Investing in buy-to-let properties can be a lucrative venture, especially in cities with strong rental yields, high demand from students and professionals, and ongoing regeneration projects. In this article, we will analyse three prominent UK cities — Manchester, Birmingham, and Liverpool —comparing their buy-to-let rental yields, student and professional demand, regeneration efforts, and overall benefits for property investors.

Manchester: The Northern Powerhouse

1. Rental Yields

Manchester consistently ranks as one of the top cities for buy-to-let investments due to its attractive rental yields. As of 2024, the average rental yield in Manchester stands at approximately 6.56%. This high yield is driven by strong tenant demand and relatively affordable property prices compared to London.

2. Student Demand

Manchester is home to three major universities: the University of Manchester, Manchester Metropolitan University, and the Royal Northern College of Music. With over 100,000 students, the city has a thriving rental market catering to student accommodation. The high student population ensures consistent demand for rental properties, making it an ideal location for buy-to-let investors targeting the student market.

3. Professional Demand

Manchester’s economy is robust, with significant growth in sectors such as finance, technology, and media. The city’s GDP per capita is £51,330, with a total GDP of £28 billion. This economic strength attracts young professionals, further boosting demand for rental properties. The average rent in Manchester is £1,291 per month, with an annual growth rate of 11.3%.

4. Regeneration

Manchester has undergone extensive regeneration over the past two decades. Key projects include the £4 billion Victoria North development, which will deliver 15,000 new homes and create thousands of jobs. Other notable projects include the redevelopment of Old Trafford and the ongoing expansion of MediaCityUK. These regeneration efforts enhance the city’s appeal, driving property values and rental demand.

5. Benefits of Investing in Manchester

  • High Rental Yields: Consistently strong rental yields make Manchester a top choice for buy-to-let investors.
  • Economic Growth: A thriving economy with diverse job opportunities attracts professionals and ensures steady rental demand.
  • Student Population: A large student population guarantees consistent demand for rental properties.
  • Regeneration Projects: Ongoing regeneration projects boost property values and create investment opportunities.

Birmingham: The Midlands’ Economic Giant

1. Rental Yields

Birmingham offers competitive rental yields, with an average yield of around 5.5%. The city’s affordability compared to London makes it an attractive option for investors seeking strong returns without the high entry costs.

2. Student Demand

Birmingham is home to five universities, including the University of Birmingham and Aston University, with a combined student population of over 80,000. This large student base creates a robust rental market, particularly in areas close to university campuses.

3. Professional Demand

As the UK’s second-largest city, Birmingham boasts a dynamic economy driven by sectors such as finance, manufacturing, and technology. The city’s central location and excellent transport links, including the upcoming HS2 high-speed rail project, make it a magnet for professionals. The average property price in Birmingham is £250,000, reflecting steady growth.

4. Regeneration

Birmingham has seen significant regeneration through initiatives like the Big City Plan, which aims to transform the city center and surrounding areas. Key projects include the redevelopment of Paradise Circus and the construction of the HS2 Curzon Street Station. These projects are expected to create thousands of jobs and attract further investment.

5. Benefits of Investing in Birmingham

  • Strong Rental Yields: Competitive rental yields make Birmingham an attractive option for buy-to-let investors.
  • Economic Hub: A diverse economy with strong job growth attracts professionals and ensures rental demand.
  • Student Population: A large student population provides a steady stream of tenants.
  • Regeneration Projects: Major regeneration projects enhance the city’s appeal and drive property values.

Liverpool: The Affordable Investment

1. Rental Yields

Liverpool is known for its high rental yields, often exceeding 7%. The city’s affordability and strong tenant demand make it a top choice for investors seeking high returns.

2. Student Demand

Liverpool is home to several universities, including the University of Liverpool, Liverpool John Moores University, and Liverpool Hope University. With a student population of over 50,000, the city has a vibrant rental market catering to student accommodation. The presence of multiple universities ensures consistent demand for rental properties.

3. Professional Demand

Liverpool’s economy is growing, with significant investment in sectors such as digital technology, healthcare, and maritime industries. The city’s Knowledge Quarter and Liverpool Waters projects are expected to create thousands of jobs and attract professionals. The average property price in Liverpool is £180,000, highlighting its affordability and growth potential.

4. Regeneration

Liverpool has undergone extensive regeneration, particularly in its waterfront areas. The £5.5 billion Liverpool Waters project aims to transform the city’s northern docks into a vibrant mixed-use community. Other notable projects include the Knowledge Quarter and the redevelopment of the Baltic Triangle. These initiatives are set to boost property values and rental demand.

5. Benefits of Investing in Liverpool

  • High Rental Yields: Liverpool offers some of the highest rental yields in the UK, making it an attractive option for investors.
  • Affordability: Lower property prices compared to other major cities provide a cost-effective entry point for investors.
  • Student Population: A significant student population ensures steady demand for rental properties.
  • Regeneration Projects: Ongoing regeneration projects enhance the city’s appeal and drive property values.

Manchester, Birmingham, and Liverpool each offer unique advantages for buy-to-let investors. Manchester stands out for its high rental yields, strong professional demand, and extensive regeneration projects. Birmingham offers competitive rental yields, a diverse economy, and significant regeneration efforts. Liverpool provides high rental yields, affordability, and substantial regeneration projects.

Ultimately, the best city for buy-to-let investment will depend on your specific investment goals and risk tolerance. Whether you prioritise high rental yields, strong tenant demand, or long-term capital growth, these three cities present compelling opportunities for property investors.