Glasgow, Manchester, Birmingham, Sheffield and Liverpool: The five top UK cities for buy-to-let yields - and we reveal the best postcodes within
07-19-2015
By Amy Andrew for Thisismoney.co.uk
London may have been claiming the house price headlines in recent years, but rather than focus their attention on the capital, property investors should turn their attention to Glasgow, Manchester, Birmingham, Sheffield and Liverpool.
That is the conclusion of research that compares rental returns to property prices, giving the locations that deliver the best yields on property. The LendInvest Buy-to-Let Index uses rents and asking prices from property portal Zoopla to identify the highest yields.
In a list of the top 20 buy-to-let hotspots for January 2015, Glasgow postcodes featured four times, as did Liverpool postcodes, Sheffield’s featured three times and Birmingham and Manchester postcodes twice.
Because of its high property prices, London was largely absent from the list, apart from the EC3 postcode, east of the city, which made the top three.
The figures also highlighted decent buy-to-let opportunities in Motherwell, Sunderland and Falkirk, Ireland.
Top buy-to-let hotspot: A view of Glasgow Merchant City in Glasgow, Scotland.
Glasgow
With house price hikes in Edinburgh making buy-to-let an increasingly expensive and less profitable option for property investors, landlords have been snapping up deals in Glasgow.
Glasgow itself is a popular city, with a vibrant nightlife, internationally-acclaimed museums and galleries, celebrated architecture and the UK’s second largest shopping centre.
It also has a long-standing reputation for its live music scene.
| Postcode | Total yield | City | Areas covered |
|---|---|---|---|
| G2 | 8.90% | Glasgow | Blythsworth Hill |
| L7 | 8.80% | Liverpool | City Centre, Edge Hill, Fairfield, Kensington |
| EC3 | 8.70% | London | St Mary Axe, Aldgate, Leadenhall, Lloyd's of London, Fenchurch Street, Tower Hill, Tower of London Tower Hamlets, Monument, Billingsgate, Royal Exchange and Lombard Street. |
| G51 | 8.50% | Glasgow | Govan, Ibrox, Kinning Park |
| M13 | 8.30% | Manchester | Ardwick, Longsight, Chorlton-on-Medlock |
| G21 | 8.20% | Glasgow | Balornock, Barmulloch, Cowlairs, Royston, Springburn, Sighthill |
| B7 | 8.20% | Birmingham | Nechells |
| S14 | 8.00% | Sheffield | Gleadless Valley |
| L6 | 8.00% | Liverpool | Anfield, City Centre, Everton, Fairfield, Kensington, Tuebrook |
| S2 | 7.90% | Sheffield | Arbourthorne, Heeley, Highfield, manor, Norfolk Park, Wybourn, park Hill |
| L4 | 7.80% | Liverpool | Anfield, Kirkdale, Walton |
| M38 | 7.80% | Manchester | Little Hulton |
| G81 | 7.80% | Glasgow | Clydebank |
| ML7 | 7.80% | Motherwell | Shotts, Allanton, Eastfield, Harthill, Hartwood, Salsburgh |
| B21 | 7.80% | Birmingham | Handsworth |
| S4 | 7.70% | Sheffield | Grimesthorpe, Pitsmoor |
| L5 | 7.70% | Liverpool | Anfield, Everton, Kirkdale, Vauxhall |
| ML4 | 7.70% | Motherwell | Bellshill, Orbiston, Mossend |
| SR5 | 7.70% | Sunderland | Carley Hill, Castletown, Downhill, Fulwell, Hylton Castle, Hylton Red House, Marley Pots, Monkwearmouth, Sheepfolds, Southwick, Town End Farm, Witherwack |
| FK6 | 7.60% | Falkirk | Denny, Dunipace, Fankerton, Head of Muir, Stoneywood |
Rivalry: Manchester is home to top football teams including Manchester United and City
Manchester
Last year Manchester experienced the strongest house price growth in the UK. Nationwide found that average prices across 200 postcode in Greater Manchester rose and some even doubled. The population of Greater Manchester grew by over 7 per cent between 2001-2011 with 2.68 million people living in 1.13 million households.
As a result, demand for rental property in Manchester is understandably at an all-time high, not only from tenants but investors looking to make a savvy purchase. Which means rental property is being sold as soon as it becomes available.
In addition, Manchester has the largest university population in the country, it’s the third largest city in the UK and a mecca to sports fans worldwide, thanks to the number of football teams based there including Manchester United and Manchester City.
Liverpool: The city has more than 60,000 students living in it
Liverpool
Liverpool is one of the largest university cities in the UK, and has more than 60,000 students living in the northern city.
As such, it is a ready-made target market for wannabe buy-to-let landlords.
The city’s growing population of both domestic and international students means there is a continuing demand for new student property investments in Liverpool, and in particular high-quality student accommodation.
Looking ahead, there are plenty of development schemes planned for the city and surrounding area, including housing schemes and a major regeneration of the Liverpool docks.
Reinvention: Birmingham has undergone a major reinvention during the past decade
Birmingham
During the past decade Birmingham has undergone a major reinvention.
There’s plenty of development already underway or in the pipeline, including the brand-new high speed Birmingham-to-London train, the HS2, which is expected to attract even more investment to the area.
Estate agents believe with the reduced travel time into central London, more people will decide to move to Birmingham. In fact, it is already showing the first signs of a surge in interest - a central Birmingham scheme by Knight Frank sold out within days last year, making it the fastest selling development in the city in years.
Birmingham City Council also recently announced £13.2billion worth of investment plans for the city during the next five years - £10.5billion of that has been earmarked for the city centre.
Snapped up: Sheffield rental property is popular among the city's large student population
Sheffield
In Sheffield, rental property is being snapped up faster than it can be provided, according to property investment experts Assetz.
In a financial climate where purchasing a property is out of reach for many consumers, people are relying on the rental sector to provide homes for them.
As with Liverpool, Sheffield has a large student population – the city is home to two of the UK’s largest universities – Sheffield University and Sheffield Hallam.
As a result, the city has a youthful population and demand for rental property is extremely high.