Successful investment in buy-to-let property is as much about where you buy as it is about what you buy, and making sure to get assets in a city where there is a high level of demand for rental accommodation is absolutely paramount.
One city which has become an important investment area at the moment for this very reason is Leeds. West Yorkshire’s largest city, Leeds has seen a swell in demand for rental homes in recent years as the jobs market improves and more career-driven young people move to the city.
Perhaps most importantly for investors, however, is the shortage of homes at the moment. Demand and supply imbalance means that Leeds has one of the highest monthly rental price averages outside of London, and the highest in the north of England. However, low average purchase prices means that assets can turn around very decent yields.
Jonathan Morgan, managing director at Morgans, said that Leeds is a booming area in 2015, but added that the city has such high demand that an extra 1,000 rental flats are needed this year.
Landlords in the city are currently pretty much guaranteed to be able to find a tenant and will have very little in the way of vacancy periods. In areas around the train station and Trinity, as well as more popular rental areas such as Clarence Dock and Headingley, occupancy rates are at a stunning level of 99 per cent in 2015.
On many occasions, landlords are seeing their properties listed and then chased by up to three or four potential tenants within a matter of days. And with large employers such as Google and Sky bringing operations to Leeds in the months to come, this demand from more affluent young professionals is only likely to increase.
Leeds is also one of the cities that is benefiting from a rise in investment that is being seen in the regions across the UK as people look for somewhere to live and work away from London, which shows it is a growing market for landlords and other investors.
An example of this is the 1.5-acre former Lumiere site near the train station, where investors have restarted a project that was halted in 2010 due to a lack of financial backing. The construction of office space and residential units to meet local demand shows just how strongly the city is being backed by investors in the current market.
Mr Morgan said: “Leeds is enjoying a fast improving city centre living environment and is quickly building a reputation as one of the UK’s premier retail destinations, so its residential market and the steady capital growth that apartment values enjoyed in 2014 will no doubt continue to flourish in 2015. However, the rentals market will still dominate market activity.”