A Guide To Buy-To-Let In Manchester
Manchester: The Emerging Epicenter for Buy-to-Let Property Investing
Manchester is rapidly establishing itself as the preferred city for buy-to-let property investment in the United Kingdom. This trend can be attributed to the following factors:
- Increasing Population of Young Professionals: The city is experiencing a surge in the number of young professionals, which contributes to the demand for rental properties.
- Presence of Three Major Universities: Manchester is home to three prominent universities, which not only attract a significant number of students but also contribute to the demand for rental accommodations.
- Consistent Growth in Property Values: Property values in Manchester have consistently risen, making it an attractive investment option for individuals seeking long-term value appreciation.
- Rapid Urban Development and Tech Industry Expansion: The city's extensive urban development and flourishing tech industry create a favorable environment for property investment, as they drive economic growth and increase employment opportunities.
- Availability of Affordable Buy-to-Let Properties: Manchester offers a range of affordable buy-to-let properties in areas such as Media City, Salford, Ancoats, and near Oxford Road, providing investors with diverse options.
While London once dominated the property market, Manchester now presents a more appealing choice due to its comparatively lower property prices and favorable rental yields. Several reputable sources, including Aldermore’s Buy To Let City Tracker and Savill’s 2021 Regional Forecasts, highlight Manchester's rapid ascent in the property market.
Advantages of Buy-to-Let Investments:
Rental Income Covering Costs and Generating Profit: Buy-to-let investments offer the potential for rental income that not only covers expenses but also yields a profit.
Long-Term Property Value Appreciation: Investing in buy-to-let properties can lead to long-term appreciation in their value, further enhancing investment returns.
Leveraging through Financial Instruments: Investors can leverage financial instruments to maximize their investment potential and achieve higher returns.
Property Management Companies for Hassle-Free Investments: Manchester benefits from the presence of property management companies, facilitating hassle-free investment experiences for property owners.
Active Resale Market: The city boasts a vibrant resale market, providing investors with the opportunity to liquidate their investments when desired.
Unique Selling Points of Manchester:
Rental Value Growth: Manchester has witnessed a consistent rise in average rental prices, increasing by more than 12% since 2019. Forecasts suggest even more significant growth in the future.
Rental Yields: When compared to many other cities, Manchester excels in rental yields, attracting a large number of renters due to reasonable property prices and the inflow of students and professionals.
Capital Appreciation: Property values in Manchester have soared by 40% since 2015, with predictions indicating continued growth in the future.
City Appeal: With its rich cultural history, world-class amenities, and significant cost savings compared to London, Manchester is increasingly becoming a favored destination for both living and working.
Manchester vs. Liverpool: Both cities possess immense potential for property investment. Substantial investments and the introduction of the "Northern Powerhouse" initiative have stimulated growth in both areas. While Manchester promises better rental value growth, Liverpool offers greater affordability.
The Student Market: Manchester boasts a robust student population due to its prestigious universities. The city's high educational standards attract a considerable number of international students, ensuring a steady demand for rental properties.
Best Buy-to-Let Areas in Manchester:
By Rental Yield:
| Postcode | Borough | Avg Asking Rent (pm) | Avg Yield |
|---|---|---|---|
| M14 | Manchester | £1,680.00 | 9.60% |
| M13 | Manchester | £1,356.00 | 7.20% |
| M6 | Salford | £1,081.00 | 6.60% |
| M9 | Manchester | £858.00 | 6.30% |
| M5 | Salford | £1,040.00 | 6.20% |
| M3 | Manchester | £1,055.00 | 5.90% |
| M11 | Manchester | £841.00 | 5.90% |
| M19 | Manchester | £1,226.00 | 5.90% |
| M50 | Salford | £987.00 | 5.70% |
| M1 | Manchester | £1,063.00 | 5.40% |
| M7 | Salford | £920.00 | 5.30% |
| M4 | Manchester | £1,042.00 | 5.20% |
| M15 | Manchester | £1,215.00 | 5.20% |
| M24 | Rochdale | £762.00 | 5.10% |
| M40 | Manchester | £787.00 | 5.10% |
| WN7 | Wigan | £636.00 | 5.10% |
| M22 | Manchester | £865.00 | 5.00% |
| M46 | Wigan | £668.00 | 5.00% |
| OL16 | Rochdale | £762.00 | 5.00% |
| SK5 | Stockport | £828.00 | 5.00% |
| BL3 | Bolton | £671.00 | 4.90% |
| M23 | Manchester | £928.00 | 4.90% |
| M30 | Salford | £800.00 | 4.90% |
| WN2 | Wigan | £598.00 | 4.90% |
| M27 | Salford | £864.00 | 4.80% |
| M43 | Tameside | £760.00 | 4.80% |
The following table provides insights into the locations within Greater Manchester where the highest rental yields, a crucial aspect of any buy-to-let investment, can be achieved.
Contrary to expectations, the dominance of the city center is not evident. While areas such as M1 (Gay Village, Northern Quarter & Piccadilly), M3 (Deansgate, Green Quarter & Spinningfields), and M4 (Ancoats, New Islington, NOMA & Northern Quarter) perform well, it is M14 that significantly outshines others in terms of rental yields.
M14 encompasses a substantial portion of Manchester's university population and is characterized by student-dominated housing areas like Fallowfield, extending towards the city center through the renowned Curry Mile in Rusholme. Student accommodation in this area consistently generates exceptional yields.
Another neighboring postcode, M13, also demonstrates strong performance for similar reasons. Starting from Longsight and stretching to the outskirts of the city center, it covers Ardwick, Manchester Royal Infirmary, the University of Manchester campus, and a significant portion of the popular Oxford Road. As expected, this area with a high concentration of students delivers yields that surpass the average.
It is worth noting the performance of Salford as well. With five postcodes among the top 25, it stands as the second-best performing borough in the metropolitan region, following Manchester. The ongoing regeneration efforts in Salford are stimulating rental price increases and, consequently, higher yields. Additionally, hotspots featuring an abundance of newly developed apartment blocks targeting young professionals, such as Blackfriars (M3), Ordsall (M5), and MediaCity (M50), serve as significant drivers for this positive trend.
Top 25 Postcodes In Greater Manchester By Property Value Growth
| Postcode | Borough | Avg Asking Price | 5 Year Growth |
|---|---|---|---|
| M38 | Salford | £142,691.00 | 67.00% |
| M16 | Trafford | £224,988.00 | 63.00% |
| M18 | Manchester | £161,770.00 | 60.00% |
| M19 | Manchester | £249,302.00 | 58.00% |
| M31 | Trafford | £225,879.00 | 54.00% |
| SK16 | Tameside | £203,435.00 | 54.00% |
| M23 | Manchester | £226,050.00 | 52.00% |
| M9 | Manchester | £163,391.00 | 51.00% |
| M24 | Rochdale | £178,649.00 | 51.00% |
| M40 | Manchester | £184,578.00 | 51.00% |
| M7 | Salford | £209,720.00 | 50.00% |
| M4 | Manchester | £241,934.00 | 49.00% |
| M27 | Salford | £214,612.00 | 49.00% |
| OL7 | Tameside | £179,280.00 | 47.00% |
| OL9 | Oldham | £194,547.00 | 46.00% |
| BL4 | Bolton | £156,780.00 | 46.00% |
| M32 | Trafford | £271,641.00 | 46.00% |
| OL1 | Oldham | £164,427.00 | 44.00% |
| M5 | Salford | £201,042.00 | 44.00% |
| M30 | Salford | £195,491.00 | 44.00% |
| SK5 | Stockport | £198,586.00 | 43.00% |
| M35 | Oldham | £192,753.00 | 42.00% |
| M6 | Salford | £197,451.00 | 42.00% |
| M43 | Tameside | £189,710.00 | 42.00% |
| M45 | Bury | £255,258.00 | 42.00% |
| M8 | Manchester | £188,949.00 | 41.00% |
The provided table illustrates the areas within the city that have experienced the highest growth in property values over the past five years.
Interestingly, the areas outside the city center have shown the strongest performance, which is not surprising. Properties in the city center are already among the most expensive in the region. While they have experienced considerable growth in the past five years, their potential for further growth is limited compared to lower-value areas.
For example, average asking prices in M4 (Ancoats, New Islington, NOMA & Northern Quarter) have increased by 49%, from £162,372 to £241,934, representing a raw increase of £79,562.
In contrast, average asking prices in M38 (Little Hulton), which is approximately 10 miles from the city center, have surged by 67%. However, since prices were initially lower, the raw increase in value is slightly lower than M4 at just £57,247.
This iswhy we see a mix of postcodes from various boroughs in the top 25. The entire Greater Manchester region has witnessed strong growth in house prices, but it is the areas with lower initial values that have experienced the highest percentage increases. However, this doesn't necessarily mean that these postcodes are ideal choices for buy-to-let investors.
Investors can benefit more from the higher raw increase in value in central postcodes, particularly when factoring in the rental market.
Nevertheless, within the top five postcodes, there are several locations considered up-and-coming. M16, M18, and M19 are all in close proximity to the city center and boast excellent transport links. Their growth may be attributed to homebuyers being priced out of neighboring sought-after locations.
M16 covers a significant portion of Trafford and is situated just north of the desirable Chorlton (M21), where the average asking price is £349,620. Buyers who cannot afford such prices may consider Trafford as a favorable alternative due to its accessibility to both Chorlton and the city center.
A similar trend may be observed in M18 (Levenshulme) and M19 (Gorton). Both areas are in close proximity to West Didsbury (M20), where the average property value stands at £327,909, and Stockport's highly sought-after "Four Heatons" (Heaton Chapel, Heaton Mersey, Heaton Moor, and Heaton Norris) in the SK4 postcode, with an average asking price of £322,615.
Levenshulme was even recognized as one of the best places to live by The Sunday Times, which undoubtedly contributes to the increasing demand for the area.
Buy-to-let investors may want to take note of this trend. If these areas are attracting buyers, it is likely that they will also attract renters, especially considering ongoing regeneration projects and their proximity to the city center.
Therefore, the best buy-to-let areas in Manchester are believed to offer a balanced combination of rental yields and capital appreciation. A strong rental yield covers the property's expenses while building equity and increasing the investor's monthly income. At the same time, capital appreciation provides a substantial payout in the future when the property is sold.
To identify the best buy-to-let locations in Manchester, a simple scoring system has been utilized. The region consists of 82 postcode districts, and the postcode with the highest rental yield receives 82 points, the second-best receives 81 points, and so on. The same scoring system is applied to the growth in property values. Rental yield scores are multiplied by two to place emphasis on yield, which holds slight precedence for buy-to-let investors. The scores are then added together to calculate a final score, which determines the ranking of results.
Here are the results:
| Postcode | Borough | Avg Yield | Yield Score | Avg Asking Price | 5 Year Growth | Growth Score | Combined Score |
|---|---|---|---|---|---|---|---|
| M9 | Manchester | 6.30% | 158.00 | £163,391.00 | 51.00% | 75.00 | 233.00 |
| M19 | Manchester | 5.90% | 154.00 | £249,302.00 | 58.00% | 79.00 | 233.00 |
| M5 | Salford | 6.20% | 156.00 | £201,042.00 | 44.00% | 63.00 | 219.00 |
| M6 | Salford | 6.60% | 160.00 | £197,451.00 | 42.00% | 58.00 | 218.00 |
| M7 | Salford | 5.30% | 144.00 | £209,720.00 | 50.00% | 72.00 | 216.00 |
| M4 | Manchester | 5.20% | 142.00 | £241,934.00 | 49.00% | 71.00 | 213.00 |
| M24 | Rochdale | 5.10% | 138.00 | £178,649.00 | 51.00% | 75.00 | 213.00 |
| M40 | Manchester | 5.10% | 138.00 | £184,578.00 | 51.00% | 75.00 | 213.00 |
| M13 | Manchester | 7.20% | 162.00 | £225,147.00 | 34.00% | 39.00 | 201.00 |
| M50 | Salford | 5.70% | 148.00 | £206,852.00 | 37.00% | 52.00 | 200.00 |
| M23 | Manchester | 4.90% | 124.00 | £226,050.00 | 52.00% | 76.00 | 200.00 |
| M14 | Manchester | 9.60% | 164.00 | £209,907.00 | 32.00% | 33.00 | 197.00 |
| SK5 | Stockport | 5.00% | 132.00 | £198,586.00 | 43.00% | 62.00 | 194.00 |
| M30 | Salford | 4.90% | 124.00 | £195,491.00 | 44.00% | 63.00 | 187.00 |
| M27 | Salford | 4.80% | 116.00 | £214,612.00 | 49.00% | 71.00 | 187.00 |
| M16 | Trafford | 4.50% | 104.00 | £224,988.00 | 63.00% | 81.00 | 185.00 |
| M11 | Manchester | 5.90% | 154.00 | £170,055.00 | 30.00% | 29.00 | 183.00 |
| BL3 | Bolton | 4.90% | 124.00 | £162,920.00 | 37.00% | 52.00 | 176.00 |
| M43 | Tameside | 4.80% | 116.00 | £189,710.00 | 42.00% | 58.00 | 174.00 |
| BL4 | Bolton | 4.60% | 108.00 | £156,780.00 | 46.00% | 66.00 | 174.00 |
| M22 | Manchester | 5.00% | 132.00 | £205,698.00 | 33.00% | 37.00 | 169.00 |
| OL10 | Rochdale | 4.80% | 116.00 | £175,963.00 | 35.00% | 47.00 | 163.00 |
| M3 | Manchester | 5.90% | 154.00 | £213,757.00 | 12.00% | 3.00 | 157.00 |
| SK1 | Stockport | 4.70% | 110.00 | £183,952.00 | 35.00% | 47.00 | 157.00 |
| M20 | Manchester | 4.60% | 108.00 | £327,909.00 | 35.00% | 47.00 | 155.00 |
| M15 | Manchester | 5.20% | 142.00 | £281,090.00 | 19.00% | 7.00 | 149.00 |
| M1 | Manchester | 5.40% | 146.00 | £237,016.00 | 7.00% | 2.00 | 148.00 |
| WN7 | Wigan | 5.10% | 138.00 | £150,388.00 | 22.00% | 10.00 | 148.00 |
| SK3 | Stockport | 4.30% | 92.00 | £224,751.00 | 41.00% | 56.00 | 148.00 |
| M32 | Trafford | 4.10% | 82.00 | £271,641.00 | 46.00% | 66.00 | 148.00 |
The best buy-to-let postcodes in Greater Manchester are primarily within Manchester and Salford, with only a few interjections by the other boroughs.
Salford does particularly well, with three postcodes in the top five. Residential projects in the previously mentioned MediaCity, Ordsall and Blackfriars have attracted a lot of investor interest over the last few years and will continue to do so.
However, it’s Manchester’s M9 that comes out on top. This is an interesting result considering M9 covers Blackley and Hapurhey, an area named as the most deprived in the UK in 2007. Yet it clearly offers value for property investors: values are still quite low and yields are strong, plus these areas are starting to attract investment, with regeneration now radiating outwards from the city centre (the Northern Gateway is a £1billion scheme, for example).
In summary, there is value to be found all over Greater Manchester for a buy-to-let investor. Aside from the popular, well-known areas across the centre, this research has sprung a number of surprises that highlight the value of looking around.
Types of Buy-to-Let Properties in Manchester:
- Student Houses/HMOs: Houses with multiple occupants, popular in student areas.
- PBSA (Purpose-Built Student Accommodation): High-quality student flats for individual students or groups.
- City-Centre Apartments: Modern apartments catering to young professionals.
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