Aldermore’s Buy to Let City Tracker, has named Bristol, Oxford and Cambridge as the best city /urban locations for landlords to invest in for 2022. 

The Tracker analyses and assesses five key indicators that impact buy to let desirability: average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the population in the rental market.

Aldermore’s Buy to Let City Tracker’s Top 10 cities: 

*Scores comprise 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, proportion of vacant properties in the city and size of the private rental market.

Bristol offers best long-term investment for buy to let investors 

Bristol has taken the top spot due to the long-term growth of property values in the area, and it has the lowest number of long-term property vacancies out of all 50 locations (at only 0.6% this year), with more than a quarter (27%) of residents estimated to be privately renting.

Since 2010 property prices in Bristol have grown by 5.1% on average per year, second only to Luton, (which is included as a city in the Aldermore Tracker even though it dropped its second attempt at gaining city status last year). 

The short-term picture in Bristol, as with many of the cities ranked high in the Tracker, is more mixed. On one hand the average rent per room is £514 per month, up 12% on last year. This makes Bristol one of only nine cities in the UK to command a rental value of over £500 per month, and one of only two cities outside of the south and east of England, with the other being Edinburgh (13^th). However, any investor will need a large amount of money to invest. With the average property price in Bristol at £348,543, the likely yield will only be 4.6% upon purchase, well below the 5.9% average across the 50 cities.

Luton enters the top 10 for the first time 

This year saw Luton enter the top 10 for the first time, rising from 12^th to 5^th place in the rankings due to the relative improvement in long-term house prices. With 5.2% year-on-year house price growth over the last decade, Luton now has the strongest property price growth of any of the 50 cities. This makes investing here an  attractive long-term prospect for a buy to let investor.

London continues to fall 

London has continued to slip down the leader board, now in 6^th place. However, the capital continues to be an attractive investment due to the long-term outlook for property prices, market potential, and relatively high proportion of private renters, according to Aldermore.

Scotland showing signs of a good investment 

Scotland’s competitive rental market remains a good investment for landlords, says the report, adding that both Edinburgh and Glasgow are in the Tracker’s top 20. Edinburgh also benefits from a high percentage of private renters (86%) and a small number of vacant properties (2.8%).

Wales continues to struggle 

Buy to let properties in Wales continue to be less attractive than other locations due to a drop in rental prices and an increase of property vacancies, creating greater supply and therefore a challenging market for landlords. While Swansea provides some longer-term value compared with other cities in Wales, due to a 3.0% growth in property prices, Newport and Cardiff both saw house prices drop in the past year. 

Jon Cooper, head of mortgage distribution at Aldermore, comments: “The City Tracker shows the UK housing market is rich with diverse and unique conditions across the regions that are ripe for investment opportunities. As we move towards a post-Covid environment, we hope this analysis gives food for thought to many landlords on where to look for those hidden gems and returns that meet their business strategies. 

“Private landlords are a central part of the housing market, supporting over 4.5m households in the UK and, as we emerge from the pandemic, landlords will need to meet the emerging demand for choice and variety from renters. With the economy opening up and EPC rating changes coming in 2025, now is a great time for landlords to talk with their broker to review where they want to take their portfolios in the future.”