The latest index report from leading mortgage platform, LendInvest, confirmed that smaller towns are becoming increasingly desirable to buy-to-let investors.
As a property development company that specialises in acquiring buildings across Greater Manchester, this comes as no surprise to us. There are many benefits to investing in strategic commuter towns close to vibrant cities – here are just a few of them.
The market value of homes
The most obvious reason is the price of the property, which is typically much cheaper in smaller towns. Renting further out can be seen as an inconvenience to those who want to be close to the hustle and bustle of the city centre. However, offering high quality, modern homes in outer areas with local amenities and great transport links often encourages demand for the property.
For buy-to-let landlords, lower-priced homes are an asset as they require smaller deposits. This allows landlords to expand property portfolios quicker and easier, helping to increase their return on investment.
Secondly, by purposefully buying homes in areas with strong local amenities and transport links into key cities, you’re increasing the appeal to potential renters. This demand, alongside the initial low buying cost, can help ensure a strong rental yield.
Cost efficiency for tenants
Unlike city centre hotspots, properties in smaller, surrounding towns can be more cost effective for tenants. Currently, young professionals are being forced out of city centres due to skyrocketing prices.
For landlords, the key to investing in small towns is to offer high quality homes that rival city living and have reasonable rent costs. This can help boost demand for property, aiding the generation of assured rental incomes and reducing chances of being left with a vacant home.
Tenant longevity and trust
Having long-term tenants is a preferential option for many property owners. Longstanding occupants are more likely to take pride in their property, keeping it clean and investing financially in its upkeep where needed.
There can also be a greater level of trust built between landlords and tenants over a longer period. This relationship can discourage tenants from wanting to relocate, providing the landlord with a stable, ongoing income with little risk.
It’s no secret that city centres are ripe with private renting schemes, with new apartment blocks being developed around every corner. The sector shows no sign of slowing down, with developers keen to meet the ongoing demands for generation rent.
However, the rapid increase in build to rent schemes, offering innovative living spaces with modern, in-house amenities, has ensured that the quality of homes has never been higher. In smaller towns, there is more existing stock, where renovation opportunities are ripe. The key is to meet – and surpass – the high expectations set by contemporary city centre living.
A buy-to-let landlord is often a full time job where the rental income is relied upon, so having an unoccupied property for a long period can be problematic. By planning your investment choices carefully, selecting areas where demand is high and competition is low, and building fantastic quality homes, you can ensure your home retains its appeal.
City centre living is no longer the only way to appeal to the rental market. People are happy to commute from satellite towns for cheaper rent as long as the quality of homes mirrors those in cities. This influx in demand will strengthen communities across these strategic towns and galvanise wider investment, which can encourage a more prosperous property market for all.