Manchester crowned top BTL investment city as London plummets

Manchester has reclaimed its position as the UK’s prime location for buy to let investments, according to Aldermore’s annual Buy to Let City Tracker.

Glasgow and Coventry secured second and third spots, respectively, while Wigan experienced a massive surge, climbing 21 places to fourth.

However, London plummeted to 32nd – a huge drop of 27 places from its previous ranking of fifth, as landlords see poorer returns on their investment.

The top 10 also sees Bristol, Portsmouth, Nottingham, Birmingham, Milton Keynes and Peterborough making the cut.

Significant shifts in the market

The lender’s director of mortgages, Jon Cooper, said: “We’ve seen a lot of movement within the index this year, which is reflective of significant shifts in the rental market.

“Landlords continuously need to be on the ball, as difficult as that can be, reviewing their portfolios and ensuring they’re getting the most out of their investments.

“There are still good returns to be made in many cities, with rental income staying steady from last year and demand remaining strong with an average of 10 applicants competing for each property.”

He added: “Landlords are seeing increased regulatory demands alongside shifting tenant expectations, posing a unique set of challenges.

“This requires them to adapt swiftly to maintain their portfolios, at the same time as continuing to offer a good standard of rental accommodation for a wide variety of tenants.”

Factors influencing BTL attractiveness

The tracker evaluates various factors influencing BTL attractiveness, such as average rent, short-term yield returns and long-term house price growth.

Manchester’s leading position is down to its robust long-term property appreciation, which is 6.5% annually, and a substantial rental market.

The index reveals that 32% of residents are renting privately, exceeding the national average of 23%.

Wigan’s impressive leap up the rankings is down to having minimal vacant properties (0.6%) and solid decade-long property price growth (5.4%).

London’s decline stems from lower rental yields (4%) and comparatively modest house price growth (3%), despite high average rents of £800.

Healthy buy to let market

Aldermore says its index highlights a healthy buy to let market, with average room rent rising by 18% and rental yields increasing to 6.9%.

Landlord confidence has also apparently improved, with 31% considering exiting the sector – it was 48% last year.

Also, nearly three out of five (58%) landlords say their property values grew over the past 12 months.

However, Wales presented less attractive investment opportunities for landlords, with Newport and Swansea at the bottom of the table, although Swansea showed signs of improvement.

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