Across the UK demand for rental property is near record-high levels with 13.8 tenants chasing every new rental that comes to market. It is therefore unsurprising that investors are eager to add to their property portfolios and are driving the buy-to-let market, particularly in Liverpool.
Your move explores why the city is such a rental hotspot right now.
Here in Liverpool it’s been a changing year for the rental sector, with new legislation and the likes of the landlord licensing scheme arriving, but predictions for the year ahead suggest the future is bright for the market and investment in property here remains a more than viable option.
According to The Times, Liverpool is set to benefit in 2016 with the city ranked second on a list of the top five places in the UK for rental yields.
Liverpool’s rental yield is 5.16% with the national newspaper citing the city’s burgeoning student population as a key reason for keeping rental prices low with major development schemes also on the horizon.
Despite the forthcoming 3% increase to stamp duty being lined up by the government in April and therefore raising the cost of properties, property investment in the city is still being highlighted as a viable option.
Liverpool agent City Residential’s latest quarterly report, ‘The End of Buy-to-Let’ says that “whilst interest rates remain subdued and other investments appear no brighter, property still has an appropriate place on most people’s investment strategy.”
A market report by Martin & Co – which prompted The Times to shine the spotlight on Liverpool’s lettings credentials – highlights that prospective tenants and clients “are happy to pay a little more to rent a really desirable property.”
“Buy-to-let investments in Liverpool have gone from strength to strength, people are fed up with their savings earning so little in interest and they are looking at more long term aims where they can see better returns,” says Denise Griffiths, manager of Martin & Co Woolton.
“With the mortgage criteria tighter for people in general there are more people now looking to rent.
“Rental returns are also growing for landlords making a buy-to-let property a good investment for many people and pushing rental properties again to the forefront.”
Compared to 10 years ago 23.1% of renting households are couples, up from 13.9%, as occupants prefer to rent rather than the outright purchasing of a property with 44% of private tenants not expecting to buy in the long term.
In the North West, tenant demand throughout 2015 rose by 37%, fourth overall behind Scotland, London and the Midlands.
Martin & Co’s research highlights the key reasons for growth in the market which, in turn, lead to a consistent demand level that benefits current landlords seeking areas to invest in.
Liverpool meets four of the five investment hotspot sectors highlighted by the report; it’s within the Northern Powerhouse area and boasts strong commuter links, technological industry growth and universities.
With one of the largest universities in the UK and increasing graduate job opportunities, Liverpool is becoming a city for young property owners and students with more accommodation building applications entered every month.
A student population of up to 60,000 and 60% of them requiring accommodation means new and renovated property for the sole purpose of the universities’ attendees is in serious demand for cost-sensitive property sharers.
New purpose-built developments such as those on Hope Street, Skelhorne Street and Bolton Street overlooking Lime Street station and the Islington Corridor site, all aim to meet demands for high-quality university housing investments.
“The student market in Liverpool is pretty busy on the basis that investors will buy in Liverpool because the yields are strong, rental prices are strong and sales values are still allowing for some high-yielding investment properties to come to the market,” says City Residential director, Phil Hartley-Chambers.
“So even with the growth we’ve seen over the last 18 months, there are still some decent investment deals out there.”
The key to modern student accommodation, according to Phil, is not the sheer quantity, but the quality on offer to appeal to occupants – an area all investors need to take note of.
“The quality of student investment products that are coming through is good and the key thing for investors at the moment is that it’s not just about buying something that is high-yielding, it’s about buying something that is high-yielding and good quality,” he says.
“That way its likely resale value is going to be strong whenever it comes onto resale and students are likely to want to rent it.
“We’re quite fortunate in that we’ve got some good quality products coming through.
“In terms of student areas, the likes of London Road, Moss Street and Mount Pleasant are key because they are so close to the universities.”
Martin & Co Woolton also suggests areas including Allerton, the city centre and its properties on Fox Street next to the new Royal Liverpool development which is set to become a world-leading site, are seeing high interest which is adding to the property investment value.
The proposed New Chinatown project, together with the new hospital and teaching school, offer unique selling points to tenants and justifiable reasons for investors to put their money into the city with confidence.
“From a letting point of view, the Strand district, Ropewalks and the Baltic Triangle are really popular and the business district in particular is really strong,” says Phil.
“We’ve got some really good quality schemes coming through at the moment so a lot of people are wanting to hang on for those.”
Graduates and industry
The technology and digital creativity sectors are fast becoming one of Liverpool’s main sources of rental income with an ever expanding market attracting an influx of young adults seeking access to entertainment and on-site amenities.
A growth in the science and technology industry and new digital companies becoming incorporated in the city centre also allows for graduates of Liverpool’s universities to stay in the area rather than seeking work elsewhere which further boosts buy-to-let.
Phil believes this has had a knock-on effect in previously overlooked areas of the city by transforming their fortunes.
“The Baltic Triangle’s renowned as being the ‘creative quarter’ and the city is in a good place, it’s come a long way in the last 10 years,” he says.
“It’s trendy, so why wouldn’t you want to be in Liverpool? Once upon a time, the likes of Manchester and Birmingham were perhaps considered to be trendier but now more and more people are wanting to stay in Liverpool because they can see what’s going on in the city and what a good place it is.”
Denise also suggests that current investment into the city including higher tourism levels are all impacting on the rental market.
“Liverpool has so much investment going into the city at the moment and so many new areas of expansion, a new-state-of-the-art hospital and teaching school, the new port investment and many others pushing Liverpool forward into the city where people want to do business and study in as well as visit as a tourist,” she says.