It’s all a question of timing – if you want the biggest returns, it’s a good idea to buy in an area on the up.
The towns with Crossrail (now called the Elizabeth Line) stations are a perfect example here; areas close to a station have seen prices jump by 22% on average in the last two years alone according to Lloyds Bank. Find an area that’s about to be in demand and you’re onto a winner.
The big hitting areas
In our latest index, we picked out the ten postcodes that have seen the biggest improvements in the rankings over the last year; these are areas that have seen some serious jumps in terms of the returns on offer to property investors, and may represent the buy-to-let hot spots of 2018 and beyond.
Take Hull for example, which has jumped from 99th position in November 2016 to 6th place in the latest index, a rise of an astonishing 93 places. That’s quite the turnaround, from being on the cusp of the bottom 10 to one of the top performers.
There are plenty of factors in this; Hull is of course the UK City of Culture for 2017 and has invested around £100m into its cultural infrastructure, ranging from building new entertainment venues to revitalising areas like the waterfront and fruit market. Add the appeal of a solid local university, and enormous firms like Siemens setting up in the city, and you can see why it has performed so strongly.
Cambridge is another town which has seen a vast improvement in its performance for landlords since November 2016, jumping 69 places in our rankings from 83 to 14 in the latest index. The fundamentals are very attractive for property investors here; not only does it boast a prestigious university and great transport links, but you also have the benefits of the city playing host to the big players in the biotech boom. That’s bringing further employment and investment into Cambridge.
Other areas which have seen huge jumps in their rankings in the index include Slough (from 79th to 16th), Leicester (from 57th to 9th) and Portsmouth (from 59th to 23rd).
The 2018 outlook
It’s notable that while so much focus recently has been on northern towns and cities presenting great investment opportunities to landlords, Hull is really the only northern representative on our list of top performers. That should be hugely encouraging to investors across the country, as it demonstrates just how dynamic property investment is at the moment. There are simply so many excellent areas on the up for wily investors to consider.
While there has been an awful lot of doom and gloom around the buy-to-let market in 2017, as brokers and investors have got to grips with the changing tax and regulatory landscape, there remains plenty to be excited about. Demand remains strong – the lack of housing supply is a problem that will take a long time to solve – and while the dinner party landlord may be out to lunch, the professional investor is still well placed to enjoy excellent returns from bricks and mortar.