It has been another challenging year for buy-to-let landlords. Record numbers are selling off rental properties, disillusioned by how difficult it has become to turn a profit from bricks and mortar.
But even with stamp duty hikes and licensing schemes, canny investors can still earn good yields – if they buy the right sort of property in the right town or city.
High entry prices have ruled out large swathes of the South West, but the Midlands, North East, North West and Scotland still offer buy-to-let opportunities with low entry prices and great returns.
From university cities to commuter towns, these are 10 places where buy-to-let can still work for you.
Britain’s sixth largest city has a proud industrial heritage. Haaris Ahmed, of property investment platform UOWN, believes it is ripe for buy-to-let.
“The investment case for Sheffield is driven by its affordability and the fact that it is a dynamic and growing city,” says Ahmed. “This leads to a punchy yield combined with the potential for capital appreciation in the coming years.”
Ahmed suggests looking for apartments in the city centre, close to where big insurer Legal & General has regenerated West Bar.
Students and young professionals who want to be in the thick of things.
A well-located one-bedroom flat in good condition would cost around £110,000, says Ahmed. Budget around £140,000 for a similar two-bedroom flat. Gross yields are around 7pc.
If you want to target the city’s huge student body with a house in multiple occupation (HMO), Joseph Lane, of brokerage Mortgage Lane, says a four- to five- bedroom house would cost around £240,000. Shared houses with multiple tenants do mean more work but gross yields are also higher at 8pc to 10pc.
Its real estate is affordable by Scottish city standards, and there is a ready market of students and young professionals to rent to, says Pamela Aitken of Savills.
“Areas such as Partick, Finnieston, and Kelvinbridge in the West End of Glasgow are popular locations, as is Shawlands in the south of the city and Dennistoun in the East End,” she says.
A two-bedroom flat.
Glasgow has a strong student population, many of whom stay on in the city after graduating and find work with employers like Barclays and JP Morgan.
A new two-bedroom flat would cost around £250,000 and would earn a yield of around 6pc, says Aitken. Prices are forecast to grow by 28pc in the next five years, so you could see acceptable capital growth as well as an income.
St Neots is set to become a commuter hotspot, with increasing tenant demand – Cre8/Alamy Stock Photo
St Neots has already benefited from a ripple of buyers moving out of high-priced Cambridge. If the long-awaited East West Rail link, connecting Cambridge to Oxford, comes to fruition, its connectivity – and prices – should grow.
“The area is set to become a commuter hotspot, with increasing tenant demand and potential capital growth,” says Jonathan Hopper of buying agent Garrington. “Its affordability compared to Cambridge makes it an appealing choice for investors seeking value in a growing market.”
A three-bedroom house.
A mix of local families and commuters.
Budget around £350,000 for a three-bedroom house and expect a gross yield of around 5pc, says Hopper.
Wythenshawe has a lot better value for money than its fancier neighbours – Heritage Images/Hulton Archive
Eight miles south of Manchester city centre, the sprawling council estates of Wythenshawe were once most famous as the filming location for Channel 4 drama, Shameless.
But the neighbourhood is being smartened up thanks to a £500m regeneration scheme, and it is currently a lot better value for money than its fancier neighbours like Didsbury and Altrincham, says Chris Dodd, of estate agency Gascoigne Halman.
“Big things are in the pipeline for Wythenshawe over the next ten years,” he says.
A two-bedroom flat.
Families and professionals, including staff based at nearby Manchester Airport, and students based at Wythenshawe Hospital.
A two-bedroom flat would set you back around £120,000 to £130,000, says Dodd. This kind of property would rent at around £950 per month, generating a gross yield of around 9pc.
“It’s a very attractive proposition and one which is now starting to entice more attention as landlords look to expand their portfolios into the next up and coming area,” says Dodd.
Bristol benefits from long-term private renters and high annual rental price growth – Thomas Faull/E+
It is certainly not the cheapest market to invest in, but Bristol took top spot in the Aldermore bank’s buy-to-let city tracker in 2024 thanks to high demand from long-term private renters and high annual rental price growth.
Buying agent, Lili Oliver, at Oliver Roth, believes rental growth is here to stay because the city’s population is growing fast and incomes are relatively high. It is also a lovely, lively city with excellent infrastructure.
If you want the biggest returns then go for an HMO, says Oliver. You could pick up a four-bedroom terrace in up and coming St George, east of the city centre, for around £450,000.
Students.
Across the board, not fantastic. Aldermore calculates average annual yields of 4.4pc which, once costs are taken into account, will probably earn you less than if you simply put the money in the bank.
Going the HMO route means more work but a better income. Oliver estimates average HMO returns at 8pc to 12pc.
A two-bedroom property in Leamingtom Spa would set you back around £325,000 – John Lawrence
This gorgeous Regency town isn’t just a pretty face. With good schools and amenities, Warwick University up the road, and blue chip employers like Jaguar Land Rover and Aston Martin, demand for quality rental homes is high.
It is also an easy commute to both London and Birmingham, widening its appeal, says Nick Martiny Roberts, of Winkworth.
A two-bedroom flat.
Commuters, mature students, and local couples.
A two-bedroom property would set you back around £325,000, says Martiny Roberts, and rent for around £1,500 per month, offering a gross return of 5.5pc. Rents increased around 5pc in the past year.
Liverpool has vast amounts of regeneration going on, with billions of pounds being spent over the next decade – Chris Hepburn
An affordable option compared to the UK’s other major cities, and one with prospects.
“I think Liverpool is a cracking location to invest in because it is a city on the up,” says Ross Fleming of Integritas Property Group.
“It has a vast amount of regeneration going on, and billions of pounds are being spent over the next decade, which will transform huge parts of the city. So not only do you have excellent affordability and, therefore, great rental yields, but with the regeneration projects in Liverpool taking place, it will elevate the city as a whole.”
A one- or two-bedroom flat.
Students from one of Liverpool’s three universities and young professionals.
You can pick up a brand new one-bedroom flat from £100,000 in Liverpool, or a two-bedroom property from around £170,000. Gross yields for new homes come in at around 6.5pc to 7pc, says Fleming.
Brighouse is well-connected between the economic hubs of Manchester and Leeds – Windmill Images/Alamy Stock Photo
Tenants love this former mill town with its good commuter links, high-performing schools, lively town centre, and lovely countryside.
“Located between the economic hubs of Manchester and Leeds, both cities are easily commutable from Brighouse via the strong network of road and rail connections,” says Adam Powell of WS Residential.
A three-bedroom semi.
Families flock to Brighouse for its good schools, including a nearby grammar school. It is also popular with commuters who work in Leeds or Manchester.
A three-bedroom family house would cost anywhere from £200,000 to £300,000, says Powell, and gross yields come in at between 6pc and 6.5pc. He also believes the town has room for price growth.
“With ongoing investment into the area Brighouse has, and will continue to become, a more sought-after location to live – both for renters and buyers,” says Powell.
“Investors should expect to see a positive increase in capital growth on their portfolios over the medium term.”
The port town of Middlesbrough is bucking the landlord exodus trend – Peter Atkinson/Alamy Stock Photo
Low prices plus strong demand makes for a great buy-to-let market for landlords who are looking for an instant income stream.
Research by estate agent Hamptons found that this port town is bucking the landlord exodus trend, emerging as the most popular spot for investors in 2024. A resounding 40pc of homes are being sold to landlords.
One of the Victorian terraced houses close to the town centre.
Commuters whose offices are in York, Newcastle, or Leeds; young families – and students from Teesside University.
You could buy a smart, central, four-bedroom terrace in town for around £150,000 to £200,000. Gross yields average at 9.2pc, according to Hamptons.