Best buy-to-let areas in the UK for 2023 - Just Landlords (2024)

Buying to let is an investment and, just like any investment, you will be focussed on getting the best returns. So where should landlords look to get the best yield on buy to let properties in the UK?

Higher mortgage rates, greater regulation, and already financially-stretched tenants will arguably make 2023 a tough year for landlords, and stricter rules on LTV (loan to value) from mortgage providers may make expanding a portfolio harder. Many investors might be choosing where and what to buy more carefully. Some may be waiting until the latter half of the year when we might expect to see greater certainty on where interest rates are going to settle. Either way, you can do your groundwork now, so you’re ready to act when the time comes.

Depending on how long you intend to keep a property, capital appreciation and the overall local trend in property prices will be increasingly important when deciding the best buy-to-let areas in the UK. There’s also your budget to take into account.

Scotland and the North-east had the highest yields in 2022, with Hartlepool landlords, for instance grossing about twice as much as those in prime central London (7.8% vs less than 4% gross yields) according to Zoopla.

How about convenience of the location? If you are going to outsource everything to a letting agent, location may not be a practical issue, but if not then proximity to your own home and practicality of visiting can l become a consideration. The good news here is that the 10 cities for long term property returns in the last year are dotted across the country.

Your timescale may also affect the type of property to let. How long do you envisage keeping the property? Are you looking for a regular retirement income, perhaps, or a retirement lump sum? Do you want long-term tenants such as growing families, or a fast turnover of young professionals or students that will provide plenty of ‘natural breaks’ for you to sell up?

Clearly there’s a balance to be found, and we should avoid using headline figures on gross yields as the only point of reference.

Figures published by specialist lender Aldermore at the end of last year in its fourth annual index for buy to let investors looked back at 2022 to see which city was best for buy-to-let investors predicted where you should look at putting your money this year.

It 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.

And the results? The lenderhas named Manchester with property prices rising and 31% of the population privately renting, London with its high rents and occupancy offsetting slightly lower yields,Bristol with high property price rises, and Cambridge and Peterborough with above-average rents as the best cities for landlords to invest in for 2023.

1. Manchester
2. London
3. Bristol
4. Cambridge
5. Peterborough
6. Milton Keynes
7. Luton
8. Reading
9. Southend
10. Coventry

Look East! No fewer than seven cities in the East of England featured in the Top 20: Cambridge, Peterborough, Luton, Southend, Basildon, Norwich, and Chelmsford. All of these cities were seen to have offered attractive long-term returns in 2022, with Southend seeing the biggest average annual increase in house price of all 50 cities featured, with a rise of 5.9%.

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