If you’re investing in property in Manchester – well done! Whether through business acumen, research or just sheer luck you are enjoying the highest rental yields in the UK.
Data from the buy-to-let lending company LendInvest, shows that the yield on buy-to-let in Manchester, at 6.1%, is the highest in the country. The yield is the annual rent a landlord can get from a property, as a percentage of the market value of the property. Of course, this doesn’t tell the whole story because capital appreciation, a rise in the price of the property, is also part of your total return as a landlord. The extraordinary rise in house prices in London has meant that although rental yields have fallen in London, because the total return on investment includes capital appreciation, London outstrips everywhere else in the country.
Realistically, many market analysts believe that this can’t go on forever, so London house prices may be riding for a fall. There has certainly been comment post-Brexit, that a lot of money had been flooding into the UK on the back of the historically strong pound and that this had led to a bubble in the price of assets such as property, particularly in London because it is favoured by overseas investors. Or as some might call them, speculators.
There is a suggestion that the fall in the value of the pound may lead to some of these investors pulling their money out, with a consequent cooling of the London market.
Meanwhile, Manchester’s economy has been growing strongly, providing a more solid basis for both property prices and the rental market, than the bubble that undoubtedly exists in London. The surge in economic activity in Manchester has been led by a large growth in private sector activity, especially in professional services and finance.
Manchester has become a key destination for large companies wanting to relocate their headquarters and it has managed to combine this with a thriving creative and digital economy. With four universities and a vibrant cultural scene, the city’s future seems assured.
With more devolution to Manchester planned, and Government investment in infrastructure taking place, the contrast with the beleaguered commuting towns of the South of England, where poor railway provision is hampering labour mobility, could not be stronger.
The 2015 population estimates provided by the council show that there are just over half a million people in Manchester; more men than women, but only just. The population bulges around the 25 – 44 age group but another 30% of the population are aged between 16 and 24. In other words almost a third of Manchester’s population are about to move into the stage of life where they are forming households, entering long-term relationships and starting families.
Many of them will be looking for precisely the type of family-friendly small houses that are a feature of North Manchester lettings, and in particular of the Moston community. They’ll be looking for rental security while they possibly have one or more children. They’re not so likely to be looking for the type of corporate development that we can see in many places in Manchester.
So although rental demand is undoubtedly going to continue to grow, not everyone is looking for a young professional’s flat in the centre of the city. And let’s not forget that many people find that personal circumstances, such as old age or problematic health, lead them to the type of community-friendly housing available in areas such as Moston, Harpurhey and Blackley.
Diversity in rental properties is the key to an area like Manchester. It would be a shame if most property was aimed at single professionals. However, while areas including Moston, Harpurhey and Blackley continue to thrive, and independent landlords are prepared to invest in providing homes, we will continue to provide for our diverse communities.