Overall, the UK property market is booming. There’s no getting away from that fact, especially given that Nationwide’s most recent data showed UK property prices growing by 10% across the country year-on-year since May 2020.
In the North West, for example, prices jumped 15%, marking a huge increase in activity that was typified by reports from estate agents and property websites reporting record traffic – with Savills reporting a record number of enquiries about property just last month.
With all that in mind, it’s become something of a free for all with property investors in the UK. As we know, we’ve also been seeing record traffic and enquiries as the private rented sector hots up even further.
Big cities have emerged as an extremely popular choice for landlords and investors as, inverse to expectations, city living has increased in popularity despite the pandemic.
Cities in the North West, North East and other ‘Northern Powerhouse’ areas are extremely popular, with many properties across the area now offering above 7% yields, with some even above 10%.
That being said, not every single area is quite as hot right now, and the general rules of thumb still apply when buying investment property. Location, facilities and local amenities as well as schools are all still relevant, and not every city can offer the same returns.
Worst cities
Coulters, an agency and law firm, have produced a league table of where landlords are most likely to make a loss on their investment.
There is some caution to be urged as this only takes into consideration averages, however, it gives us some idea of the areas of the UK that may be lagging behind.
The agency calculated their average by taking the average house price of these areas and then dividing them by average mortgage repayments and rental payments to give an average Return On Investment, or ROI.
The worst place in the UK for this ROI measurement was Warrington, with an average house price of £254, 189 but average rents of just £566 per month. The rest of the list were almost exclusively in southern England, with Cambridge, Crawley, Poole, Swindon, Reading, Doncaster, Perth, Luton and Oxford making up the rest of the list.
Perhaps unsurprisingly, the vast majority of those in the ‘best’ category were in the north of the UK. Preston topped the list, with Coventry, Glasgow, Swansea, Dundee, Manchester, Paisley, Leeds, York and Stoke-on-Trent making up the top 10.
UK property
This perhaps confirms a growing gap between the hot investment opportunities north of Birmingham compared to the South East and South West of England.
Regardless, investment and buy to let property across the UK remains hugely good value, with the vast majority of areas seeing fast and sustained price growth as well as rental growth.
With so many investors and landlords now keen to get their hands on more property from a dwindling pot of availability, it’s perhaps now time to consider branching into other areas and, most of all, move quickly to acquire good opportunities as you see them.
