The best city for buy to let investment revealed

The best city for buy to let investors isn’t London – it’s a city that has robust property prices and strong rental demand, a Buy to Let City Tracker reveals.

According to Aldermore, the best location for BTL investors is Manchester which appears to be weathering the economic storm well from a landlord perspective.

The tracker puts London in second place, and Bristol is third.

Manchester returns to the best city since 2020, which is mainly down to the average property price rising by 5.6% to reach £247,341.

Opportunity for landlords with rising property prices

The city also has a healthy rental market with 31% of the population privately renting, which brings opportunity for landlords with rising property prices and strong tenant demand.

However, after falling in popularity in recent years, London has risen from 6th to 2nd place.

Aldermore says that the capital offers the highest average room rent for any of the Tracker’s cities, but London’s shorter-term yields remain comparatively low at 5.1%.

Despite this, London’s private rental market size and tenant demand continues to be healthy.

Peterborough and Milton Keynes soaring up the rankings

Potential BTL investors should also take note of Peterborough and Milton Keynes soaring up the rankings.

Peterborough has jumped 11 places to 5th place and Milton Keynes has risen an impressive 28 places to 6th place.

Aldermore says that with more people working from home post-Covid and new rail links connecting people around the country, these cities make an attractive base for many commuters.

The longer-term return prospects for these cities have jumped over the last year with property price growth in Milton Keynes rising from 4.6% in 2021 to 5.6% in 2022, and in Peterborough from 3.86% to 5.2% during the same period.

Above average rental values have seen these cities become very attractive prospects for buy to let landlords looking to expand their portfolio.

City Tracker highlights how quickly the UK housing market moves

The head of mortgages at Aldermore, Jon Cooper, said: “In its fourth year, our City Tracker highlights how quickly the UK housing market moves across the country.

“Year on year, we’ve seen the cities offering the best investment for landlords shift consistently.

“This highlights how landlords really have to be on top of their game to ensure they maximise their investment, looking for areas that offer value not only for the short term but for the longer term too.”

He added: “The mortgage industry has experienced a series of testing events with interest rates hikes, uncertainty in the UK economy, as well as stamp duty shifts and looming Energy Performance Certificate changes; factors that are not only affecting landlords but also their tenants, putting both groups under pressure.”

Aldermore’s top 10 best cities for BTL investment are:

• Manchester
• London
• Bristol
• Cambridge
• Peterborough
• Milton Keynes
• Luton
• Reading
• Southend
• Coventry

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