Manchester has emerged as the best city for buy-to-let investments in the UK for 2023, based on data from Aldermore Bank’s Buy to Let City Tracker. The Northern powerhouse rose from fourth place last year to steal first place from Bristol, thanks to its strong house price growth and soaring demand for rental properties.
Almost one-third of Manchester residents rent privately, meaning rental accommodation in the city is highly sought after.
Across Manchester, rental yields are outperforming the national average; in the city centre, landlords can expect yields of around 4.5%, whilst the suburbs saw averages as high as 9.1% last year.
Manchester is the number one—and the most northern—city in the top 10, followed by London in second place (up from sixth last year), and Bristol in third. Other cities in the top 10 are all either in the East or Southeast of England, bar Coventry in the West Midlands.
Midland cities saw some dramatic declines, with Northampton, Leicester, and Derby all falling several places from last year. Birmingham and Nottingham, however, made significant strides, rising eight and nine places respectively.
Best cities for new landlords
The report also concluded which cities were the most popular with new landlords. It looked at which UK locations had the most landlords that had owned property for less than a year and had taken out landlord insurance in 2022.
London stole the top spot, followed by Manchester. Birmingham, Liverpool, Nottingham, Glasgow, Leeds, Bristol, Edinburgh, and Hull also featured in the top ten.
These findings differ from that of the “best buy-to-let areas” in two significant ways; not only are most of the locations major UK cities, but many are located in the Northern part of England. This suggests that the north is becoming an increasingly popular place to rent out property, particularly amongst those new to the buy-to-let scene.
Students and young professionals
The UK’s major cities are home to some of the best universities in the country, which is a major draw for buy-to-let investors. With an increasing number of young people opting to pursue the university pathway, and campuses welcoming a growing number of international students, the demand for university accommodation is stronger than ever. Only last year, Manchester Metropolitan was in the spotlight for encouraging prospective students to take up beds in neighbouring cities such as Huddersfield and Liverpool due to a startling accommodation shortage.
Furthermore, cities with a large population of students and young professionals are very attractive to HMO landlords. HMO (Houses in Multiple Occupation) landlords rent rooms out separately to tenants in order to generate more rental income. London, Birmingham, Bristol, Manchester, and Cardiff were the main hotspots for HMO landlords in 2022, thanks to their leading universities and thriving employment markets.
Overall, major UK cities pose an attractive option when it comes to buy-to-let investments. Not only do they boast large tenant populations and low supply, but also top tables in terms of total average rent, rental yields, and house price growth.
Naturally, the UK capital and nearby cities have long been profitable locations for landlords. However, the north is becoming an increasingly popular place to live, work and invest—with Manchester leading the way as the best city for buy-to-let investments in the UK.
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