Southampton Buy-to-Let Guide

Southampton properties have an average rental income of £1,381 pcm, according to Home.co.uk.

Homelet states that the average UK rental income is £1,243 pcm.

As such, Southampton rents are 10.5% more expensive than the country average.

Southampton boasts an impressive 6.7% rental yield. This is better than the UK’s 5.19% average.

In addition, the South East has enjoyed rental growth of 9.80% over 12 months. Meanwhile, the UK annual rental growth is 10.30%. Only the West Midlands, Scotland and Greater London area have recorded better growth.

Whether you are a first-time buyer or property veteran, you’ll need to know about Southampton’s many districts before investing in the area.

In this section, all property prices are according to Zoopla. Rental prices are courtesy of housesforsaletorent.co.uk.

City Centre / Northam / Ocean Village

Southampton’s city centre has a small living market compared to other cities. Many residents choose to live in the suburban parts of town. However, the Ocean Village redevelopment is now a hotspot for luxury apartments. Investors can find leisure facilities and short-term accommodation in the area as well.

Northam is a city centre area. It is home to St. Mary’s Stadium. The area is quite deprived compared to the rest of the region. However, it has gone through some regeneration in recent times. Learn more about how to buy buy to let property and how to avoid making basic errors with our free property investors guide.

Average Property Prices in the City Centre, Northam and Ocean Village

The SO14 average property price is £253,955.

Average Rental Yields in the City Centre, Northam and Ocean Village

The average rental price is £1,210 pcm. The yield is 5.7%.

Totton is separate from Southampton itself. It is part of the New Forest district but attracts those who commute into Southampton and the surrounding areas for work. Totton boasts excellent transport links by car, bus and train into the city centre. The area also offers easy access to New Forest’s natural beauty.

Totton is mid-priced, but expect higher property values on the outskirts of the area.

Average Property Prices in Totton

Average prices in this area are £382,256.

Average Rental Yields in Totton

Average rental prices are £1,092 pcm, while yields are 3.4%.

These areas are north of Southampton and part of the Eastleigh Borough. That being said, they offer great residential areas and an easy commute down the M3 and M27. Eastleigh’s railway station also allows access to the city.

Southampton airport is nearby as well.

Average Property Prices in Chandler’s Ford and Eastleigh

The average price here is £495,949.

Average Rental Yields in Chandler’s Ford and Eastleigh

Landlords can expect an average rental income of £1,252 pcm. Yields are around 3%.

Leisure and Amenities

Southampton and Portsmouth locals would disagree on which city is the capital of Hampshire. However, Southampton leads the way for shopping, leisure, culture and sport in the region.

The city’s Westquay Shopping Centre is one the biggest in southern England. Meanwhile, Southampton FC are one of the biggest football teams in the area. Matchday attracts thousands of people to the city. Sure, Brighton may occupy a spot in the Premier League, but Southampton are still the most successful club in the region.  Read more about where the best buy to let areas in the UK are with our guide.

Booming Economy

Southampton is one of the top maritime cities in the UK. This brings in holidaymakers and workers. For instance, Southampton offers the biggest cruise ship terminal in Europe. The cruise industry welcomes 2 million passengers and 500 cruise calls into Southampton every year.  This may be more attractive for some Chinese property investors with its access to the world via its shipping ports.

The port serves as a terminus for the Isle of Wight ferry service, which also brings thousands of passengers every single day.

Additionally, Southampton is second to Felixstowe as the UK’s largest container port. It also facilitates vehicle exports, making it a big name in the UK’s world trade. The port has introduced 15,000 jobs in the city and brings in over £1bn to the UK economy.

The local economy also includes the following businesses:

• Cunard
• BAT
• Kingfisher
• Ordnance Survey
• Oil refineries
• Chemical plants

The local NHS hospitals are also significant employers.

Student Population

Southampton has a huge student population. The University of Southampton has roughly 25,000 students, while South Solent University has 18,500. That means Southampton’s students account for 17.68% of the city’s entire population.

In comparison, London’s students make up 5.3% of the capital’s population. Meanwhile, Liverpool (which has 4 top universities) students account for 8.13% of the city’s population.

What’s the takeaway?

Southampton has a huge demand for student property. If you’re interested in this market, consider buy-to-let investments in Swaythling, Highfield, Portswood, Shirley or Bassett.

Newly built properties often draw significant interest from tenants but often see higher price points for investors than conventional residential units.

To attain more affordability with new-build properties, one strategy is to invest through off-plan property investment. This entails purchasing a property before construction is completed. By getting involved so early, investors can usually secure developments at discounted rates compared to standard market values.

By engaging in off-plan investment, investors can potentially capitalise on substantial appreciation in property value as construction progresses. The closer the property nears completion, the greater the potential for capital growth.

Like any new-build, there is typically strong rental demand associated with this property type, potentially increasing the likelihood of considerable rental yields in the future.

The most successful off-plan investments are often in emerging areas with robust infrastructure and burgeoning job markets. Locations undergoing significant regeneration are particularly appealing, as many private developers target such areas for future construction projects.

While the potential exists for off-plan investment in the Southampton rental market, investors may find more profitable opportunities in UK cities boasting a more comprehensive array of new-build developments, such as Liverpool and Manchester.