Buy-to-let the best area in the UK for 2018
- Manchester is currently the best place to. Buy-to-let the best area in the UK for 2018. It ranked highest for rental yields (5.55 per cent) and rental price growth (5.76 per cent). Manchester took the top spot after a steady climb up LendInvest’s rankings throughout 2017.
- Colchester in Essex and Luton in Bedfordshire are in second and third position, with rental yields of over 3.78 per cent. Colchester has the strongest capital gains of all postcode areas over the last 12 months, while Luton remains a popular commuter town within easy reach of London.
- The Midlands is still the buy-to-let location to watch, though – Leicester rose an incredible 17 places to reach ninth place in December’s index, while Birmingham narrowly missed out on the top 10, coming in at 11th.
Where are the best buy-to-let areas?
The buy-to-let index is compiled using data from the Land Registry and Zoopla, and ranks English and Welsh postcodes based on the key metrics of rental yield, capital gains, rental price growth and transaction volume growth.
To calculate rental yield, the annual rent received on a property is taken as a percentage of its market price.
While commuter belt towns remain some of the best places to buy-to-let (Luton, Rochester, Southend-on-sea and Romford are all in the top 10), markets in the East of England have enjoyed prominent rental price growth, with Norwich joining Ipswich in the top 10 for the first time.
LendInvest has singled out the Midlands as the buy-to-let area to pay most attention to. Leicester is in at nine, and while just outside the list at 11, Birmingham has climbed the index due to a strong rental market driving an attractive yield.
Birmingham benefits from a huge professional service sector (creating a substantial tenant pool), the forthcoming HS2 rail line that will speed up train times into London, and significant regeneration in the city.
Hull deserves a special mention as the biggest climber of 2017 – after finding itself in 99th place at the end of 2016, Hull ascended to number six in the latest report.
According to the research, here are the 10 best buy-to-let areas 2018:
- Manchester
- Colchester
- Luton
- Rochester
- Southend-on-sea
- Hull
- Romford
- Norwich
- Leicester
- Ipswich
Best buy-to-let areas for capital gains
Along with a high annual rental yield, property investors will also want to make a profit on their property when they come to sell.
While Colchester leads in this report with capital gains of 11.96 per cent, it’s London’s boroughs and towns that do particularly well. Southall, Harrow, and Ilford all have capital gains of 11.09, 9.89, and 8.82 per cent, respectively.
Top 10 areas for capital gains in the UK
| Area | Capital gains |
|---|---|
| Colchester | 11.96% |
| Southall | 11.09% |
| Hemel Hempstead | 10.27% |
| Slough | 10.19% |
| Harrow | 9.89% |
| Ipswich | 9.44% |
| Luton | 9.16% |
| Southend-on-sea | 9.12% |
| Ilford | 8.82% |
| Hull | 8.46% |
Best buy-to-let areas for rental price growth
Leicester and Birmingham perform strongly for the Midlands here, coming in at the second and eighth best buy-to-let areas for rental price growth respectively.
But Wales also gets a look in on this table, with Cardiff and Swansea great choices for rental price growth too.
Top 10 areas for rental price increase in the UK
| Area | Rental price increase |
|---|---|
| Manchester | 5.76% |
| Leicester | 5.30% |
| Luton | 5.26% |
| Rochester | 5.12% |
| Cardiff | 5.00% |
| Brighton | 4.61% |
| Swansea | 4.47% |
| Birmingham | 4.29% |
| Newcastle Upon Tyne | 4.18% |
| Truro | 4.13% |