Areas of Birmingham: Property Investment Buy-to-Let Hotspots
Birmingham is said to be England’s second city. But Birmingham has a population of around 1.1 million and a fast-developing economy. One way Birmingham is second best to London however is in property prices. Property here costs well under half that of London property, making Birmingham very affordable indeed for property investors.
Why Invest in Birmingham?
Birmingham is the UK's second-largest city by population, with around 2,684,807 residents of the greater Birmingham area and around 1.1 million in the city itself. The wider West Midlands catchment region is home to approximately 5.75 million people.
Birmingham has a diverse and dynamic economy, with a range of sectors contributing to its growth. As of 2024, the city's employment rate is 65.1%.
The largest sector for employment in Birmingham is human health and social work activities, followed by professional services like banking, finance, and law. The city also has a strong presence in digital and tech industries, with a focus on innovation and growth.
Birmingham's unemployment rate is 7.5%, slightly higher than the national average of 4.2%. The city has a young and diverse population, with over 80,000+ students and a notable proportion of economically inactive residents (29.2% in 2022).
The city's economy has been boosted by major regeneration projects, including the Paradise Redevelopment, Birmingham Smithfield, and the Midlands Metro Extension. Birmingham Airport's expansion will further enhance its connectivity and appeal to investors.
Birmingham's city population is growing, with a projected increase to 1.24 million by 2030. The city is attracting young professionals and students, with a young population and has a very high graduate retention rate of 41%.
Birmingham's diverse property market offers a range of residential and commercial investment opportunities. House prices and rents are well below the national average, making it an attractive option for investors seeking strong returns and capital appreciation.
The city's cultural attractions, green spaces, vibrant nightlife and employment opportunities enhance its appeal, making Birmingham a desirable location for renters and investors.
Transport Links
Birmingham boasts an impressive array of transport links, making it a major transport hub in the UK. The city is well-connected by rail, road, and water, with Transport for West Midlands (TfWM) overseeing public transport and key highways.
Birmingham New Street is the largest and busiest of the city's three main railway stations, serving as a hub for the UK rail network. Trains to London Marylebone depart from Moor Street Station, with most continuing to Snow Hill Station. Birmingham Moor Street is just a six-minute walk from New Street and offers direct services to London Marylebone via the Chilterns route. Other stations include Birmingham International, Snow Hill, and Wolverhampton.
Birmingham has a wide bus network, with approximately 50 operators of registered local bus services. National Express West Midlands is the largest operator, accounting for over 80% of journeys. Buses are a convenient way to get around, with routes connecting different areas of Birmingham and nearby cities and towns.
The West Midlands Metro is a light-rail tram system with one line currently connecting Birmingham to Wolverhampton via West Bromwich and Wednesbury. Extensions are underway to reach Five Ways, Edgbaston, Eastside, Brierley Hill, Digbeth, and Birmingham Airport.
Birmingham is centrally located, with multiple motorways converging on the city, including the M40, M6, M5, M42, and M6 Toll. The city's canal network is also a unique feature albeit a somewhat bespoke way of getting around. The canal network in Birmingham consists of 100 miles of canal, which by some estimates makes it larger than the canal network of Venice.
Birmingham Airport is a large, international airport located in the Borough of Solihull and is just a 10-mile (approx. 40-minute) journey from the city centre.
HS2 Updates
The High Speed 2 (HS2) high-speed rail link between London and Birmingham was intended to be the backbone of the UK rail network. The project was initially split into three phases over a 15-year development span, to have a route that begins with London and leads to the North, stopping at major cities including Birmingham, Leeds, and Manchester.
However, in October 2023, Prime Minister Rishi Sunak announced that the HS2 high-speed rail link between Birmingham and Manchester would be scrapped. The decision came after concerns about spiralling costs and severe delays. Instead, £36 billion in funding will be put into alternative transport projects (or so they say).
The cancellation of the northern leg of HS2 has had a not insignificant impact on property investment in Birmingham. The city was expected to benefit from improved connectivity and reduced travel times, making it an even more attractive prospect for investors. That the improved connectivity to the North is now not going to become a reality, along with further problems with the HS2 project, has come as a blow for the city.
Property Values
Birmingham's housing market is set to strengthen over the next few years, with a cumulative house price growth of 19.2% predicted between 2023 and 2027. This exceeds the expected UK average of 8.9% over the same period.
While the wider UK market has seen a dip over 2023/2024, Birmingham's housing sector is forecast to grow 2% in 2024, 4% in 2025, 4.5% in 2026, and 6.5% in 2027. This equates to an average annual house price growth of 3.6%, making capital growth in Birmingham second only in the UK, to Manchester.
Birmingham's housing market has been driven by a combination of factors, including extensive regeneration projects, the Commonwealth Games, and the upcoming HS2 route. These factors have attracted significant investment and businesses to the city, boosting its economic growth and employment prospects.
The city's population is also growing, with an estimated increase to 1,240,000 by 2030. This, coupled with a shortage of properties to meet demand, is expected to further boost house prices in the coming years.
Birmingham's rental market is also forecast to grow over the next five years. This growth is driven by a continued shortfall in rental properties, with landlords selling their properties to capitalise on high house prices. As a result, the availability of rental stock has decreased, pushing rents upwards.
Birmingham's housing market offers a unique combination of affordability and high growth potential, making it an attractive prospect for investors seeking strong returns and capital appreciation.
Average Property Price (Price Paid) by Postcode Area
Last updated: April 2024
Data from HM Land Registry
Please note: This is only a sample of postcode district areas in Birmingham. There are too many postcode areas to list here. For complete data please see Birmingham on property xyz.
| Postcode District | Average Property Price |
|---|---|
| B1 | £277,646 |
| B2 | £230,246 |
| B3 | £223,718 |
| B4 | £263,276 |
| B5 | £301,964 |
| B6 | £228,583 |
| B7 | £301,520 |
| B8 | £221,111 |
| B9 | £361,615 |
| B10 | £205,083 |
| B11 | £240,739 |
| B12 | £368,376 |
| B13 | £323,284 |
| B15 | £359,533 |
| B16 | £304,548 |
| B17 | £350,525 |
| B18 | £416,635 |
| B19 | £423,410 |
| B20 | £248,788 |
| B21 | £191,091 |
Rental Demand
Birmingham's rental market offers a diverse range of opportunities, catering to locals, commuters, and students. The city's thriving economy, business scene, universities and cultural attractions continue to attract new residents, driving up demand for rental properties.
Average Rent
The average rent in Birmingham varies depending on the source and the timeframe that is being considered. Here are some figures from different sources:
- According to Home.co.uk, the average rent in Birmingham is £1,598 per calendar month.
- PropertyData and Rightmove suggest that the average rent in Birmingham is £1,193 per calendar month.
- JLL research predicts that rental prices in Birmingham could increase by 12% over the next few years.
Rental Yields
Birmingham's rental yields vary depending on the area and property type. Here are some figures from different sources:
- Joseph Mews claims that the average rental yield in Birmingham is 5.37%.
- Zoopla puts the average rental yield in Birmingham as closer to 8.74%.
- According to home.co.uk, the highest average rental yield in the UK (for a standard, residential home) can be found in Birmingham in the postcode B7, which stands, as of April 2024, at 10.6%.
Average Rental Yield by Postcode Area
Rental yield is the rental return an investor can expect on their investment once costs have been taken into consideration. Please note, this is not a complete list of postcode districts in Birmingham. For more data please see Birmingham on property xyz.
Last updated: April 2024
| Postcode District | Average Rental Yield |
|---|---|
| B1 | 5.9% |
| B3 | 6.1% |
| B5 | 7.3% |
| B12 | 6.3% |
| B13 | 4.5% |
| B15 | 6.2% |
| B16 | 5.8% |
| B17 | 4.6% |
| B18 | 6.9% |
| B20 | 3.9% |
Factors Affecting Rental Demand
Birmingham's rental demand is influenced by several factors:
- The city's thriving economy and business opportunities attract professionals and businesses.
- Infrastructure developments, such as the Birmingham Airport expansion, improve connectivity and appeal to investors.
- Regeneration projects, like the Paradise Circus redevelopment and the City Centre Masterplan, revitalise the city and attract new residents.
- Birmingham's affordability, compared to other major cities, makes it attractive to renters and investors.
- The city's young population, with approximately 40% under the age of 25, drives demand for rental properties.
- Birmingham's status as a major student city, with a population of around 80,000 students, ensures a steady tenant market.
- The city's diverse property market offers a range of residential and commercial investment opportunities.
- Birmingham's cultural attractions and green spaces enhance its appeal as a place to live and invest.
Landlord Licensing
Birmingham City Council has implemented a range of measures to regulate the private rental sector and improve housing standards. These include Selective Licensing, HMO Licensing, and Article 4 Directions, each serving a specific purpose.
Selective Licensing
Birmingham City Council introduced a selective licensing scheme in 25 of the city's 69 wards, which came into effect on 5 June 2023. The scheme requires landlords to obtain a licence to rent out private properties in the designated areas. The licence costs £700 and is valid for up to five years.
The scheme aims to improve housing standards and reduce anti-social behaviour in the private rented sector. It targets issues such as poor property management, overcrowding, and housing-related crime, although it is always worth pointing out that such schemes are not without controversy.
Failure to obtain a licence can result in enforcement action, including fixed penalty notices, prosecution, and property closure.
You will not need a selective license for an already licensed HMO in Birmingham.
HMO Licensing
As is the case for all of England and Wales, Birmingham City Council enforces mandatory HMO licensing for properties with five or more occupants, forming more than one household, who share facilities. This includes purpose-built flats where there are up to two flats in the block, and at least one has five or more occupants sharing amenities.
The council introduced a new fee structure for HMO licences, effective 31 March 2022, with a cost of £755 per licence.
Article 4 Directions
The council introduced a city-wide Article 4 Direction on 8 June 2020, requiring planning permission for converting family houses (C3 use class) into small Houses in Multiple Occupation (HMOs) accommodating three to six people (C4 use class). This was implemented to address the negative impact of high concentrations of HMOs on neighbourhoods and to prevent unbalanced communities.
The Best Places to Live in Birmingham
Birmingham, the UK's second city, offers a diverse range of neighbourhoods, each with its unique character and appeal. Here are some of the best places to live in Birmingham:
- Digbeth: Known as Birmingham's 'bohemian' district, Digbeth is a hub for independent shops, pubs, and eateries. It's home to the 'Custard Factory', a mixed-use development housing creative and digital businesses. Digbeth was also a key site for the 2022 Commonwealth Games, showcasing its unique style to the world. With a tram stop planned for the future, Digbeth is an excellent choice for those seeking a vibrant and eclectic community.
- The City Centre: Birmingham's city centre is a shopper's paradise, boasting the world's largest Primark, Selfridges, and the Bullring Shopping Centre. The city centre is ideal for young professionals, offering all the advantages you would expect from living at the heart of a major, international and well-connected city while still being relatively cheap, compared to the UK average.
- Jewellery Quarter: With over 500 jewellery businesses and 200 listed buildings, the Jewellery Quarter is steeped in heritage. It offers a mix of high-end restaurants, museums and bars. The area has a community feel and is just a short distance from the city centre.
- Brindleyplace: This is one of Birmingham's newest and most affluent areas, boasting a collection of international businesses, leisure hotspots, and residential developments. With a metro stop, Brindleyplace provides easy access to the rest of the city. It's a popular choice for well-heeled professionals seeking a dynamic lifestyle.
- Eastside: Eastside is home to Aston University and Birmingham City University, attracting students and graduates. It's also undergoing extensive regeneration, including the HS2 transport project, which will improve connectivity to London.
- Mailbox: Mailbox is a popular retail destination but the surrounding area is also a great place to live. It offers a range of residential options, With its central location and proximity to New Street and Grand Central, Mailbox is perfect for those seeking a city centre lifestyle.
- Moseley and Kings Heath: Moseley and Kings Heath play host to music festivals, including the iconic Moseley Folk Festival. These areas offer exciting pubs, restaurants, and music venues, and they achieve some of the best rental yields in the city.
- Bournville: Bournville, founded by chocolate magnate John Cadbury, is a very British-looking village. It's known for its sprawling parks, excellent schools, and the largest zero-waste supermarket in the UK. Bournville is ideal for families seeking a quieter lifestyle.
- Solihull: Solihull has been referred to as 'one of the best places to live and work in England'. It offers a thriving evening economy with theatres, cinemas, and restaurants. Solihull is a commuter haven, attracting those seeking a peaceful alternative to city life. It's also home to Birmingham International Airport, Resorts World, and the NEC. It's well-connected and a lot is going on here.
- Edgbaston: Edgbaston is one of Birmingham's most affluent suburbs, boasting the Birmingham Botanical Gardens and Edgbaston Cricket Ground. It has a variety of Michelin-starred restaurants and pubs. The new West Midlands Metro stop improves connectivity to the city centre. Edgbaston is perfect for those seeking a quieter lifestyle with easy access to city amenities.
- Harborne: Harborne is a foodie's paradise, with neighbourhood eateries like Harborne Kitchen and The Plough. It offers a cosy atmosphere, exciting leisure hotspots, and stunning green spaces. Harborne is ideal for families or professionals seeking a community-driven village feel.
- Erdington: Situated five miles northeast of the city centre, Erdington has a rich history dating back to the 9th century. It's well-connected, with easy motorway access, good bus links, and a railway station on the Cross City Line.
Property Investment in Birmingham
Population: 1.1 million approximately
Average House Price: £229,000
Birmingham offers property investments to suit every kind of investor, and every kind of property type including city centre apartments, traditional terraces, and detached and semi-detached family houses.
Here we’ll look at some of the most popular areas for Birmingham property investments, and at prices and what sort of rental yields you might expect.
Birmingham City Centre has a population of around 27,000. It is popular with professionals who want to live near work and to all the city centre amenities. Birmingham city centre apartments vary from new build blocks, in locations such as the Mailbox area, plus conversions and period properties which the Jewellery Quarter is notable for.
The average house price in the city centre is approximately £219,000 and city centre landlords can expect a yield of around 5.1%.
East Side and Digbeth have a population of around 29,000 and are considered to be fashionable and up-and-coming areas. They’re within the Birmingham City Centre Enterprise Zone and are targeted for huge regeneration. Birmingham City University’s new campus at Eastside kickstarted regeneration here and the future HS2 station at Curzon Street will underpin the area as a major new city centre district.
Digbeth has a reputation as a trendy, fashionable area – the Sunday Times has called it the coolest neighbourhood in Britain – and it’s an area that is attracting more attention from developers with new city living developments.
The average house price here (B5 postcode) is £205,000 and landlords here can expect a yield of around 5.2%.
North of the city centre are Aston and Nechells which have a population of around 42,000. These inner city districts north of Birmingham city centre have some of Birmingham’s lower property prices. They’re popular with landlords looking for budget buy-to-lets and offering shared or HMO accommodation and good yields are possible. Aston University has its main campus here making the area popular with students.
The average house price in Aston (B6) is £183,000 and landlords can expect a yield of around 5%. The average house price in Nechells (B7) is £157,000 and landlords can expect a yield of around 6%.
Erdington is just north of the centre and has a population of around 20,500. A plus point for Erdington is its great public transport and road links into the city. Erdington is a lower-cost housing area very popular with tenants looking for lower- cost accommodation and landlords looking for cheap property. It’s also popular for student lets.
The average house price in Erdington is approximately £180,000 and landlords can expect a yield of around 4.5%.
Perry Barr and Handsworth are to the north west of the city centre and have good transport links to both the city centre (within 15 minutes) and the M6 or M5 motorways. Perry Barr is benefitting from improvements to public transport, a recent new railway station, new shops and other regeneration here including new homes that should help make it a more popular residential area.
The average property price in Perry Barr (B42) is £197,000 and yields are 4.1%. The Handsworth (B19) average price is £218,000 with yields at 6.3%.
The south Birmingham suburbs include Edgbaston, Selly Oak, Harborne and Moseley. They have a combined population of around 65,500 and are some of the city’s most popular mid-market residential suburbs.
These suburbs attract professionals wanting to live outside the city centre as well as families. Some of the locations have something of a fashionable villagey atmosphere – the Sunday Times has named Moseley as one of the best places for city living.
Birmingham University is also located in this part of the city so some areas are popular for student accommodation – although some students have been drawn to live in the city centre in recent years.
Average asking prices in Edgbaston are £252,500 and Selly Oak £313,000 while Moseley is £285,500 and Harborne is around £252,000. This means yields are tighter at 3-5%, although a good student investment property could return 10%.
Further out Stirchley (B30) has average property prices of around £284,000 making yields of about 4% and up.
Sutton Coldfield or the Royal Town of Sutton Coldfield to use its full title is a town in its own right although it is still within the City of Birmingham district. It has a population of around 95,000.
Sutton Coldfield is one of Birmingham’s more affluent areas and very popular with families due to its good schools and commuting – the 20-minute train journey into Birmingham New Street operates every 10 minutes.
Average prices here are some of the highest in the area. The average house price in Sutton Coldfield (B23) is £385,000 and landlords can expect a yield of around 4.5%.
Property investors who are interested in investing in Birmingham property may also be interested in other nearby areas: