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Where to invest in UK property

Where to invest in UK property

Choosing the right investment location is a key consideration when building your property portfolio. Not all locations are made equal. Every location will have different pros and cons that affect how your investment will perform. That’s why knowing where to invest in UK property can be a tough decision for new investors.

Like so many things in property investment, it largely depends on your goals. Different strategies will work better in different locations. That’s why the same location could be amazing for one investor but terrible for another.

In this article we explore the main considerations to help you decide where to invest in UK property.

What are your property goals?

You will make money from property in two ways. Rental income and capital growth. Although the ideal scenario is to have the best of both, it rarely works that way. Each location and property type will be more suited to delivering one or the other.

That’s why you need to know which is your priority.

Rental income

Higher rental yields are typically achieved on cheaper properties. Finding a location where property prices are cheap will usually be better for cashflow. However, you still need to look for good fundamentals to attract quality tenants and minimise void periods.

Investing in a HMO strategy (House in Multiple Occupation) can be great for cashflow as yields are typically higher. You will need to consider licensing regulations when choosing an area as many councils operate Article 4 restrictions. Also look for locations where your target demographic would want to live. For example, a student HMO needs to be close to a university.

Capital growth

If your focus is capital growth, you need a desirable location with strong fundamentals. These are reasons why people would want to live there and afford to buy there. Diverse employment opportunities, excellent transport links, and convenient amenities are essential. These factors all make higher than average growth more likely.

Locations that are seeing investment and regeneration are great for capital growth too. Anything that is likely to improve a location in future could be a trigger for capital growth.

Buy-Refurbish-Refinance (BRR) or Buy to Sell (Flip) are also capital growth strategies. Natural market growth is less important here as you are forcing short term appreciation through refurbishment. A more important factor could be investing locally, which makes the logistics much easier.

Having a clear strategy will help you decide where to invest in UK property for the best results.

Where to invest in UK property Manchester

Should I invest locally or remotely?

There can be advantages and disadvantages to both, so a lot depends on your strategy and goals.

If you intend to be hands-on, investing locally makes sense, simply because logistics will be easier. For example, a refurbishment project will be time and labour intensive. It will be far harder to implement successfully from a distance.

If you intend to be hands-off, investing remotely is probably best. It’s highly unlikely that where you live is the best place in the whole country to invest! So, if you don’t need to be nearby, you’ll probably be better off looking further afield.

Again, you should also consider your goals.

Self-managing your properties is easier when they are local. Especially more time intensive strategies like HMO’s or serviced accommodation. However, if your goal is passive income or time freedom, you should set things up to run without you. Investing remotely forces you to be hands-off so could be a better fit. When you invest locally, there’s always a temptation to get involved, even if you didn’t plan to.

When deciding where to invest in UK property, many new investors worry about investing remotely. Maybe because they don’t know the area or maybe because they don’t have a network there. Consider using our bespoke sourcing service to help build your perfect hands-off portfolio. We also help with implementing systems for easy hassle-free remote management.

What are the local fundamentals?

Overall, the UK has a shortage of homes to satisfy demand.

In 2004, the Barker Review of Housing Supply found that the UK needed to build 250,000 new homes every year. This was just to keep pace with demand and prevent prices from spiralling. More than two decades later, we’ve come nowhere close to meeting that target! The current Labour government has now increased that target to 300,000 per year. Still, it has never been hit.

However, that doesn’t necessarily mean there is demand for every type of property in every location.

One of the biggest factors to consider when deciding where to invest in UK property is supply versus demand.

For strong capital growth, you need more demand from buyers than supply available. This creates competition and forces prices upwards. For strong rental profits, you need more tenant demand than properties available to rent. This reduces void periods and provides more choice to secure a quality tenant.

This is why local fundamentals are so important.

What are your tenants looking for?

Think about your ideal target tenant. Where would they want to live? What do they want to live close to? What type of property would they be looking for?

Family tenants will want to be in the catchment area of good schools. Single professionals might favour a city centre location where there’s more going on. Student tenants will obviously want to be near to a university.

Everyone needs a job to afford their rent, so locations with a strong economy and diverse employment opportunities are important. Look for big companies, hospitals, and universities who will all be major employers.

Think about how easy it would be for your tenants to commute. A remote countryside cottage may be beautiful, but it’s also inconvenient, so rental demand will likely be low. Excellent transport links are vital for strong demand. Look for proximity to train stations and motorway networks.

Desirable locations with plenty of local amenities will be favourable. The convenience of local shops and supermarkets. Access to outdoor space. Safe locations with low crime.

A lot of this may sound obvious, but it’s often overlooked by new investors chasing a cheap “deal”!

Where to invest in UK property Birmingham

Where is it affordable to invest?

Deciding where to invest in UK property is often about striking a balance. The most desirable location with the best fundamentals could be out of budget. You might also price out most buyers and tenants, so demand will be low due to lack of affordability.

At the other end of the scale, the most affordable properties might have no fundamentals. Demand there will be low simply based on lack of desirability. Growth will be limited and any tenants you do attract are likely to be riskier too.

For growth to be possible, there needs to be buyers who can afford to pay more in future. Areas that are already expensive (like London and the Southeast) have seen lower growth recently. Relatively more affordable locations that still have excellent fundamentals (like Manchester and Birmingham) have seen stronger growth.

Think about the property type too. For example, HMO’s can be great for cashflow but can be hard to sell. That’s simply because your only resale market is to investors. They will only buy if they get a good deal, so it limits price growth. A property and location that appeals to owner-occupiers might have better growth potential.

Where to invest in UK property in 2025

When deciding where to invest in UK property, we’re looking for a balance between strong fundamentals and good affordability.

London and the South has fantastic fundamentals, but affordability is very stretched. That means growth potential will be limited. There is a very clear trend that growth is stronger in the Midlands and North for that reason. Locations that still have great fundamentals but are also relatively affordable will do best. We expect this to continue in 2025 and beyond, primarily due to affordability constraints.

Hometrack is a fantastic resource to see what is happening with property prices in different cities and regions. They publish a new report monthly based on research from Zoopla.

There are lots of locations across the UK for investors to consider. Manchester, Birmingham and Leeds are all major economies with strong track records that represent a safe bet for investors. Smaller cities like Liverpool, Nottingham, Derby, Sheffield, and Newcastle also have lots of opportunities.

We are wary of making recommendations for specific hotspots. Many companies will talk about hotspots, usually because they have developments they are trying to sell in that location! Hopefully this article has highlighted that the best place to invest depends on the individual.

We operate our services across the whole of England. Our investors often diversify their portfolio across several locations. We help to source bespoke investments perfectly tailored to your personal goals and requirements. If you would like to discuss your options and where is best for you, book a free call here.

 

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