The UK’s Buy-to-Let Hotspot 2015

on Jun 9, 2015

Manchester, often referred to as the UK’s second city, has long since competed with the capital in terms of attracting investment and retaining a thriving housing and rental market. But now, in the wake of rising unaffordability in London and the increasingly overheated property market, investors and house-hunters alike have been flocking out of the capital and instead looking to more regional cities to make their money go further.

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Naturally, Manchester has fast become the go-to destination for savvy landlords, who have recognised the potential of the city and its thriving housing market. Homes in and around Greater Manchester (which, as well as the City Centre also encompasses the nearby Salford Quays and MediaCityUK) have surged in popularity of late, so naturally house prices have inflated in response to the rising demand. Investors are particularly enamoured with properties in Manchester because, as well as being significantly more affordable than investments in the capital despite the recent price rises, Manchester’s private rental sector is growing from strength to strength, offering investors both high rental yields and low void periods that come as a result of high tenant demand.

In fact, investor confidence in Manchester is so strong that UK bank HSBC recently named Manchester the UK’s number one buy-to-let hotspot for 2015, commending the region’s capacity for offering the best rental yields in the country.  The report indicated that the city of Manchester provided the UK’s highest rental yield so far in 2015, with average gross yields coming in at an impressive 7.93%. Research also shows that the city, up one place from second in 2014, offers investors low but steadily increasing house prices (averaging £108,870), average monthly rent of in excess of £719, and a massive 26.85% of housing stock in the thriving private rental sector.

To put this into perspective, HSBC research also highlighted the fact that London hosted a huge six of the ten worst buy-to-let hotspots, with properties in areas like Kensington and Chelsea producing comparatively low yields of around 2.87%. Furthermore, the market is crippled by extortionate house prices (often in excess of £1m) and a relatively stagnant rental market, a further testament to the capital’s unaffordability.

All evidence points to the fact that, while London’s buy-to-let capacity is declining because of unsustainable house price growth, Manchester’s rental market is going from strength to strength.  The rising demand for rental accommodation in the city means that the available properties are able to command higher prices, and can therefore offer investors better yields than anywhere else in the country.

But the good news continues for savvy Manchester investors—the city’s growth, particularly in the rental sector, does not look set to stop anytime soon. Huge investments into Manchester’s infrastructure will continue piquing the interest of tenants and investors alike, both of whom will be keen to enjoy all that the city has to offer. The Greater Manchester conurbation, gaining unparalleled press attention of late because of its iconic investments, is now home to MediaCityUK, the new regional home of the BBC and ITV studios and situated on the iconic Salford Quays waterfront. Furthermore, the region is soon to be the primary beneficiary of a new state-of-the-art high-speed railway system HS2, which will significantly decrease journey times to other major UK cities.

There has never been a better time to invest in property, and where better to look than in the burgeoning city of Manchester, the UK’s number one buy-to-let hotspot? 


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