Top cities for millennial renters revealed
With tax and regulatory changes putting pressure on landlords, new research has revealed the thriving, millennial-heavy cities where investment can still bring great rewards.
Landlords have faced a host of changes and challenges in recent years, with more still to come in the future, but there is strong evidence to suggest that those who invest in the right areas can still generate excellent returns on their investment. With millennials – a group broadly defined as those born between 1980 and the early 2000s – making up a large chunk of the private rented sector, it makes sense on a number of levels for landlords to target areas with a high concentration of people from this demographic. Big cities, in particular, are often booming rental hotspots – none more so than London, where renting is now the largest form of tenure according to the most recent English Housing Survey.
The best cities for Generation Y?
Recent research carried out by TotallyMoney claimed to have found the best cities for millennials to live in based on a number of factors. These included the cost of buying or renting a one-bedroom home, employment considerations such as average weekly earnings and the number of business startups and graduate hires. They also covered cost of living factors like the price of gym membership, a posh coffee and a meal for two in a local restaurant. The survey also factored in the percentage of 'Brexit Remain voters' when highlighting the most ideal cities for Generation Y. Studies suggest that more than 70% of 18-24 year olds voted Remain in June 2016, while data released last year also revealed that most younger people would vote Remain if a fresh referendum was held now. Glasgow took first place, helped to top spot by good weekly wages, a huge range of entertainment and cultural hotspots, and house prices well below the national average for both renting and buying. One-bedroom properties in Scotland's second city have an average monthly rent of £584 per month. London, in spite of its high rental costs, also performed well. It's a key employment hub, a Remain stronghold, a cultural behemoth and home to a significant number of startups and graduate opportunities. While the average rent for a one-bedroom property in London is £1,633 pcm, house shares are very popular in the capital and can make renting more affordable. Third place went to oil-rich Aberdeen (a graduate jobs hotspot with an average rent of £478 for a one-bedroom home), while the rest of the top 10 was made up by Liverpool, Bristol, Gloucester, Southampton, Cambridge, Cardiff and Middlesbrough – all with one-bedroom average rents below £690. By contrast, Basildon in Essex languished in bottom spot in the findings. According to TotallyMoney, only 2% of graduates find work in the town, while extra-curricular activities pale in comparison to the rest of the UK. In addition, Basildon delivered the second-lowest Brexit Remain figures.
“There are some things millennials have had to adjust to that haven’t been experienced by past generations, and with this comes an entirely different set of priorities,” James McCaffrey, spokesperson for TotallyMoney, said.
“Rising house prices, stagnant wages, and Brexit are just some of the hurdles this generation have to get over.”
What makes a city appealing to renters?
Most major UK cities have significant rental populations and thriving rental markets, helped by a large number of students and young professionals prizing the flexibility (and, in many cases, the affordability) renting provides. Cities also tend to be home to a sizeable number of tenants because they offer considerable job opportunities, ample green space, excellent transport links, numerous leisure, cultural and sporting venues, and an eclectic range of bars, restaurants, pubs, clubs and street food markets – all of which make them attractive places for renters to call home. They are also areas that landlords should be targeting if they want high demand, regular rental income and the chance to generate healthy rental yields. Students, young professionals and a rising number of family and middle-aged renters will all be looking for places to rent, and it may be that up-and-coming areas – which have flown under the radar but are now becoming cool – represent the best investment opportunity. That's because the initial costs of investing are likely to be cheaper, with lower house prices at play, but the likelihood of rents rising fast in the future are high as the area becomes much more popular. Homes near regeneration or major infrastructure projects can offer the same benefits.
At our June show we will be holding a 'UK Property Development Hotspot' debate to identify where the rental hotspots of the near future might be. The show will take place at Olympia London on June 13 2019 and you can register at www.landlordinvestmentshow.co.uk.