Best buy-to-let areas in the UK for 2022

Buying property in the right areas is crucial for landlords, so where in the UK can you benefit from attractive returns in 2022?

Read on to find out the top towns and cities attracting property investors, the most popular locations for HMOs, and where landlords new to the market are buying properties.

• How to do a landlord tax return
• Landlord checklist – what to do before renting out a property
• How can landlords get a buy-to-let remortgage?
• What does landlord insurance cover?

Where are the best buy-to-let areas?

Bristol has taken top spot in Aldermore Bank’s buy-to-let city tracker, which ranks the UK’s best areas for buy-to-let. The city in the South West rises from seventh in last year’s rankings, overtaking Manchester which has fallen down to fourth.

Aldermore’s tracker is based on five key factors which combine to make investment locations appealing to landlords:

• average total rent
• short-term returns through rental yield
• long-term returns through house price growth
• the lowest number of vacancies as a proportion of total housing stock
• percentage of the city population in the rental market

Here are some of the key findings from the latest research:

• Bristol is ranked top, thanks to its long-term property growth (annual average of 5.1 per cent), as well as the lowest number of long-term property vacancies (0.6 per cent), and over a quarter of residents (27 per cent) renting privately
• ranked second and third respectively, Oxford and Cambridge are once again seen as profitable investment locations after coming fourth and second in 2021
• Luton shot up seven places to enter the top 10 for the first time. This is largely thanks to average annual price growth of 5.2 per cent offering landlords an attractive long-term return on investment
• London has dropped to sixth, but remains in the top 10 due to its long-term stability and high demand from tenants
• Scottish cities Edinburgh and Glasgow benefit from a low level of property supply, which is helping to push up rents and improve short-term returns for investors

Top 25 buy-to-let areas in the UK

The remaining towns and cities in the top 25 best areas for buy-to-let are:

• Southend, East (overall score: 65)
• Coventry, West Midlands (overall score: 61)
• Edinburgh, Scotland (overall score: 58)
• Swindon, South West (overall score: 56)
• Leicester, East Midlands (overall score: 56)
• Peterborough, East (overall score: 56)
• Basildon, East (overall score: 56)
• Portsmouth, South East (overall score: 55)
• Southampton, South East (overall score: 55)
• Glasgow, Scotland (overall score: 55)
• Plymouth, South West (overall score: 54)
• Derby, East Midlands (overall score: 54)
• Chelmsford, East (overall score: 54)
• Birmingham, West Midlands (overall score: 53)
• Bournemouth, South West (overall score: 52)

Where are new landlords investing in property?

Research by Simply Business has identified the buy-to-let areas that are most popular with new landlords.

We looked at which areas had the most landlords who’ve owned property for less than a year and taken out landlord insurance in 2021.

London came top, followed by Birmingham, Manchester, Liverpool, and Glasgow. It’s interesting to note that the top five buy-to-let areas for new landlords are all major UK cities where tenant demand is likely to be high and property price growth likely to be steady.

The top ten was made up of:

• Nottingham
• Leeds
• Bristol
• Leicester
• Hull

All of these areas have well-known universities. Letting to students is often popular with new landlords due to the lower acquisition costs, annual demand, and potential for high rental yields.

Where are the UK’s HMO property hotspots?

Houses in multiple occupation (HMOs) are larger properties that can be let to three or more people from more than one household who share living facilities.

For example, a house share of five young professionals would count as a ‘large HMO’. Read our guide to HMOs for further details.

To successfully let an HMO, you need to be operating in the right market – somewhere with lots of students or young professionals could be an ideal location.

If you’re looking to buy and rent out a larger property, here are the top five hotspots where we saw the most HMO landlords take out insurance during 2021:

• London
• Birmingham
• Bristol
• Manchester
• Leeds

It’s no surprise that all of these cities have multiple universities and strong employment markets, making them popular with young professionals – and so appealing to HMO landlords.

Revealed – popular buy-to-let areas by property type

The type of property you rent out is likely to have an impact on the prospective tenants it attracts.

For example, houses could be more popular with families, while flats may appeal to young professionals, and bungalows could be more suitable for older renters.

We’ve taken a closer look at where the most landlords took out insurance policies for different property types during 2021.

Houses

The top hotspot for detached houses was Nottingham, while London was most popular for terraced and semi-detached houses. Birmingham was also popular with landlords who own houses, featuring in the top five for all types of house.

Bungalows and maisonettes

London was the most popular location for landlords renting out maisonettes, followed by Birmingham, and Southampton.

Meanwhile, Nottingham, Leicester, and Lincoln were the top buy-to-let areas for bungalows.

Flats

The top UK area for flats was London, followed by Scottish cities Glasgow, Edinburgh, and Aberdeen, with Manchester making up the top five.

The worst buy-to-let areas

As in 2021, Aldermore’s data suggests that locations in Wales are less appealing for landlords. Swansea and Newport take the bottom two spots of the top 50, while Cardiff comes in at 36th.

According to Aldermore, falling rental prices and a large supply of rental properties in Wales are increasing competition among landlords, making the areas less attractive as investment locations.

However, landlords looking to buy a property in Wales could receive a long-term return on investment by targeting Swansea thanks to property price growth of three per cent.

Here are the bottom 10 areas in the list:

• Dundee, Scotland (overall score: 35)
• Leeds, Yorkshire (overall score: 35)
• Belfast, Northern Ireland (overall score: 33)
• Wolverhampton, West Midlands (overall score: 33)
• Wakefield, Yorkshire (overall score: 32)
• Sheffield, Yorkshire (overall score: 31)
• Doncaster, Yorkshire (overall score: 31)
• Sunderland, North East (overall score: 31)
• Newport, Wales (overall score: 21)
• Swansea, Wales (overall score: 12)

Where are you looking to buy property in 2022? Let us know in the comments below.

Photograph 1: Stephen Davies/stock.adobe.com