2018 has been a volatile year, in many ways, for the BTL market. People are leaving London for the north and landlords of buy-to-let properties are looking elsewhere to maximise profits in a tense and fraught market. But it’s not all bad news. For every area (such as London) that becomes difficult to trade in, other areas come to the fore. There are two cities attracting buy to let landlords and the great thing is, they’re both prestigious university cities. Buy to let’s tough time was revealed recently to have seen a 26% drop in lending last year. Most of the tail off of profitability was in the south
Liverpool
One of the largest and celebrated cities in the north, Liverpool has recently been revealed to have some of the most profitable postcodes as far as rental yields are concerned. It’s seen masses of investment from EU funding and partly centring on the city’s four academic institutions. The city has 70,000 students each year which is a large population. It’s hardly surprising that BTL yields remain strong – it’s one of the top universities in the country.
But much of the shift from south to north has come because of two things: firstly, the cost of living is lower in the north. Secondly, property prices have always been traditionally lower. This has not changed and arguably led to a mini-boom of northern property. Liverpool’s best-performing postcodes were L7 and L6 with average rental yields of 11.79% with an average rent of £1,162 for L7 and 11.52% with an average rent of £1,046 for L6.
Manchester
The value of properties in general in Manchester increased by around 34% between 2014 and 2017. In Salford, that increase was even higher at 38% in the same period. Nationally, property prices have increased by around 30% so the Manchester area is a great place for investment before prices get too high. Of course, buy to let landlords buy property to rent out. The same period produced an average rental yield across the city of 5.3% for Manchester and Salford with annual returns expected to be anything between 11% and 20%. All the while, the BTL stock increases by an average 4% each year.
The main reason is strong tenant demand in the general population, but for landlords of student tenants, a reason to invest in Manchester is the strong and prestigious university environment. There are four universities and a student population of 99,000. That’s a large population every year and a lot of required housing stock for them to live. With prices increasing and yields high, now is a great time to invest in student housing stock in Manchester.