Despite an incredibly difficult period for tenants and landlords throughout the cost-of-living crisis, the demand for rental properties remains high. And with experts predicting house prices to fall by 10% in 2023, now could be the most advantageous time to expand your portfolio.

To make sure you’re pointing your investments in the right direction, it’s important to do your research first. Based on area demand and prices despite the recession, we’ve highlighted a few areas to focus on as a buy-to-let landlord in 2023 and beyond.

The best UK cities and towns for buy-to-let landlords

Who should buy-to-let landlords market to?

Choosing a profitable location for an investment property relies on being able to find and keep the right tenants. When you let out property as a landlord, one of your priorities will be looking for long-term, reliable tenants who respect the property and pay their rent on time.

Navigating the market successfully can be complicated, but there are two groups worth focusing your efforts towards:

  • Younger people

Whether you market to students or young people in their mid-20s, it’s possible to turn a profit on a buy-to-let property for a younger audience. Multiple locations with colleges and busy campuses could offer scope and opportunity, with university towns remaining popular for those settling down and starting a family.

  • Over-65s

According to a recent survey, at least 6.8 million of those aged 65 or over in England are private renters, making up the largest household tenure group. If you’re looking for a significant investment opportunity, a large retirement apartment complex could be lucrative. Alternatively, bungalows in suburban areas also make a popular choice for older renters.

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What should landlords consider when choosing a location?

  • Rental yields

You should aim to invest in areas with the best rental yields. As a general rule of thumb, a good yield is anything between 6% and 8% – often, northern postcodes tend to offer better rental yields than anywhere else in the UK.

  • High demand

When choosing a location, you’ll need to ensure sufficient demand for prospective tenants. London is an obvious contender, with a high in value and position in the rental market. It’s worth bearing in mind that young people might be more likely to meet high costs – since they don’t have any dependents.

  • Affordability

As a landlord, you need to be able to afford your new investment too. Previously, university towns like Oxford and Cambridge have given landlords an annual return of up to just 5% – for stronger yields, cities further north could be worth exploring.

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Which cities are best for buy-to-let opportunities?

  • Nottingham

Nottingham is a fantastic spot for investors, having the universities and a dynamic local community, and higher-than-average rental yields. The centre is popular with young professionals and families alike, with an array of shops and attractions like the famous Ice Arena within the Motorpoint Arena.

  • Manchester

Manchester has overtaken Bristol as one of the best cities to invest in a buy-to-let property, based on average rent per room per month, yield, and average property price.  According to Aldermore Bank, nearly a third of Manchester’s residents rent privately. Fuelling this short-term demand will allow landlords to make a good return on investment.

  • Bristol

Bristol boasts strong demand due to work and universities around the city. This growing city has proven to be a hotspot and the perfect place for property investment. More than a quarter of Bristol’s residents are estimated to be privately renting, creating a large pool of tenants to choose from.

We’ve offered general advice in this guide, but it’s always worth consulting your bank, solicitor, or letting agent for specific guidance on your next investment.

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