As a result of the increase in house prices and rental yields in 2021, the year was a record. A continuation of this growth is expected in 2022 as a result of the ongoing recovery from the pandemic. As part of this blog, we take a closer look at the city locations forecast to yield high rental yields in the coming year.
It is important to choose the right location when investing in real estate, with 34% of landlords planning to purchase at least one more property in the next year. Zoopla reports that the private rented sector is expected to increase by 4.5% nationally in 2022 as a result of an increase in demand for city centre living following the recovery from the pandemic.
Investing in student cities Nottingham, Manchester, and Newcastle will yield the best rental returns in 2022, according to an analysis by property investment company, Track Capital:
Nottingham
- Large student population from two universities: University of Nottingham and Nottingham Trent
- Home to the largest teaching hospital in the UK, the Queen’s Medical Centre
- HQ to major companies, including Boots, EON and Experian
- Tram network with lines north and south of the city
Manchester
- One of the largest university cities in the UK with 5 universities
- The largest economic area outside of London
- Fast growing centre for tech and media sectors (BBC MediaCity in Salford Quays)
- Property prices up to 40% cheaper than in London
Newcastle
- Large student population from two universities
- Designated UK Science City
- Emerging hub for creative and tech sectors
- Offshore & Marine Enterprise Zone
- House prices in the North East are 47% less than the UK average
Here are three things to consider when selecting your next investment property:
Does the opportunity fit with your investment strategy?
Are you interested in adding a student rental or a house in multiple occupancy to your portfolio over the long term? Though student lets in the cities mentioned above may offer the highest yields, consider if they are a good fit for your preferred investment style.
Have you done your research and forecast expected returns?
Are you considering investing in one of the top cities listed above? Make sure that you conduct further research in areas that are aligned with your strategy. Calculate projected rental income and capital growth using our free buy-to-let calculator. Try contacting a few local letting agents to determine whether the areas you are considering align with tenant demand and your projected returns.
Are there any tax implications and do you need specialist advice?
Have you changed your short- or long-term goals or switched strategies? It may be beneficial to seek tax advice in order to fully understand the tax implications and identify opportunities for tax savings. For example, if you plan to purchase multiple properties in the same transaction (i.e. 4 flats in a block), you may qualify for the Multiple Dwellings Relief.
