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Investing in Liverpool Property

Investing in Liverpool’s property market has proven to be a lucrative strategy for buy to let investors. In this article, Experience Invest explains how you can maximise your return on investment by outlining the pros and cons of investing in the city.

  • Last updated: Mar 2020

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Investing in Liverpool’s property market has proven to be a lucrative strategy for buy to let investors. In this article, Experience Invest explains how you can maximise your return on investment by outlining the pros and cons of investing in the city.

Welcome to Liverpool

From the Beatles to the Titanic, Liverpool has a rich cultural legacy and is internationally recognised as one of the UK’s most-loved cities. It has been over ten years since Liverpool was crowned the European Capital of Culture in 2008. Over this time, the Merseyside city has established itself as a popular tourist destination for UK and international visitors.

The city is home to two world-famous football teams, the largest collection of museums and galleries outside of London, a UNESCO World Heritage Waterfront and, in 2015, the city was granted a UNESCO Creative City of Music award.

With popular attractions including the bustling Liverpool ONE shopping centre, the Arena Convention Centre and countless restaurants, bars and pop-up businesses, Liverpool has much to offer residents, visitors and property investors.

UK Buy-to-Let hotspot

Discover why Liverpool's property market offers property investors capital growth potential and reliable rental returns.

What you need to know about investing in Liverpool:

  • How large is Liverpool?
    Located in the north-west of England, Liverpool is the fifth-largest city in the UK. With a large population of approximately 494,814 (ONS), Liverpool is the biggest city in the county of Merseyside.

    Liverpool is also the home of the UK’s fastest rising city centre population, climbing 181% between 2002 and 2015 according to Centre for Cities.
  • Is Liverpool a good place to invest in property?
    Liverpool offers buy to let investors impressive rental returns and a lower entry level onto the property market, when compared to other prominent UK cities.

    With some postcodes offering between 6% to 9% rental yields and a diverse range of asset classes available (residential, commercial and student), Liverpool boasts some of the best buy to let rental returns currently available on the property market.
  • Where are the best areas to buy in Liverpool?
    The areas to invest in Liverpool are as diverse as the city’s rich cultural heritage. The city’s L1 postcode is ranked the number one UK buy to let hotspot by Totally Money. With five other areas to invest in Liverpool ranked in the UK’s top 25 buy to let postcodes (L11 ranked 4th, L6 ranked 7th, L2 ranked 13th, L3 ranked 15th and L4 ranked 22nd), the city offers property investors ample scope for investment.

    Depending on the demographic, here are the best areas to buy in Liverpool. The city’s large student population have gravitated towards the trendy Baltic Triangle and the vibrant Knowledge Quarter, whereas young professionals have settled in pockets of the central L1 postcode including the city’s waterfront and the prestigious Georgian Quarter.
  • Is there a demand for student accommodation?
    With 5 higher education institutes including one Russel Group establishment, Liverpool is one of the UK’s largest university cities and is home to almost 60,000 students.

    The most recent analysis of Liverpool’s student accommodation market has shown that there is a current shortfall of 21,900 managed bed spaces. As student numbers continue to climb, there is a continued demand for high-quality Purpose Built Student Accommodation developments in areas which offer easy access to university campuses.
  • Is Liverpool a good place to visit?
    Liverpool is the sixth most visited city in Great Britain. In 2018, the Liverpool City Region welcomed 67.3 million visitors (up 5% year-on-year) and it now boasts a visitor economy worth over £4.9 billion.

    The city is a popular choice for UK and international tourists. The city hosts a variety of sporting activities throughout the year and its rich history and world-famous music credentials continue to attract visitors from across the globe. In recent years, the tree-lined streets of the city’s Georgian Quarter have been used as a backdrop for popular television series and period dramas.

A fast-growing city

Business
Liverpool has emerged as a popular destination for new businesses and has been ranked as the third best location for start-ups in the UK.
A steady flow of new talent from university graduates is ideal for recruitment, and the city’s relatively low cost of living – when compared to other UK core cities – has made Liverpool an attractive option for business owners.
A steady flow of new talent from university graduates is ideal for recruitment, and the city’s relatively low cost of living – when compared to other UK core cities – has made Liverpool an attractive option for business owners.
The broad nature of business opportunities available in Liverpool has been reflected on the city’s commercial property market, where a variety of commercial spaces are required to keep up with the city’s needs.

In the years to come, Northern Powerhouse cities like Liverpool will offer property investors strong growth potential. The continual expansion in the city’s business, education, infrastructure and housing markets have the potential to create a swell in demand for commercial and residential property investment, offering buy to let investors a reliable rental income from investing in Liverpool property.
Economy
Over the next five years, Liverpool’s economic growth forecast is expected to be above the average UK GDP of 2% per annum. JLL expects that Liverpool GVA growth to reach 2.1% per annum between 2019 and 2023. The city’s rate of employment is set to rise at 0.8% p.a. - a faster pace than the UK average of 0.5% per year.
Source: JLL Northern England Residential Forecast, February 2019.
Source: JLL Northern England Residential Forecast, February 2019.

Liverpool regeneration

Buyers considering investing in Liverpool are set to benefit from the city’s rapid transformation. In recent years, the government’s Northern Powerhouse initiative has helped to enhance Liverpool’s future economic growth.

This investment, combined with multibillion regeneration schemes across the city, will ultimately boost demand for property in the city. Here is an outline of some of the city’s regeneration projects.
Regeneration zones
in Liverpool
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£5.5 billion Liverpool Waters
waterfront regeneration
Spread over 2.3km, the £5.5 billion Liverpool Waters waterfront regeneration will include 315,000sqm of office space and 27,000sqm of restaurants and cafes.
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Infrastructure and connectivity

As one of the UK’s best-connected cities, Liverpool has a unique global appeal that few cities can rival.
The city’s Liverpool John Lennon Airport and the Port of Liverpool provide at gateway to the world, while a 2-hour fast train connects the city by rail to London. Liverpool is connected to the rest of the UK via motorways, rail links and regular ferry services, making access to and from the city relatively easy.
The city’s Liverpool John Lennon Airport and the Port of Liverpool provide at gateway to the world, while a 2-hour fast train connects the city by rail to London. Liverpool is connected to the rest of the UK via motorways, rail links and regular ferry services, making access to and from the city relatively easy.
As more money is invested in Liverpool, there is a growing need for the government to provide better infrastructure to support the city’s regeneration.
As more money is invested in Liverpool, there is a growing need for the government to provide better infrastructure to support the city’s regeneration.

The potential introduction of the government’s new HS2 high-speed rail service will help to support residents and businesses alike, enhancing the city’s appeal by offering a faster rail service from Liverpool to London and Manchester.

Liverpool market
property report

Liverpool has established itself as a leading UK property market. Its private rental sector has witnesses significant growth over the last 10 years, largely because of the city’s young and dynamic population.
In 2017, JLL released a Northern England Report which estimated that two thirds of homes in Liverpool’s city centre are privately rented, with young professionals and graduates making up the city’s largest rental demographic.

Around 50% of people residing in the city’s centre are young professionals, making the high yielding L1 postcode a lucrative option for buy to let investors. This tenant pool is widely known as iGens – people aged under 25 about to graduate, recently graduated or newly employed often living in an urban area.
Around 50% of people residing in the city’s centre are young professionals, making the high yielding L1 postcode a lucrative option for buy to let investors. This tenant pool is widely known as iGens – people aged under 25 about to graduate, recently graduated or newly employed often living in an urban area.
This large pool of affluent renters is not necessarily ready to commit to a permanent future in the city, which has created a demand for centrally located, contemporary properties with high-quality facilities.

For landlords and property investors, investing in the Build to Rent sector in Liverpool is a profitable way to tap into the city’s private rental sector’s potential.
JLL said: Liverpool continues to suffer from a lack of higher spec private sale development.
And it’s not just the city’s rental market that attracts investment to Liverpool.

Throughout 2019, Liverpool has been a leader in house price growth, recording some of the fastest rising property values across the country. In the year to January 2020, property prices in Liverpool climbed by an impressive 4.2% and at a significantly faster pace than the UK average of 2.9% (Hometrack).
According to Zoopla: property prices in Liverpool have increased by 21.5% over the last 5 years and in the 10 years since the recession, values in the city have climbed by 25.5%.
Yet despite continuous growth, Liverpool boasts the lowest average house price of £124,300 when compared to the UK’s core cities. The entry level of property in the Merseyside city sits markedly lower than the UK average of £222,900.

A prime student property market

Liverpool’s private rental sector is also made up of the city’s large student population of around 60,000 people.

Academic excellence is one of the city’s key selling points and with five higher education establishments (University of Liverpool, John Moores University, Liverpool Hope University, Liverpool Institute of Performing Arts and Liverpool School of Tropical Medicine), Liverpool is a popular university city.

Over the last few years, the city has witnessed a significant rise in the number of people studying in the Liverpool. The influx of additional students has created an estimated shortfall of 21,000 university operated or privately managed beds across the city.

A lack of student centric housing has opened an opportunity for developers and investors alike to capitalise on the demand for safe, modern housing within easy access of one of Liverpool’s many university campuses. The city provides investors with the opportunity to invest in a city with highly ranked universities and benefit from the evergreen nature of the UK’s number one asset class.

These factors make income investment in Liverpool's student property market a lucrative choice for investors.

A hotspot of hotel investment

The renaissance of Liverpool’s tourism industry has created an impressive £4.9 million visitor economy.
Largely due to the city’s 2008 European Capital of Culture accolade, Liverpool has emerged a prominent tourist destination and, with year-round sporting events, a vibrant retail district and a large events and conference arena, there are plenty of attractions to entice a steady influx of visitors.
The renaissance of Liverpool’s tourism industry has created an impressive £4.9 million visitor economy.
For buy to let investors considering investing in Liverpool’s hotel sector, the city has been ranked third in Colliers International’s UK Hotels Market Index.

The city has emerged as a regional hotel investment hotspot, boasting an average room occupancy rate of 81.8% and the highest overall recorded RevPAR of 7.3% across all UK markets.

Investors looking towards Liverpool’s commercial property investment have the potential to secure a long-term rental income from the city’s on-going demand for hotel rooms.

Liverpool property
market forecast

Over the next 5 years, housing markets in the north west are expected to outperform the national average.

Liverpool’s property market forecast paints a particularity positive picture for investors.
Liverpool’s property market forecast paints a particularity positive picture for investors.
According to estimates from JLL, Liverpool stands to emerge as a market leader, with house prices expected to climb by 12.6% between 2019 and 2023. When compared to the UK’s 5-year average predicted growth of 11.4%, residential buy to let investment in Liverpool paints a particularly strong picture for future growth.

A distinct undersupply of new-build and centrally located housing, tailored towards the city’s younger rental demographic, will provide ample scope for developers and individual investors alike. Market predictions reflect the buoyancy of the city’s property market, with rental growth expected to rise by 15.9% over the next 5 years.
Despite the challenges faced throughout 2019, the UK’s property market has proven its resilience, with regional markets such as Liverpool proving there is ample scope buy to let property investment in 2020 and beyond. If you're considering investing in Liverpool, download our guide to the top 5 property investment trends to watch in 2020.
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