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Southampton Buy-to-Let Guide

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    Property Investment in Southampton

    Southampton is one of the smaller cities in the UK. The population sits at around 246,000. In comparison, London has a population of over 7,500,000. Birmingham and Liverpool have populations exceeding 980,000 and 860,000, respectively.

    Today, we’ll be looking at Southampton’s buy-to-let market. This guide will cover rental yields and property prices. In addition, we’ll look at areas within the city and the surrounding suburbs. Also, we will compare Southampton with the rest of the country.

    By the end of the guide, investors should have a good indication of how and where to invest in this region.

    Read on for more information.

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      Buy-to-Let Property Prices in Southampton

      Land Registry puts the Southampton average house price at £246,052. Like most areas, detached houses are the most expensive. They average £433,804. Meanwhile, semi-detached houses cost £310,415. Terraced houses and flats cost £253,675 and £169,472 respectively.

      But how does this compare to the national average?

      Well, the UK average house price is £287,546. This means Southampton properties are 15.55% cheaper than the average UK property. This represents good value for money. However, investors may be able to find better value if they look at other areas in the UK. So what is a buy to let property? Find out more with the RWinvest BTL guides.

      Let’s focus on price growth.

      From June 2022 to June 2023, Southampton experienced a price growth of 2.50%. However, the previous year saw growth of 10.30%. This is typical of the rest of the country. 2022 and 2023 have been marred by high inflation and interest rates. In turn, mortgage rates also rose, and people became reluctant to purchase properties.

      That said, Southampton is still above the UK average price growth, which stands at 1.70% for the same period.

      However, the area is only expected to see a capital growth of 16.7% by 2028. This is less than the national prediction of 17.9%

      The property price figures look healthy. However, investors should be wary about Southampton’s economic potential moving forward.

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      Buy-to-Let Rental Market in Southampton

      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.

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      Buy-to-Let Investment in Southampton: Area Breakdown

      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%.

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        Shirley / Millbrook

        Shirley is found just outside the city centre. The area has a high street and good schools. As such, the area attracts families. The Southam General Hospital attracts workers to the area as well.

        Shirley consists of various housing estates. Properties offer good value, making the area popular with investors.

        Millbrook is on the A33 road heading towards Bournemouth. Millbrook Trading Estate offers employment opportunities that bring people into the area.

        Average Property Prices in Shirley and Millbrook

        Property prices in these areas are around £327,600.

        Average Rental Yields in Shirley and Millbrook

        Rental prices are around £1,198 pcm. Yields are 4.4%

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        Totton

        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%.

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          Southampton Residential Area

          Bassett

          Bassett is a popular part of the city with students. The Highfield campus is in this area. If you go further east, Swaythling has good value properties and a railway station.

          Meanwhile, Southampton Common fills the local green space quota and helps the area appear rural.

          Average Property Prices in Bassett

          Average property prices in SO16 are £314,965.

          Average Rental Yields in Bassett

          Rental prices are around £1,146. This puts yields at 4.4%

          Southampton Residential Area

          Chandler’s Ford and Eastleigh

          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%.

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            Southampton Centre

            West End and Hedge End

            West End is found in the east of the Southampton area (confusing, right?). The area – along with Hedge End – sits on the border of Hampshire and offers relatively expensive property prices.

            West End commuters can access the M27 with ease.

            Average Property Prices in West End

            Average prices here are around £353,655.

            Average Rental Yields in West End

            Investors could earn around £1,097 pcm in this area. The average yield is around 3.7%.

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

              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.

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                Southampton New-Builds

                Newly constructed properties, often referred to as New-Builds, are increasingly becoming a favoured investment option amidst the prevailing supply/demand imbalance within the UK housing sector.

                These developments require minimal upkeep or repair, presenting properties that are essentially move-in ready for tenants at any given time. Such convenience not only translates to a hassle-free experience for occupants but also ensures a swift transition for landlords to begin earning rental income.

                The Townhill Park regeneration scheme in Southampton aims to replace outdated council housing inventory with more than six hundred modern, energy-efficient council houses. Through this, the council seeks to create a better community and help address the undersupply of housing within the local market.

                With the ongoing evolution of property market dynamics, investing in newly developed properties such as this could offer the potential for increased rental growth in the future years.

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

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                  Off-Plan Property in Southampton

                  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.

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

                  As you can see, Southampton offers numerous benefits to property investors. However, its rental yields are somewhat “middle-of-the-road”. In addition, the South East’s growth potential is limited.

                  If you are serious about seeing capital growth with your investment, consider looking to northern cities instead.

                  For example, the North West capital growth prediction blows the South East out of the water. The region expects 20.2% capital growth by population, one of the best in the country.

                  House prices are also cheaper in both Liverpool and Manchester. Land Registry puts Liverpool prices at £177,528 on average. Manchester’s prices are more expensive at £233,243. However, Manchester offers a stunning 9.12% average rental yield. Liverpool’s average rental yield is no slouch either; properties can earn around 7.77% in this riverside city. Other areas are also affordable such as buy to let in Birmingham and many more around the UK.

                  The general rule in the UK property market: northern properties are cheaper and offer substantial returns.

                  The figures above prove as much.

                  Note: Southampton City Council enforces an Article 4 direction across the city. As such, investors need planning permission to convert a property into a shared house or HMO.

                  Investors also need to consider the city’s licensing scheme for HMOs in certain districts. Make sure you understand these laws before purchasing a property.

                  More information can be found on the Southampton regional government resource here.

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                  Want to Invest in Southampton?

                  Through research and seeking expert advice, investors can find units in property hotspots that are set to explode into life. This could lead to huge capital appreciation.

                  It’s also beneficial to look into off-plan properties. These types of properties can be bought at huge discounts and sold for significant profits when they are ready to be tenanted. Alternatively, many clients choose to keep the properties and collect a rental income for considerable ROI.  Other types of investors look at Serviced Accommodation as an alternative option for property investment.

                  If you are interested in buy-to-let property investment, it could be worth getting in touch with a property investment company. If you want to learn more about the different buy-to-let hotspots the UK can offer, take a look at some of our guides:

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                  Author

                  Dale Barham

                  Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

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