Is Leicester a Buy-to-Let Hotspot?

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Is Leicester a Buy-to-Let Hotspot?
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Discover if Leicester is the next Buy-to-Let hotspot with our comprehensive analysis of the city and its property market. 

If you’re looking to make a property investment, chances are you’ll be scouting out the best cities and towns. At least, that’s what thorough due diligence should look like. However, there’s a lot to uncover, especially if you want to make a well-researched decision. You need to consider the rental market outlook, amenities of the city, and property values. 

Well, that’s exactly what this article is for. We’ll aim to provide all the relevant information you need to help you make that all-important decision. 

What does the Leicester rental market look like?

To get a good picture of what the rental market in Leicester looks like, here are some statistics:

  • Average property rental price – £975 pcm

By property type:

  • House – £1,085 pcm
  • Flat – £888 pcm
  • Room – £900 pcm

From research conducted, the average median rent for properties in the UK is £209 a week (£836 a month) – From this, it’s clear to see that the rental prices stack up better than the average across the UK. Although, that covers many cities and obviously cannot be compared to major cities like London or perhaps Birmingham.

However, Leicester has continually outperformed many cities in terms of the best buy-to-let areas. Aldermore Bank’s buy-to-let tracker found that in 2021, Leicester was the 15th best place for Buy-to-Let returns. Whereas, in the latest data, the city has dropped a few ranks yet maintains the second-best place for Buy-to-let returns on Bungalows.

So the question has to be asked, why does Leicester perform so well against many other cities? 

We’ll now take a look at some of the reasons this might be and why it makes Leicester an attractive place to have a rental property portfolio. 

What are the job opportunities like in Leicester?

Leicester is home to many companies that operate nationally and internationally. They include brands such as Next, Walkers, and Dunelm, to name a few. With so many well-known brands alongside up-and-coming ones, Leicester is definitely a business hub. Leicester was also once well-known for its clothing manufacturing output. However, its employment market now is well-diversified, with Health, Education, and Manufacturing also attracting many employees. 

Additionally, in terms of statistics – only 5% of the population in Leicester is unemployed. Of that, 2% are students. This opens up an avenue for a large cohort of individuals that are likely to rent during their stay in Leicester. 

Does Leicester have a university?

Leicester is actually home to two universities, the University of Leicester and De Montfort University. Beyond this, Loughborough University is located only 11 miles from Leicester. All three of these universities are world-renowned and so bring in thousands of students to the city yearly. The majority of whom will rent properties. Additionally, with highly regarded universities comes the presence of academic members and researchers who may also choose to rent during their tenure. 

Other sources of visitors

Leicester is also home to the Leicester City football team. Now playing in the Premier League, the team and city, by extension, receive visitors and fans from around the country and world during the football season. As a result, many hotels, Air BnBs, and similar short-stay properties are quickly booked up during the season. 

Property values in Leicester

The most important factor when purchasing a property for Buy-to-Let purposes in Leicester is the overall property value. 

The current average property price in Leicester is £235,274. 

Here is the breakdown by the type of property:

  • Semi-detached properties sold for an average of £270,849. 
  • Terraced properties sold for an average of £214,472, 
  • Detached properties sold for an average of £396,743.
  • Apartments/flats sold for an average of £153,410

Compare the value of these properties to the national average property price, which is £296,000. From this, it’s clear to see that properties cost lower in Leicester while returning a higher rental price compared to the national average. Both of these are important to determine where to purchase a Buy-to-Let property. 

Challenges faced by Buy-to-Let Investors in Leicester

Students renting properties

While it can be a good thing to know that there are many students willing to rent in an area, it can often cause more issues than benefits. It is common knowledge that students are less likely to look after their property. Without “responsibilities” and knowing they may only be staying at the property for a year or two, students have free reign to do as they wish. Unfortunately for landlords, the students will be doing so in the Buy-to-Let property, carrying out untold damage. The costs of maintenance and repairs will add up, eating into the profits of the Buy-to-Let property.

Moreover, with troublesome tenants comes further issues. Selling a tenanted property is notoriously difficult.

(However, cash buyers like us at We Buy Any Home are able to make an offer for your property, even if it is tenanted.)

Tax and Buy-to-Let Interest

Due to recent changes in legislation, the interest from Buy-to-Let mortgages is no longer tax deductible. As a result, this is another cause for concern for landlords as they will need to factor this into the overall profitability of this investment route. As a result, many landlords are required to foot the bill and have to ensure that their property remains tenanted to avoid having to pay out of their own pocket. 

Can you buy-to-let in Leicester?

Leicester is definitely in the top 20 places in the UK for a buy-to-let investment. However, over recent years other areas have begun to challenge Leicester’s position. As a result, other cities in the UK may appear much more profitable than Leicester. However, as long as property prices remain lower and rental prices remain higher than the UK average, it will continue to be a good place to make steady returns on a Buy-to-Let investment. 

For those who have a Buy-to-Let property in Leicester and are looking to sell for better returns elsewhere, you’re in the right place.

We Buy Any Home can make a free cash offer for your property, regardless of condition, location, or if it is still rented out. 

We can ensure you can sell a tenanted property in a time frame that suits you. Get in touch to get your free cash offer. 

Free cash offer within minutes, any condition, any location.

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