their location to bring the very best to its occupants. See what else this development has to offer.
Newcastle
Newcastle’s average property value is significantly lower than the national average at £207,752, sold prices were down from last year by 3% but up from 2020 by 4%. The city’s future is bright with major parts of the city centre being redeveloped and the rental market anticipated to continue thriving.
Newcastle is taking its time to expand into the modern apartment aspect of the property market with 42.3% of all properties sold being terraced houses. However, rental yields remain high at 5 - 7%. This allows investors to benefit from affordable prices and less competition with the ability to benefit from capital growth as the market evolves.
This development will be propelled by projects such as Newcastle Helix - £350 million is being put into bringing together tech firms, businesses, academics, top researchers and industry leaders. The progress of the city is not only occurring through regeneration projects but also through its population, the city had the highest population growth in the Northeast at 7.1% between 2011 and 2021.
Buy-to-let investors have the opportunity to benefit from the reasonable housing prices Newcastle has to offer. Landlords can also capitalise on the strong capital growth that will occur as a result of the city’s development. This, alongside the high rental yields and abundant population present in the region, makes Newcastle a region which can provide investors security in their property investment.
Interested in Newcastle?
This recently refurbished two-bedroom apartment is in excellent condition. It's conveniently located in the city centre of Newcastle, with Grainger town and Market just a 5-minute walk away. Looking to benefit from 7.5% yields? Take a look at this second-hand Newcastle property.
Finding your buy-to-let property
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