Leicester offers more affordable opportunities for property investors compared with most major cities in England, which is why buy-to-lets in Leicester are becoming increasingly sought-after.
Rental demand is driven by a healthy student population and a strong local economy, both of which provide a stable foundation for prospective landlords. Continued growth is on the horizon as the city continues to attract the attention of landlords looking for high-potential areas and rental properties in strategic locations throughout the UK.
This guide will walk you through everything you need to know when considering a buy-to-let property in Leicester.
Sitting on the banks of the River Soar, Leicester is one of the key cities in the Midlands and home to a growing population of professionals, families and students. This makes the city a fantastic option for buy-to-let investment because there are a range of options that suit the criteria of practically every property investor.
Leicester’s large student population is fed by several local universities which together attract north of 65,000 students every year. The University of Leicester is a world-renowned research facility, whereas De Montfort University is a top destination for those studying art, design, law and engineering. Nearby Loughborough University is famed as one of the best sports science institutions in the country.
Infrastructure and good transport links in the city are well-developed, making it easy for tenants and buyers to get around the city. Given its convenient location right in the centre of England, many people choose to live in the city because it offers a quick commute to nearby cities such as London and Birmingham. There are plenty of connections to other UK cities via the motorway and rail networks, and internationally by the East Midlands Airport.
History of human settlement in the region stretches back at least 2,000 years, giving Leicester claim to a fascinating, storied history like no other. The city’s population has grown incredibly quickly since the turn of the century. Leicester now ranks as the most populous municipality in the East Midlands, and data from the Office For National Statistics predicts the city will reach over 400,000 inhabitants by 2035.
With the second-largest economy in the East Midlands, the city is home to offices of major employers – including British Gas, BT, HSBC and Next. Manufacturing has historically been a big industry in the city, and remains so.
However, new businesses, mixed with a growing service industry, continue to create jobs and aid the city’s economy.
Why is Leicester a good choice for property investors?
- Range of properties – There are a number of cities across the Midlands that show excellent investment potential – and Leicester is certainly in that category. The healthy mixture of terraced properties, city centre apartments, and semi-detached and detached houses means there is something to suit every investor’s criteria.
- Accessible house prices – Over the last year, the average price of a property in Leicester was just over £280,195 according to data from Rightmove (as of August 2023, this may have changed), which is under the UK average of £286,000. Prices have risen just over 6% over the past year, and have nearly doubled (+93%) over the past 10 years.
- Plans for development – Interest in residential property investment has seen several surges in recent years, with many property investors encouraged by positive data and plans for development issued by Leicester City Council. Between 2016 and 2019, the city was named as one of the UK’s top-performing cities for three years in a row by PwC.
- Strong local economy – Leicester’s consistently high performance in PwC’s rankings has been underpinned by an increase in jobs, new businesses and skills. It also has one of the fastest rates of population growth in the country, particularly amongst working age 25-34 year olds, and offers good rental yields, annual rental growth and affordable property prices.
- Demand for student accommodation – The region has a large student population, many of whom settle here following graduation due to the range of employment options. These young professionals are ideal buy-to-let tenants.
Overall, the promise of redevelopment plans, affordable investment prices and a good record of strong rental yields means that Leicester has all the telltale signs of a fantastic location for property investors.
Types of Property Investment in Leicester
Buy-To-Let in Leicester
Buy-to-let rental properties in Leicester offer investors the chance to enter an affordable property market with high earnings potential.
This potential is realised through capital growth, with the average price of a flat in Leicester increasing by more than 22% in the past 5 years, and rental income, with yields of 8% possible in certain postcodes.
Student Accommodation in Leicester
Purpose-built student accommodation in Leicester is in high demand due to the thriving student population. The city is home to the University of Leicester, DeMontfort University, and nearby Loughborough University, each of which brings floods of students into the city each year.
For landlords, this means there are plenty of potential tenants, leading to reliable, consistent and high rental yields.
Top 5 Buy-To-Let Areas In Leicester
So, which are the best postcodes to consider when looking for a rental investment in York? Let’s take a look at a few different hotspots for buy-to-lets in the local area.
1. LE1 – Leicester City Centre, Saint Matthews
LE1 is the heart of Leicester and offers a vibrant, urban lifestyle close to the city’s main shops, restaurants and bars. The postcode scored 8th on Totally Money’s buy-to-let yield map for 2020, with an average rental yield of 8%.
Average house prices currently sit between £130,000-140,000, though there is plenty of choice on either side of that range. The area well-connected with public transportation, including bus and train services, making it convenient for residents, students, and commuters.
2. LE2 – Clarendon Park, Aylestone Park, Oadby
The LE2 postcode covers a large area to the south of the city centre and offers a mixture of Victorian and Edwardian terraces, semi-detached homes and apartments. It’s a popular location for young professionals and students due to its close proximity to the University of Leicester.
Residents here enjoy easy access to a number of beautiful green spaces and parks, including Clarendon Park and the Aylestone Meadows Nature Reserve. It’s also where you’ll find the King Power stadium – home of Leicester City FC – and Leicestershire County Cricket Club.
3. LE5 – North Evington, Humberstone, Thurncourt
Lying to the east of the city, LE5 is a largely residential area that caters to a diverse community of families and young professionals. This is one of the most multicultural and vibrant areas of the city, and has plenty of local amenities, schools, parks and recreational spaces.
Many see this area as a more affordable option that’s still close to the city centre. It’s also the location of Leicester General Hospital, one of the UK’s busiest NHS trusts, which means that many employees choose to live in LE5 for a short commute to work.
4. LE3 – Westcoates
The LE3 postcode offers a good range of properties to suit every budget and is within walking distance of the city centre and train station. The local shops and restaurants on Narborough Road are an attractive prospect too.
Although it hasn’t traditionally been considered a hotspot for student accommodation, we’re seeing more and more interest from both landlords and students in the Westcoates area due to its handy location on the doorstep of De Montfort University.
5. LE11 – Loughborough
Moving slightly outside of the city, LE11 covers the town of Loughborough. The town is home to Loughborough University – one of the UK’s leading sports and engineering institutions – which makes it an attractive destination for privately rented student accommodation and HMOs.
The area has seen plenty of ongoing regeneration projects and developments in recent years, all of which have benefited the local residents greatly. From Loughborough, it’s easy to commute to nearby cities of Leicester, Nottingham and Derby.
Frequently Asked Questions
Below you can find a selection of common questions from previous investors looking at Leicester as a destination for property investment.
Is Leicester a good place to invest in property?
Yes – Leicester has all the hallmarks of a great location to invest in property.
Its location in the UK typically leads to many properties offering the traditional affordability of Northern housing (and therefore, strong rental yields), but given it sits more southwards than other Northern cities, it also benefits from the impact of the southern economy’s radial effect.
How much do properties in Leicester tend to cost?
The average house price of a property in Leicester was just over £280,195 (as of August 2023, this may have changed), which is 2% under the UK average of £286,000. However, many areas of Leicester offer more affordable options than this, even within the city centre area.
Thinking about investing in buy-to-let rental properties in Leicester?
High rental demand, a large student population and plans for continued regeneration are just a few reasons why so many buy-to-let investors are looking at Leicester and the East Midlands.
Investors in Leicester should look to under-valued off-plan properties to maximise return on this upcoming area. This is where our advisors can help. Our team draws on years of experience supporting buy-to-let property investors across Leicestershire and beyond. We’re here to help you source and deliver exceptional properties in an ethical manner, at no extra cost.
Whether you’re an experienced or first-time property investor weighing up your options around the Leicester area, feel free to get in touch with our friendly team using the form below or via [email protected] to discuss your situation and objectives.