Buy-to-Let in Birmingham: Opportunities in Britain’s largest city

Is Birmingham really the UK’s biggest city?

Granted – based on population Greater London is bigger, but Greater London isn’t a city, so although Birmingham is referred to as the ‘second city’, it’s actually the first city if numbers matter!

It’s a funny place, Birmingham.London is London, Liverpool is the Beatles and the Mersey beat, Manchester was Madchester, but Birmingham just sort of is. A huge urban sprawl through which the M6 winds its way – oh, and Peaky Blinders!

And yet Birmingham is so much more than that, a cauldron of cultures and culture, and if you are looking for property investment opportunities, buy-to-let in Birmingham should be right at the top of your list.

As buy-to-let property professionals with decades of experience, we’re going to show you why Birmingham is almost certainly more than you think it is!

Radicalism, reform and revolution

Birmingham has a long history with evidence of human activity there dating back to 8000 BC. The town proper emerged in 1166 with the grant of charter to hold a market at the castle of Lord of the Manor, Peter de Bermingham.

Later Birmingham was to become the hub of iron production and manufacturing which gave rise to a society which was markedly different to those which surrounded it, being based on pragmatic relationships rather than a simple feudal system.

This unique history has led to Birmingham being a hotbed of political and social reform for centuries, producing some of Britain’s leading reformist politicians over the years.

In the 18th Century, this unique aspect of Birmingham would lead to the Midlands Enlightenment. It was also exceptional in that its expansion during the industrial revolution was based on a highly skilled and diverse workforce.

This was in stark contrast to elsewhere in the UK where the industrialisation of a single task – weaving for instance – formed the basis of the upheaval which propelled Britain to the fore world-wide.

The resulting prosperity continued until the mid-20th century when Government policy redirected industry and investment to other areas of the country, leaving Birmingham “…top heavy with the old and infirm”.

Fortunately for this proud city, as the 21st century dawned, increasing levels of investment and a positive civic vision have raised Birmingham once more to its deserved place as a major UK city.

Education and Economy

Birmingham is home to five universities including the oldest business school in the UK, the Birmingham Business School, and some 76,850 full-time students. From a property investment perspective, that’s already highly encouraging.

Once heavily industrialised, the service sector now accounts for around 88% of Birmingham’s business. Traditional manufacturing now accounts for only 8% of the city’s output.

It is still the home to Jaguar LandRover and Cadbury, and also accounts for some 40% of all jewellery made in the UK comes from Birmingham’s jewellery quarter, continuing a tradition dating back to 1308.

Buy-to-let in Birmingham

Birmingham is well up the list of UK cities to invest in. Buy-to-let in Birmingham can realise yields of up to 9% depending on the area you invest in and given the size of Birmingham, there are plenty to choose from.

Thanks to the Big City Plan, Birmingham has been undergoing extensive renovation and restoration. With plenty of former industrial buildings, there has been no shortage of stock to convert into high quality accommodation.

According to HMRC’s Valuation Office Agency, the average rent in Birmingham is £787 PCM. This is lower than the England average, but bear in mind that the city embraces the extremes of the property market, like many large conurbations.

Many desirable, and profitable areas lie to the south of the city centre. Edgbaston, Selly Oak and Balsall Heath can deliver excellent returns for landlords. In part this is due to the siting of the university and the corresponding preponderance of students.

Student rentals historically deliver good returns for investors, and Birmingham is no different. This is the area where yields of up to 9% can be made from canny investments.

Property prices in this area average £268,690, but monthly rentals are in the region of £2,000 per calendar month.

The Jewellery quarter is increasingly popular with young professionals thanks to its vibrant street life and high quality accommodation. Covering portions of 3 postcodes, average rent is around £1,000 PCM, against average property prices of £220,000.

Advice from the property pros

Within the UK, Birmingham has for some time ‘enjoyed’ a reputation as a post-industrial wasteland. This is both unfair and untrue.

Even a couple of decades ago, aggressive redevelopment was transforming the city centre, and that drive to improve has continued. These days Birmingham is a diverse, vibrant city of over 1,000,000 residents.

Its substantial student population makes it well worth consideration for any existing or new property investors, however it has increasingly become a popular destination for young professionals and families as prices rise elsewhere.

Which area of Birmingham appeals to you will likely depend on your circumstances. In a period of relatively high mortgage rates, buyers with resources behind them may choose the more attractive areas with their promise of higher yields.

Where some level of finance is required, areas such as the Jewellery or Gun quarters may offer a better investment balance of cost vs return.

Birmingham property prices are not immune to the winds of the property market, and during a period of relative stagnation, this might be a good time to seek bargains. That said, during better times, house prices, and rents, have been buoyant.

In summary…

One of the benefits for buy-to-let investors in a city like Birmimgham is the wide range of properties and areas available. Some will be more suitable than others, depending on your strategy, but you will find something to interest you.

So if you’re looking for a wide range of options in one geographic area, Birmingham could be right up your street. Its size, the availability of UK-wide transport links and the plethora of potential tenants is ideal.

With years of experience in serving the buy-to-let property market we’re ideally placed to help you take your first steps on the property investment ladder. If Birmingham sounds attractive, please get in touch.

We’ll be able to guide you towards achieving your goals, while offering a number of practical services to smooth your path.

Written by John Forth CIHM, Property Consultant at Portolio

Get in touch on 07714 758 320 or email to [email protected]