3 reasons why Manchester is the UK's buy-to-let hotspot

Contributed by Select Property Group, 01 July, 2015

From rising rents to substantial government investment, what makes the north-west city the best place in the UK for property investment returns?

It’s official – Manchester is currently the best place in the UK to make a buy-to-let property investment.

The north-west city recently came out on top of HSBC’s list of buy-to-let hotspots by yield, with gross annual returns in 2015 of 7.98%, as more investors are heading north and away from the traditional investment go-to hub of London.

So what’s driving the success of the city’s private rented sector (PRS) and why should expats looking to invest back in the UK add a Manchester property to their portfolio?

Below we’ve outlined three key factors:

  1. Rising rents

There has been a strong, growing demand for rental property in Manchester in recent years, which has had a significant impact on monthly rates (and yields for investors). Annual rent growth in the city is now at 4%, as the yearly rent has reached £8,628.

Across the country, the preference for and popularity of rental accommodation is partly being driven by the rise of Generation Y, millennial that have a strong focus on their career and thus need the flexibility to easily be able to move as work commitments dictate.

Manchester has a high graduate retention rate, and also has a thriving digital, online and new media business community, meaning that the area is dense with young professionals that require quality rental accommodation.

  1. Minimal property price rises

Whilst rental rates have been quick to grow, comparatively property prices have accelerated a little slower. The average price in Manchester is currently £108,870, a slight increase over last year’s average of £104,244.

In the north-west region as a whole, the average price is £145,295, 61% cheaper than the average found in Greater London.

For investors, this lower entry price in Manchester could be the solution to the unprofitable buy-to-let marketplace in the capital. Furthermore, lower prices and growing rental returns ultimately make for a more profitable investment.

  1. A growing economy

Manchester is already the largest economic area outside of London, with around 80 of the FTSE 100 companies having offices in the city, including Google, Deloitte and Siemens.

And the economic climate in the region is set to grow ever more positive in the coming years. Manchester is central to the UK government’s Northern Powerhouse plans, the initiative to build a stronger economic environment across the north of England. The city is set to benefit from £7 billion worth of investment under the proposals.

Already plans have been announced to expand Manchester Airport to the tune of £1 billion. Coupled with the HS2 rail project, Manchester will become even better connected to London and hundreds of destinations across the globe.

As visitor and employment numbers increase, so will the need for rental property. In particular, the influx of new business will drive the numbers of tenant sub-groups such as the city centre tenant to Manchester, with its preference for luxury, short-term apartments with hotel-like amenities.

Tags: business | professionals | investment | environment |

 

 





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