Aldermore, a prominent buy-to-let lender, has recently designated Bristol as the most promising city for landlords seeking investment opportunities in 2024. This assessment is part of a comprehensive analysis that takes into account five crucial indicators influencing the desirability of buy-to-let properties. The factors considered include the average total rent, short-term returns measured by yield, long-term returns derived from house price growth over the past decade, the lowest proportion of vacancies in relation to total housing stock, and the percentage of the city’s population actively participating in the rental market.
Among the key elements assessed, Bristol emerges as the frontrunner, showcasing a blend of factors that make it particularly appealing for landlords. The city not only demonstrates a competitive average total rent but also boasts promising short-term returns, as reflected in its yield. Additionally, Bristol exhibits commendable long-term potential, with substantial house price growth over the last decade. This combination positions the city as an attractive prospect for landlords seeking stability and growth in their investments.
While Bristol takes the lead, the remaining cities in the top five—Manchester, Coventry, Brighton, and London—also exhibit noteworthy characteristics that contribute to their desirability for landlords. The comprehensive analysis by Aldermore provides a nuanced understanding of the varied factors impacting buy-to-let investments, offering valuable insights for landlords navigating the dynamic landscape of the property market in 2024.
Bristol secured the top position in the rankings this year, thanks to its promising rental prospects, a substantial population of long-term private renters, and a low vacancy rate. The city stands out with an annual return growth of 6.6%, making it an attractive choice for landlords seeking sustained returns. However, potential investors should note that Bristol is geared towards those with a long-term investment horizon, as short-term yields are at 4.4%.
Manchester, while slipping to the second position, remains an appealing option for landlords due to its lower average rent per room (£461) and a vacancy rate of 0.9%, below the national average of 1.2%. Despite the slight dip, Manchester offers an enticing long-term return of 6.1%, coupled with a robust tenant market.
Southern English cities such as Brighton, London, and Reading also present positive prospects for landlords. These areas boast higher average rents per room and a strong demand from renters, contributing to their appeal for property investors looking for potential growth and stability in the rental market.
For the first time in the five-year history of Aldermore’s ratings, a Scottish city, Glasgow, has broken into the top 10, securing the eighth position. Glasgow offers landlords competitive rental returns at £471 and boasts one of the highest short-term returns, standing at 8.6%, surpassing the average of 5.5%.
The ratings highlight a steady increase in the average rent per room over the years. In 2021, the average room rental was £423, which rose to £432 in 2022 and further increased to £455 this year. Aldermore’s research indicates that 9 out of 10 landlords raised their rents in the past 12 months. The current rental market scenario also revealed that just under three-quarters of landlords experienced a rise in tenant demand over the last year.
At the bottom of the rankings, Newport and Swansea retained their positions in 49th and 50th place, showcasing a consistent standing in the ratings.
Properties in Newport offer the lowest rent return at £292 per room, compared to the average of £455; however, long-term yields show promise at 4.9%. Meanwhile, Cardiff has ascended several places to secure the 40th spot, benefitting from a substantial proportion of private renters (25%, compared to the average of 22%) and a low number of vacant properties.
Jon Cooper, head of mortgages at Aldermore, notes, “Landlords have navigated an unprecedented year with rising interest rates and inflation, coupled with changes in property legislation. Despite this, the demand for rental accommodation has reached unprecedented levels.
“Unlike previous years where a few regions dominated, this year sees a broader range of areas in the top 10. Each region comprises multiple smaller markets with unique conditions and challenges.
“Landlords are diligently conducting research, collaborating with brokers to review their portfolios and ensure optimal value for their properties, regardless of the obstacles they may encounter.”
