The UK rental market is currently booming with rents outside of London rising at their fastest rate since 2008. But, with so many choices, it can be difficult to decide where to invest as a UK expat or foreign national investor. Here, we examine one of the most promising options for UK expat and foreign national buy-to-let investors – Manchester.
The Manchester Rental Market for UK Expat and Foreign National Investors.
‘While rental market demand is booming in general, there are certain areas which are performing exceptionally well’ says Stuart Marshall. ‘One of those areas is Manchester. Recent research from Urbanbubble is reporting that the number of properties available to rent in the city centre of Manchester stands at only 427. This is the first time that this figure has fallen below 500.’
The high demand for rental property in Manchester is making sure that supply stays incredibly low, and consequently this is driving up prices and increasing rental yields for UK expat and foreign national investors. But properties are letting at an extraordinary rate too. In the third quarter of 2021, there were more than 2750 lettings agreed in Manchester, 10.3% higher than we saw in the same period of 2019. The speed at which properties are letting means that UK expats’ and foreign nationals’ investments are far more profitable – minimising costly void periods.
‘All of the factors that contribute to high rental yields – high consumer demand and low supply – are there for Manchester rental property, pointing to the financial opportunity that’s available to UK expat and foreign national investors. Looking at the figures that we are seeing for Manchester at the moment, the profitability that’s available for UK expat and foreign national investors is clear to see. Zoopla is reporting that the average rental price in Manchester city centre currently sits at £1,505pcm, around £500 higher than the UK average. Furthermore, there is no sign of a decline for this figure. Average rents for studio and two-bed apartments have risen 6% in the last 3 months as a result of the constraint on supply, meaning that UK expat and foreign national investors are seeing higher rental yields and a quicker return on investment for Manchester rental properties in particular. With all of this in mind then, it’s not surprising that the average rental yield in Manchester sits at 8.55%, more than double the UK average.’
Youth Population Driving Demand.
‘Much of the demand for rental property in Manchester is due to the youth population that continues to thrive there. We’ve noted in previous articles that the shift in mindset and worldview amongst the youth population is drastically changing the rental market. In short, young people are less likely – and more importantly, often less willing – to buy property. Instead, they are looking to rental property to facilitate a more fluid way of living that can accommodate changing jobs, a less routine working life, and more regular travel. Because of this change, city centre rental property is coming out on top as young people look toward city centre property in order to be in close proximity to bars, restaurants, clubs and other social hubs.’
With this in mind, it’s no surprise that the rental market in Manchester is thriving. Manchester’s population is rapidly growing and now sits in excess of 500,000 people. 37% of this population is aged between 18 and 34. With younger people more willing to rent, the constraint on supply and the high demand that we’ve noted above is set to continue. And, all of these factors are contributing to Manchester’s cementing reputation as an excellent investment location for UK expats and foreign nationals.
‘Knowing the demographic for the area in which you’re investing is incredibly important’ adds Stuart Marshall. ‘When investing in a property, you need to know what your target audience are going to want out of that property. With such a strong proportion of renters in the Manchester area coming from the youth demographic, it’s important to purchase a buy-to-let property that caters for the specific needs of these people. This is going to reduce the time it takes for your property to let, minimise void periods, maximise the asking rent and make sure that the profitability of your investment remains as high as possible’.
Don’t Sleep on Off-Plan.
‘The demand that we’re currently seeing in Manchester for rental property isn’t surprising to us – or anyone that’s been paying attention, for that matter’ says Stuart Marshall. In 2020, Zoopla reported that the demand for rental property in Manchester was 5 times higher than the available supply of rental property in the city centre. ‘The state of affairs that we’re seeing now has been building for a while then. With this in mind, buying the right type of rental property can be a competitive game. Our advice, as always, is to speak to a qualified expat and foreign national mortgage broker, who can help you to navigate the UK buy-to-let market. However, one other thing that we’re currently advising for many UK expat and foreign national investors is to keep an eye on off plan investment properties.’
‘Off plan properties are typically more accessible and more affordable than properties that already exist in the market. And there is a wide range of choice available, particularly in popular rental hubs like Manchester, where there are currently 16,000 apartments under construction and 1,700 awaiting planning permission. Buying off plan can be a much simpler way to get your slice of the lucrative UK buy-to-let market and start building your investment portfolio as a UK expat or foreign national investor.’
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