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When you are considering a buy-to-let opportunity, engaging local experts who really know and understand the area you are buying in can be invaluable. Our experienced team of independent financial advisers at PIL Southampton has lived in this popular area for many years.
Our firsthand familiarity with the different regions of our city means that we can help you to plan your financial strategy when you are looking to invest in a buy-to-let property in Southampton.
Southampton is arguably the UK’s most thriving maritime city.
It has the biggest cruise ship terminal across Europe, servicing 500 cruise calls and their two million cruise passengers who visit every year.
Also, the global access provided by its shipping ports can make it attractive to foreign investors.
Southampton has the UK’s second largest container port and is a big player in the UK’s world trade due to its vehicle exports. The port provides our city with 15,000 jobs and contributes more than £1bn to the UK’s economy.
The port is also a terminus for the Isle of Wight ferry, bringing thousands more people to Southampton every day.
As well as being home to many large employers, Southampton has a large student population. The University of Southampton and South Solent University’s combined 43,000 students make up nearly 18% of the city’s whole population, compared to Liverpool, for example, where their four universities’ students represent just over 8% of the population.
This booming student population means that there is a huge demand for student housing that could be an attractive opportunity for buy-to-let investors.
Southampton is a popular destination for leisure, sport and culture.
Westquay Shopping Centre is one of the largest in the South of England, making Southampton the region’s central hub for shopping, and Southampton FC is one of the biggest football teams in the area.
It also attracts high visitor numbers, partly due to its strong links to The Titanic.
Southampton properties are generally more expensive than those in the Midlands and northern England, however they’re relatively cheaper than some other southern regions.
When you are looking for a buy-to-let investment, you should consider whether the area you are looking to buy in has a growing economy, good transport links, and is attracting businesses who want to invest there. Southampton ticks all these boxes.
You’ll find a wide variety of properties to choose from in the Southampton area. Rightmove’s figures show that the majority of properties sold in Southampton last year were flats, which sold for an average of £172,544. The average sale price of a semi-detached house was £319,999 and the average sale price of a terraced home was £263,806.
Overall, property prices in Southampton saw a 3% increase on the previous year.
The Southampton rental market is healthy, and boasts the highest rental yield in the South East, at 6.42% according to Zoopla’s 2024 figures.
Average property price £253,955
Average rental price £1,210 pcm, yield 5.7%
Many Southampton residents choose to live in the surrounding parts of town rather than right in the heart of the city centre. The Ocean Village development is a key location for luxury apartments and there are good leisure facilities in the area too.
Northam, home to St Mary’s Stadium, is within the city centre and is currently experiencing regeneration, having traditionally been a more deprived area.
Average property price £353,655
Rental price £1,097 pcm, yield 3.7%
This is a relatively expensive area that is actually on the east side of Southampton, bordering Hampshire. It’s a handy location for the M27.
Average property price £314,965
Average rental price £1,146 pcm, yield 4.4%
This is where the Highfield university campus is, and it’s a popular part of the city for students. Southampton Common gives a rural feel to the area.
Average property price £327,600
Rental price £1,198 pcm, yield 4.4%
Located just outside the city centre, Shirley is renowned for its good schools and a decent high street, which makes its various housing estates popular with families. The Southam General Hospital means that many workers are located here too.
Millbrook, which is based on the A33 road on the way to Bournemouth, attracts people to the area due to the employment opportunities at the Millbrook Trading Estate.
Average property price £495,949
Rental price £1,252 pcm, yield 3%
Based north of Southampton, and part of the borough of Eastleigh, this is an attractive residential area near to Southampton airport, with an easy commute via the M27 and M3.
Average property price £382,256
Rental price £1,092 pcm, yield 3.4%
Though technically not part of Southampton, as it’s part of the New Forest district, it’s got excellent transport links to the city so it’s popular with residents who love the natural beauty of the New Forest and want an easy commute into Southampton.
Brand-new properties can be an attractive option for buy-to-let investors. They generally require minimal maintenance and should be pretty hassle-free for you and for your tenants. The convenience of a ‘move-in ready’ property means that it should be quick to move in new tenants and start earning rental income as soon as possible.
It is worth noting, however, that new build properties can face delays and often don’t complete on time, and sometimes the snagging list can be time consuming to get resolved.
The Townhill Park Regeneration scheme is one of several initiatives that Southampton City Council currently has underway, replacing old council houses with over 600 energy-efficient new home and new amenities for the local community.
A way of making a new-build property more affordable is investing in off-plan property investment. Buying whilst construction is still underway usually means that you get a discount on the standard market value.
The closer the property gets to being finished, the more your potential for capital growth should increase. Just like any new build, there is generally a lot of interest in renting this type of property, especially if it’s being built in an area that’s undergoing regeneration, or an emerging area that has good infrastructure and a growing job market.
A buy-to-let investment can be quite hands on, so there is often a benefit to buying local to where you live as this will make logistics more straightforward if there are any onsite maintenance demands you need to take care of, or any other potential issues.
Rental yields in the Southampton area hover around the middle of the market, compared to other regions across the UK. And the potential for growth across the South East isn’t as strong as it is when you look further north.
If your primary goal is to maximise your capital growth, then the North West is leading the charge, topping the UK’s leaderboard with an expected growth of almost 30% by the end of this decade.
Property prices tend to be lower in many northern regions too, with attractive yields. Comparing figures available at the Land Registry, an average property price in Liverpool is £177,528 and Manchester’s average is £233,243. Both these areas have strong rental yields – Liverpool’s average is about 7.77% and Manchester’s is over 9%.
Would-be Southampton property investors take note! Southampton City Council runs a citywide Article 4 Direction, meaning that you must have planning permission if you want to convert a house into a shared house, or a house of multiple occupancy – HMO.
Southampton City Council also implements an additional licensing scheme for HMOs in certain areas so make sure you check on all relevant regulations you need to adhere to before you buy.
We love Southampton and we know the city very well. Our qualified, experienced team of financial advisers can help you to financially plan for your buy-to-let project and to help you to find the best buy-to-let mortgage deal available to suit your specific circumstances and needs.
You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.
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