With all the hype around major cities like Manchester, Birmingham, and Liverpool, Nottingham has gone under the radar for property investing. But many shrewd investors see this famous East Midlands city as a treasure trove of opportunities. If you’re wondering if it’s worth dipping your toe into Nottingham’s property market, we’re here to tell you it most definitely is. In this blog post, we’ll look at what makes Nottingham such a compelling place to invest in property. We’ll also answer some common queries from aspiring landlords.
Why invest in property in Nottingham?
Nottingham is a great place to live. And great places to live are invariably great places to invest in property. Across the world, Nottingham is synonymous with the name Robin Hood. But the modern city is far more than the backdrop of a legend. Here are some reasons why Nottingham is on the way up.
- For a relatively small city, Nottingham packs a punch. Visitors and residents are charmed by the wide variety of things to do and see in the city. It’s got something for everyone, including a rich sporting heritage, a diverse selection of restaurants and an immersive arts and cultural arena.
- Economically, Nottingham has been on the rise for years. Law firm Irwin Mitchell’s UK Powerhouse Report predicted Nottingham’s economy to grow by 1.7% year on year until Q4 2023. They also anticipated the creation of 5,000 new jobs by the end of the year.
- Thanks to its healthy business scene, Nottingham is teeming with job opportunities. Big companies like Boots, Capital One and E.ON have headquarters in the city. What’s more, the life sciences, finance, and creative & digital industries, among others, are flourishing.
- Nottingham is a city with an eye on the future. The Nottingham City Council has committed to becoming carbon neutral by 2028. And it already boasts 20% green and open space covering the city’s surface. By 2030, the council also hopes to have completed an ambitious £1 billion redevelopment of the old Island Quarter.
Will you get a return on your investment property in Nottingham?
Okay, so Nottingham is a fine city, but will investors make money from properties there? As you know, for property investors, the ideal goal is to get a return from rental income and capital growth appreciation. Nottingham offers ample opportunity to do just that. According to HM Land Registry’s data, the average price paid for properties in Nottingham in 2022 was £198,080. This is considerably lower than England’s average of £342,297. It makes Nottingham far more affordable than most other cities in the country.
Moreover, the price paid for Nottingham properties has increased by an average of 5.2% every year since 2012. If the growth continues at this rate until 2025, Nottingham properties will sell for £242,506 on average. For investors, sizeable returns from capital growth could be there for the picking. However, as of early 2023, the UK’s cost of living crisis and increased bank rate has caused a dip in the property market. It’s not possible to say exactly what could be in store for Nottingham’s property market in the future, but if the headwind is only temporary, house prices could well be on the rise again in no time.
What does Nottingham’s rental market look like?
The state of the rental market is a very important factor for a prospective investor to consider. So, you’ll be pleased to hear that Nottingham’s rental market is thriving. As an investor, finding tenants in Nottingham is unlikely to be a problem, especially if you invest in one of the many central hotspots. Why is there such a high demand for rental properties in Nottingham?
As the home of two world-class universities, Nottingham has more than 60,000 students living in the city. This means there’s an almost endless demand for student housing in central locations. It has even been said that there aren’t enough rooms on the market to cover all the students.
Student housing is snapped up quickly in areas like Lenton, Dunkirk and Beeston because it’s not uncommon for students to search for accommodation up to a year in advance. For landlords, it’s standard to have student tenants in situ from August to July of the following year, with only a week or two between a changeover.
With both universities declaring their intention to keep expanding, the competition for student housing shows no signs of slowing down any time soon. Additionally, for investors, there is also the possibility of diversifying their portfolios with purpose-built student accommodation.
Beyond the student population, Nottingham has copious young professionals who stay on after university or move to the city for work. Locations like West Bridgford are particularly popular with this cohort. According to the 2021 government census, the average age of people in Nottingham is 31. This is the lowest average age in the East Midlands and falls well below London’s average of 40. Although the majority of Nottingham residents are of working age, the census showed the unemployment rate is only 3.2%.
Thanks to its many excellent schools, transport links, and job opportunities, Nottingham is also popular with families looking to rent. This is good news for landlords. Large homes in areas like Wollaton, Mapperley, and Long Eaton offer excellent capital growth potential.
What rental yields can investors expect?
Rental yields are the second way for investors to make money from property. If you’re new to investing and haven’t heard this term before, don’t worry, it’s quite simple. Rental yields are the total sum you can expect to earn from renting your property every year. It’s usually expressed as the percentage of the property’s value you’ve made back in rent that year.
Rental yields are where Nottingham really shines as a city to invest in property. Track Capital’s 2023 report placed Nottingham 7th out of all towns and cities in the UK in terms of rental yields. The average for Nottingham properties is 5.94%, which is well above the East Midlands average of 4.1%. The NG7 postcode also ranks as the 5th best out of the 2,468 postcodes that were assessed. So, it is clear that property in Nottingham could be a worthwhile addition to your portfolio.
How can you become a landlord in Nottingham?
The first major step to becoming a landlord is acquiring a property. There are a few ways you can do this. For one, you can take out a buy-to-let mortgage if you’re eligible. You may also become a landlord by buying a property outright before letting it. Or renting out an inherited property. Of course, all these approaches should be informed by research, legal guidance and careful financial consideration.
It’s a fairly straightforward process to become a landlord once you own a property, although certain licences and certificates are also required. The most challenging parts of becoming a landlord are arguably managing the property and finding tenants. Fortunately, there are lots of companies you can hire to cover the day-to-day management of the property. And if you make the smart move of investing in a city like Nottingham, it shouldn’t be difficult to find tenants.
What happens if you want to stop investing?
You usually have to play the long game if you want to make money in property investing. But if for whatever reason you decide it’s no longer for you, there are many options available. You can sell the property, which may allow you to make a profit from capital gains. Alternatively, you may be able to stop renting and live in the property yourself. There is also the option of transferring ownership of the property to another party.
If you’ve had trouble selling your tenanted property for any reason, or you’d simply like it taken off your hands fast, selling on the open market isn’t your only option. Cash house buyers can make it easy for you to sell your tenanted property in Nottingham.
