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Cambridge Buy-to-Let Guide

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    Everything You Need to Know About Cambridge Buy-to-Let

    Much like Oxford, Cambridge is famous around the globe thanks to its well-renowned local university. However, there is more to this city than just world-class education. The area is also a hotspot for scientific and technological research and innovation.

    Additionally, many experts have argued that Cambridge’s stature has directly affected the local buy-to-let property investment market.

    With this in mind, we’ll be looking at the massive demand for properties in this Cambridgeshire city. We’ll cover the rental market and the best places to live and compare Cambridge with the rest of the United Kingdom.

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      Buy-to-Let Property Prices in Cambridge

      According to Numbeo, Cambridge is the second most expensive city in the United Kingdom. In October 2023, the HM Land Registry UK House Price Index put Cambridge property values at £542,142. This marks a 2.62% price growth compared to October 2022. In comparison, the UK average valuation is £287,782.

      According to Rightmove, the most popular property type in Cambridge over the last 12 months was terraced housing, which sold for an average of £587,334.

      Learn More: Discover how to find cheap buy-to-let properties and the latest buy-to-let costs in 2024!

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      Buy-to-Let Rental Market in Cambridge

      As you would expect, with such high property prices, the Cambridge rental market is also one of the most expensive in the country. Home’s Cambridge Market Rent Summary puts the average rental cost at £2,594 PCM, which is higher than most UK regions, ignoring buy-to-let in London.

      This average translates to a gross rental yield of 5.74%, higher than the average UK rental yield of 5.33%.

      Single rooms command an average rent of £808 PCM. However, flat rental costs jump up to £3,147 PCM. Surprisingly, houses have a cheaper average rent at £2,213 PCM.

      According to the 2023 Homelet Rental Index. East of England’s annual rental growth was 8.10%, which falls short of the overall UK growth of 10.30%.

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      Investment Properties for Sale in Cambridge

      Cambridge has a range of properties available for investment, including terraced and semi-detached properties and flats. As mentioned, properties in this area are often considerably higher than the rest of the UK. This means that despite some decent rental yields, investors will likely find greater affordability and more secure investments elsewhere.

      According to Rightmove, Cambridge property prices saw an overall average of £581,806 over the last year. The majority of completed sales were terraced properties at an average price of £587,334. Flats saw an average of £329,764, whilst semi-detached properties came in at a whopping £622,757.

      Overall, sold prices in Cambridge were 4% higher than the previous year and 7% up on the peak price of £544,574 observed in 2021.

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        Buy-to-Let Investment in Cambridge: Area Breakdown

        Before investing in any buy-to-let investment opportunity, you must thoroughly research the UK property market.

        Here are some of the most popular locations in Cambridge for property investors and tenants.

        Chesterton

        Chesterton is a northern suburb that offers village aesthetics. However, it is only a half-hour walk to the city centre. The area is popular with families and is well-placed near prominent schools.

        Chesterton also appeals to professionals, thanks to attractive riverside flats, excellent transport links and good eateries.

        One of the more affordable postcodes in Cambridge, it was also voted one of the top suburbs in 2018 by The Times.

        Average Property Prices in Chesterton

        The average property price in Chesterton is £496,951.

        Average Rental Yields in Chesterton

        Rental properties in CB5 garner an average yield of 3.7%

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          Grantchester Meadows

          Grantchester Meadows looks like the quintessential British village. You’ll find plenty of nature and farmland in this part of Cambridge. However, prices are also ridiculously high for this slice of tranquillity.

          Average Property Prices in Grantchester Meadows

          The average property price in Grantchester Meadows is £1,612,013.

          Average Rental Yields in Grantchester Meadows

          Rental yields here are only 1.57%.

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          Mill Road Area

          If you are looking for a popular city centre area with trendy, independent shops and a thriving local scene, consider Mill Road. This place is full of quirky stores and international restaurants and boasts a vibrant atmosphere that attracts young professionals, students and families alike. Commuters can reach Kings Cross Station in less than an hour from the nearby Cambridge Station.

          Average Property Prices in the Mill Road Area

          Average property prices in CB1 are £524,704.

          Average Rental Yields in the Mill Road Area

          Average yields in this area are 3.6%.

          (Average property prices were taken from Zoopla in late 2023, and rental yield estimates were calculated with figures from housesforsaletorent.co.uk in late 2023.)

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            Why You Should Consider a Buy-to-Let Investment in Cambridge

            As mentioned, Cambridge is one of the most renowned cities in Europe and offers many reasons to consider a buy-to-let investment in the area.

            Substantial Student Population

            For those looking at multiple property investment strategies, student property investment should be high on your list of priorities in Cambridge. The city is famous for the University of Cambridge, which has 20,000 students, and interestingly, one in five people in Cambridge is a student at a local university.

            Because rent and property prices are so high, investors may consider an HMO property targeting this demographic.

            World-Leading Innovation

            The Cambridge Science Parks are one of the most important aspects of the local economy. Born from solid partnerships with the university and businesses, these research centres bring massive companies to the city, which have helped the area become a world leader in software, pharmaceuticals and biotechnology, creating enormous demand for jobs and buy-to-let properties.

            In addition, Addenbrooke’s Hospital and the Royal Papworth Hospital are world leaders in medical research and cardiothoracic medicine, respectively. Both employ thousands of researchers and medical/support staff in the area.

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              Cambridge New-Builds

              Newly built properties (also known as New-Builds) are gaining traction as one of the most popular investment strategies as the supply/demand imbalance continues to dominate the UK housing market.

              Almost no maintenance or repair work is needed on these developments, with the properties essentially ready for whenever tenants wish to move in. This also means a faster turnaround for landlords to start receiving rental returns, which can be a significant incentive.

              In Cambridge, there are extensive planning and development schemes at work to introduce new communities and homes. For example, in July 2023, new government growth proposals were announced as part of the Local Plan to meet the anticipated housing to accommodate the predicted growth in the broader Cambridgeshire job market. These forecasts suggest an increase of around 60,000 new jobs across Greater Cambridge by 2041, meaning an additional 14,500 new homes would need to be developed.

              Considering recent UK market trends, investing in new-builds such as these could lead to significant capital appreciation further down the line. 

              However, whilst there could be a steady stream of new-build opportunities in Cambridge, investors may find better affordability and larger tenant pools in other cities, such as Liverpool and Manchester.

              Read More: Discover more about this investment trend with our recent buy-to-let guides, covering everything from new-builds in Doncaster to the latest UK hotspots!

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              Off-Plan Property in Cambridge

              New-builds are immensely popular with landlords and tenants alike but typically see higher prices than older residential investments. 

              Purchasing newly built properties through off-plan investment is one way to reduce spending.

              Off-plan investors will purchase a property early in the planning/construction stage, meaning they can see heavily discounted prices compared to usual market rates. When investing with this method, the property’s value can skyrocket throughout development. Alongside this higher capital appreciation, investors will likely see higher rental demand, which could lead to solid returns further down the line.

              Typically, the most successful off-plan developments can be found in areas with thriving infrastructure and growing job markets. Regions with notably higher levels of regeneration are also breeding grounds for these kinds of properties, with many private developers considering it a critical factor when deciding where to begin construction.

              While there is some potential for off-plan investment opportunities in Cambridge, investors will find more affordability and a broader range of developments in flourishing property markets like the North West.

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              How Does Cambridge Compare to Other UK Regions When It Comes to Buy-to-Let?

              While Cambridge is a city known worldwide, the enormous price of properties is enough to deter many investors. As a first-time buyer, you may be looking for something more affordable with better rental yields.

              As such, you may want to consider looking further north. After all, the further south you go, the pricier properties will be.

              Many investors could find numerous cities in the North West of England with good value properties and attractive rental yields.

              For example, Liverpool has an average property price of less than £180,000 (per the HM Land Registry UK House Price Index). You can also find rental yields exceeding 7.77%, with some areas potentially offering more lucrative yields.

              Even buy-to-let properties in Manchester – one of the biggest investment cities in the UK – have lower prices than Cambridge. The average property costs around £230,000 and typically boasts average rental yields exceeding 9%.

              In addition, Savills predicts the North West will enjoy a capital growth of 20.2% by 2028 – the joint highest rate in the country.

              Further Reading: Our recent Blackpool Property Investment guide delves deeper into the North West property sector, analysing the latest trends and statistics! Our team have also created a review of the Birmingham Property Investment market place for some additional inspiration.

              Why not read our guide on how to invest 100k in the property sector in 2024 with our free guide.

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                Want to Invest in Cambridge in 2024?

                So, is Cambridge one of the best buy-to-let locations in the UK?

                The area undoubtedly has substantial levels of potential rental growth and a wide variety of property types on offer. However, for those seeking more affordable investments with higher levels of future capital appreciation, it might be worthwhile to pursue an alternative route.

                Take a look at our extensive library of buy-to-let area guides for the latest insights into the UK rental market:

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                Author

                Dale Barham

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                Dale is a property news and onsite content writer at RWinvest.

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