Manchester retakes top spot as best city for buy-to-let investment

According to Aldermore’s Buy-to-Let City Tracker, this was followed by Glasgow, which climbed six spots to second position in the ranking of the best cities for BTL investment.

Coventry came third, stable year-on-year, while Wigan climbed 21 spots on the previous year to claim fourth and Bristol fell four positions into fifth.

The report evaluates BTL investment and desirability through five indicators. This includes 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’s population in the rental market.

Aldermore said Manchester had the best long-term price rises of all cities, at 6.5% annual growth.

This means it offers “significant appreciation” opportunities for landlords, as they can benefit from rental income and rising value of their investments.

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Manchester also has a “healthy market of tenants”, with 32% of locals being private renters, which is higher than the national average of 23%.

Wigan’s rise was attributed to the city having one of the lowest proportions of vacant properties, which had led to annual property price growth of 5.4%.

Aldermore explained that while the total return is lower, the city ranks highly as a BTL investment, as it is a “safer bet”.

London fell to 32nd position from fifth last year. The report noted that this was due to short-term returns on rental yields and lower house price growth dragging down the higher average rents.

‘Significant shifts in the rental market’

Overall, the report found that the rental market still offers good investment opportunities for landlords.

The average rent per room rose by 18% from the previous year to £518 in 2024 and rental yields increased from 5.5% in 2023 to 6.9% in 2024.

Landlords are also more optimistic compared to the year prior, with only 31% considering leaving the sector today, compared to 48% in the previous year.

Almost three out of five landlords say the value of their properties has increased in the past 12 months.

Jon Cooper, director of mortgages at Aldermore, said: “We’ve seen a lot of movement within the index this year, which is reflective of significant shifts in the rental market. Landlords continuously need to be on the ball, as difficult as that can be, reviewing their portfolios and ensuring they’re getting the most out of their investments. There are still good returns to be made in many cities, with rental income staying steady from last year and demand remaining strong, with an average of 10 applicants competing for each property.

“Landlords are seeing increased regulatory demands alongside shifting tenant expectations, posing a unique set of challenges. This requires them to adapt swiftly to maintain their portfolios, at the same time as continuing to offer a good standard of rental accommodation for a wide variety of tenants.

“However, with challenge comes opportunity. The current market environment presents a chance for landlords to rethink their strategies and work with their brokers to adapt and build resilience for the future.”

This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Manchester retakes top spot as best city for buy-to-let investment