There is no question that millennials are fuelling the growth in the Private Rented Sector (PRS) right now. A myriad of causes, from rising house prices to a more transient way of living, are leading a generation of young adults to stay in rented accommodation for longer periods of time than ever before. It is for this reason that investors must take note of their target tenants wants and requirements.
Landlords who are able to get ahead of the curve with trendy destinations, flexibility with things like having pets, and even décor trends, could find that they reap the benefits with low void periods and higher than average yields.
With that in mind the results from a recent survey from Holiday Lettings which has identified the UK’s coolest city destinations may well be of interest to buy to let landlords. The study analysed every review on TripAdvisor and found which cities had the highest percentage of reviews mentioning the word ‘hipster’ – and the results are certainly interesting.
At number one Manchester is already celebrated as the UK’s best city for buy to let investment. Rapidly rising in popularity, the Northern city has been attracting young professional renters in huge numbers as London becomes more and more out of reach for those starting out post-university. Described by Holiday Lettings as ‘one of the most interesting and exciting cultural hubs in the UK’, Manchester is an attractive option for investors due to the rising rental demand and low market price compared to the capital. A recent article from the Manchester Evening News highlights the unbelievable growth that has led to an economic boom in the city, describing how the city centre population is expected to hit 60,000 by 2027 – up from just 6,100 in 2002.
Behind Manchester, London takes the second spot for obvious reasons. The UK’s capital is undoubtedly the place to be for young renters and this is unlikely to change anytime soon despite competition from the North and swelling property prices and rents. Still considered a powerhouse for buy to let, investors who can afford to buy in London will be rewarded with some of the highest rents in Western Europe. Its housing market slump aside, London remains one of the most attractive places to live and work for young renters today.
The rest of the list is where it gets interesting for would-be investors looking for the next place to invest. In third place comes Brighton, followed by Leeds, then Newcastle-upon-Tyne, Bristol, Belfast, Glasgow, Whitstable and Cambridge.
Each one of these favoured ‘hipster’ destinations presents an interesting case for buy to let investment. Brighton, described as the ‘perfect city for dynamic forward-thinkers’, has seen an almost 30% rise in house prices in the last five years alongside a 14.5% rise in rents since 2015 according to Hamptons International. Packed full of ‘vinyl shops, tattoo parlours, vintage boutiques and exciting restaurants’, Brighton is a popular destination for renters looking to work in the creative and digital industries without the hustle and bustle of a major city.
Over in Leeds, which Holiday Lettings says is ‘becoming one of the hippest cities in the UK with a flourishing food and craft beer scene, eclectic live music performances, and uber-cool coffee shops’, a similar story can be seen, with private and government funded investment powering infrastructure like the future HS2 terminal to keep up with growing tenant demand. Plans to double the size of the city centre with the development of the South Bank area of the city will create a brand new residential destination and a home for the many professionals who power the UK’s second financial capital outside of London.
Meanwhile Cambridge – one of the UK’s most prestigious university cities – has an ever growing pool of renters thanks to its educational status, cultural appeal and proximity to London. Because of its wide appeal Cambridge boasts some of the most expensive homes in the UK, with an average property price of £446,598, up over 27% in the last five years. Whilst the city doesn’t necessarily have the strongest yields, an investment in this historic city is likely to result in strong capital appreciation as homes in the city become harder to come by.
Of course it’s impossible to predict where the next UK buy to let hotspot will be, but it’s fair to assume that young renters will continue to move in large numbers to cities which constantly adapt their food and drink offering, have a rich cultural history and growing job prospects. As always, it remains crucial for investors to keep a keen eye on where craft beer pubs, indie clubs and celebrated restaurants pop up for where they appear you can be sure renters will follow…
