Oxford best city for buy-to-let investment

Aldermore the bank has published a report looking at the best Cities in the UK for buy to let investors and Oxford is confirmed the best city for landlords in the UK.

The city emerged top of the 25 analysed in the bank’s Buy to Let City Tracker.  Manchester, Edinburgh, London and Norwich respectively joined Oxford to make up the top 5

Oxford’s advantage for private landlords was that it has one of the largest private sector rental markets in the UK, with 28 per cent of all residents renting privately.

Average property prices have grown at 4.8 per cent a year over the past decade, the city’s average monthly rent for a room was £596, and it has low levels of void when compared to other Cities.

Five measures of buy-to-let investment desirability were assessed: Average total rent;  Best short-term returns through rental yield; Long-term return through house price growth over the past decade: Lowest number of vacancies as a proportion of total housing stock; and, the percentage of the City’s population renting.

Derby, Sheffield, Bradford, Newcastle and Wolverhampton were the lowest ranked Cities in the report.

The Aldermore report confirms feedback that I have given to Oxford landlords over the last few years, that their long-term investment returns are strong particularly after 5 years of property ownership.  Whilst property values have rather stagnated over the last several years in Oxford, the long-term returns remain robust and compare favourably with alternative investments.

However, with planning approvals and new build supply failing to improve, it seems likely that the proportion of Oxford residents renting will only rise further.  This seems certain to put upward pressure on rents, improving landlord returns, but not helping first time buyers to move into their first home.  With Government policy dissuading landlords from buying new properties, I believe Oxford is heading for supply constraint for good quality private rented properties.  Landlords with available funds would be well-advised to invest further to benefit from this supply constraint.