The top 5 cities for buy-to-let investors



30 March

Buy-to-let property can give you another income stream and it may be something you’re thinking about investing in. If you are considering buy-to-let property, there’s a lot to think about, including where the property should be located.

If you want to actively manage the property, purchasing a buy-to-let that is close to your own home can make sense. But, if you want to maximise your profit, choosing an area with a high proportion of renters can increase your returns. So, which cities provide the most opportunities for buy-to-let investors? According to a This Is Money report, these five come out top.

1. Bristol

The vibrant city of Bristol was named the top city for UK buy-to-let investors. While it might be known for its harbour and contribution to arts and science, average house prices are climbing at a fast pace, which makes it an attractive place for investors.

Looking at figures from the last 12 years, house prices in Bristol have grown by around 5.1% each year. In 2010, the average property in the city would have set you back £212,261, but today this has increased to £348,543. Of course, continued growth can’t be guaranteed, but the figures suggest that Bristol could make sense if you’re looking for a long-term investment. The average rental yield is also a healthy 4.6%.

2. Oxford

As a university city, Oxford can present an opportunity to benefit from a student market and a high demand for rental properties. In fact, the research found that 29% of residents rent privately and the vacancy rate for rental properties is just 0.6%. While the average rental yield in Oxford might be lower than alternatives at 3.6%, the demand for rental property has earned it second place on the list.
Since 2010, figures also show that Oxford property has been steadily increasing in value. On average, property prices have increased by 5% each year.

3. Cambridge

Cambridge paints a similar picture to Oxford. A high student population means that almost 3 in 10 people in the city privately rent their home. Again, the vacancy rate for rental properties is low at 0.7%. The findings suggest that landlords investing in Cambridge could experience fewer periods where the property is empty and not delivering an income.

However, Cambridge falls slightly behind its rival, Oxford, when it comes to annual average property price increase (4.9%) and rental yield (3.1%).

4. Manchester

Last year, Manchester was named the best place for landlords to invest, but it’s slipped down to fourth place this year. Yet, it remains the top spot in the north. The main reason for Manchester falling down the rankings is that there are now more vacant properties and fewer residents renting privately.

Despite this, Manchester can still be attractive as it has the highest yield on the list so far (5.9%) and house prices have increased, on average, by 4.2% each year.

5. Luton

This year, Luton entered the top 10 for the first time. The main reason for this is the city’s relative improvement in long-term house prices. Luton was found to have the strongest property price growth out of all the cities included in the research. On average, property prices have increased by 5.2% year-on-year.

Luton’s location means it’s known as a commuter city, which could have helped push up prices, especially as workers left the capital during the pandemic.

Is a buy-to-let property right for you?

A buy-to-let property can seem like a simple way to generate a passive income and you could benefit from house price rising further in the long term. However, you need to think carefully before becoming a landlord as it’s not the right decision for everyone.

Landlords must meet certain legal regulations and it would be your responsibility to ensure the property is safe. This can take up more time and money than you may think. You also need to consider how a void period, when the property is empty, would affect your income, or how you’d cover significant housing maintenance costs if they were required. Make sure you carry out your research before you become a landlord.

If you plan to use a mortgage to purchase a buy-to-let property, you should also be aware that lenders will often have different criteria than if you were buying a property to live in. For example, rather than looking at your affordability, they will consider the potential rental yield when assessing how much you can borrow, and you’re likely to need a much larger deposit.

If you decide that a buy-to-let property is right for you and want help securing a mortgage, we’re here to help. Please contact us to discuss your needs and plans today.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Buy-to-let mortgages are not regulated by the Financial Conduct Authority.


Mathew Angell

Director & Financial Lifestyle Planner

Matt’s goal is to help you develop great financial habits and make sure your life is at the forefront of all plans that are put in place. His vision is to be your trusted partner through your life, there to help you through the difficult times and appreciate the good.