In an unprecedented global climate and with the new tax year looming, investors everywhere will be thinking about the future and their future investments. For those for whom the current situation means a little more time on their hands, or those who want to maintain a sense of business as usual, now is an opportune time to re-evaluate their investment strategy for the future or potentially carry out some research into new territories.
A recent report by lettings management company Howsy found that two-bedroom properties make the best investment for buy-to-let landlords for rental yields. Another recent report found that the South East is the region with the highest average weekly wage amongst residents outside London.
With this in mind, leading property investment and development company, SevenCapital, has carried out some research into the best areas in the South East for residential property investment, based on average wage versus average rent, cost to buy, rental yield and five-year capital growth for a typical two-bed property in each area.
Here’s the top five:
| Location | Median Av. Weekly wage | Av.rent for a 2 bed pcm | Av. Price of a 2 bed | Av. Rental yield | Av. 5 year growth | 5 year growth in GBP |
| Slough | £613 | £1,098.00 | £268,000.00 | 4.7% | 23.0% | £50,113.83 |
| Bracknell | £680 | £1,140.00 | £288,000.00 | 4.5% | 20.0% | £48,000.00 |
| Oxford | £630 | £1,252.00 | £327,000.00 | 4.4% | 21.0% | £56,752.07 |
| Luton | £560 | £847.00 | £209,000.00 | 4.6% | 30.0% | £48,230.77 |
| Swindon | £584 | £736.00 | £170,000.00 | 4.9% | 23.0% | £31,788.62 |
(Data sources: ONS, Property Data)
Slough:
Home to some of the highest average wages and with good rental values and yields with growing house prices, Slough tops the list with a strong performance overall. (fig 1)
Slough’s prime position along the Crossrail route, where new developments such as Iron House by SevenCapital are already proving popular, and the planned Western Rail access to Heathrow, both designed to make commuting from this well-connected town even easier in future, have already been the cause of fantastic house price growth. Recently named the best place to work in the UK by Glassdoor for the third year in a row and with a £3 billion high street regeneration programme still in the pipeline, Slough’s future, where tenants, investors and growth are concerned, is bright.
Figure 1
Bracknell
Second on the list, Bracknell has a higher average wage and monthly rent and, for investors, a higher average property price too. Slightly further away from London than Slough but at the heart of the UK’s own ‘Silicon Valley’, Bracknell also offers a great commuter location as well as its own thriving tech economy. Currently in the midst of a £770 million town centre revamp- which has already seen the introduction of a £240 million retail and leisure destination, The Lexicon, and with Boris Johnson pitching it as the ‘epicentre of global free trade’, it’s easy to see why Bracknell is predicted to see a 15% population increase by 2036.
This town on the rise is in the early stages of modern, buy to let development, however the bar is already being set high by the likes of The Grand Exchange.
For investors looking for early entry into one of the South East’s most up and coming hotspots, Bracknell is one to watch.
Oxford
Renowned worldwide for its top universities, Oxford has long been in demand from both tenants and investors. Average wages are similar to Slough and Milton Keynes, however property and rental prices are both the highest of our top five, which means that whilst growth in percentages looks lower than Oxford’s contenders, in actual figures, it rates much higher. Not a place to rest on its laurels however, Oxford has a Strategic Economic Plan that will see 28,000 new homes, 24,000 new jobs plus hotel, offices and a mew transport interchange introduced.
One for investors looking for an investment at the higher end of the market.
Luton
Named twice by Jackson Stops as their top commuter hotspot, Luton demonstrates great value with an almost comparative wage to the top three, but lower price point for both rent and house prices. With an airport, three train stations and just 22 minutes from London and with £1.5 billion of investment into key development and regeneration projects, there’s not doubt about its attraction for tenants. With 30% price growth over five years, Luton is a great option for investors looking for capital gains with a lower entry point.
Swindon
Not technically South East, but a similar distance from London to Oxford, but with a far more affordable price tag, Swindon is still at the beginning of its evolution as a top investment hotspot. With its lower average rents but the strongest rental yield of the top five, Swindon is already showing its potential as a buy to let hotspot.
With a multi-million-pound investment deal with SevenCapital to redevelop its North Star site into a major retail and leisure destination – including one of the largest real snow indoor ski slopes in the UK – and a £300 million town centre regeneration plan in the pipeline, Swindon is going to see a major transformation over the coming years.
One to watch for investors whose strategy includes key regeneration zones.
For more information on SevenCapital visit www.sevencapital.com.
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