Where Should I Buy Property For Investment? [UK 2023 Guide]

Where Should I Buy Property For Investment? [UK 2023 Guide]

If the idea of earning recurring income from property investment appeals to you, you must ask yourself, “where should I buy property for investment?”.

Not only is the location as crucial as any other factor, but it also affects all your other considerations for real estate investment. The property price, rent and rental yield, capital growth, etc., all depend on the area in which the property is located.

Even market conditions, like economic situations, trends, or government policies, will affect locations differently. Therefore, paying special attention to the location is advisable, considering that property investment is a long-term commitment.

While the best place to buy real estate in the world will vary slightly, depending on the investor’s preferences, most of them have the same factors in common. 

We’ve combined key considerations, and below, you’ll find the best cities to buy a rental property in the UK as well as why each of them is an excellent option to explore.

If you’d like to get bespoke insight from the UK’s property investment experts, then feel free to get in touch with our team.

Best Cities to Buy Rental Properties in the UK

Birmingham

Avg. property price: £257,440

Zoopla annual % rental change: 12.3%

JLL price growth (2023 – 27): 18%

Birmingham is already a popular option among the best cities to buy a rental property in the UK. Thanks to its massive regeneration and predicted continuous growth, the demand in Birmingham has soared in recent years.

Where Should I Buy Property For Investment

During the last decade alone, the city has seen its average rent rise by 30%, with more upward movement expected in the coming years. That’s because forecasts say the population will continue rising to 1.24 million by 2030.

With rental yields going as high as 6%, the property market in Birmingham is mainly made up of one and two-bedroom apartments. 

Birmingham has benefitted and continues to profit from its Big City Plan. It has helped to ensure major developmental projects. The recent 2022 Commonwealth Games hosted in Birmingham has further added to the development, per the Commonwealth Games Value Framework report. 

Aside from the massive £778 million dedicated to building sporting facilities, other city-centre projects worth over £25 million were carried out to expand pedestrian and public spaces for visitors during the event. These remain after the event and will do Birmingham a world of good.

Other factors expected to boost Birmingham’s performance include its demand for residential properties by mainly young professionals. While some result from the city’s 49% graduate retention rate, others come from London in search of more affordable housing.

Also, the High Speed 2 (HS2) is worth a mention. When completed, it is expected to revolutionise the featured cities, of which Birmingham is one. Transportation forms a major investment opportunity in Birmingham, with links like the Birmingham International Airport and Grand Central. 

While our Birmingham developments are now sold out, feel free to check out developments page for other opportunities which might fit your budget.

Leeds

Avg. property price: £253,334

Zoopla annual % rental change: 11.0%

JLL price growth (2023 – 27): 13.5%

Leeds is another popular real estate investment destination. The city has positioned itself as an excellent location for long-term property development. Leeds has a population of over 800,000, with a fast-growing economy competing with many top European cities.

Housing UK’s second-largest banking and finance sector, Leeds pulls in professionals from the sector while offering huge rental returns. If you’re looking for a place with long-term investment opportunities, the city is an excellent option because of its tenant demand.

Where Should I Buy Property For Investment

Leeds is one of the top destinations for people leaving London, especially after the pandemic. Its excellent rental demand has already seen an 11% year-over-year improvement, and JLL predicts a cumulative five-year price growth of 13.5%.

Zoopla ranks Leeds as one of the UK’s top places for rental growth, which looks promising for investors. Irwin Mitchell’s UK PowerHouse report also predicted that Leeds will be one of the top UK cities in 2023 as far as employment is concerned. 

Considering the city is already an attractive option for professionals searching for higher salaries, that promise looks like it will be delivered soon. It is also expected to create close to 20,000 new jobs to further cement its attractiveness for working professionals.

The next few years promise to be transforming for Leeds, with £7.3 billion in developmental projects already lined up. This is in addition to the £3.9 billion regeneration projects completed within the last decade. All these and more make Leeds one of the best cities to buy rental property in 2023 and beyond.

Burton

Avg. property price: £243,934

If you’re looking for a place to invest in property, Burton-Upon-Trent is an excellent choice. Located in Staffordshire, England, this town is known for its rich history and vibrant culture. From stunning architecture to beautiful parks, there’s something for everyone in Burton-Upon-Trent. In this section, we’ll explore 3 reasons why Burton-Upon-Trent is a great area for property investment.

  1. A Growing Population

Burton-Upon-Trent’s population has been steadily growing over the years, making it an attractive location for property investment. According to the latest census data, the town’s population is around 72,000. The area’s population growth is primarily due to the influx of new residents looking for job opportunities, high-quality schools, and a great quality of life. This growth bodes well for investors, as it means that there is an increasing demand for housing.

  1. Affordable Property Prices

One of the most attractive aspects of Burton-Upon-Trent is its affordable property prices. Compared to other areas in the UK, such as London or Manchester, the cost of living in Burton-Upon-Trent is significantly lower. This makes it an excellent location for first-time buyers, families, and property investors who are looking for a good return on investment.

  1. Strong Rental Market

Burton-Upon-Trent has a strong rental market, with high demand for rental properties. The town’s growing population, combined with the presence of large employers such as Molson Coors and Toyota, means that there is a high demand for rental properties. This makes it an excellent location for buy-to-let investors, as there is a good chance of finding reliable tenants.

Burton on trent

Above, you can see our in-progress, stunning investment property opportunity in Burton, Plough Maltings. We have limited properties available at this development, so get in touch today to learn more.

Manchester

Avg. property price: £284,622

Zoopla annual % rental change: 15.6%

JLL price growth (2023 – 27): 18%

Manchester is one of the best cities to buy rental property in the world, and any list of best investment locations would be incomplete without it. Banking on a rich history of capital growth that has seen over 20% value improvement in five years, this city isn’t slowing down soon.

According to Zoopla, for those with thoughts like “where should I buy property for investment,” Manchester should make the decision easy due to its 15.6% increase in the annual rental charge. 

It has improved better than any other city on this list year-over-year, and the expected price growth of 18% over five years is also the joint top position. These show that Manchester isn’t only a viable option but is primed to remain so for a long time.

Manchester is one of the top alternatives for London in the North due to employment and population growth. Among top European cities, it came in second in economic growth.

Property investment in Manchester

The average age in Manchester is 33, which isn’t the youngest average population you can find. However, it is profiting from an excellent graduate retention rate and more than 100,000 students.

Other factors contributing to the success of Manchester are developmental projects like MediaCityUK and Spinningfields. The Great North Rail is another project that has opened up opportunities for economic activities in the city. 

These massive projects will provide job opportunities and infrastructure to further cement the city’s place among the best places to invest.

At Global Residential, we have several highly-profitable developments in popular cities and Manchester isn’t left out. Check out our Manchester properties today.

Liverpool

Avg. property price: £209,781

Zoopla annual % rental change: 9.4%

JLL price growth (2023 – 27): 11.5%

Finding a combination of affordability and high yields is often elusive, but when you complete ROI calculations with Liverpool, you have a contender for the best place to buy real estate in the world. 

While its price and rental growth are the lowest on the list, they are still impressive, especially with key areas like the city centre, L1, and L7 turning in excellent numbers. Some areas have been known to deliver between 8-10% rental yield. 

The city’s property purchase prices are generally affordable, but the amenities and infrastructure on offer mean the rent can be great. The future looks good for Liverpool.

Invest in Liverpool

The city also has some outstanding projects propelling its value. Liverpool Waters, an ambitious £5 billion investment lasting for 30 years, promises to positively impact the local economy, deliver new amenities, provide tourism opportunities, and create new jobs for 17,000 individuals.

To take full advantage of what the Liverpool area offers, look at the Global Residential development in Liverpool. Better still, read our comprehensive Liverpool property investment guide

Newcastle

Avg. property price: £205,293

Zoopla annual % rental change: 10.5%

JLL cumulative price growth (2022 – 26): 13.5%

Newcastle is one of the most affordable cities on the list, despite being the most populous north-eastern city and having one of the biggest populations within the UK. Renowned for its high graduate retention rate as part of a growing population, Newcastle is a city worth exploring for real estate investment. 

This city is backed as one of the most favourable for startups. Therefore, it is able to attract entrepreneurs as well as professionals seeking job opportunities. This will favour property investors since it will boost demand and rental incomes.

Newcastle is doing pretty well as far as global brands are concerned. It houses major brands like Goldsmiths and Greggs, and Fenwick. When added to its strong digital foundation, it should appeal to young individuals, boosting economic activities in the coming years.

With a house price index that’s way lower than the UK average, it is a great chance to make impressive returns on properties in the city. However, Newcastle hasn’t been turning in great capital growth, but certain postcodes will still deliver outstanding yields.

Nottingham

Avg. property price: £241,382

Zoopla annual % rental change: 11.9%

JLL cumulative price growth (2022 – 26): 17.5%

Nottingham, while not one of the most popular, is doing pretty well and merits being on the list of the best cities to buy rental property. The city has grown significantly in recent years and is now a real estate hotspot. 

Unlike Newcastle, it thrives on high capital growth and is set to enjoy excellent yield for a long time. The houses are relatively affordable, especially around the city centre. If your target market consists of students, Nottingham is a location you should explore.

It is home to two universities, which contributes to its rising real estate demand, graduate retention, and improved creative sector. The Queen’s Medical Centre is also located in Nottingham, and the hospital welcomes medical students and 6,000 medical staff, who will no doubt need monthly rent accommodation within the city.

Invest in Nottingham

The Sunday Times ranked the city as one of the best places to live some years ago. Different data from Zoopla also reveals that the city has had very promising developments recently. For instance, it saw the highest increase of 10.7% in rental price between June 2021 and June 2022.

According to the same Zoopla, Nottingham’s average rental yield increased by 13% between March 2021 and 2022. Finally, Irwin Mitchell’s PowerHouse report ranked Nottingham 15th among the top cities experiencing the most economic growth. 

If you’re interested in other locations within the Midlands, Burton presents a wonderful opportunity for real estate investors looking to leverage a thriving rental market investment.

Glasgow

Avg. property price: £199,450

Zoopla annual % rental change: 14.1%

JLL cumulative price growth (2023 – 27): 13.5%

While Glasgow has been in the shadow of the Scottish capital for a while, the largest city in Scotland is finally delivering on the promises of its real estate market. Combining the city’s huge population, affordability of properties, and impressive rental yield, Glasgow is a city you don’t want to ignore.

Although it started slowly after the pandemic, JLL is predicting a cumulative price growth of 13.5% by 2027, in addition to the 14.1% rental growth year-over-year. Its economy is the largest in Scotland due to the firm foundation of industrialisation. 

If you have an interest in culture, Glasgow promises to satisfy your expectations. The city is renowned for its rich culture and related amenities. It was one of the cultural capitals of Europe in the 90s, and it has a wide range of art galleries and museums to cement its place.

The student population is also quite healthy and was recently supported with a £118 million campus added to the local university. This city has shown great potential, and investors could be reaping from a major price boost in the coming years.

Sheffield

Avg. property price: £222,823

Zoopla annual % rental change: 12.4%

JLL cumulative price growth (2022 – 26): 15%

Sheffield isn’t only already an excellent option, but it also has a massive potential to become even better in the future. It is currently delivering great numbers for investors and has continued to position itself as one of the best cities to buy rental property.

When you invest in Sheffield’s rental estate market, you can expect up to 6% rental yields, especially for properties around the city centre. It is expected that Sheffield’s property price will grow by 15% in the coming years, according to JLL

Invest in Sheffield

As the Covid-19 lockdown eased, Sheffield was one of the property markets that got back to speed, with 20% higher sales than was recorded by early 2021 per Zoopla.

In response to its imminent population rise, the city has pumped close to £500 million into developing the retail sector. Its ‘Heart of the City’ scheme also contains several other projects planned to develop the city.

Sheffield is a city filled with amenities and infrastructural developments. With cultural attractions and entertainment venues like music and movie houses, Sheffield has the proper foundation any city needs to become one of the best places to buy real estate in the world.

As an investor interested in the Sheffield property market, it’s essential to explore profitable options, and that’s what you get from our Sheffield development

Conclusion

These are the best cities to buy a rental property in the UK. Regional areas and cities all over the UK are witnessing significant growth in the price of properties, with many performing excellently. 

Not only has this provided a wider range for investors to select properties from, but it has also opened up more opportunities for even inexperienced buyers looking outside London.

However, your personal objectives remain crucial when deciding on the best place to buy real estate in the world for maximum return on investment (ROI). That is how to choose a location that suits you perfectly rather than one that works for someone else.

Remember to factor in your budget, job objectives, the city’s population, infrastructure, opportunities, etc. Check local laws and comments from those who’ve lived in the neighbourhoods before. 

If you need more help, you can also contact us at Global Residential for quick, detailed, and specific solutions.

FAQs About The Best Cities to Buy Rental Properties in the UK

What age is best to buy an investment property?

Many property investors buy their first house in their early 30s, but you can do so at any age as long as you’re within the legal age limits. Buying an investment property in your 30s gives you enough time to enjoy your investment’s benefits. It’s also essential to have around 30-40% of the budget and have a regular income to make regular payments. 

What is the 1% rule for investment property?

The 1% rule for investment property is an unofficial rule that helps you measure property price against its gross income. It states that the monthly income shouldn’t be less than 1% of the property price.

What is the 2% rule for investment property?

The 2 percent rule is used to determine how much the rental income of a property should be. It states that properties should generate at least 2% of their price on a monthly basis.

What type of property is most profitable? 

Commercial real estate properties and rentals are the most profitable because of their ability to generate consistent rental yields. 

Is 7% ROI good for real estate?

7% is a good ROI within an acceptable range for a real estate property, depending on other factors. Investors try to aim above 10%, but anything between 5-10% may be good enough.