Investing in UK Property: Where To Buy

If you’re looking to invest in UK property, one of the most important decisions is where to buy – London or a different city? Urban or suburban? The choice depends on your plans for the property and your investment strategy.

In this webinar, recorded in April 2025, we were joined by two industry experts from the Experts for Expats partner network, who discussed:

• The London property market and which areas of London expats are investing in
• The most popular regions for property investment outside London and the reasons why – including Northern cities, university towns, London suburbs and rural locations
• Key considerations when choosing where to invest in UK property including your long-term investment goals, rental yield and ideal tenants

This article is a summary of the key points from the webinar. You can watch the full recording here:

The London property market

During the COVID years, it felt like a lot of people moved out of London. Now, it seems many people are looking to move back to the capital – is this the case?

During the pandemic people did move out of London and other cities, but the numbers aren’t as high as you might think. Only around 75,000 of people left London during COVID, which is about 0.7% of the population – roughly the size of a large town.

Since COVID, a lot of those people have come back to London, and we've seen the city centre population swell due to people returning to work and the re-opening of cultural and entertainment activities.

In 2024, 30% of all new lets in London were from people previously residing outside the city. In 2022 to 2023, we saw a 76,000 population increase in London – but over that same period, only 14,600 new dwellings were completed.

There has been a significant supply and demand imbalance in the UK property market for some time now, and the property shortage is well documented. More and more people are moving back into the cities, but we can't keep up with that growth. This is why city centre property prices are rising so much.

When you look at prime locations in central London, there is a finite supply of land – almost all available plots of land have now been built on. So even though demand for property is increasing, supply can't physically increase because there's nowhere to build.

By comparison, when you look at a property market like Hong Kong, Singapore, or Dubai, they’re able to create more space by reclaiming land and building on it. But in London, we can't increase the supply, which is why – over the last 40 years or so – property has been a strong investment choice.

Because the imbalance between demand and supply is increasing so much, we saw huge rental growth of 17% between 2022 and 2023. Since then, we’ve still seen growth, but it has been much lower – between 2-5%.

For investors looking at buy-to-let properties in London, it is important to note that in some areas, tenants are now spending around 50% of their incomes on rent. Therefore, there is only so much that London rents can now increase by and remain affordable for tenants.

Which areas of London are popular with overseas investors?

Based on transaction volumes, i.e. the sheer amount of money being spent, then the most popular areas of London for property investment are Mayfair, Kensington, Chelsea and Knightsbridge.

However, this is where property is most expensive – and probably not where the average overseas investor will be looking to buy. For most people, property investment is about putting their hard-earned money to good use in terms of inheritance and pension planning.

In this case, you’ll want to look at up-and-coming areas of London where properties are more affordable and have the potential to rise in value. For example, in South London areas such as Oval or Elephant and Castle, there are particularly good regeneration schemes backed by large developers. Stratford is also a very popular area, as is Wembley.

When deciding where to invest, it’s also important to look at the tenant demographics. Lots of young people are living in these up-and-coming areas, therefore you’ll find high rental demand here. These areas also have more modern apartment buildings which are very well managed and popular with young renters – they’re also sure to be compliant with new building regulations.

The property market outside London

Where are the popular areas to invest in UK property outside of London, and what makes these locations attractive to investors?

Over the last 10-15 years, there has been a lot of investment into the north of the UK, as the government wanted to rebalance the UK economy and move away from an over-reliance on London.

For example, Manchester is now a mature market and has done extremely well over the last ten years. Often, in Northern cities like Manchester, you’ll find more affordable properties and higher yields with room for growth. As a result, we’re seeing a lot of investment – domestic, overseas and institutional money – coming in and developing these areas.

In fact, Manchester now has the second largest economy in the UK outside of London, and Manchester’s economy is bigger than Dubai's. One reason for this is 80% of all FTSE 100 companies now have a physical presence in Manchester including Amazon and The Bank of New York Mellon –this is attracting talent into the city and fuelling property growth.

Economic growth is a big factor when deciding where to invest outside of London. You’ll also want to look at factors such as student population and population growth. Birmingham, Liverpool and Manchester all have very large student populations – and Manchester has the largest student population in the whole of Europe.

There are around 120,000 students in Manchester and, while you might not necessarily rent out a property to students, graduate retention rates are a key factor. 51% of all students from Manchester end up staying to live and work in the city. This means, each year, there are just over 60,000 graduates adding to the city’s population. Most of them won’t be home buyers and will be looking to rent properties in the city centre where they can be close to amenities and friends – and they want to live in the luxury projects.

There are more 25 to 29-year-olds living in Manchester than anywhere else in the UK, which is resulting in exceptionally high rental demand and why property in Manchester city centre is doing so well. The city centre needs 170,000 homes by 2038 to meet demand – but currently there are only 70,000 planned. The city centre is quite small, and because we've seen such a high population growth, skyscrapers are shooting up, and the city is almost unrecognisable compared with even ten years ago.

Manchester airport also provides global connectivity to the US, Middle East and Far East which is very important from an investment perspective.

Right now, there is a window of opportunity to invest in this core central zone of Manchester which won't exist in five years’ time. By 2030, you won’t be able to buy new builds direct from developers – you'll be buying off an investor who has already made that initial investment and who’s been able to resell and capitalise on this growth.

There's a similar story for Birmingham and Liverpool, as well as some of the smaller UK cities. In places like Preston, Sheffield and Leeds, property prices are cheaper but rental demand is still high – so you'll find that your rental yield (i.e. the proportion of income you get as a percentage of the property price) is very strong. While the capital growth isn't as high in these places because you haven't got companies like Amazon or HSBC moving their regional headquarters to Preston, for example, you will still get a good income, which might be very useful for someone looking at building their pension or substituting income because they're taking some time out of work.

As a common theme, the most popular UK cities to invest in all have universities, hospitals and a well-developed infrastructure.

Additionally, in some of the UK’s coastal towns, purchasing a property as a holiday let can give you much higher rental yields. In some places, you can get the equivalent of a month's rent from a standard tenancy contact in a week. However, there will of course be seasonal fluctuations. Additionally, during COVID there was a huge desire for people to move to the coast – as a result, house prices in a lot of coastal areas are hugely inflated, and locals have been priced out.

What are the key considerations for overseas investors deciding where to buy property in the UK?

The first factor to consider when investing in UK property is your budget, because everyone will be limited by how much they have to invest. Then, it’s your strategy:

• What are you investing for?
• Are you investing for income and high rental yield?
• Are you investing for capital growth?
• What’s your time horizon for investing?

All of these are key factors in deciding where you're going to invest.

Timing is particularly important. For example, you might see an area where huge infrastructure developments are planned, but it might be a 10-year plan – in which case, if your investment horizon is five years, this won’t work for you. Alternatively, you might be flipping a property, which is a relatively short timeline.

Everyone will always say location, location, location is what matters. When you're buying an investment property, you've got to go for an area with high rental demand.

You’ll want to understand the local rental market, what the current demand is and what the yields are and whether that will be sustainable – for example, what changes are happening in the area? Is there a healthy local economy with plenty of job opportunities for people?

Another thing to consider is whether you want your property investment to be passive or active. Many overseas investors want passive investments. They want to be able to buy a property, set up a bank account, and collect rental income because they're working overseas, they've got busy jobs, busy lives and a family. They want their investment to be something that creates time and freedom rather than taking it. Whereas some people want to be a bit more hands on. For example they may wish to renovate properties, because the potential gain from this can be higher.

Essentially, when you choose an area to invest in property, make sure you do your research, check the opportunity matches your investment strategy, and ensure you're prepared to take on any risks involved with that particular location.