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article dwell leeds

Guide To Property Investment In Leeds

Published: 01/02/2022

Choosing where to invest in property can be tricky, especially when considering the whole of the U.K. but there’s no doubt that in terms of return on investment, Leeds is the number one choice for all budding property investors. Dwell’s Investor services are designed to help navigate investors Leed’s local market and offer unparalleled knowledge and expertise.

So, why exactly is Leeds one of the best cities in the U.K. for property investment? With strong economical potential and plenty of regeneration projects currently active, over the next few years house prices and the rental market are expected to grow as the city develops into a vibrant, thriving hotspot.

Supported by an ever-growing student population as more and more young people attend the award-winning universities and following that, an influx of young professionals, Leeds is an up and coming city with lots to offer for millennials and Gen-Z’s. So, they’ll be wanting a property to rent all the while.


Is leeds a good place to invest in property over other cities?


As the UK’s fastest growing city, it’s the perfect time to invest in property in Leeds. It’s ideal for buy-to-let investors as it has one of the highest potential yields in the whole of the UK, an average of 8.7% compared to 3.05% in London. This means investors can see more return on investment in Leeds than they would if renting out a property in London.

As the city is so popular with young people and especially students, there will always be demand for property, which means you’ll have no trouble finding a tenant. With the average age of a person purchasing their own property now at 33.1 and rising, that means that the market for rentals is stronger than ever.

House prices in Leeds are on the rise, reporting a 7.6% increase in 2021, so now is the perfect time to invest. Demand is increasing as more and more people move into the city, which is only a good thing for the rental market as increased demand equals increased  rental prices, thus making your investment more profitable.


How affordable is Leeds in Comparison to the rest of the UK?

As one of the UK’s largest cities, Leeds is surprisingly cheap considering the lifestyle and average salary of its inhabitants. On average, the cost of living in Leeds is 36% cheaper than London, which is a massive saving for those paying their mortgage or renting.

In Leeds, the average house price is £234,928, and this could buy you a three bed semi-detached property with a generous driveway and garden. In North London, the same property would cost you just over £1 million, with the additional cost of on-street parking. In comparison, the average house price in London is currently £507,230.

But, London certainly isn’t representative of the entire UK, so how much would the same property cost in different parts of the country?

To buy a three bedroom, semi-detached house in Plymouth, with a generous driveway and garden, you could expect to spend around £340,000

 

To buy the same in Chelmsford, Essex, you could expect to spend up to £450,000.

 

And to buy a property in Wales with the same attributes, you would have to spend £285,000.

 
This is why at Dwell we are of the belief that Leeds is the best place to buy in the UK in terms of value for money. But what about other factors such as job opportunities, entertainment and travel?


Factors to consider before investing

Before investing in a buy-to-let property, it’s important to know who might want to live in the property you buy, which depends on what type of property it is and where exactly it is located.

Reasons people might be looking to live in the city of Leeds include:

  • Travel links
  • Entertainment venues
  • Restaurant
  • Bars
  • Clubs/hobbies
  • Work

Travel

In terms of travelling around the city, Leeds is different from others as it is the largest city in Europe without any form of underground system or light railway. However, Leeds city centre is extremely well connected and in fact Leeds Station is one of the busiest in Britain. It has close links to the city suburbs as well as lines running to all other cities in the U.K.

 
Benefiting those in the city centre, Leeds has a free bus scheme called Zero Fare Free City Bus which runs on a circular route in the centre of Leeds.
Buses also run outside of the city centre and into the suburbs as an alternative means of travel.

Restaurants

Rated number one on Tripadvisor, La Taberna might be one reason to be tempted to move to the city centre, with its delicious homemade Spanish food and tapas, the perfect meal to nibble while catching up with a friend.

The city is also home to many popular chain restaurants such as Gauchos, Bills, Turtle Bay and many more, as well as independent venues that offer a wide variety of cuisines.


In Leeds, you can dine out to eat
  • Japanese
  • Greek
  • Indian
  • Italian
  • Argentinian
  • British
And, many more venues continue to open as the city develops further.

Bars

Similarly to restaurants, you can choose from your favourite well-known spots such as Dirty Martini or The Alchemist, or you can try an independent bar where you might find a speciality cocktail or two.

Cuckoo has a reputation in the city as a quirky, out there venue with colourful rainbows and animal heads all over the walls. This place comes alive after night and is the perfect spot for young professionals and students to let their hair down on a Friday night.

 
For a more rock ‘n’ roll vibe, Mojo often hosts live bands and specialises in rum cocktails. The perfect alternative party place for newcomers to the city to explore.


Will house prices rise or fall in Leeds in 2022?

In the year of 2021, house prices in Leeds rose by 7.6%, which follows a trend of an average rise of 7.1%. This indicates that house prices in Leeds are rising slightly quicker than the rest of the country, so now is the perfect time to invest.

The rise in house prices in Leeds could be due to the amount that’s been invested in the city, with a huge regeneration scheme planned for the years ahead.

South Bank Leeds is a development that will double the size of Leeds city centre, a 253 hectare space the size of 350 football fields, which is being transformed into a space for learning, creativity and leisure. This will create 8,000 homes and 35,000 new jobs once finished, increasing demand for rental properties as a result.

The High Speed Rail 2 (HS2) is also being built, which will offer better connections to the north, midlands and south of the U.K. This station is expected to welcome more travellers than Gatwick Airport, and encourage a growth of 143% in city size.


What type of properties are best to invest in Leeds?

Ultimately, the best type of property to invest in comes down to profit, but there are other factors such as what kind of tenants you desire and for what purpose you are making the investment.

If you would like to aim for the highest returns on investment, many investors opt for HMO’s or a House In Multiple Occupation, which can be extremely lucrative. In Leeds there are many thousands of HMO’s for both students and professionals and each type represent a strong market in Leeds.

However, these properties often require a lot of maintenance and frequent change of tenancy contributing to additional costs. But, there’s no doubt that there is strong tenant demand for them.

If you would like to have steady, long term tenants then investing in a family home in the suburbs would be a wise choice. Though the upfront costs of the property might be more expensive, the security of having a long term tenancy in place will be sure to make you a good return on investment, and may even develop a relationship between yourself and the tenant.

Maintenance on these homes might not be so costly, especially if it is a new build property, which reduces additional yearly spend and makes for a good yield.

There is a shortage of larger family homes to rent and the pandemic has led to increased demand for larger homes with a garden, and as a consequence these types of homes have appreciated more than any other in terms of capital growth and rent recently.

City centre apartments are also well worth considering as long term investments. They are always in demand, particularly with young people seeking the sheer convenience and flexibility they offer for modern living. Maintenance costs are usually very low making for a very low hassle investment.

Eventually, when it comes to selling the property, you will reap the rewards of your investment and you can expect to benefit from capital appreciation, particularly over the long term. House prices are expected to continue to rise and they’ll keep doing so whilst demand outweighs supply.


What are the best parts of Leeds to invest in?

If you plan to rent your property out to students, then purchasing a 3-4 bedroom house to the north of the city, in Headingley could be a great option. Close to the Leeds Beckett University campus, this town is considered to be the centre of Leeds student population, and there will always be a heavy flow of tenants looking to rent student properties in this area.
Here you can find a property for an average of £216,000 and expect to achieve a yield of 7.4%.

 
If young professionals or families are your target market, then it might be wise to invest in a property in a north Leeds suburb such as Roundhay, Moortown Adel or Horsforth which are considered to be some of the best places to live in Leeds outside of the city centre.

Those who live in this area will be able to access Leeds city centre in just 9 minutes by train, as well as be in the catchment area for highly commended grammar schools.

In these areas your property is likely to cost around £250,000, and achieve a yield of 4-6%.

In the city centre there are a mixture of people who want to be close to university or their work, but all are looking for the same inner-city lifestyle. With plenty of converted warehouse and loft style apartments, and lots of high-rise buildings in the pipeline, the city could be transformed in the coming years, so it’s a great time to invest.

A property in the city centre can sell for an average of £180,000, and investors can expect a yield of around 5-6%.


How much rental income can buy-to-let investors expect?

Leeds was named the third most profitable city to be a landlord in, after Brighton and London. Despite being third, It’s far cheaper to purchase a property in Leeds than the preceding two cities, which means you could become a landlord and start making a return on your investment sooner than you might think.

 
The average cost of renting a property in Leeds is £1,418, and with the average house price sitting at £234,928, this creates an average yield of 7%, which is well ahead of the national average of 3,63%.

In Leeds, landlords will make an average monthly profit of £432.29, which is an impressive number considering the low house prices, even in the city centre.

And these numbers are only set to increase over the coming years as Leeds continues to grow. Demand for residential properties is steadily increasing as more businesses move in and with the planned developments for the city centre coming to fruition, prices will only inflate further.

The best time to invest is while prices are still low but statistics are suggesting that this won’t last long. If you are considering purchasing a buy-to-let property in Leeds then don’t delay, invest your money now to maximise earnings and who knows where the future figures will take you.