Why investors’ eyes are on the Midlands

By Ian Boden, sales director at LendInvest

It’s been a rollercoaster couple of years for the world of property investment, with a succession of tax and regulatory changes that investors and their brokers have had to get their heads around.

But for all of the discussions about stamp duty, portfolio landlords and underwriting rules, the fundamentals of property investment haven’t really shifted; the challenge is still to identify which areas tenants are going to want to rent in, and the sorts of properties which will appeal to those tenants.

That’s why we produce the LendInvest Buy-To-Let Index, to dig into the data on which areas are providing the greatest return for investors and the underlying trends which may lead certain towns and cities to outperform others.

One particularly noteworthy result from our latest index has been the improving performance of towns in the Midlands.

Leicester, for example, has had an eye-catching performance, jumping 17 spots in our ranking of the best towns for property investment to break into the top 10, primarily off the back of sharp rental price growth of more than 5%. Meanwhile, Birmingham has also jumped significantly up the table, rising from 18th place overall in September’s index to 11th in the latest.

When you talk about property investment in the UK, it is perhaps inevitable that the discussion is dominated by the performance and prospects of the capital, or of the commuter towns that surround it.

But savvy investors have been well aware of the potential for greater returns by pinpointing towns and cities that are still growing – and the Midlands is full of them.

Birmingham is, in many ways, the perfect example. It is host to a number of excellent universities, which is always a great foundation for landlords. Those universities don’t just mean a steady supply of students looking for rental accommodation, but also a substantial number of graduates looking to build their post-studies life in the area as well.

But there is much more to Birmingham than simply students and recent graduates. There has been enormous investment in the city infrastructure, to the point that huge global names are choosing to set up shop there. HSBC and Deutsche Bank, for example, have moved their core UK functions to Birmingham, while it has also proven attractive to tech and media firms.

Then there is Leicester, highlighted as one of the best cities for growth in a report by PricewaterhouseCoopers earlier this year. This is in large part down to the very small levels of unemployment seen in the city – always an important factor for landlords when determining where to invest.

The momentum building up in the Midlands is already attracting the attention of investors. In Crowe Clark Whitehill’s 2017 Property & Construction Outlook report, the West Midlands was picked out by 19% of respondents as the best place for investment, easily the most popular region beyond the South East.

Property investors looking for a solid area in which to boost their portfolio will continue to watch the Midlands closely.