Tuesday 15 February 2022
Following the turbulence of the last two years, UK investment remains an obvious option as we enter 2022. There has never been a better opportunity to invest in property in the UK. Low interest rates and the growing potential of main regional areas have produced a market where a variety of areas are deserving of the title of best place to invest.
According to Savills, over the next five years, UK property is expected to rise in price by 21.5%. This means the average UK property will rise from £322,000 to £370,000.
Driven by a chronic undersupply and rising demand for property in the UK, long-term forecasts for rental prices are extremely positive for those looking to UK investing.
JLL predicts the average rental price for a UK investment could rise by 2% during 2022, contributing to an 8.5% increase over the next five years. This is ideal if you are investing in a buy-to-let, as it presents a fantastic opportunity for the property to maximise returns over the long-term.
When looking at key areas for property investment in the UK, especially regional cores in the Midlands and the Northwest, these forecasts are even higher. The West Midlands especially is outperforming the wider market, with forecasts suggesting it could see rental prices increase by 12% over the next five years. Despite there being plenty of external forces impacting the market, buyer and seller confidence has remained high – a trend that looks set to continue in 2022.
75% of active buyers in the UK were confident they would purchase a property in the next 3 months, while 81% of sellers were confident, they could sell within the next 3 months. This is largely being driven by a high availability of low-rate mortgages.
Those interested in UK investing would do well to consider how this level of demand is impacting supply and what that could mean for prices going forward. One of the biggest factors for anyone looking to invest in UK property is the imbalance between supply and demand.
Many regional areas in the UK – especially those forecasting above-average price growth – remain affordable in the current market and are seeing incredible demand because of low supply.
With buy-to-let in the UK worth over £1 trillion, research estimates that UK renters will outnumber homeowners by 2039. For context, this represents nearly 125 million households in a private rented sector set to grow by 24% by 2021.
This only serves to highlight the power of property investment in the UK – where the market is heavily trending towards renting but cannot deliver the supply to meet demand.
With the UK population expected to reach 74 million people in the next 20 years – we are seeing why demand is growing within the UK rental market.
Where are the best UK Buy-to-Let property investments?
When we talk about the best places to invest in UK property 2022, there are a number of factors to consider. While some of these are obvious, it is important to get a clear idea of what makes a good buy-to-let investment before we jump in.
Key factors to look at are:
Property Prices – Rental Yields – Tenant Demand – Population – Regeneration – Career Opportunities – Tenant Demographics – BTL Opportunities – Transport Links
These metrics will help to build a complete picture of a location’s buy-to-let performance, while also highlighting emerging towns and cities that might not be traditional options for investment. Understanding these metrics is a great way of figuring out where to consider for a property investment in the UK and is something we heavily focus on when carrying out our due diligence.
UK house prices have risen at their fastest rate in over seven years – increasing by 10.9% compared to this time last year – highlighting the power that property investment in the UK can have for investors.
So, let us dive into where the best regions for investment are:
Property Investment in West Midlands:
In 2022, Birmingham will remain one of the best places to invest. Demand is at an all-time high as additional projects in the Big City Plan come to fruition. Birmingham, according to Savills, will be one of the fastest rising locations in the country over the next five years, with price hikes of 24 percent expected by 2025.
Rents have climbed 30% in the previous ten years and are likely to rise another 12% in the next 5 years. The main cause will be a surge of tenant demand from young professionals looking to relocate from London and a rising population set to be 1.24 million by 2023.
Some of the strongest connectivity foundations in the UK are being improved with new transport links. For example, the Midlands Metro expansion continues to offer unprecedented access to emerging West Midlands destinations while work has begun on HS2 – a generational development which will revolutionise Birmingham and surrounding areas.
An estimated 300,000 new jobs have been created in the region over the last 7 years alone. So, it is no surprise that Birmingham is a much-favoured destination for graduate talent. Career and employment prospects are excellent, wages are rising faster than in any other part of Britain, and yet living costs are significantly low than those in the Southeast. The result of this has been a continuing inward migration of skilled young workers, all looking for somewhere to live.
Birmingham is a key component of the West Midlands Combined Authority area, which is working closely with the Greater Birmingham Local Enterprise Partnership. Together, they have set ambitious targets for economic growth, including:
• Creating 250,000 private sector jobs by 2030
• Raising GVA by £29 billion by 2030
Birmingham itself has a 20-year, £1.5 billion City Centre Masterplan, which seeks to:
• Build 1.5 million square metres of new office space
• Create over 50,000 new jobs
• Add £2.1 billion to the economy each year
Property Investment In The Northwest
Manchester has continued its reputation as a northern powerhouse, positioning itself as one of the most attractive investment destinations.
Manchester has led the way for price growth in the North, with some of the strongest capital appreciation returns on our list over the previous five years, including a large increase between 2017 and 2018.
According to Savills' updated estimates, future growth is projected to continue, with property values expected to soar by 28%. This is partly due to the city's rapidly expanding economy and population, both of which have achieved great gains in recent years.
Manchester continues to be a viable alternative to London in the lettings market. According to Hamptons International, the city is now the top destination for young professionals in the Northwest, only being beaten out by Midlands’s destinations such as Birmingham, with a plethora of career opportunities in global businesses and employment growth of 84 percent between 2002 and 2015.
In terms of future growth, the Great North Rail project is projected to be completed by 2022, allowing 40,000 additional people to commute between important northern towns, considerably enhancing tourism in Manchester.
Due to the rental rates, it can deliver, Liverpool is a strong contender for best place to invest in property in 2022. While price growth has been slower than some other options in the previous five years, Liverpool offers some of the best rental yield postcodes in the country.
L1, often known as the Baltic Triangle, is one of Liverpool's trendiest neighbourhoods, with an annual growth rate of 8.1 percent in the past. The Royal Liverpool University Hospital is located in L7, which has been reported to produce yearly rental returns of 10%.
According to JLL, housing prices in Liverpool will climb by 28% in the next four years, following the same trend as Manchester.
Liverpool also has a 4.9 income-to-house-price ratio, demonstrating its affordability when compared to the strength of its workers.
The Liverpool Waters Plan, a £5 billion, 30-year plan aiming at developing new areas, increasing tourism, and creating roughly 17,000 jobs, will be one of the most significant in terms of regeneration for the city.
Located in the heart of the Northwest, Preston is the strategic and economic centre of Lancashire, and one of the UK’s fastest growing cities. Preston became the UK’s 50th city when it was awarded city status in 2002. Since then, it has enjoyed much success, benefitting from a wealth of public and private investment schemes to upgrade its centre and surrounding areas. Today, Preston is the third largest city in the Northwest—as well as being the largest in Lancashire—and with a population of 141,000, it looks to have a bright future.
Located less than an hour away from both Manchester and Liverpool, Preston is the largest city in Lancashire, a county that is generating £23bn in Gross Value Added (GVA) annually, with more than 45,000 registered businesses and around 620,000 jobs. The city’s proximity to its economic powerhouse neighbours has set Preston on its own path to prosperity. Attracting 70,000 commuters between 2001 and 2011, a figure that continues to grow, it has fast become an attractive place to work and live, with young professionals pushing up demand for quality rental properties.
The city is considered a national centre for education, home to the University of Central Lancashire (UCLAN). With a student and staff community of almost 38,000, the university ranks as the fifth largest in the UK based on undergraduate intake. With so much talent being nurtured in the city, businesses continue to see the massive potential in Preston’s young and progressive workforce. The city now boasts an extremely strong employment rate of 77.5%, 3.1% higher than the national average. All things considered; Preston has become an investment hotspot in its own right and should be considered seriously by those looking for their next rental property. However, some areas are growing faster than others, so pinpointing where exactly to invest is key to a successful long-term strategy.
A number of future-facing investment schemes have been announced in recent years which are aimed at expanding Preston’s infrastructure and residential offering. The aim being to ‘level up’ Preston, transforming its city centre and surrounding areas into a hotbed for economic and social growth.
Preston’s £434m cash injection Signed in 2013, the Preston, South Ribble and Lancashire City Deal has been described as “a landmark agreement” by Preston City Council. The Infrastructure Delivery Programme and Investment Fund totals £434m of new investment and aims to stimulate new development opportunities in the city, delivering 17,420 new homes to the residential market, and creating more than 20,000 jobs. The scheme will also better connect the city through the enhancement of local transport links, with a focus on four road schemes, helping to support future business. It is anticipated that the City Deal will grow the local economy by £1bn over the next decade.
Preston’s location is a key driver of success. Located centrally in the Northwest, the city has easy access to all of the major northern roadways, including the M6, M61, M65 and the M55, opening up travel throughout the UK for residents and those looking to do business. Preston is also well-served by rail, situated on the West Coast mainline. This puts it within easy reach of the UK’s most well-known cities including Manchester, Liverpool, Glasgow, Edinburgh, Birmingham and London.
While the city’s close proximity to both Manchester and Liverpool are of particular benefit, as Preston is commutable to either The University of Central Lancashire (UCLAN), a renowned centre for education and research, is central to Preston’s community and one of the city’s largest employers. The UCLAN Masterplan is a £200m investment scheme that will transform UCLAN’s campus into a world-class education facility. Plans for a fully integrated city centre campus will enhance the learning experience for current and future students and staff, and contribute to the city’s reputation as a place to live, study and visit
Property Investment In the South
Woolwich is a beacon of cultural, creative, revitalisation and regeneration excellence. The town is the most stimulating destination in Southeast London – now incorporated into the wider Docklands regeneration area – bright, diverse and atop of its transformative curve.
Woolwich’s glorious military history gives the town immense character and has left a legacy of handsome listed buildings. The former munitions site is now an epicentre of activity, with places to drink, dine and socialise – set against a backdrop of over 1km of waterside walks and public art. Complementing the town’s heritage quarter is an established High Street and two revitalised social focal points – General Gordon Square and Beresford Square – with access to green, open space across Woolwich Common, Charlton Park, Blackheath Common and Greenwich Park.
Woolwich has experienced an explosion of independently run bars, restaurants, cafes, and shops, adding extra variety to its already thriving hospitality scene. Woolwich is a brand-new cultural hub, café and bar that now provides a home to resident and travelling artistic companies, including the National Youth Jazz Orchestra.
Expected to finally open in the first half of 2022 is Crossrail. This is said to be driving price growth across London and Woolwich is set to be one of the greatest beneficiaries. For years, London has struggled to keep up with the demand for housing and has experienced an acute imbalance in the city’s real estate market.
The arrival of Crossrail, one of Europe’s largest construction projects, is further increasing demand and driving price growth as it transforms rail transport in London, cutting journey times across the city and having a significant impact on property prices and investment.
Residential capital values are projected to increase in the areas immediately surrounding Crossrail stations. This huge infrastructure project is opening up new areas of accessibility in outer London, allowing inhabitants to move around the city with greater ease and efficiency. Woolwich is predicted to be one of the biggest winners from Crossrail, both in terms of investment and price growth.
Crossrail in Woolwich is part of a new waterfront masterplan – an area that has undergone a dramatic transformation. The Royal Arsenal Riverside development is a £1.2 billion mixed-use scheme set on an 88-acre brownfield site with almost 1km of riverside frontage. It will include a prominent cultural quarter with parks, retail, food and beverage outlets and a performing arts venue.
The county of Kent is a one-in-a-million location. A place truly unspoiled by progress, Kent has it all in abundance. With an enticing mix of country, coast and city living, Kent is a rare blend of ancient and modern, natural and luxurious, individual and international.
Home to the Ashford Designer Outlet Centre with over 70 designer brands, restaurants and coffee shops, your shopping needs are well catered for. Ashford is also set to become one of the country’s leading digital media hubs, with Ashford International Film Studios set to be launched by 2022. With the likes of Netflix and Amazon set to dominate the area, it is believed that the studios will bring 2,000 new jobs to the local area.
Ashford International train station is a gateway to Europe’s capitals. With trains to London within less than 40 minutes, Paris less than 2 hours away as well as Brussels and Amsterdam. To add to the connectivity, Kent’s M20 motorway is five minutes away, and access to the North Kent and the East of the county awaits. London Gatwick International Airport is only 1 hour away and even closer is Lydd London Ashford Airport, which has a £25 million redevelopment planned and is just a 30-minute drive.