As the UK’s second-largest city, Birmingham offers a wealth of opportunities for landlords. Canal-side city-centre flats, family homes, suburban properties and student accommodation all represent great property investment opportunities. If you’re looking for a buy to let property in Birmingham, read on for The Landlord Link’s guide to buying rental property in buzzing Brum.
Why invest in Birmingham buy to let property?
Growing investment in Birmingham and fantastic transport links to virtually everywhere else in the UK have made it an attractive location for businesses, students and regeneration projects. Once HS2 arrives in 2031, you’ll be able to get to London in just 49 minutes. While Birmingham may not appear on the list of the best places for rental yields in 2020, the city is most definitely on the up.
Investment projects in 2020 include the Eastside Locks regeneration scheme which is modelled on an area in Barcelona. A £450 million investment makes it one of the most significant city centre regeneration schemes in Europe, with apartments, a hotel, shops, bars and restaurants all rising from a formerly neglected part of the city.
Near the Bullring, a 42-acre site south of the city centre will be transformed into an area that will bring food, culture and community together, with a foodie hub attracting people into the area. The centrepiece square of the Smithfield project aims to rival the best that Europe has to offer, with a museum, cultural centres and family attractions like an ice rink.
Digital and media projects are also seeing significant investment. Birmingham and the West Midlands are the UK’s first testbed for widespread 5G mobile communications. The director of Peaky Blinders has plans in the works to create a £500 million media village to capitalise on Birmingham’s growing reputation as a filming location.
All these plans are likely to increase demand for rental property in Birmingham and the West Midlands – so which areas in Birmingham should you look at to add properties to your rental portfolio?
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Best areas for buy to let in Birmingham 2020
At the Landlord Link we’ve done our research into the Birmingham property market. Here are the areas we think landlords should consider for buy to let property in Birmingham.
Birmingham city centre
Like many UK cities, Birmingham has seen huge growth in city centre living. Apartments in converted warehouses and sleek new builds attract professional singles and couples looking to take advantage of Birmingham city centre’s food scene, nightlife, shopping and leisure facilities.
As always, brand new properties have a price premium, making decent rental yields more challenging. Some property investors also believe that there’s an over-supply of apartments to rent in Birmingham city centre, and that family homes further out may be a better buy.
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Digbeth and Eastside
These two areas to the east of Birmingham city centre have already seen a lot of regeneration and more is planned.
Digbeth has been hailed by the Sunday Times as one of the coolest neighbourhoods in Britain (get used to seeing that in off-plan development listings!). With Curzon Street station due to become Birmingham’s HS2 hub, the area has all the amenities that city-dwellers could wish for.
Properties for sale in Digbeth and Eastside are mainly apartments. Some are in modern blocks with amenities like communal roof gardens, while others are in converted industrial buildings, reflecting the history of the area. Prices are well above the Birmingham average at around £200,000+ for a two bedroom flat. That said, rental yields of 6% are possible, and there’s still potential for prices to rise in this most fashionable of Birmingham areas.
Aston and Nechells
Just north of Birmingham city centre you’ll find Aston and Nechells. Both are inner-city areas with large numbers of HMOs and shared accommodation. Aston is popular with students at nearby Aston University.
Crime is higher than average in these two areas but they can be a cheap place to invest for experienced landlords; current yields are slightly higher in Nechells at up to 9% vs 5% in Aston, thanks to lower asking prices.
Edgbaston and Selly Oak
Either side of the University of Birmingham campus you’ll find Edgbaston (to the north) and Selly Oak (to the south). Unsurprisingly, both areas are very popular with students but you’ll also find family homes here.
Leafy Edgbaston is known for its large houses, botanical gardens and the Edgbaston cricket stadium. In recent years, Edgbaston has seen a number of purpose-built student accommodation blocks built, particularly around the large reservoir. Yields in Edgbaston will vary a lot depending on the type of property but average around 4%. That’s not to say that it’s not worth looking at Edgbaston for your next rental property; good student properties could be much higher.
Selly Oak is significantly cheaper than Edgbaston and also offers higher rental yields at around 5%. Check the street and neighbours carefully as some streets are student hubs while others are family areas. Selly Oak has also seen lots of purpose-built student accommodation blocks coming on to the market recently, with more blocks likely to come. If you’re considering a student house share or HMO in Selly Oak, be aware that your competition for tenants is likely to be of a high standard.
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Western Birmingham: Quinton, Smethwick, Oldbury
The suburbs on the outskirts of Birmingham straddling the M5 can be a solid investment. While Oldbury, Smethwick and Quinton may not be as fashionable as Moseley or Digbeth, investors report good returns.
Quinton (B32) has one of the oldest populations in Birmingham and the lowest crime. Housing in Quinton is mostly 1930s and 1940s semi-detached family homes mixed with some bungalows and more modern developments. Yields are around 4%.
Smethwick is strictly speaking part of the West Midlands rather than Birmingham, but it’s only 4 miles from Birmingham city centre and has some of the highest yields with a Birmingham postcode at 5.4% for B66. Smethwick is a town in its own right and tenants will appreciate the range of facilities along with transport links to the city centre.
Oldbury’s B69 postcode sits either side of the M5 and again is West Midlands rather than Birmingham-proper. Oldbury is heavily built up with a mixture of social housing, private housing and industrial areas. Landlords who take the time to understand the market for buy to let properties in Oldbury could be rewarded with yields of around 5%.
HMOs and Article 4 in Birmingham
From 8 June 2020, Birmingham City Council planning department introduced an Article 4 Direction across the entire city, meaning that any new HMOs need planning permission. With Birmingham council showing their stance on HMOs in such a firm way, getting planning permission to convert a large property into an HMO is likely to be difficult to come by.
If you’re still keen to invest in HMOs in Birmingham, buying an existing Birmingham HMO could be a better way to go. To protect your investment, make sure you get proof that the property has been an HMO for 10 years or as a minimum that it has been operating as an HMO since before the Article 4 date.
Is Birmingham a good place for landlords to invest in property?
For savvy investors, Birmingham can be a great place to invest in buy to let property. One of the best reasons for landlords to purchase buy to let property in Birmingham is the level of demand and the variety of property available. We’ve already seen strong investment in jobs and infrastructure in Birmingham, and the city population of 1.1 million is forecast to grow by nearly 20% by 2039. That’s an extra 200,000 people who’ll need somewhere to live.
Birmingham property prices are surprisingly low with the average property selling for £163,000. That’s less than either Manchester or Leeds. It’s also substantially less than London, and the easy transport links back to the capital, coupled with good job opportunities and excellent schools have led Birmingham particularly attractive to Londoners looking for a better quality of life.
Which area will you choose for your Birmingham buy to let investment?
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