The buy-to-let phenomenon has endured for decades at this point, presenting as it does an equitable way for new homeowners to expand their property portfolio and create new income streams in the process. Recently, though, buy-to-let landlords have encountered unique difficulties with regard to affordability – arising not just from general rises in the cost of goods and services, but also from rising interest rates.
Interest rates were increased by the Bank of England in response to potentially inflationary policies proposed by a short-lived administration of the current Conservative government. The rises heavily impacted mortgage price, making it much harder for buy-to-let landlords with slim margins to justify trading. Still, though, buy-to-let remains a potent route to semi-passive income – and Manchester has recently been touted as the best place in the country for it.
Manchester Tops List in Latest Study
The study sought to rank cities in the UK for their buy-to-let potential, based on a number of points from average rent prices in the city to regional property value performance – all having taken into account the renting population of said city.
With all this taken into consideration, the study turned out Manchester as the best city in the UK to invest in buy-to-let property. Manchester won out on account of the performance of property values here in recent years, with an annual average growth in house prices above 5%. It was also discerned that a large percentage of Manchester’s population relied on the rental system, at nearly a third of all residents.
Other High-Ranking Buy-to-Let Locations
Manchester rose to first place from 4th in the previous year’s study, demonstrating well the agile nature of property markets and buy-to-let practice. This year, thought, it was closely followed by London and Bristol, which won second and third place respectively. Bristol was the 2022 winner, but recent fluctuations in property value made it slightly less profitable on balance.
Why are Some Regions Outperforming Others?
But why exactly are some regions better than others to consider a buy-to-let portfolio in. The answer, in essence, comes down to where profits are made and the how properties are valued.
Buy-to-let landlords need to effectively offset the overall value of their buy-to-let mortgage, as well as ancillary costs in the form of landlord insurance and emergency repair costs. Even though buy-to-let mortgages are interest-only for a fixed period of time, they still need to balance with your overall takings at the end of the agreement in order to guarantee you a net profit.
The property itself is also an investment that can generate income passively, and boost your profits as a result. The more promising property values are in a region, the more likely your asset is to grow of its own accord. In stagnant markets, your property might effectively devalue itself with respect to currency inflation.