Best Places to Invest In Property in the UK: 2022 guide
In this guide, we examine the main factors that buyers should take into account when determining the best places to invest in UK property.
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The best places to invest in property in the UK: 2022 guide
Even with the current chaos surrounding the UK economy, investing in property is rarely a bad decision.
Many investors are wondering where to invest in UK real estate as low borrowing rates and a rapidly expanding market meet.
In this Oasis Living guide we are examining the main factors that buyers should take into account when deciding where to invest money in the UK. Specifically, where are the ideal locations for UK real estate investments in 2022, and if you already know where to invest, what should you be on the lookout for?
We've analysed a number of crucial factors regarding the location, such as past performance, present returns, and future potential, when determining the best places to invest in UK property in 2022.
We've spared no detail, and this guide covers:
- Property costs
- Rental yields
- Tenant demand
- Expansion projects
We're highlighting some essential top investment locations, including: Manchester, Birmingham, Derby, Leicester, Nottingham, and Bracknell.
With all of these points considered, we’re able to build out a complete overview of the best property investment areas in the UK. As you’d imagine, this not only highlights traditionally popular areas but exciting, emerging locations that could still offer excellent returns!
So, which cities are the best places to invest in property in the UK?
Home of Robin Hood, Boots and HP sauce, Nottingham is a strong contender for your property investment shortlist.
- Average Property Price: £240,526
- Average Rent: £1,183 pcm
- Average Rental Yield: 5.9%
Nottingham is home to over 50 business headquarters, including Boots and E.ON, plus the likes of Rolls Royce call the city home. On top of this, they have a large student population with approximately 13% of Nottingham’s residents being students, making a student property investment a popular choice for landlords.
Another major contributor to Nottingham’s rising population is Queens Medical Centre, a ‘super-hospital’ that’s also a leading teaching hospital in the UK and home to over 6,000 medical staff, many of whom are looking for residential accommodation within the city.
We're absolutely delighted to shine a light on a location and community that isn't in the north of England! Several important South East suburbs have emerged as a result of post-pandemic Londoners making the move out of the capital, offering greater affordability while maintaining connectivity to the big smoke.
The town of Bracknell is a perfect example of this genre of suburban commuter dream locations. It is home to several well-known companies with a global presence, including Dell, Microsoft, and 3M, and the town centre is undergoing a massive reconstruction that is drawing a lot of attention.
- This new town's average house price has increased by 249% in the last 20 years, yet it is still less expensive than the typical London home
- As a result, Bracknell provides greater yields at 5.48% versus 2.90% in London
Additionally, a £770 million regeneration plan is having a beneficial effect on real estate prices, helping Savills predict average increases of 19.1% over the next five years.
Bracknell gives an opportunity for investors looking to capitalise on long-term growth and reliable income in the booming young, commuting professional demographic close to London.
Birmingham, a familiar and sturdy face of the UK market, will continue to be one of the best places to invest in property in the UK because of the massive amount of demand, growth, and regeneration it is expected to see. Birmingham anticipates price increases of 24.5% by 2026 even as the Big City Plan continues to transform the city by bringing in modern mixed-use developments and public spaces.
Birmingham's average rents have increased by 30% over the past ten years, and over the following five years, they are predicted to climb by another 12%.
Young professionals leaving London for Birmingham's affordability are driving up rental demand, and the population is expected to increase and reach 1.24 million by 2030. A whopping 41% retention rate for graduates attracts fresh twenty-somethings looking for housing too.
Key things to note:
- As a result of graduate retention, one and two-bedroom apartments dominate the Birmingham real estate investment market in the city centre
- Rental yields can reach up to 6%
- A strong residential pipeline is forming in projects like Lockside Wharf.
Transport connections continue to be an important aspect of Birmingham's success in terms of where to invest. The 'second city' will soon serve as a major hub for HS2, one of the most exciting infrastructure projects in a generation and a big reason why Birmingham is continually one of the best places in the UK for real estate investment, in addition to the top-notch connections from Grand Central and Birmingham International Airport.
Derby, the city at the exact centre of the UK, straddles the divide between the North and the South and is one of the East Midlands' leading lights. It is emerging as one of the best places to invest in property in the UK outside of the north.
Derby property price projections for 2022/2023 indicate that prices could rise by 17.5% over the following four years. The city is currently undertaking a significant regeneration project called the "2030 Derby Masterplan" that is changing the local environment.
Derby has had outstanding growth, which is supported by its young population and superior connectivity. With 17 colleges all within an hour's drive, the city is home to 34,000 students.
Given that Derby has an average population that is under 35 and is particularly popular with graduates, there is a significant potential demand for rental properties:
- 23% of graduates stay on to work after attending the University of Derby
- 46% of graduates relocate to Derby for employment
- With a graduate wage of £24,100, Derby ranks seventh in the UK (vs. the national average of £23,100).
The strength of Derby's rental market as one of the top locations to invest in UK real estate in 2022 are being driven by this younger generation. The greatest rate of rent growth in the UK, at 8% between 2020 and 2021, is expected to persist as long as demand outpaces supply, which will undoubtedly improve rental yields in Derby.
Manchester must be included on any list of the best places to invest in property in the UK for 2022, and likely for many years to come.
This has been reflected in the lettings market, as Manchester continues to be a top North option to London. The city's employment increased by 84 percent between 2002 and 2015, making it a top choice for young professionals, only surpassed by locations in the Midlands like Birmingham.
The history of capital growth in Manchester, where property values have climbed by 20.69% over the last five years, has played a significant role in the city's population growth.
The average age is 33, yet it doesn't have the youngest population on this list, which is a typical sign of rental demand. Manchester is a potential rental hotspot due to its over 100,000 students and above-average graduate retention rate.
With fantastic employment prospects at multi-million dollar redevelopment projects like Spinningfields and MediaCityUK, the city has also been recognised as a top place for company start-ups.
With property prices anticipated to increase by 28% over the next four years, future growth appears certain to help Manchester maintain its title as the king of property investment in the UK.
Best Rental Yields in Manchester
- M1 (City Centre): 6.55%
- M3 (Salford): 6.99%
- SK1 (Stockport): 5.43%
- M15 (Greater Manchester): 7.80%
- M14 (South Manchester): 9.46%
With one of the strongest economies in the nation, supported by a booming industrial sector, Leicester is one of the more established "emerging" cities on this list. This East Midlands city is a hub for professional prospects because it is home to several significant UK firm headquarters, such as Walkers, Dunelm, and Next.
The Leicester NHS Trust, one of the busiest trusts in the city and an employer of over 15,000 employees, contributes to this need for a large workforce.
These are all essential success indicators for investors looking for stable, long-term rental demand.
Leicester has excellent connectivity via national rail with large cities like Birmingham and London, because of its location inside the East Midlands. It's perfect for commuters who desire a more inexpensive living because Birmingham is reachable in just 48 minutes and London in 92 minutes.
The high amount of demand that has been generated by these transportation options (and employment prospects) has affected the local real estate market. Since 2016, real estate prices have increased by 45%, and according to forecasts, they could rise by another 17.5% in Leicester by 2026.
Despite the fact that rental yields aren't the highest on the list, this capital growth provides a strong argument in favour of investing, due to the following factors:
- One of the UK’s top 10 economies
- Forecasting property price increases of 24%
- High capital growth over the last five years at 45%
- A population set to rise by 11% by 2031
Other factors to consider when choosing a location for investment
It's important to decide which type of property you'd like to invest in.
In the UK, there are three main types of property investment opportunity: buy-to-let investments, property development, and new-build flipping.
You may have read stories saying the buy-to-let boom is over, due to legislation. Although it's true that landlords are faced with more compliance than ever before, buy-to-lets remain a great investment. Getting on the property ladder is consistently difficult for younger people, so landlords who provide stand-out rental properties will see continued demand from tenants. If you're looking for a long-term investment, where you'll generate an income as well as any capital growth, buy-to-lets could be the right option for you.
Property development can be a great short-term investment strategy. In theory, by finding a property in need of renovation work, you can add value before selling the renovated home for a profit. However, the return on your investment is subject to several factors, including:
- The amount you paid for the property in the first place
- Any costs accrued from renovation work and labour
- How quickly any building work is completed
- The current market conditions and demand from buyers
The more time you spend renovating, the more likely you could be effected by changes to the market. Costs can also rise over a long period of time, all of which can eat into your profits. For example, inflation fluctuates.
We can help with all of your property investment queries!
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