While the rules may have got tighter and tax breaks less generous, investing in a buy-to-let property can still provide decent returns.
So if you’re looking to buy an investment property in 2017, where should you buy?
We’ve asked the experts to give us their predictions of some of the best places to snap up a buy-to-let property next year.
One city that most experts flagged is Manchester. The city is enjoying an enormous amount of investment as the crown jewel of the ‘Northern Powerhouse’, and that is only going to boost demand for property in the city, whether for purchase or rent.
Jonathan Stephens, managing director of property consultancy Surrenden Invest, said that savvy investors should consider taking advantage of Manchester’s “buoyant” rental market.
“Manchester city centre has experienced an influx of buy-to-let activity throughout the last few years and now stands alongside the capital as a prime buy-to-let market within the UK,” he said.
“Investment in the heart of this northern city is a trend that investors will definitely be getting involved in in the New Year, as enthusiasm for the area continues to build on such a positive trajectory.”
According to the latest Buy-to-Let Index from online mortgage lender LendInvest, properties in Manchester have seen capital gains of 4.4% over the last year, while rents have grown around 2.6%.
It offers an overall yield of 6.2%.
Property prices in Leeds have jumped more than 6% over the past year but, with an average house price of around £150,000, it still represents good value.
Graham Davidson, managing director of Sequre Property Investment, explained that as the government implements phase two of the HS2 rail project, Leeds will become an even bigger attraction for investors.
“HS2 is one of largest regeneration projects in Europe and we know that historically infrastructure paves the way for wider investment,” he said.
“What’s more, the city has the fourth largest student population in the country and is served by four universities, meaning the demand for rental properties is extremely high.”
Davidson also noted that Leeds is set to see several renovation and regeneration projects in the next few years, further boosting its appeal, including a £350 million development in the heart of Leeds South Bank which will potentially create 7,000 new jobs.
Rents in the city have jumped 3.6% over the past 12 months, with an overall yield to investors of 4.8%.
Rob Bence, co-founder of The Property Hub, a global community of property investors, and presenter of The Property Podcast, believes Hull is a city to watch for buy-to-let investors.
Bence said: “My wildcard for 2017 is Hull. Yields are already fantastic, and with Hull gaining Capital of Culture status, plus the recent investment into the city, I expect to see property investors paying more attention to Hull.”
Back in 2005, the city was named the worst place to live in the UK by a Channel 4 TV show, but its fortunes have improved considerably since then.
Siemens has just opened a £310 million wind turbine blade factory in Hull, which has been flagged as the biggest investment in the city since Victorian times.
Property prices have jumped 2.5% in the city over the last year, though rents have actually fallen by 3.5%. Nonetheless it offered investors a yield of 4.8%.
According to Frazer Fearnhead, founder and chief executive of property crowdfunding platform The House Crowd, Stockport should be at the top of the list for any property investor.
He pointed out that it enjoys direct rail services to Manchester, Liverpool, Birmingham and London, and is set to see significant investment.
“With a £42 million transport interchange under construction and £1 billion being invested across retail, residential and commercial sectors over the next five years, Stockport is establishing itself as a regional business hub. Properties in the area offer investors strong, consistent yields - a safer bet than relying on speculative capital growth.”
According to LendInvest, Stockport has seen capital gains of 4.3% over the last year, while rents have grown 0.7%, delivering a total rental yield of 4.2%.
If you really want to get ahead of the pack, then you need to look beyond the perceived ‘safe options’, according to Dale Hornidge from property management firm No Agent.
He points out that these areas are already saturated with investors and priced accordingly, meaning yields are low.
Instead you should look to forgotten areas of the UK which continue to perform, one of which is Inverness.
He pointed to the fact that it benefits from the Aberdeenshire oil industry, and the fact that the average house price in the city is now beyond the reach of many first-time buyers, boosting the rental sector there.
According to Zoopla, the average property value in Inverness is now almost £184,000, having risen more than 5% over the last 12 months.