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 Oxford, closely followed by Manchester, to be the best locations.
The Tracker was determined by analysing and assessing five key indicators that impact desirability; average total rent, the best short-term returns through yield, long-term return through house price growth over the past ten years, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the city population that rental property.
Aldermore stated: “Oxford’s rapid growth and investment has narrowly won the city top spot in our City Tracker, with good scores on four out of five metrics. Oxford's main selling point for private landlords is that it has one of the largest private sector markets of all 25 cities, with 28% of all residents in the city renting privately. This is combined with above average rental ability (on average £596 per room per month), a low level of vacant properties, and security in investment with property prices having increased by 4.8% per year on average over the past decade. The only sore spot is that short term returns through yields is one of the lowest on the list.”
London still in high demand
London ranks in fourth place behind second place Manchester and third place Edinburgh. In some cases, London does outperform Oxford. For example, property prices have increased faster at 5.5% a year on average over the past decade. However, despite strong rental prices (at £630 per room per month); very high property prices in London (£617,238 on average) means annual rental yields are very low for a new buy-to-let purchase at only 3.0%.
Southern England dominates for long-term investment
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 28% of locals privately renting.