THE UK'S HOTSPOTS: THE UK'S TOP BUY-TO-LET HOTSPOTS TO WATCH IN 2021 - FJP Investment
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THE UK’S HOTSPOTS: THE UK’S TOP BUY-TO-LET HOTSPOTS TO WATCH IN 2021
SHIFT IN FOCUS AMONG BUYERS
AND RENTERS
Demand for residential real estate across the UK evidently remains high, spanning
first-time buyers and those already on the property ladder through to BTL landlords
and investors.
However, there are several interesting trends at play The same trend can be seen in the rental sector.
under the surface that warrant attention. Prices are According to Savills, more than three quarters
growing, and transactions are taking place at an (79%) of agents have reported there being more
increased rate; yet, evidence suggests that buyers demand than ever for workspaces in the home. To
and renters are now seeking properties in different complement this, top-speed broadband is now even
areas and with different qualities. higher up the priority list for tenants. Properties
with more bedrooms – which can be used as offices
The coronavirus pandemic and the “new normal” – are therefore seeing more enquiries.
it has created are affecting people’s relationships
with their homes. In essence, fewer people are The second notable trend is that both buyers and
commuting to work and socialising has been renters are considering moving further afield
THE UK’S TOP BUY-TO-LET HOTSPOTS made more difficult; resulting in more time being
spent in the home both inside and outside of
when on the hunt for a property.
TO WATCH IN 2021 working hours.
This simple fact is having a profound impact on
almost all industry sectors and financial markets.
After years of Brexit uncertainty and political upheaval, 2020 was expected to It marks a notable shift in consumer and business
be a year of relative calm. Boris Johnson entered the year having just won an behaviour, which is having a ripple effect into
overwhelming majority in parliament, while the UK officially left the European all parts of people’s day-to-day lives. For BTL
Union (EU) at the end of January. investors in particular there are two notable
developments as a result of this shift.
COVID-19 suddenly disrupted this projection. The Over recent months, both house prices and
rapid spread of the virus has disrupted financial transactional activity have been rising sharply. Firstly, homebuyers and renters are looking for
markets around the world. In the property sector, Halifax’s September house price index showed more space from their property. More confined
however, the fallout has not been as damaging that, even in the midst of the ongoing pandemic, to their homes – including working remotely on
as some commentators predicted. In fact, house prices had increased by over 7% year-on- a part-time or full-time basis – there has been
demand among homebuyers has increased, while year. Furthermore, a recent survey by the Royal a marked rise in the number of people seeking
investors continue to look towards bricks and Institute of Charted Surveyors revealed that the properties with additional space, or a spare
mortar with great interest. UK is now experiencing an 18-year-high in the bedroom, that can be used as a home office.
rate of house price growth. Similarly, people are also eager for properties
The UK’s implementation of the stamp duty with outdoor space.
land tax (SDLT) holiday has evidently played
a significant role in sparking life back into the One estate agent, Dexters, surveyed buyers to
property market after months of lying dormant establish what their “non-negotiable” demands
during the lockdown period between March were when the property market reopened in July.
and July. The holiday means buyers are exempt The top result was a dedicated extra room for home
from paying the tax on the first £500,000 on all working, followed by outside space in the form
properties in England and Northern Ireland. of garden, roof terrace, or balcony. The company
This exemption also applies to buy-to-let (BTL) added that these preferences marked a major shift
purchases. from previous surveys, when “vanity factors” such
as external appearance, size of kitchen and number
of bedrooms had ranked higher.
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RECOVERING LOST CONFIDENCE LEEDS
Data from the Office of National Statistics Statistics released by estate agent Hamptons in CIA Landlord recently claimed that Leeds
shows that half of all employed people in September showed that demand from people looking was the ‘most profitable city to become a
to rent in city locations across Britain is down 23%. Between March 2019 and
the UK were working from home during the Conversely, commuter belts and less expensive
landlord in the north of England’. March 2020, Leeds recorded
height of the first lockdown earlier in 2020. suburbs are seeing an increase in interest. average house price growth of
Prior to the pandemic, fewer than 30% of Although not offering the highest rental yields, the
people had worked from home at all. It begs the question, then, which regions are now
combination of low average property values and a
bustling student population means this Yorkshire
3.1%
among the most popular for buyers and renters?
city is primed and ready to offer considerable long-
This change has been positively received among Looking ahead to 2021, here are some key BTL
term gains for property investors over the coming
many professionals – in turn, it has increased hotspots for investors to consider based on tenant
12 months.
demand for remote working to remain the demand, rental yields, and house price growth.
norm in the long-term. A recent poll of 1,000 UK
While the student population provides a healthy
workers found that almost a third would rather
stream of prospective tenants, Leeds’ status as a
quit their job than forfeit the option to work from
‘brain gain’ city – shared with only Manchester
home on a permanent basis.
and London – means that more of these students
remain in the city after graduation rather than
Free from having to commute to the office
moving away. One consequence is that the city
every day, the remote working revolution has
hosts the nation’s largest financial services
given both buyers and renters greater freedom
sector outside of the capital, potentially attracting
to consider a much broader range of areas
investment from companies eager to move out
when searching for a property. It is a trend
of their expensive London offices following
BTL investors must monitor closely as it will
COVID-19.
dictate which regions, cities or town are likely to
experience the highest level of demand.
Between March 2019 and March 2020, Leeds
recorded a house price growth of 3.1%, which
outstripped the national average of 1.8%. In terms
of rental prices, Rightmove stated in mid-2020 that
the average monthly rent in Yorkshire was £625
per calendar month, up 3% year-on-year.
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LIVERPOOL MANCHESTER AND SALFORD
Liverpool is well established as a popular The average Liverpool rental yield is around 5%, Mirroring the desirability of Liverpool and Manchester boasts a higher average house price
destination for BTL investors, regularly while the city’s property market also generates the North West as a BTL hub in general, (£193,681), but equally delivers an improved
an average rental price growth of 2.65%. Savills average rental income (£1,141).
emerging at the top of numerous rankings predicted at the start of 2020 that house prices in
the neighbouring areas of Manchester
of UK cities in terms of potential BTL the North West would rise by 24% in the next five and Salford are in high demand among
rental yields. years, far above the UK average of 15.3%. property buyers and renters alike.
With six universities and colleges – and Manchester’s vast student population – the
5%
being a key part of the government’s Northern The average Liverpool University of Manchester is the country’s largest
Powerhouse initiative – more people have been university by student numbers – coupled with
rent yield is around
calling Liverpool home over recent years. The the establishment of MediaCityUK in Salford has
Office for National Statistics states there was a seen many younger people relocate to the area.
181% rise in the city’s population between 2002 Moreover, the data of landlords’ expected returns
and 2015. marks it out as a leading BTL destination.
For BTL investors, there are multiple Referring again to a CIA Landlord study, Salford
developments to choose from. Five entire was found to have an average house price of
neighbourhoods are soon to be completed as part £173,311, meaning properties are affordable in
of the Liverpool Waters development, and the the area. Further, as average rent prices are in
Wirral Waters plan will bring both residential and the region of £1,052 per month, it proves to be
commercial developments alongside 25 miles of extremely profitable too.
the River Mersey.
These developments are being matched with
investment into the region’s infrastructure. High-
speed rail connections between Leeds, Manchester
and Liverpool are due to be finished within half
a decade, likely increasing the average property
value in these cities upon completion.
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CARDIFF THE THOUGHTS OF FJP
The capital city of Wales seems primed “COVID-19 has shown us all just how people want properties with more space,
for impressive property price growth over tumultuous financial markets can be, but and that they are less wedded to urban
the next decade. also just how resilient real estate is during areas. The regions highlighted above
uncertain times, as demonstrated by all share the qualities of having popular
With a metropolitan area population of over 1.1
million citizens, predicted to grow an additional
many of the statistics presented above. cities for culture and business, but also
20% by 2035, rental demand in Cardiff is likely to idyllic surrounding areas and trendy
surge in the coming years. “The task for all investors is to suburbs, giving people that much sought-
understand how the property market after work-life balance.
Cardiff hosts a wide range of developments is responding the unique challenges
for BTL investors. Cardiff Bay boasts Europe’s presented by the pandemic. Moreover, “As the pandemic shows no signs of
largest waterfront development, and the soon-
to-be completed £500 million-plus coastal
they must assess how the demands of abating, it will be interesting to monitor
developments look set to push surrounding prices buyers and renters has shifted in 2020. these trends further and establish how
up even further. the world of property investment will be
“As has been well established in this affected by the lasting changed brought
Reports often cite Cardiff as an ideal BTL report, BTL investors must not only about by COVID-19.”
investment locale; especially given the 240% rise in carefully consider both where they buy
the city’s house prices over the past two decades.
According to mortgage broker Private Finance,
their next property, but also the qualities
Cardiff delivers average rental yields of 6%. it possesses. Indeed, as we enter the so-
called new normal, it is safe to predict that
people’s social and professional habits will Jamie Johnson
be greatly different from how they were Founder and CEO
Average house prices in Cardiff
for a long time to come – and the rental FJP Investment
have increased by 240% in the
past two decades
and sales markets will reflect that.
“The overarching trend seems to be that
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Prospect House
2 Athenaeum Rd
Whetstone
London
N20 9AE
United Kingdom
Adelphi Mill
Grimshaw Lane
Bollington
Cheshire
SK10 5JB
United Kingdom
Phone +44 (0) 207 183 0343
Email info@fjpinvestment.co.uk
www.fjpinvestment.co.uk
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