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Towns within a commutable distance from larger cities are witnessing the highest rental price growth. As opposed to the capital, where rents have plummeted by 13%. The challenging market in London is facing lower average returns on investment properties. Rental yields continue to decline as housing stock returns to the market and demands plunge.
However, trends are reversing in neighbouring towns. The resilient property market continues to defy gravity, with prices shooting upwards. These soaring rates are attracting investors looking to profit from a long-term investment.
Consider the Complete Picture
It is important to consider the complete picture when investing in property. Investors cannot solely focus on the development itself. Social and demographical factors in the area are also taken into consideration. A buy-to-let property positioned below market value may be desirable but as an investor, it is important to consider the rental yields achievable.
High rental yield properties are in areas driven by high rental demand due to the limited availability of quality housing supply. Areas with a growing population also witness increasing demand. Property investment yields are greater in areas with excellent transport links. Another factor promising high capital growth and good rental yields are successful regeneration schemes.
Cities undergoing regeneration projects, revitalise run-down areas. Hence, improving amenities and enhancing the quality of living for residents. Yorkshire offers some of the best rental yields in the UK. The best short-term rental yield is achievable in Hull at 9.2%. Take a look at some of our investment city spotlights on regeneration:
Sheffield: Transforming the City of Steel with £1.5bn Regeneration
Hull: £1.5bn Regeneration investments revitalise Hull
Leeds: Solidifying its Role as the Powerhouse of Yorkshire
The North: Strengthening the Northern Property Market, Railway Upgrades
Birmingham: Big City Plans for the ‘City of 1000 Trades’
Increasing Demand with No End in Sight
Liverpool is an extremely affordable area to invest in property. The average property price is listed below the UK average at £186,527. Nonetheless, Liverpool boasts some of the most incredible rental yields across the country. The city is home to the highest performing areas, such as the Baltic Triangle in L1 and the Royal Liverpool University Hospital in L7. These areas achieve high rental yields of 8.1% and 10% respectively.
According to Rightmove, the average rent in Liverpool has increased to £843, from £659 in March 2016. Asking rents in Liverpool have increased by 28% in the last five years. The £5.5bn Liverpool Waters scheme will truly revitalise the thriving city. Once in place, the scheme will create 17,000 new jobs. Therefore, boosting rental demand and diminishing vacancy rates. Ultimately, this will raise rental yields in the area.
Home to the Highest Performing Areas
Nottingham offers incredible rental yields of 9% coupled with below-average house prices. High yields are due to the large student populations driving tenant demand in this area. Two of the major universities are located close to the city centre. The graduate pool is also growing with speed as graduates look to reside in Nottingham.
Transforming the Face of the City
Sheffield is experiencing some major transformations. The latest regeneration schemes, including the Heart of the City II, will change the face of the city. Therefore, making it a much more desirable and sustainable place to live. The revitalisation projects will work on providing more amenities to the growing population. In the city, yields of 7% are achievable.
Outside of the city centre, in well-connected towns such as Woodhouse, buyers can purchase cheaper homes. The growing demand in these areas is also due to the abundance of outdoor space. For this reason, investors can expect to attain high rental yields of 7.7%.
UK’s Biggest Rental Market
Manchester is a leader of the northern powerhouse. It is the most popular investment location with the biggest rental market in the UK. Over 31% of Manchester’s population includes private renters. Manchester ranks as the best city for buy-to-let investors by Aldermore’s Buy to Let City Tracker. Property investors can expect to achieve high rental yields of 6.7%.
Data from JLL show prices in the city are set to rise by 17.1%. The city offers illustrious career opportunities for aspiring professionals and employment has grown by 84% across 13 years. The city has some of the lowest vacancy rates and this number will continue to decline with the growing demand.
Big City Plans to Boost Rental Demand
The city of Birmingham attracts and retains skilled professionals and investors can expect to achieve strong yields of up to 6%. Workers are injecting more of their income back into the city as they rent in places close to work. Thus, adding to the booming economy. The Big City Plan is successfully transforming the city, resulting in soaring levels of demand.
Over the past decade, rents have grown by 30% and will continue to rise in the ever-evolving city. By 2030, it is expected the population will grow to 1.24 million as the London exodus continues. Therefore, adding more pressure to the increasing demands for accommodation.
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