The UK housing market is going from strength to strength in 2021. House prices are increasing at a rapid pace, and the most recent budget from the UK government caused a spike in demand of 80% according to the latest Hometrack UK House Price Index.
The same report emphasises that this good news is no flash in the pan by showing that year-on-year house price growth has been at more than 4% for three consecutive months, with no signs that this growth will come to a close anytime soon. In fact, the opposite is likely to be true based on current projections, and the long-term prospects for buy to let investors looking at adding UK property to their portfolios are strong.
So, given the strength of the market, where are the best areas to purchase your next buy to let property in 2021?
When looking for the best areas to invest in, we considered the following aspects to be the most important:
When considering those factors, two candidates stand out most strongly as the best areas for buy to let in 2021 and beyond. We will give a brief rundown of each, along with some of the reasons why they are so appealing, below.
Preston occupies a central location in the North West with good links to Manchester, Liverpool, Birmingham, London and many more UK cities. This strong location attracts businesses who can make the most of the large local workforce and the steady stream of graduates from the world-class University of Central Lancashire.
The good jobs on offer and hundreds of millions of pounds of investment flowing into the city are transforming Preston into a truly modern, international economic destination. The 10-year plan being undertaken by the City Council is creating thousands of jobs, upgrading the university, putting in place kilometres of new pedestrian and cycle ways, renovating the city centre – and giving the local housing market a major boost.
The Office for National Statistics shows that the North West of England is leading the way with property prices increasing by 6.6% annually. At the heart of that growth is Preston, a city named the best in the North West to live and work for two years in a row by Demos-PwC. Due to this, more and more young professionals are moving to Preston every year, and rents are growing twice as fast as the national average as a result according to recent Zoopla figures.
Preston is one of the UK’s best up and coming property hotspots and this is the perfect time to purchase a buy to let property in the city.
If Preston is the up and coming market in the North West, then Manchester is the established leader which still projects strong growth and a whole range of opportunities for buy to let investors.
Manchester’s housing market performed extremely well throughout 2020 despite the challenges of the last year. This was especially evident in the luxury city centre housing market which went from strength to strength and is arguably the UK’s leading investment option.
Over 2020, Hometrack recorded house price growth in Manchester of 5.9% - not only far above the national average, but also more than twice as high as London. The gap between the two cities also appears to be widening over time.
In large part this is to do with Manchester’s growing population. The City Council estimates that approximately 5,000 additional people are moving to the city centre every year and will continue to do so until at least 2025. The exceptional job opportunities on offer are a huge draw for young professionals, and the more they are drawn to Manchester the more house prices and rents in the city will increase.
The upcoming HS2 high speed rail line will be yet another draw for big businesses as journey times to Birmingham and London are slashed. This is turn will fuel rental growth even further, with estimates showing that rents are set to increase in the city by more than 12% by 2025.
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