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property-investment-guide

Why Invest in the Leeds Property Market? 

After years of huge growth, property investment in Leeds has become a top choice for UK investors.

With property prices predicted to rise by 5% in 2023 and rental income also growing, the Leeds property market could be the perfect place for your next investment.

Keep reading this in-depth and straightforward guide to learn why you should (or shouldn’t) invest in Leeds in 2023:

Invest in Leeds for Affordable House Prices

Likely the biggest appeal of Leeds property investment is its affordable house prices.

As of March 2023, the average house price in Leeds was just £221,412, according to the Land Registry.

This is an incredibly affordable house price compared to many locations in the South, with Leeds property prices over £53,300 below the UK average.

It’s not all good news, though:

While Leeds offers affordable housing and good value property, it isn’t the cheapest spot out there.

Leeds is less affordable than nearby locations like Manchester, Liverpool, Newcastle, and Sheffield.

However, while these prices may not be the cheapest, returns for property investment in Leeds are some of the highest around.

property-investment-leeds
property-investment-leeds

Invest in Leeds for High Returns

Whether you’re focused on income or looking for long-term growth, Leeds can be a top choice for UK property investors.

Thanks to a sizeable average rent of £1,612 per month, Leeds can generate average rental yields of 8.77%.

Amazingly, this means Leeds is the third-highest yielding city in the UK and second only to Nottingham out of the major rental property hotspots.

It gets better:

Not only does the Leeds rental market deliver a high average rental yield, but capital growth is also massive.

Over the last 12 months, Leeds property prices have increased by 8.20%, showing a value increase of £16,774.

Factoring in a predicted house price growth of 5% in 2023 alone (according to JLL) and it’s clear that property investment in Leeds holds an exciting future.

Why Invest In Leeds?

Invest in Leeds for High Demand 

Without demand, property investment is doomed to fail.

Luckily for Leeds property investors, the Leeds City Region helps generate some of the highest rental demand in the UK.

Leeds is the heart of West Yorkshire’s commercial and financial sector, which has led to the city becoming a magnet for young professionals and businesses.

There are currently over 498,000 active workers in Leeds, making the city the largest employment centre outside of London.

And with a further 25,000 workers expected over the next decade, the demand for property is only going to get higher.

Lack of Supply in Leeds Property Market 

Significantly, Leeds doesn’t have enough properties to meet demand.

The Leeds population currently outweighs properties by 2:1, with a report from JLL revealing that Leeds needs 1,200 homes per year for the next decade to match demand.

While this lack of supply may seem like a negative, it’s actually vital for a property investor in three main ways:

  1. A low property supply leads to higher house prices, which has been seen in the UK property market over the last year.
  2. A lower supply and high rental demand also mean higher rental income, with Zoopla finding that Yorkshire had the largest annual growth of rental demand in mid-2023.
  3. High demand means that investors feel confident that their rental property will be tenanted for longer, ensuring a consistent income.

Property investment in Leeds offers all the ingredients necessary for a successful property portfolio.

Download Leeds Property Investment Guide

Leeds Property Market Predictions 2022-2026

 Looking at the latest market predictions, property investment in Leeds is set to get even more attractive.

According to JLL’s UK Residential Forecast 2022-2026, the Leeds property market will see house prices rise by 5% in 2023.

This is before an additional house price growth of 4.5% in 2023, with an average increase of 4.2% per annum by 2026.

It’s a similar story for rental growth, with a massive 3% rise in rental values in 2022. Another 3% rise is expected in 2023, with a 2.6% yearly average between 2022 and 2026.

This is a sizeable growth rate and matches up well with other cities.

For instance, Leeds’s average price growth is higher than Liverpool and London but falls short of Manchester and Birmingham.

So, what’s the bottom line?

While property investment in Leeds doesn’t offer the highest growth potential, it can still net you strong returns at an affordable price.

How to Invest In Leeds

The beauty of property investment in Leeds is its versatility.

With a wide and varied market of students, young professionals, families, retirees, and businesses, Leeds property investors have plenty of ways to make a successful investment.

But what type of Leeds property investment is right for you?

Find out below:

Perfect for investors focused solely on income, student property investment in Leeds is an affordable alternative to residential property.

Leeds currently has one of the UK’s biggest student populations, with 60,000 students recorded in the city.

This impressive population is attracted to four high-quality universities offering some of the best courses in the UK:

  • The University of Leeds
  • Leeds Beckett University (formerly Leeds Metropolitan University)
  • Leeds Art University
  • Leeds Trinity University

According to research from Paragon (reported by This is Money), Leeds has the tenth highest yields for UK student buy to let property, with an average return of 7.62%.

So, what type of student investment property is there in Leeds?

Well, those looking for student properties in Leeds have two main choices; student HMOs and purpose-built student accommodation.

These properties can make effective strategies, with purpose-built student accommodation offering the lowest property prices, while HMOs provide higher income.

In recent years, PBSA has become the most popular way to target student property investment in Leeds. Student tenants are starting to favour the higher quality of life offered by PBSA than HMOs.

As such, if you’re asking how to make a student property investment in Leeds, purpose-built student accommodation could be a good opportunity for you.

The bread and butter for most UK property investors, residential property is likely the most standard way of investing in Leeds real estate.

But how should you buy Leeds residential buy to let property, and what type of tenant should you target?

Firstly, you’ll need to decide between off-plan property or a completed property.

Off-plan property is available for purchase but has not been completed.

The benefit of buying off-plan property is that it tends to be cheaper than completed properties. It can also sometimes come with extra benefits like rental yields that are assured for a set number of years.

The downside?

Investing in an asset that is not completed can be risky as the developer could go bust. To avoid this, you should research the developer’s track record to ensure they’re reliable.

Alternatively, you can invest in completed properties – both new builds or pre-owned property.

While new builds are an attractive choice for investors as they have no wear and tear, they come at a premium compared to completed properties.

According to the UK House Price Index, the average price of a new build in the UK is £358,543, compared to £260,629 for existing properties.

While knowing how to purchase new residential developments is important, you also need to consider your target tenant.

By knowing your target tenant, you’ll be able to choose the right property that meets their interests.

For instance:

If you’re interested in buying a larger home in a residential area, then you’ll be targeting families.

Young professionals will more likely want a Leeds city centre apartment.

You can also consider targeting retirees, with research predicting that a third of over 60s could be privately renting by 2040.

With so many businesses in Leeds, why not consider a commercial Leeds investment property?

Commercial development in Leeds is some of the biggest outside London, with currently £7.35 billion of commercial property projects underway in the city.

There are over 32,000 VAT-registered businesses in Leeds, with the likes of NHS England and over 30 international and national banks calling the city home.

You stand to earn some impressive returns in Leeds, with research from Statista finding that the annual rental cost of prime high street retail properties in Leeds is £140 per square foot – the seventh highest in the UK.

However, this falls behind other popular destinations like London (£240/sqft), Manchester (£220/sqft), and Birmingham (£180/sqft).

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Collaboratively administrate empowered markets via plug-and-play networks. Dynamically procrastinate B2C users after installed base benefits. Dramatically visualize customer directed convergence without revolutionary ROI.

Best Areas To Invest In
Leeds

Average House Price in LS6: £226,832 

Average Rental Yield in LS6: 12.09% 

Based on the latest statistics, the best place to invest in Leeds in 2022 is LS6.

Covering popular residential areas and North Leeds suburbs like Beckett Park, Burley, Headingley, Hyde Park, Meanwood, and Woodhouse, LS6 generates the highest rental yields in the Leeds market.

Despite above-average property prices of £226,832, LS6 can generate massive 12.09% returns thanks to a monthly income of £2,286 – the highest in the city.

Average House Price in LS2: £138,655 

Average Rental Yield in LS2: 9.47% 

The LS2 postcode boasts the most affordable house prices in Leeds.

Spanning Leeds city centre and Woodhouse (found North of the city centre), LS2 offers the second-highest rental yields in Leeds at 9.47%.

Leeds city centre is likely the best place to invest to target young professionals. Woodhouse is popular amongst students due to its nearby location to The University of Leeds.

Average House Price in LS4: £214,306 

Average Rental Yield in LS4: 8.42% 

Following closely behind LS2 is the LS4 postcode.

Generating 8.42% returns, LS4 covers the inner city suburbs and areas of Burley and Kirkstall.

You can expect higher rental income than LS2 with a monthly rent of £1,504 on average, but higher property prices mean an overall lower rental yield.

Average House Price in LS1: £205,876 

Average Rental Yield in LS1: 7.06% 

The second appearance for Leeds city centre on this list, LS1 is offering the city’s fourth-highest returns.

Spanning Leeds city centre, LS1 is the heart of Leeds and offers a good blend of low prices, high income, and high returns.

You can earn an average of £1,212 PCM in LS1 with significant returns of 7.04%.

Average House Price in LS10: £199,311 

Average Rental Yield in LS10: 5.71% 

Finishing the top five best Leeds postcodes is LS10.

A step down from the other returns on this list due to a lower rental income of £948, LS10 lacks the potential of the other four postcodes.

You can expect returns of 5.71% on average here, with the LS10 postcode spanning south Leeds locations like Belle Isle, Hunslet, Middleton, Stourton, and parts of Leeds city centre.

Is Leeds Worth An
Investment In Property?

Although property investment Leeds shows all the right data for a promising investment, it’s important to look deeper.

After all:

Property statistics can change rapidly, with slight variations in income heavily impacting rental yields.

As such, it’s essential to understand what’s propelling the market to see if growth and demand are sustainable.

So, let’s take a look at Leeds regeneration, the Leeds population, the Leeds economy, and Leeds infrastructure to see if Leeds is worth a property investment:

Leeds Regeneration 

Urban regeneration is vital for investment in property in Leeds as it helps attract more tenants and businesses.

Excitingly, Leeds regeneration is some of the most expansive in the North.

The biggest project ongoing in the city is South Bank Leeds, which will see Leeds city centre effectively double in size, with around 250 hectares of land to be regenerated.

It’s predicted that the South Bank scheme will create 35,000 jobs and 8,000 new homes.

Leeds Economy 

A big driver behind Leeds’s ongoing success is its sizeable economy.

Leeds is one of the UK’s biggest business cities and generates 5% of England’s total economic output at a whopping £60.5 billion.

The Leeds economy is so huge that it’s bigger than nine European countries.

The Yorkshire city is home to some of the UK’s biggest businesses, with Channel 4, NHS England, Asda Walmart, and Jet2 running major operations.

It’s no surprise that Leeds is widely known as the UK’s financial centre, with over 30 national and international banks.

Leeds Population <h3>

Young professionals and students are often the lifeblood of a city’s rental market.

And looking at the latest population statistics, you can see that Leeds has an incredibly young population.

According to the Office for National Statistics, around 30% of the Leeds population is aged 15-34.

The population is also on the rise. Leeds has seen its number of residents rise by 1.1% on average over the last nine years and has grown at seven times the rate of London, according to the Centre for Cities.

More residents in a city mean more growth in house prices and rental prices – a positive sign for any Leeds investor.

Leeds Infrastructure

So, why are so many people choosing to live in Leeds?

Well, Leeds offers its residents some of the best infrastructures in the North of England, with many local amenities and transport links to explore.

Thanks to its central location in the North, Leeds is blessed with expansive motorway links helping residents travel to Liverpool, Manchester, and Birmingham in less than two hours.

The city even has popular public transport links and the famous Leeds Bradford Airport just 20 minutes outside the city.

How about amenities?

Leeds city centre has become a hotspot for dining and leisure and boasts one of the UK’s biggest retail scenes at Trinity Leeds, providing an ideal living experience to its residents.

How To Make The Best Property Investment In Leeds?

01

Backup & Recovery

Location. Location. Location. This is perhaps the most important part of a Leeds property investment.

You need to make sure you buy property in Leeds that offers the tenant demand, property prices, and rental yields needed for a successful investment.

02

Network Service

After pinpointing an area you think would make a good investment, it’s wise to consider any regeneration projects.

Regeneration can be exciting for investors as it can help increase the value of your property.

However, it can also be a double-edged sword as tenants may not want to move into an area that is essentially a building site.

It’s important to strike a good balance and find a property near major development plans.

03

Provide The Right Facilities

Covid-19 and the resulting lockdowns have changed much about what tenants want in their property.

This makes it vital to consider what types of facilities you’re providing to ensure you attract tenants.

According to research from estate agents Benham and Reeves, the three most vital features in a rental property are:

  • Fast broadband
  • Outside space
  • Close to a park or outside green space.
04

Consider the Costs of Property Investment In Leeds

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05

How to Make the Best Property Investment In Leeds?

Although Leeds properties are affordable compared to other locations, there are additional costs you need to factor in.

Not only could you need to pay mortgage repayments and stamp duty, but there are also running costs like ground rent and management fees.

It’s critical to factor these outgoings into your income and rental yields to see if you can afford the costs of property investment in Leeds.