Buy-to-Let in Liverpool
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It is no surprise that investors are so attracted to buy-to-let in Liverpool. Over the past two decades, Liverpool has quickly developed into a thriving city and firmly established itself as one of the leading lights in the UK.

Helped by its status as the European Capital of Culture in 2008, extensive regeneration of buildings and spaces from the city’s industrial past, along with public and private investment in the city’s businesses and infrastructure, have pushed Liverpool forward in recent years. The city is now enjoying a major economic and cultural revival.

Recognition has followed. For example, in recent years The Times has twice named Liverpool a desirable place to live. In 2017, the city centre’s Baltic Triangle was voted the coolest place to live in Britain. And then in 2019, the entire city was named one of the best places for graduates, thanks to “affordable housing, good job prospects and a decent night out”.

So it should be no surprise, then, that Liverpool is becoming a more popular pick for buy-to-let property investors. Many are beginning to realise that the city holds incredible long-term potential, yet offers a bargain compared to other large cities across the UK.

As a property investment company with a global client base, we’ve certainly noticed a growing appetite for buy-to-let in Liverpool from investors all over the world. Many of whom are shifting focus away from London and towards the more cost-effective cities in the North.

So, in this guide we’ve pulled together everything a buy-to-let investor needs to know about Liverpool, and why it should be top of your list for your next (or even your first) property investment.

Contents

  1. Why buy-to-let?
  2. Why Liverpool?
  3. Market forecast
  4. Liverpool vs Manchester
  5. Student market
  6. Where in Liverpool?
  7. What type of property?
  8. How much will I need?
  9. How can I find a buy-to-let in Liverpool?
  10. Summary

Why Buy-to-Let?

A buy-to-let property is any which has been purchased with the intention of letting it out, either on a short term basis (e.g. the Airbnb model) or as part of a long-term, traditional tenancy agreement.

There are, of course, other property investment strategies, but we’re huge advocates of buy-to-let. Here’s why:

  • Monthly rental income should cover all costs, whilst still providing a profit for the owner
  • Long-term, properties increase in value (even accounting for temporary dips, like a global recession or a pandemic), meaning owners can benefit from huge capital appreciation
  • Buyers can usually leverage their purchase with finance, meaning a much lower initial investment is required
  • Modern buy-to-let projects have property management companies in place, allowing for a hands-off investment
  • There’s a wide resale market as a proven, high-performing buy-to-let will always attract interest from other investors (along with those looking to purchase their own home)

Why Liverpool?

There are three clear reasons to purchase a buy-to-let in Liverpool:

  • Lower property prices
  • But they’re growing
  • High rental demand from students, young professionals and tourists

We’ll explore each of these factors in more detail below.

Lower Property Prices

The average property price in Liverpool is £205,395, according to Zoopla in March 2022. Interestingly, this is much lower than other major cities, which makes it an attractive option for investors.

Using Zoopla’s data, we can easily see Liverpool’s lower average value in comparison to the rest of the UK:

Area Average Value
Liverpool £205,395
UK as a whole £329,407
Birmingham £238,656
Bristol £363,674
Cardiff £286,321
Edinburgh £314,540
Leeds £256,752
London £715,201
Manchester £235,333
Sheffield £225,746

What does this mean?

Well, firstly, it means Liverpool is more accessible to investors with lower budgets. It also means better value for money, as somebody could purchase three properties in Liverpool for the same price as one in London. This might appeal to investors looking to build a multi-property portfolio.

And secondly, it means better yields. Liverpool has consistently generated some of the strongest rental yields in the country thanks to the affordable property prices and high rental demand. In fact, Totally Money’s 2019 study found Liverpool’s L1 postcode had the highest yields in the UK. Our updated research in 2022 had similar findings, with many of Liverpool’s inner-city postcodes enjoying exceptional yields above the national average.

Growing Property Market

With lower property prices in comparison to other cities, there’s plenty of room for price growth in Liverpool. And with huge regeneration projects across the city, mass public and private investment, and a thriving job market, that’s exactly what’s happening.

In November 2021, Zoopla published research showing house prices in Liverpool increased by 10.6% year on year. This was the fastest and strongest growth in the country, with Manchester (8.7%) and London (7.9%) not far behind.

In comparison, London achieved growth of just 2.3% – showing the incredible performance of northern property markets in recent years.

Plus, there’s plenty of room for further growth. Savill’s residential property forecast predicts the North West will witness an 18.8% increase in average property values over the next five years, the best in the UK alongside Yorkshire.

Rental Demand

Rental property in Liverpool is in high demand, thanks mainly to the yearly influx of students, young pros seeking residential properties, and tourists who want to stay in serviced accommodation.

Students

We’ll dig deeper into Liverpool’s student property market later in this report, but for now, keep in mind that Liverpool’s popular universities are a huge draw for any property investor.

With over 60,000 university students in the city, it’s one of the major hubs for higher education in the UK. The city’s heritage and reputation for a great “uni experience”, along with world-class education facilities, pull thousands of students to Liverpool each year.

This continuous supply of new domestic and international students means investors interested in student property can be confident of attracting tenants and enjoying high rental yields.

Young Professionals

The number of young professionals living in Liverpool is rising quickly. The Liverpool Echo reported that, between 2001 and 2011, the number of 22-29-year-olds living in the city centre nearly quadrupled.

This has likely continued, as the young professional population is being fed by the city’s universities. The graduate retention rate is one of the highest in the UK (joint 8th at 38% with Newcastle according to Knight Frank). Plus, there’s a healthy mix of new graduates from other sources, such as those returning to the city after leaving for university – this group makes up roughly 20% of Liverpool’s graduate workforce according to a Centre for Cities report from 2017.

Furthermore, with the London housing and rental market becoming increasingly unaffordable, a rising number are moving away from the capital to alternatives in the north.

This should be music to the ears of a property investor. Young professionals are the ideal tenant demographic – they earn solid salaries, are willing to pay extra for quality and location, and often need to rent for several years whilst they save up for a deposit.

Tourism

Liverpool’s visitor economy is worth £4.9bn each year, thanks to its status as a major tourist attraction – it’s the 5th most visited city in the UK.

Tourism is driven by a number of factors, such as:

  • Sport: The city is home to two Premier League football clubs, Liverpool FC and Everton FC. Due to the international appeal of the Premier League and the historical success of both teams, fans from all over the world visit every weekend to attend games. Plus, nearby Aintree Racecourse hosts the hugely popular Grand National horse race.
  • Art & Culture: Liverpool has the highest number of museums, parks, listed buildings, and galleries outside of London.
  • Music: The city has a rich history of musical pedigree with many chart-topping bands and artists. The most widely recognised and successful of all are The Beatles, who are considered the greatest of all time. Their history is captured at popular tourist attractions like the Cavern Club.
  • Nightlife: Liverpool’s famous nightlife is another major attraction. Several areas within the city centre are dedicated to bars, pubs, and clubs of all varieties. Many consider Liverpool to be the best night out in the country.

But what does this mean for a buy-to-let investor in Liverpool?

Tourists need places to stay. And the demand for high-quality serviced accommodation (such as the type of properties typically found on Airbnb) has opened up an entirely new investment opportunity.

With a short-term letting model, property owners can let their properties to visitors at a higher price per night than a long-term renter would be willing to pay, which can result in exceptional rental yields.

Market Forecast

There is plenty of data and research suggesting that Liverpool is on the rise, with further improvements forecast. Some of this data has already been mentioned, but here’s a summary of the highlights:

  • Savills estimate property values will grow by 18.8% over the next five years in the North West, the best of any region in the UK
  • JLL predict house values will grow by an average of 3.9% per annum, whilst rental values will increase by 2.6% per annum
  • Avison Young forecast GVA growth of close to 6% for 2022, compared to a pre-Covid average of just 0.6%
  • Liverpool City Council predict population growth of 7.5% over the next 10 years, outstripping the average for the UK

Compared to Manchester

Manchester and Liverpool have enjoyed a similar trajectory over the past few decades.

Both witnessed incredible growth during the industrial revolution, owing largely to the Manchester Ship Canal, which connected Manchester’s factories with the rest of the world via Liverpool’s port.

But following the end of the First World War, an economic slump hit the UK. Industrial cities in the north were heavily impacted, leading to mass unemployment and poverty. It has taken decades to fully recover, with several setbacks along the way.

Since the 1990s, both Liverpool and Manchester have witnessed mass urban regeneration and widespread public and private investment. The cities have, in effect, been completely transformed and the last few years, in particular, represent a period of incredible success and growth.

But which is better for a property investor?

We consider the question in our blog post: Is it better to invest in Manchester or Liverpool?

But if you’re after a quick summary, the main argument for Liverpool is that property in the city is more affordable than in Manchester, making it more accessible to investors on a budget. It also means there’s huge growth potential and excellent yields should be achieved.

Meanwhile, the main argument for Manchester is that, historically, it has delivered better growth in property and rental values. All forecasts suggest this is set to continue, suggesting investors can make the biggest raw cash returns in Manchester.

Student Market

Liverpool has three universities: The University of Liverpool, Liverpool John Moores University, Liverpool Hope University.

The pedigree of a university is a major pull factor for prospective students. Liverpool enjoys an excellent reputation in this regard. The University of Liverpool has nine Nobel Prize winners amongst its alumni, whilst it was also a founding member of the Russell Group of Universities in 1994. This is an exclusive group of world-class, research-focused universities in the UK, which are popular choices for students owing to their excellent teaching standards and post-university job prospects.

Overall, there are over 60,000 students spread across the three universities according to HESA. Fascinatingly, for property investors, half of this population is reliant on private sector halls (e.g. Purpose Built Student Accommodation) or private rentals (e.g. student HMOs). This is a huge market of potential tenants.
Many students stay in Liverpool after graduating too. The graduate retention rate for the city is 38%, one of the best in the UK. This owes to a thriving job market, affordable living conditions, and, naturally, an affinity developed for the city during studies.

Why is this good for investors?

A large student population is a major plus for any property investor.
In general, student property achieves excellent rental yields as landlords can either fill properties with multiple, paying occupants, or they can focus on higher-end students willing to pay more for luxurious spaces.

Plus, with so many of the student population sticking around university, investors also stand to benefit from the demand for city-centre residential property from newly employed graduates.

If you’d like to learn more, read our guide to student property investment.

Where in Liverpool?

So far, we’ve established reasons to invest in Liverpool buy-to-let properties, but we’ve not looked at where. Of course, if you’re interested in Liverpool then we implore you to do your own research, but in this section, we’ll present a few options.

Here are a few:

  • Baltic Triangle: Named by The Times as the coolest place to live in the UK, Baltic Triangle has everything within easy reach with its location just south of Liverpool city centre. The area is filled with high-end apartments, independent shops, restaurants, bars, and creative office space. Investors should note Baltic Triangle falls under the L1 postcode, which has historically generated very high rental yields.
  • Dingle & Toxteth: A little further southwards, but still part of the inner city, areas like Dingle and Toxteth are enjoying a revival. These areas had less than desirable reputations for a long-time, but that’s all changing thanks to major regeneration projects. It’s densely populated, with a mix of Victorian-era terraces and larger family houses (that are now being broken up into individual flats) which are attractive to both students and young professionals. Part of the L8 postcode, this is another top performer in terms of rental yields and capital growth.
  • Bootle: North of the city, Bootle was (and still is) one of the most affordable spots in the country. Yet, our research shows Bootle’s L20 postcode achieves the third-highest average rental yield in the city and the second-highest capital value growth over the past five years. That makes it a hotspot of short and long-term potential for investors.
  • Docklands: Liverpool’s docks fell into disrepair in the latter part of the 20th Century, but regeneration since the turn of the millennium, along with a 30-year, £5.5bn project called Liverpool Waters, has helped establish the area. Luxury, waterside apartments are now highly sought-after. This is covered by the L3 postcode, which, again, has seen some of the strongest rental yields and capital growth in the city.

If you’re looking to learn more, we recommend having a read of our research: Where Are The Best Buy-To-Let Areas In Liverpool?

What Type of Property Should I Buy in Liverpool?

Ultimately, there are two types of residential property we recommend a buy-to-let investor considers for Liverpool:

  • City-centre apartments, targeting workers
  • Student accommodation, which can be split into Purpose Built Student Accommodation (PBSA) and Houses with Multiple Occupancy (HMOs)

City centre apartments are brilliant for buy-to-let investors. They offer an excellent balance between good rental yields and capital growth, meaning investors can benefit both immediately and long-term.

New blocks are going up in Liverpool at a frightening pace, but supply is still well short of demand. These apartments are generally finished to a high standard and attract workers looking to enjoy all that living in the centre has to offer. For this type of property, take a look at any projects in L1, L2, L3 and L4.

Meanwhile, student accommodation is a worthy consideration for its excellent yields. A HMO is the typical student property that comes to mind – residential housing that has been converted into multiple bedrooms to fit groups of students wanting to share and live together. As these properties generally fit a higher number of occupants than the average residential property, there are multiple rental incomes and, as such, yields are high.

PBSA is becoming increasingly popular, too. These are apartments designed with students in mind and may be built for single occupants or groups. Generally, they stand apart from HMOs due to a higher level of modernity and finish, meaning higher rental prices can be achieved. Again, this leads to excellent rental yields.

For student property in Liverpool, look towards L6, L7, and L8.

How Much Will I Need?

If you’re looking to purchase a buy-to-let in Liverpool, you’ll benefit from the more affordable property prices. Take, for example, the average property price in the city. As of March 2022, that’s just over £205,000.

Of course, if you have the budget, you can pay in cash. But outside of ultra-high-net-worth individuals, most investors don’t have £205,000 lying around.
So that means purchasing with a mortgage. And this is where Liverpool really starts to show its affordability.

Buy-to-let mortgages usually require a deposit of 25%. This means, for the average property in Liverpool, you’ll need a deposit of £50,000. There will be extra costs, such as stamp duty, legal fees, and furniture to consider, but if you have £50,000 saved, then it’s likely you have enough to get started. This is because many off-plan properties in Liverpool are actually available for much less than £205,000, so a budget of £50,000 will usually cover the deposit and all additional fees.

If you want to learn more, check out our post discussing how to invest £50k in property.

How Can I Find a Rental Property in Liverpool?

Once you’ve settled on getting a buy-to-let in Liverpool, the next step is to find an actual property.
First, we suggest figuring out what you want from an investment property. Do you want to focus on capital growth? Or would you prefer to supplement your monthly income with rental revenue? Do you want to be hands-on or hands-off? Do you want something that’s already active, or are you willing to look for something still under construction for a better deal?

Make a note of your thoughts, and then begin your search. Having an idea of what you’re after will help you quickly filter out poor matches.

For the search itself, you can do this manually or you can work with a property investment consultant (like us!). The benefit of working with a consultant is that they may be able to provide access to properties not publicly available, along with netting discounts and deals.

Summary

Liverpool is a fantastic choice for any property investor. It achieves excellent rental yields and shows strong capital growth thanks to its burgeoning reputation as a desirable place to live, study and work.

Alongside Manchester, we believe it’s the best city in the UK for a buy-to-let. There are plenty of projects available at different price ranges and suitable for different objectives.

If you’re interested in learning more or finding a property, please either visit our Liverpool Property Investment page or get in touch – one of our team would be more than happy to run through your options.

We’ll support you through every stage of your investment journey, from finding a property to providing after-sales construction updates. We don’t charge any fees for our service and we’re part of the Property Ombudsman, an organisation designed to protect investors. Get in touch today to learn more about buy-to-let in Liverpool.

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