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Investors bullish about Birmingham as Britain’s second city crowned top buy-to-let destination
March 4, 2014Article by Ray Withers
Famous for being the second most populous city in the UK and for its commitment to leading architectural design, such as the iconic Bull Ring commercial centre, Birmingham is now making headlines for a new reason, having recently been identified as one of the highest yielding buy-to-let destinations in the UK.
A huge market
Buy-to-let is increasingly being seen as one of the most exciting and dynamic investment markets available within the UK. With rising house prices and a construction sector that is lagging hugely behind demand, many families are seeking rental properties rather than purchasing their own home.
The private rented sector has been growing steadily over the past decade, but has accelerated significantly within the last 12 months as the UK’s housing market has picked up, with the latest Sequence index showing a 15% year on year increase in new tenancies across the UK. At the same time, home ownership is falling, dropping from 71% of households in 2003 to just 65% currently, according to the latest English Housing Survey from the Department of Communities and Local Government.
Hand in hand with the increased demand for rented accommodation, monthly rental prices have been rising over the past year, with the Sequence index showing an increase of 8% over the period. The combination of factors has made the UK buy-to-let market an extremely attractive investment option – and nowhere more so than in Birmingham.
Big plans for a big city
As befits its status as England’s second city, Birmingham has some big plans in place to ensure it retains its reputation as one of the most exciting places in the UK to live and do business. The visionary 20 year Big City Plan is set to create a host of new business facilities, transportation links and public spaces in Birmingham during the plan’s life, adding 50,000 jobs and contributing £2.1 billion to the economy every year.
The planned High Speed Two (HS2) rail link, which will propel Britain’s Victorian railways into the 21st century and dramatically cut journey times between Birmingham and London, is scheduled to begin construction in 2017 and will further enhance Birmingham’s reputation as a leading commercial and business-oriented city. Once finished, HS2 should allow passengers to travel from London to Birmingham in just 48 minutes.
Beating the crowds
The ambitious regeneration and rail plans are set to create tens of thousands of jobs in Birmingham, attracting a host of new workers to the city and already the trend is driving house prices up. Ray Withers, CEO of leading property investment firm Property Frontiers, explains how this is creating the perfect buy-to-let environment within Birmingham,
“House prices in Birmingham are increasing, but remain consistently below the levels we are seeing in London. Concurrently, rental yields in Birmingham are higher than one can expect in London. With lower purchase prices and higher yields, it might well be the UK’s second city but it’s not second choice with smart investors avoiding the capital in favour of buy-to-let property in Birmingham.”
The latest nationwide date from Move with Us supports Mr Withers’ expert conclusions, showing Birmingham as the highest yielding rental area in the UK when considering rental income as a percentage of the property’s purchase price.
The news is indeed well timed as Property Frontiers is about to release an exclusive new opportunity in Birmingham to investors. The prime city centre residential development will consist of a number of luxury apartments with high yielding rental income. As further details are eagerly awaited, those keen to beat the crowds and be the first in the know are encouraged to sign up for the company’s latest newsletter, The Frontier, for early market insights and opportunities.