Buy-to-let property in Birmingham has captured investors’ imaginations for a multitude of reasons. This thriving West Midlands city is second only to London in terms of population size, with more than 1.1 million residents. The city is a hotbed of dynamic economic activity and young people have flocked to it in pursuit of economic opportunities, cultural attractions and recreation and leisure facilities. This has created strong, sustained demand for housing in Birmingham in recent years.
Birmingham’s population grew by an impressive 9% between the 2001 Census and the 2011 Censuses. The addition of so many people seeking to be part of the city’s future has done great things for Birmingham. This is reflected in the January 2017 Birmingham Economic Update, which shows every single indicator moving in the right direction.
The economic dashboard contained within the report shows that Birmingham’s nominal GVA is up by £1.2billion (5.1%), resident earnings are up by 3.8% and NVQ4+ qualifications are up by 17.0%. The only downward movement relates to claims for unemployment benefit, which have reduced by 6.2%. This is all excellent news for buy-to-let investors in Birmingham.
Also positive are Birmingham’s entrepreneurial credentials. Business startups in the city were up by 37%, according to the January 2017 Economic Update, reaching a level of 65.8 per 10,000 residents.
In keeping with its dynamic workforce and thriving economic activity, Birmingham is undertaking an ambitious City Centre Masterplan, to ensure that the city remains a world-class venue for those who live and work there. The second phase of the Big City Plan, the City Centre Masterplan aims to expand the size of the city core by 25%, running from 2010 to 2030 and covering five areas of development estimated to be worth £10 billion.
The plan incorporates some 5,000 new homes and 50,000 new jobs. A number of impressive elements have already been completed, including the new Library of Birmingham and the first new city park since Victorian times (Eastside City Park). Such developments are already benefitting those who have invested in buy-to-let property in Birmingham, but adding to the desirability of the city as a place to live.
The City Centre Masterplan also aims to improve Birmingham’s transport infrastructure. This included the £600 million redevelopment of New Street Station, which opened in September 2015. The redevelopment was much-needed – Birmingham New Street’s annual rail passenger numbers more than doubled between 2004/05 and 2014/15, rising from 16.2 million to 35.3 million, based on figures from the Office of Rail and Road Statistics.
Birmingham’s transport infrastructure is set to receive a further massive boost, thanks to the high speed rail network planned to run between the city and London, known as HS2. According to independent research undertaken in 2013, the implementation of HS2 could lead to 26,000 new jobs in Birmingham/Solihull, an average gross value added increase of £680 per worker and a £4 billion increase in annual economic output.
Birmingham is a key UK hub for foreign direct investment (FDI), with incoming firms citing the city’s strong talent pool, affordable space and transport links as reasons for their belief in Birmingham. In 2015, the city was the third greatest recipient of FDI in the UK, securing its best investment results for a decade, according to the EY UK 2016 Attractiveness Survey.
Housing in Birmingham – and particularly rental property in Birmingham – has experienced increased demand as a result of this influx of residents. Like much of the UK, the city is in the midst of a housing crisis. Buy-to-let property investment in Birmingham is seen as one of the key ways in which this need can be met. At present, it is estimated that some 89,000 homes are needed in order to house the city’s growing population.
House prices in Birmingham have risen by 4.12% in the past year, according to Zoopla, while rents are currently averaging £963 pcm. This is excellent news for buy-to-let property investors in Birmingham who are seeking the perfect blend of healthy yields and capital growth potential.
Across the UK generally, home ownership levels are falling sharply. Between the 2012/13 and 2014/15 English Housing Surveys, published by the Department for Communities and Local Government, home ownership fell from 65% to 64. As fewer people own their homes, more rent. The opportunity for those investing in buy-to-let property in Birmingham and other sought-after city locations is clear.
England’s second city certainly has a winning combination when it comes to attracting interest from investors. Its youthful and entrepreneurial workforce is creating a truly dynamic environment for businesses within Birmingham, while the mixture of foreign direct investment and regeneration funding from within the UK is elevating the entire city to the next level. For those with a keen nose for future success, buy-to-let property investment in Birmingham is well worth considering.
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