Five buy-to-let hotspots for all budgets: where to find £75k houses and good rental returns from Bristol to Birmingham

There are good investment opportunities for prospective landlords all across the country, whatever your budget. The key is to find the areas that offer good rentability and the possibility of price growth...

£350,000 budget: Bristol

According to Hometrack’s latest UK cities house price index, Bristol prices soared 11.2 per cent last year, to an average £238,200.

This is better than Oxford or Cambridge, and not far off London’s 13.3 per cent growth.

George Cardale, head of residential development sales at Savills’ Bristol office, recommends either a safe bet — a prime central location, such as Clifton or the harbourside, where a two-bedroom apartment would cost around £350,000 to £400,000 — or a bigger gamble on an emerging location outside the city centre where prices will be lower, yields higher and, if the area (he suggests Easton or Bedminster) fulfils its potential, higher capital growth, too.

“Because of the university Bristol has a large student population, many of whom remain in the city after graduation,” says Cardale. “It is a solid employment centre, especially for professional services and finance, and is far enough from London for many companies to have head-quarters in the city. Bristol offers an attractive lifestyle — it’s somewhere people want to live.”

£250,000 budget: Birmingham

With high-speed rail on its way to the Midlands, and major firms such as HSBC relocating, Birmingham’s star is on the rise.

The city centre has enjoyed great regeneration over the past 10 to 15 years and, according to Knight Frank, prices have risen 10 per cent in the past year alone. A two- bedroom flat in the fashionable Jewellery Quarter would cost around £250,000 and Raj Bedi, managing director of Martin & Co Birmingham, believes that a yield of six to seven per cent would not be an unreasonable aim for a landlord.

If you are looking for an up-and-coming location, try the Gun Quarter in the north-east of the city centre, where former munitions factories are rapidly being turned into flats, priced about £200,000 for two bedrooms.

For the family market, Bedi recommends leafy Edgbaston, where a four- to five-bedroom detached house costs from about £400,000. Edgbaston has good schools and there are plans to upgrade its shopping and create a major new healthcare facility in the area.

£200,000 budget: Basildon, Essex

With annual price increases of 11 per cent, the market in Basildon is booming. But average prices still stand at £214,392, meaning you could buy a good flat or even a small house for around £200,000. Ian Marston, national field manager at House Network, believes an investment in Basildon will pay dividends, with plans for a major regeneration of the town centre and several big developments in the pipeline. It’s 40 minutes from Fenchurch Street station.

“The area has something for everyone, with a world-class sporting village used for the 2012 Olympic Games, vibrant nights out at Basildon Festival Leisure Park and close links to nearby trendsetting areas such as Leigh-on-Sea,” says Marston. “It is ideal for young professionals wanting something quick on the commute but close to a town centre, or for growing families who want to take advantage of some of the local parks or recreational activities.”

Marston calculates that investors could enjoy yields of six per cent-plus on a two-bedroom flat, or around 5.5 per cent on a three-bedroom house.

£150,000 budget: Brighton and Hove

Buying in this perennially booming London commuter location is a lot cheaper than investing in the capital itself, with one-bedroom flats in the centre starting at £150,000 and likely to earn a monthly rent of £650. “This bottom end of the rental market is always in demand with tenants as their budget does not stretch very far in the town centre — so voids in the tenancy tend to be few and far between, a vital part of a successful buy to let,” says buying agent Sally Fraser of Stacks Property Search.

“Many landlords have been achieving an increase in the rent with the student market of about five per cent year on year, offering a return in the region of five to six per cent.”

For student lets, investors should look for a central location with good bus links to both the city centre and the Sussex University campus.

£75,000 budget: Carmarthen, Wales

If you want to keep entry costs at rock bottom, then this county town could be ideal — you can pick up a three-bedroom terrace house in the centre for £70,000 to £80,000.

Carol Peett, managing director of West Wales Property Finders, recommends the area because of high rental demand, thanks to the University of Wales Trinity St David campus. Demand will also increase for posher homes because the West Wales General Hospital is expanding and the S4C TV studio is relocating from Cardiff. “The large £74 million St Catherine’s Walk shopping centre has brought a new vitality to the town and it is the chosen place to live for many who work in Llanelli, Swansea and even Cardiff,” says Peett.

“The proximity to glorious beaches and stunning countryside as well as the theatre, restaurants, art galleries and great shopping make it a popular place for singles, families and retirees.”

You could pick up a three-bedroom semi for around £115,000, a four-bedroom detached house for under £200,000, or a Georgian four- bedroom family house for less than £300,000. But Wales has struggled to shake off the recession, so don’t expect any madly exciting capital growth in the near future.