Best buy to let areas for property investment in Birmingham

Birmingham’s an attractive UK city for buy to let property investors. Find out why they’re investing and discover the best areas to invest in Birmingham.

Ellie

4 minute read

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Updated on 11 Apr 2024

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Investing

Birmingham is increasingly emerging as a top buy-to-let area in the UK due to various reasons, such as rapid infrastructure development, increased employment levels, and comparatively low property prices within the UK. For instance, according to Rightmove, the average price of property sold in Birmingham in the last year was £268,471, substantially lower than London’s £780,337 average sale.

Find out why investing in Birmingham and renting out your property is a lucrative opportunity and which buy-to-let areas to look at.

Birmingham’s rental market is fast-growing as a result of the city’s rapid development in terms of both population and opportunity.

Birmingham’s “Big City Plan” has generated over 50,000 new jobs and aims to make the city walkable, cyclable and suitable for commuters. Such developments have made Birmingham very attractive to young professionals. Birmingham is also home to several well-established universities that attract thousands of international students yearly, increasing the demand for student accommodation in Birmingham.

With such a young population, rental properties are in constant demand. The number of private renters has grown by nearly 4% between 2011 and 2021, resulting in over 20% of the population renting their property privately in Birmingham. With such high demand for rentals, ONS reports that the rent prices in Birmingham have grown by 13.4% between February 2023 and February 2024.

According to JLL’s own research, which analysed 6 major cities in the UK, Birmingham has seen the most investment in new rental properties in the past 3 years. Despite seeing such growth in investment, property prices in Birmingham have only increased by 1.8% during the same period. This is significantly less than in cities like Edinburgh and Glasgow, where prices have increased by 5.8% and 4.2% respectively. Despite having the lowest growth in average property price, Birmingham saw the highest rental growth. Based on their research, JLL reported a 16.7% growth in average annual rent during 2023.

"As the second largest city in the UK, Birmingham, too, suffers from the country's severe supply shortage, which consequently makes this an incredible buy-to-let investment location. It's a melting pot of culture with many expat students and young international professionals. The presence of Aston University and Birmingham University also makes it attractive to PBSAs and Co-living providers."

• Nandish Jagwani, UK Business Development Manager.

Before investing in Birmingham’s property market, you must know where to invest. So, let’s look at the most lucrative areas in Birmingham for property investors.

Before you decide to invest in property and enter Birmingham’s rental market, it’s wise to compare different areas and get an idea of the type of tenants you’ll cater to. Here are the best buy to let areas in Birmingham for renting to students and young professionals.

Selly Oak: A student haven

Selly Oak is in the B29 postcode area of Birmingham. Because of its proximity to the University of Birmingham and Queen Elizabeth Hospital, you’ll mainly find terraced houses full of students in this area. This is because while university halls are an option for the nearly 84,000 students, most students prefer to rent privately after their first year.

The big student population in Selly Oaks allows for a higher rental yield as the competition for student accommodation is high in Birmingham. A buy-to-let property in Selly Oaks will typically have a 7-8% rental yield.

This is based on the average rent and property prices in this area. For instance, a 2-bedroom apartment in Selly Oak has an average rent of £944 per month. The average property price is about £225,000.

You can learn how to calculate rental yield yourself using the rental yield formula.

The Jewellery Quarter: The young professional zone

Named after its jewellery trade history, the Jewellery Quarter has been a popular spot for investors. The area has proven successful for property investors in recent years as it has undergone a recent transformation, welcoming modernized infrastructure.

This neighbourhood now attracts young professionals with its chic bars, restaurants, and lucrative job prospects. Additionally, it's within walking distance of Birmingham city centre.

If you’re interested in property investment in the Jewellery Quarter, you can expect a 6–7% rental yield. A 2-bedroom apartment in Selly Oak has an average rent of £1,200 per month. The average property price is about £283,000.

Digbeth: A future commuter hub

Digbeth is one of the fastest-growing property markets in Birmingham. It’s a popular neighbourhood as Digbeth is within walking distance of Birmingham city centre. It’s also known as the city’s “Creative Quarter” as old warehouses were restored to become independent restaurants, bars, creative spaces and businesses.

This neighbourhood is also predicted to grow in the next 10 years as Digbeth is within walking distance of Curzon Street Station, which will be the end of the HS2 rail line.

In Digbeth, you’ll see a 6–7% rental yield. This is calculated based on the average rent of a 2-bedroom apartment, which is £1,182 per month, and the average property price of £286,000.

Erdington: Affordable student housing

Erdington is undoubtedly one of the best up-and-coming areas in Birmingham. It sits a little outside Birmingham city centre, yet is home to 23,000 residents, many of whom are students seeking accommodation. Erdington has plenty of public transport connections, making it well connected with the centre, yet the average property prices are about 30-40% lower than in the centre.

Erdington grew popular with students because of its affordable rental prices. Property prices remain relatively low, only rising 4% in the past 12 months. While the area is known for its cheaper rent, it is also undergoing several regeneration projects.

Erdington's average rental yield is about 4-5%. This is based on the average rent of a 2-bedroom apartment in Erdington, which is £763 per month, and the average property price of £163,000.

All in all, Birmingham is quickly becoming one of the most important cities in the United Kingdom. The economy is one of the fastest growing. The student population is considerably high, and the number of young professionals increases yearly, guaranteeing a source of future tenants. Birmingham is also set to become a commuter hub for London workers in the coming years because of the rail line. All this means there are multiple up-and-coming areas in Birmingham, providing an incredible investment opportunity.

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