Despite the recent tax and regulatory changes, buy-to-let continues to look an attractive income investment at a time of low-interest rates and volatile stock markets, but which city ranks best for buy-to-let investment?
Aldermore’s new Buy-to-Let City Tracker, which analyses 25 cities across the UK to understand the best places for landlords to invest in, has found that Oxford narrowly ranks number one, ahead of Manchester.
The Buy-to-Let City Tracker comprises of five core indicators: average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 years, the proportion of vacant properties in the city and size of the private rental market.
The index uses a series of secondary data sources including the ONS, Census and other official housing statistics.
Oxford, which scored well on four out of five metrics, has one of the largest private sector markets of all 25 cities, with 28% of all residents in the city renting privately.
Oxford also offers above average rental ability, at an average of £596 per room per month, a low level of vacant properties, and security in investment with property prices having increased yearly by on average 4.8% the past decade.
The only sore spot is that short-term return through yield is one of the lowest on the list.
Seven of the top ten cities for landlords are in southern England. Both Bristol and Oxford fare particularly well for long term returns, with an average 4.8% increase in property prices. Brighton scores well for rent, yielding an average of £507 per room. The city also has one of the largest market sizes across the UK, with a staggering 28% of inhabitants privately renting.
Damian Thompson, director of mortgages at Aldermore, said: “Aldermore’s Buy to Let City Tracker shows there are still great short and long-term investment opportunities for landlords.
“The number of people renting in the UK has been rapidly growing, up 1.7 million in ten years, so private landlords are an increasingly central part of the housing market as supporting a robust and strong Private Rented Sector becomes more essential.
“The UK housing market has never been a singular thing, instead made up of multiple smaller markets with their own unique conditions and challenges. There have been numerous regulatory changes recently and persistent economic uncertainty but this affects every region differently.
“Going forward, landlords will need continual backing and advice from lenders and the wider industry so they can provide choice, diversity of tenure and quality properties for renters.”