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Top UK cities for 2024 rental potential revealed by industry supplier

Aldermore has named Bristol, as the best city for landlords to invest in for 2024. 

Manchester, Coventry, Brighton and London make up the rest of the top five.

The firm analyses five key indicators that impact buy to let desirability: average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the city population in the rental market.

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With good rental prospects, a high proportion of long-term private renters available and low number of properties currently vacant, Bristol jumped to the top of the leaderboard this year. 

Growth on returns is also an attractive lure for landlords with an annual increase of 6.6 per cent. However, investing in Bristol isn’t for those looking to make a fast investment with short-term yields sitting at 4.4 per cent.

Manchester dropped one place this year from the top spot, although the average rent per room is lower at £461, and the proportion of vacancies in properties is lower at 0.9 per cent compared to the national average of 1.2 per cent, long term returns are very appealing for landlords at 6.1 per cent with a healthy market of tenants available.

Other cities in southern England also provided positive prospects for landlords including Brighton, London and Reading with higher average rents per room and strong demand from renters.

For the first time since the Aldermore ratings were launched five years ago, a Scottish city has entered the top 10 with Glasgow now in eighth place. The city provides good rental returns for landlords at £471 and offers one of the highest short-term returns of 8.6 per cent, higher than the average of 5.5 per cent.

The ratings also show the average rent per room has steadily increased, in 2021 the average room for rent was £423, while in 2022 it was £432 and this year increased to £455. 

Research by Aldermore found that nine out of 10 landlords increased the rent they charge in the last 12 months. With the current position of the rental market, the research also revealed just under three quarters of landlords have seen an increase in tenant demand for their properties in the last year.

There was no change at the bottom of the leaderboard with Newport and Swansea remaining in 49th and 50th place. 

Properties in Newport provided the lowest rent return of £292 per room compared with the average of £455, although long-term yields looked more promising at 4.9 per cent. 

However, Cardiff did climb a few places higher to make 40th place, helped by a good proportion of private renters (25 per cent available (compared to average of 22) and low number of vacant properties.

Jon Cooper, head of mortgages at Aldermore, comments: “Landlords have experienced an unprecedented year with rising interest rates, rising inflation, all while navigating their way through property legislation changes. Yet, the demand for rental accommodation has never been so high.

“Usually, a few regions dominate the leadership board, but this year we see for the first time a wider range of areas making it into the top 10. We can see that each region is made up of multiple smaller markets with their own unique conditions and challenges. 

“Landlords continue to do their research, working with their brokers to review their portfolios and ensure they are getting the best value for their properties, whatever obstacles may come their way.”

Aldermore’s Buy to Let City Tracker 2023 Top 50 Ranking Table:

Ranking

City

Region

Overall Score

2021 ranking

1

Bristol

South West

70

Manchester

2

Manchester

North West

69

London

3

Coventry

West Midlands

68

Bristol

4

Brighton

South East

67

Cambridge

5

London

London

67

Peterborough

6

Cambridge

East

66

Milton Keynes

7

Portsmouth

South East

66

Luton

8

Glasgow

Scotland

65

Reading

9

Basildon

East

65

Southend

10

Milton Keynes

South East

64

Coventry

11

Reading

South East

62

Oxford

12

Luton

East

61

Basildon

13

Peterborough

East

61

Norwich

14

Swindon

South West

61

Brighton

15

Northampton

East Midlands

60

Nottingham

16

Southend

East

59

Birmingham

17

Nottingham

East Midlands

59

Glasgow

18

Edinburgh

Scotland

58

Southampton

19

Norwich

East

58

Swindon

20

Maidstone

South East

55

Chelmsford

21

Birmingham

West Midlands

55

Edinburgh

22

Chelsmford

East

54

York

23

Belfast

Northern Ireland

53

Portsmouth

24

York

Yorkshire

53

Northampton

25

Wigan

North West

53

Maidstone

26

Hull

Yorkshire

50

Plymouth

27

Liverpool

North West

50

Telford

28

Oxford

South East

50

Leicester

29

Bournemouth

South West

50

Bournemouth

30

Derby

East Midlands

49

Liverpool

31

Southampton

South East

48

Stoke

32

Telford

West Midlands

48

Derby

33

Plymouth

South West

48

Wigan

34

Leicester

East Midlands

47

Hull

35

Leeds

Yorkshire

45

Wakefield

36

Newcastle

North East

41

Barnsley

37

Sheffield

Yorkshire

41

Newcastle

38

Doncaster

Yorkshire

41

Warrington

39

Barnsley

Yorkshire

39

Leeds

40

Cardiff

Wales

39

Belfast

41

Warrington

North West

39

Doncaster

42

Bradford

Yorkshire

38

Dundee

43

Wakefield

Yorkshire

36

Cardiff

44

Dundee

Scotland

35

Aberdeen

45

Stoke

West Midlands

35

Bradford

46

Aberdeen

Scotland

32

Wolverhampton

47

Sunderland

North East

31

Sheffield

48

Wolverhampton

West Midlands

28

Sunderland

49

Newport

Wales

18

Newport

50

Swansea

Wales

15

Swansea

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