Where are the best buy-to-let property investments?

By Georgia Galloway | Thursday 9th May | 4 minute read

Over half of UK landlords actively seek to expand their property investment portfolios in 2024. 

As the buy-to-let property market evolves, many UK landlords show increased interest in expanding their portfolios in 2024. Our latest poll reveals that 51% of landlords plan to invest further in property this year, up from 45% in 2023. Despite rising costs and economic uncertainties, the growing rental demand and potential for capital growth continue to drive investment. This trend highlights the need for landlords to carefully evaluate property types and locations to maximise returns, balancing immediate rental yields with long-term capital appreciation.

Where are the best Buy-to-Let property investments?

This year, landlords' intentions to invest in property have increased compared to 2023, as 51% said they think they'll buy an investment property in 2024 vs 45% the year before.

But where in the UK are the best BTL property investments?

How many landlords will buy an investment property in 2024?

Our 2024 Landlord poll found that 51% of landlords are looking to invest further in property in 2024. As a comparison, 29% are not looking to invest and 20% haven't decided if they'll invest in 2024.

The number of landlords looking to invest has increased compared to our 2023 Landlords poll, which found that only 45% were looking to invest, 30% said ‘No,’ and 25% were ‘Undecided’. 

Is Buy-to-Let property investment worthwhile?

Multiple factors will influence whether a landlord feels BTL property investment is worthwhile.

Rental demand is soaring currently, which means landlords can increase rents. As the property's value increases over time, there will be capital growth. These advantages make property investment a promising venture for those seeking a first-time investment or expanding their portfolio. Our survey found that 71% experienced increased demand for rental properties, and 61% experienced an increase in their rental yields, suggesting promising returns for those looking to invest. 

But landlords are also facing increased costs with many looking to leave the rental sector altogether. Inflation, cost of living, borrowing costs and mortgage interest rates are all sources of concern for landlords. And 56% of landlords are concerned about property investment opportunities.


What are the types of property investment? 

Most landlords own more than one rental property. 74% of landlords own 2 or more properties they actively rent out. 28% of landlords own 2 rental properties, whilst 26% own 1.

Residential property: The demand and rental yield for BTL properties have increased. In 2023, 71% of landlords experienced an Increase (46%) or a Significant Increase (25%) in demand for their rental properties, and 61% of landlords experienced either an Increase (43%) or a Significant Increase (18%) in rental yields. Residential property investment is usually bought with the intention of generating rental income or achieving capital appreciation.

But there are other types of property landlords may look to invest in:

Commercial property: Commercial property investment involves investing in properties used for business purposes, such as offices, stores, warehouses, and factories. This provides a consistent income stream from lease payments and potential capital appreciation. A bridging loan for property development can facilitate the acquisition or renovation of commercial property by giving short-term capital.

Holiday lets: These are properties purchased to rent out to 'staycationers' for short breaks in the UK. The Peak District is one of the best locations to consider when looking to purchase a holiday let. With over 13 million visitors every year and average property prices at £288,497, the average rental yield in the Peak District is 16.89%. 

House in Multiple Occupation (HMO): This strategy involves renting out individual rooms within a property to multiple tenants. According to the National Residential Landlords Association, this property investment can offer higher rental yields, on average around 6%.

Property flipping: Investors buy properties below market value, renovate them to increase their worth, and then sell them for a profit. However, this form of investment requires extensive knowledge of the market, renovation skills, and a good understanding of buyer preferences. Finbris's Property Flipping report found that 1.57% of flips resulted in profits ranging from £10K to £25K. 62% of flips yielded profits within the £10K to £75K range.


Regions with the best rental yield

The 51% of landlords that are looking to invest in property this year might consider a recent analysis from Zoopla that identified the best regions for rental yield in the UK when determining where their next property investment should be:

Region

Average gross rental yield

Average monthly rent

Average price of a buy-to-let property

North East

7.65%

£695

£109,072

Scotland

7.48%

£793

£127,284

North West

6.66%

£848

£152,719

Wales

6.43%

£881

£164,388

Yorkshire and the Humber

6.38%

£799

£150,261

Northern Ireland

6.11%

£735

£144,423

West Midlands

5.95%

£905

£182,531

East Midlands

5.84%

£860

£176,730

South West

5.37%

£1,077

£240,472

South East

5.34%

£1,325

£297,971

East of England

5.28%

£1,163

£64,539

London

4.93%

£2,121

£516,295

Source: Zoopla Rental Index, March 2024


Where are the best locations to buy investment property? 

The following 10 cities have the best average gross rental yield when deciding where to invest.

  1. Sunderland - 8.96% average gross rental yield
  2. Aberdeen - 8.03%
  3. Burnley - 8.00%
  4. Dundee - 7.96
  5. Glasgow - 7.95%
  6. Middlesborough - 7.92%
  7. Blackburn - 7.52%
  8. Hull - 7.45%
  9. Newcastle - 7.45%
  10. Liverpool - 7.44%

Each city with the highest gross rental yield is either in the North of England or Scotland due to their lower property prices than southern cities. These cities are better investments in the short term, but more expensive investments in the south might be better in the long term due to stronger capital appreciation.


Where is tenant demand for rental properties increasing the most?

Average rental yield is a key factor in determining where the right buy-to-let property location. But demand is also equally important. 

Our landlord survey has discovered how many landlords in each location experienced an increase or significant increase for their properties:

Region

% of Landlords that experienced an increase in demand for their rental property in 2023

London

83%

South West

82%

Northern Ireland

76%

Scotland

76%

East Midlands

75%

West Midlands

75%

North East

74%

East England

74%

South East

74%

North West

71%

Yorkshire & the Humber

67%

Wales

63%


Final thoughts 

In summary, despite rising costs and market uncertainties, the UK buy-to-let property market remains attractive to many landlords, with more than half planning to invest in 2024. The appeal lies in the increasing rental demand and potential for capital growth, especially in regions like the North East and Scotland, which offer high rental yields. However, landlords must carefully consider the property type and location to maximise returns, balancing short-term rental yields with long-term capital appreciation.

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