Manchester has been identified as the top city for landlords looking to invest, with Glasgow, Coventry, Wigan, and Bristol also ranking among the best locations. These cities offer strong potential for buy-to-let investors due to a combination of factors that influence rental demand and profitability.

A recent analysis by buy-to-let lender Aldermore examined five key indicators that determine the attractiveness of a city for property investment. These include the average total rent collected by landlords, the potential for short-term returns through rental yield, and long-term profitability based on house price growth over the past decade.

Another crucial factor considered was the level of housing supply in each city. The study assessed the proportion of vacant properties within the total housing stock, as lower vacancy rates indicate stronger demand for rental homes.

Additionally, the research took into account the percentage of the city’s population that relies on the private rental sector. Cities with a higher proportion of renters tend to offer more stable investment opportunities for landlords.

Manchester’s position at the top of the rankings highlights its strong rental market and consistent property price growth, making it a highly attractive option for investors. Other cities in the top five also demonstrate a strong balance of affordability, rental demand, and long-term capital appreciation.

As demand for rental properties remains high across the UK, these insights provide valuable guidance for landlords seeking locations that offer both immediate rental income and potential for future growth.

Aldermore’s Buy to Let City Tracker Top 10 cities:

Manchester stands out as the top city for landlords, boasting the highest long-term property price growth among all UK cities. With an annual appreciation rate of 6.5%, investors not only benefit from rental income but also from the increasing value of their properties over time. This combination of strong price growth and a thriving rental market makes Manchester an attractive option for buy-to-let investors.

The city’s rental market remains robust, with 32% of residents being private renters—significantly higher than the national average of 23%. This high demand for rental properties ensures a steady stream of tenants, reducing the risk of long-term vacancies and offering landlords a more secure investment.

One of the biggest surprises in this year’s rankings is Wigan, which has soared to 4th place from its previous position at 25th. The key factor behind this dramatic rise is its exceptionally low proportion of vacant properties—just 0.6%. This tight housing market, combined with a strong annual property price growth of 5.4% over the past decade, has made Wigan a more attractive investment destination, even if its total returns are lower than some larger cities.

London, on the other hand, has seen a significant drop in the rankings, falling from 5th place in 2023 to 32nd place in 2024. While average rents in the capital remain among the highest in the country at £800 per room, the city’s relatively low short-term rental yield of 4% and weaker house price growth of 3% have made it less appealing for landlords. These factors have contributed to London’s declining attractiveness as a buy-to-let investment location.

The latest Buy-to-Let City Index highlights that the rental market across the UK remains a solid investment for landlords. Average rent per room has risen by 18% compared to the previous year, increasing from £455 in 2023 to £518 in 2024. This surge in rental prices has driven rental yields up from 5.5% to 6.9%, providing landlords with a strong return on investment.

For investors looking for stable and profitable opportunities, cities like Manchester, Glasgow, Coventry, Wigan, and Bristol continue to present strong prospects. With rising rental demand and steady property price appreciation, these locations remain at the forefront of the UK’s buy-to-let market.

Aldermore’s latest research reveals a growing sense of optimism among landlords, with fewer considering leaving the sector compared to last year. In 2023, nearly half (48%) of landlords were contemplating an exit, whereas today, that figure has dropped to just 31%. This shift in sentiment is reinforced by property values, with almost three out of five (58%) landlords reporting an increase in their property’s worth over the past twelve months.

Despite these positive trends, Wales continues to rank as one of the least attractive regions for property investment. Newport and Swansea remain at the bottom of the table, placing 49th and 50th, respectively. However, there are signs of improvement, as Swansea’s average rental yield has increased from 4.7% in 2023 to 6.3% in 2024. Additionally, annual property price growth in the city has seen a modest rise from 4.1% in 2023 to 4.3% in 2024, suggesting some progress in the Welsh rental market.

Jon Cooper, director of mortgages at Aldermore, notes that this year’s rankings reflect significant shifts in the rental sector. He emphasises the importance of landlords staying proactive in managing their portfolios, ensuring they maximise their investments. Rental income has remained steady, and demand continues to be strong, with an average of ten applicants competing for each available property.

However, landlords are facing mounting regulatory pressures alongside evolving tenant expectations. These challenges require them to adapt quickly, not only to maintain the profitability of their investments but also to provide high-quality rental accommodation that meets the needs of a diverse range of tenants.

While the sector presents its difficulties, it also offers new opportunities. Cooper highlights that the current market conditions give landlords a chance to reassess their strategies. By working closely with brokers and staying informed about market trends, investors can position themselves for long-term success.

For those willing to adapt, the changing landscape of the UK’s rental market presents potential for strong returns. The key lies in strategic investment choices, thorough financial planning, and a keen understanding of market dynamics.

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