Oxford is the best city for private landlords to invest in, Aldermore’s Buy-to-Let City Tracker has found.
The tracker was determined by analysing and assessing five key indicators that impact desirability.
These are average total rent, the best short-term returns through yield, long-term return through house price growth over the past 10 years, the lowest number of vacancies as a proportion of total housing stock and percentage of the city population in the rental market.
Oxford scored four out of five on the tracker with 28% of all residents in the city renting privately.
This is combined with above average rental ability of £596 per room per month on average, a low level of vacant properties, and security in investment with property prices having increased yearly by 4.8% on average in the past decade.
The only downside here is that short-term return through yield is one of the lowest on the list.
Damian Thompson, director of mortgages at Aldermore, said: “Aldermore’s Buy-to-Let City Tracker shows there are still great short and long-term investment opportunities for landlords.
“The number of people renting in the UK has been rapidly growing, up 1.7 million in 10 years, so private landlords are an increasingly central part of the housing market as supporting a robust and strong private rented sector becomes more essential.
“The UK housing market has never been a singular thing, instead made up of multiple smaller markets with their own unique conditions and challenges.
“There have been numerous regulatory changes recently and persistent economic uncertainty, but this affects every region differently.
“Going forward, landlords will need continual backing and advice from lenders and the wider industry so they can provide choice, diversity of tenure and quality properties for renters.”
London ranks in fourth place behind second place Manchester and third place Edinburgh. In some cases, London does outperform Oxford.
For example, property prices have increased faster at 5.5% a year on average over the past decade compared to 4.8% in Oxford.
However, despite strong rental prices at £630 per room per month; very high property prices in London means annual rental yields are very low for a new buy-to-let purchase at only 3.0%.
Seven of the top 10 cities for landlords are in southern England.
Both Bristol and Oxford fare particularly well for long-term returns, with an average 4.8% increase in property prices. Brighton scores well for rent, yielding an average of £507 per room.
The city also has one of the largest market sizes across the UK, with 28% of inhabitants privately renting.
However, Yorkshire appears to be an unappealing region to invest in for buy-to-let, with three cities in the county in the bottom six.
Sheffield has one of the lowest rental prices (£324 per room per month), and is not a good short-term investment, with a below average yield of just 5.3%.
Bradford meanwhile suffers with poor price rises (only 1.6% per year) and a high number of property vacancies (4.1%).
Hull ranks at 12th on the list, boosted by the highest short-term yield of all 25 cities (9.3%).
Elsewhere, Nottingham was seventh on the list offering a very strong short-term yield at 7.3% and the market size is also impressive with 24% of residents being private renters.
On the other end of the spectrum, Wolverhampton sits at the bottom. The city has the smallest rental market with only 12% of residents privately rent.
As a result, vacancies are above average at 3.1% of properties, suggesting that landlords might struggle to always fill their properties.