The Ultimate Guide to Buy-To-Let in 2022

Investing in property can be rewarding - and as the property market has shown recently, tangible assets like houses often perform well during times of economic uncertainty. Property investment in 2022 could be fruitful for those who know which key metrics to consider when making a purchase.

In this guide, we’re going to consider when property investment makes sound financial sense. We’ll also look at the easiest ways to start your property portfolio, and the best places to invest in property in 2022. In addition to this, we’ll also highlight the up-and-coming areas in the UK that could offer the highest rental yields for buy-to-let investors this year and next.

Why should I invest in property in 2022?

In times of economic uncertainty, interest rates on bank accounts, savings accounts and other investments are often incredibly low. During the onset of the coronavirus pandemic, share and stock prices around the world could be found plummeting at freefall speeds – and many of these have yet to recover, despite government strategies helping us to find a pathway to normality. During this period, many have found it difficult to generate any form of profit on these types of investment, and in many cases, backers have ended up losing money in non-tangible investments.

Property, however, offers several advantages in comparison to things like shares, stocks and cryptocurrencies, which is why it is often considered a “safer” investment. While property investment is not without its risks, many people choose to invest in houses because:

  • Rental income provides a solid, regular revenue stream. This predictable income is a good safety net for the retired or self-employed and is easy to keep track of.
  • Property prices have a tendency to rise over time (capital growth). Capital growth usually continues during turbulent economic times, as proven by significant price rises during the pandemic.
  • Property helps people to diversify their investment portfolio, instead of keeping “all eggs in one basket” such as a pension or bank account.
  • Property is a tangible, easy to understand and uncomplicated concept.
  • Where should I invest in property in 2022?

    Between 2020 and 2021, UK property prices have increased at their fastest rate in seven years. Measures taken by the government to kickstart the economy during the pandemic (such as the Stamp Duty Holiday) and increased demand for rental properties have served to push property prices up by almost 11%. Figures like this demonstrate to even the most inexperienced of investors just how lucrative the property industry can be.

    However, knowing where to invest in property can be a confusing task if you don’t have an acute understanding of the key metrics to focus on. By focusing on these key performance indicators, you will find it easier to identify the best areas to invest in property in the UK:

    At PropertyData, we’ve collated some of the best places to invest in property in 2022, based on these criteria. However, it’s worth noting that there aren’t strictly any right or wrong areas to invest in - instead, there are areas which suit your investment strategy and approach, and others that don’t.

    This list is by no means exhaustive, although it does include some of the most up-and-coming areas in the UK which have previously remained off-radar for many national and international property investors:

    Liverpool

    Liverpool is home to some of the most affordable properties in the UK. Despite prices soaring over the past two years, housing here is still below the national average. In addition to this, strong tenant demand means that buy-to-let investors can expect to achieve high rental yields - not just in the city centre, but in up-and-coming areas like Toxteth.

    Over the past two decades, Liverpool has undergone serious regeneration and is now a vibrant and diverse hub of commercial activity. It’s also home to six universities, with approximately 70,000 students enrolling across its campuses every year.

    Student populations and rental demand go hand-in-hand. Furthermore, houses in student areas usually fall under the multiple occupancy tenancy brackets, and these types of tenancy typically offer larger yields than single occupancy properties. On average, buy-to-let investors can expect to enjoy rental yields of between 6% and 10% in Liverpool, making it a great choice for those hoping to maximise ROI.

    Manchester

    Cities with a large private rental sector are always a great choice for property investors, and Manchester has one of the largest concentrations of private renters in the UK. It is estimated that around 31% of the population of Manchester rent privately - and a growing economy (complete with increasing job opportunities) means this figure is only set to increase.

    Current figures suggest that over the next five years, rent in central Manchester is set to increase by as much as 17%. While demand for rental properties in the city continues to grow, property prices have remained comparatively below average. Manchester, therefore, provides investors with that perfect sweet spot between affordability and demand for housing.

    Glasgow

    While it’s true that Glasgow’s property market is usually overshadowed by Scotland’s capital Edinburgh, all signs point towards property rises throughout the “dear green place” over the next five years. In fact, Glasgow’s economy is set to perform on par with Edinburgh, with property prices predicted to rise by nearly 25% over the next decade.

    During the same period, rental growth is also expected to increase by around 11%. In addition to this growth, Glasgow Council has a commitment to develop purpose-built rental homes, with the population within the city centre set to double by 2030. This brings with it an increased demand for housing along with the availability of affordable property, making now the perfect time for buy-to-let investors to consider Glasgow.

    Sheffield

    While previously mentioned cities have been providing buy-to-let investment opportunities for quite some time, Sheffield certainly deserves plaudits as one of the most up-and-coming areas in the UK for investors. In recent years, Sheffield has shaken off its image as a post-industrial landscape and is instead attracting attention for all the right reasons.

    Almost £500 million has been pumped into the local shopping district, which has, in turn, attracted businesses and major retailers. The knock-on effect is that Sheffield is now one of the most desirable areas to live for young professionals and students, and with investment from several green companies, this city is fast morphing into a modern, technology-driven metropolis. As such, rental property is hugely in demand, while property prices have remained below the national average - for now, at least.

    Leeds

    A short trip North of Sheffield takes us to Leeds, which is another city fast recognised by investors as a place of opportunity for those seeking long-term rental returns. Like Manchester, a huge proportion of Leeds residents currently rent, which means there is an abundance of potential tenants. While capital growth in Leeds has been slower than other cities on this list, increased investment in the city and a growing student population ensures that buy-to-let properties here will manage to turn a healthy profit.

    What will happen to real estate in 2022?

    Several property experts have predicted that the boom in the UK real estate market is likely to continue into 2022, driven by strong demand among buyers and high rental demand in city centres. While some have hypothesised that sales will begin to normalise after 2021, most predictions suggest that year-on-year growth is set to continue until at least 2025.

    It’s worth understanding that the latter half of 2020 and the entirety of 2021 were particularly frenetic in the housing sector. While 2022 might not bring the 11% increase in house prices we have witnessed this year, several financial institutions are predicting a comfortable 5% national average increase in house prices by the time 2023 rolls around.

    In addition to this, we can expect to see more homes on the market. Valuation requests from homeowners are currently up almost 20% compared to last year, which suggests that many people are making plans to move in the new year - but what will this mean for investors?

    Ultimately, a housing market with greater choice, an increase in buyer momentum and the highest rental demand for the best part of a decade all mean that property investors who make the right decisions could benefit from a healthy return on investment, both in the short and long term.

    Is property still a good investment in 2022?

    All signs are suggesting that property investment in 2022 could be highly lucrative. At present, the UK property market is presenting a wealth of different opportunities for investors of all types. An ongoing shortage of homes coupled with increased rental demand means that house prices look set to continue to increase throughout the year.

    While property investment is a good investment in 2022, it’s worth remembering that tangible assets like houses are long-term investments. While capital growth could help net you a tidy profit twelve months down the line, other more permanent investment strategies - such as buy-to-let - could provide you with a steady income stream for years to come.

    There are plenty of good reasons to consider buy-to-let as a medium or long-term investment. Firstly, UK rents are increasing year-on-year and are expected to have risen by at least 17% between now and 2025. Secondly, capital growth predictions suggest that house prices could rise by as much as 13% between now and 2026.

    It can therefore be deduced that property is indeed a sound investment in 2022, and beyond - particularly in the buy-to-let market. One of the main attractions of a rental property is that you can earn a passive income each month. This income is predictable, regular and requires comparatively little effort in return. However, it’s important to do your research, make the right investments and choose properties that cover their own expenses to ensure you end up with a reasonable income after things like mortgage repayments, property management fees and any maintenance/repairs are taken into consideration.

    How do I get started with buy-to-let investment in 2022?

    Becoming a landlord is not an overnight decision. Before getting involved with buy-to-let property investment in 2022, you’ll need to spend a considerable amount of time researching the best areas to invest in property, the types of rental property available and the different mortgage deals available to investors.

    Most first-time buy-to-let investors tend to finance their properties with a mortgage. However, it’s important to understand that it can sometimes be difficult to get accepted for a buy-to-let mortgage, and there are some fundamental differences between these mortgages and standard homeowner financing.

    When applying for a buy-to-let mortgage, you’ll usually need a more substantial deposit than you would for a normal mortgage. The minimum deposit for a buy-to-let mortgage is usually around 25%, although it can be as much as 40% depending on the criteria of your financier, your age, your occupation and your personal financial circumstances, among other things.

    Why is rental yield important in a buy-to-let investment?

    Rental yield is the term given to the return on your buy-to-let property investment. To calculate it, simply divide the annual rent income of your property (minus any expenses such as maintenance fees or property management costs) by the price you paid by the property. Multiplying this figure will provide you with a percentage.

    For example, if you purchased a property for £150,000, and your rental income was £700 per calendar month with annual maintenance/management costs of £1,000 per year, your rental yield would be calculated as:

    £700 x 12 = £8,400

    £8,400 - £1,000 = £7,600

    £7,600 divided by £150,000 = 0.046

    0.046 multiplied by 100 = 4.6

    Your rental yield would therefore be calculated at 4.6%. While it’s important to work out rental yields on existing investments to ensure they are turning a profit, it can also be pertinent to work out estimated rental yields prior to investing in a property. This will give you an indication as to whether an investment could potentially be profitable. For a quick and easy way to calculate rental yields on the spot, why not use our free rental yield calculator?

    Will house prices increase in the next 5 years?

    According to government forecasts, we can expect house prices to increase by approximately 13% over the next five years. These figures, collated by the Office for Budgetary Responsibility, suggest that property prices are expected to increase year-on-year until at least 2026.

    The continuing rise in property prices will likely be driven by demand for property in the North of England, with high rental demand, a shortage of housing and families looking to purchase larger properties after protracted periods of pandemic lockdowns all fuelling the interest in areas like Lancashire and Merseyside.

    Will house prices go down in 2022?

    While we can expect some form of a market correction (or at the very least a slight return to market normalcy) in 2022, house prices are not expected to go down, despite earlier predictions. In March 2021, the Office for Budgetary Responsibility had suggested that house prices would fall during 2022, before increasing in value again by 2023.

    However, this outlook has been retrospectively amended in the wake of a surge in property values throughout the year. An ability for people to save more than usual during periods of lockdown, low mortgage rates and an extension to the stamp duty holiday all helped to boost the housing market, pushing prices far beyond what the Office for Budgetary Responsibility initially expected.

    As a result, the OBR updated a forecast in which it predicted house prices would fall by 1.7% in 2022. It now believes that figures will instead rise by approximately 3.2%.

    Will house prices drop in the United Kingdom?

    The property market has witnessed incredible growth since the beginning of the pandemic, and there are no signs of sales slowing down, even when faced with the reintroduction of some Covid-19 restrictions. Despite predictions that suggested a decline in property sales would coincide with the end of both the stamp duty holiday and the furlough scheme, the demand for housing continues to fuel the property market.

    There is little evidence to suggest there will be any significant change in 2022 to the trajectory taken by property prices over the past eighteen months. While the Christmas and New Year period is traditionally quiet for the UK housing market and typically results in a slight downturn, from March 2022 we can expect to witness business as usual as far as predicted property price increases are concerned, barring any major national/international events.

    Much of this can be attributed to the fact that demand for property is almost 30% higher than five years ago, while the amount of housing stock has cumulatively dropped by nearly 40%. As any investor understands, supply and demand dictate prices, and with demand expected to continue to outstrip supply in the short-medium term, investment in property is arguably one of the more sensible strategies to make the most out of your finances.

    Where are the best areas to invest in property in 2022?

    Where to invest in property will largely depend on your individual circumstances and preferred investment style. If you’re simply looking to invest in property for capital growth and intend on selling in the short or medium-term to make a small yet significant profit, you should be prepared to research the towns and cities in which property prices are rising the quickest.

    In 2022, the North of England can be considered one of the best areas to invest in property for the purposes of benefitting from capital growth. Prices are rising fastest in areas like Liverpool, Lancashire, Greater Manchester, Nottinghamshire and Yorkshire.

    Where to invest in property as a buy-to-let investor

    Buy-to-let property investment in 2022 could be potentially very lucrative - although the best areas to invest in property will vary, depending on the sort of landlord you want to be. A lot of buy-to-let investors like to be as hands-on as possible when it comes to administration, maintenance, tenant selection and problem-solving.

    Understandably, hands-on landlords tend to want to be located close to their investment properties. This way, they can keep an eye on things, ensure the property is well looked after, and can tend to any issues that may arise at a moment’s notice. If this sounds like the sort of investment you’d be interested in, it makes sense to research areas with high rental yields which are near your home.

    However, if you are willing to delegate things to a property management company or letting agency, you might feel comfortable looking further afield for your property investments. This helps to widen the scope for higher rental yields, as it means you can pick and choose from any area in the country without worrying about being available to deal with property issues at the last minute.

    Predictably, the North of England is again the place for buy-to-let investors to focus their attention in 2022. Areas like Liverpool, Manchester, Sheffield, Leeds and Hull are all likely to provide the highest rental yields over the next decade, as increased rental demand and regeneration takes place.

    Learn more for free

    Whether you’re an experienced property investor or a relative newcomer to the buy-to-let world, you could benefit from using the tools available via PropertyData. Real-time, up-to-date property prices, average rent calculations and tools to work out potential ROI can all facilitate better decision-making when it comes to making the most of your property portfolio.

    To gain access to all this data and more, simply sign up for a free two-week trial with PropertyData today, and arm yourself with the app that could give you an advantage when it comes to making investment decisions.

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    Transparent data promise

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What are the statistics used?

    Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How do you know the square footage of properties?

    We use proprietary technology to read the square footage of properties from agent floorplans. Although we cannot determine the square footage for all properties, we can usually get sufficient coverage. Agents are sometimes known to inflate square footage, and this should be borne in mind as a weakness of this data.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property "price paid" data provided by the Land Registry.

    How often is the data updated?

    Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

    What time period does the data cover?

    You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-05-31, although some sales that took place before this date may still be added in the coming months.

    How is the raw data processed?

    No additional processes are applied to this data.

    What are the statistics used?

    Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property "price paid" data provided by the Land Registry, and Energy Performance Certificate (EPC) data provided by Ministry of Housing, Communities & Local Government.

    How do you know the square footage of properties?

    We match the Land Registry data to EPC data provided by the MCHLG. Due to the fact that not all properties sold have had an EPC and vagaries of addressing in the UK, we are not able to determine the square footage of all properties, but we can usually get sufficient coverage.

    How often is the data updated?

    The private paid data is updated once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month. The energy performance certificate database is updated monthly.

    What time period does the data cover?

    You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-05-31, although some sales that took place before this date may still be added in the coming months.

    How is the raw data processed?

    No additional processes are applied to this data.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Room let listings on SpareRoom, the UK's biggest room letting website.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from SpareRoom, they are soon removed from this tab.

    How is the raw data processed?

    Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale.

    What is the yield calculation used?

    The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The data is updated in near real-time.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from Zoopla, Rightmove or Spareroom, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale. For the SpareRoom data, hypothetical properties consisting of two to six average double rooms with shared bathrooms are used to derived average rent. For all sources, listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What is the yield calculation used?

    The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property "price paid" data provided by the Land Registry.

    How often is the data updated?

    Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

    Zoopla Zed-index

    What time period does the data cover?

    The data covers transactions in the last six years

    How is the raw data processed?

    No additional processes are applied to this data.

    What are the statistics used?

    The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

    What time period does the data cover?

    The price paid data shown goes back to January 2015. The listings data is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    What are the calculations used?

    Average sales per month are for the last 3 finalised months. Turnover is average sales per month divided by total for sale. Inventory is 100 divided by turnover.

    Where does the raw data come from?

    Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

    How often is the data updated?

    The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

    What time period does the data cover?

    This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

    How is the raw data processed?

    Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

    Where does the raw data come from?

    We receive data on the extent and corporate ownership of all land titles in England & Wales from the Land Registry.

    How often is the data updated?

    The data is updated once per month when released, typically in the first few days of each calendar month.

    What time period does the data cover?

    This is an ownership snapshot - the data represents ownership as recorded by the Land Registry at the last monthly export.

    How is the raw data processed?

    No additional processes are applied to this data.

    Where does the raw data come from?

    We source different expert forecasts Savills, Knight Frank, OBR

    How often is the data updated?

    The data is updated annually when new forecasts are released, typically towards the beginning of the year.

    How is the raw data processed?

    We calculate a consensus forecast using a simple mean average.