Are you looking to invest in property in a city in England? While other northern cities have won plaudits in recent years, Sheffield shouldn’t be overlooked by property investors seeking to diversify their portfolios. In this post, you’ll discover what makes Sheffield such a desirable place to live. And why, in turn, that creates opportunities for ambitious property investors. We’ll also lift the lid on the Sheffield rental market and give you an idea of the returns you can expect on your investments.
A snapshot of Sheffield
When looking for somewhere to invest in property, it’s smart to choose a location with a lot on offer to its residents. That way, you’ll know there’s a strong desire from people to live there. Sheffield is one of those places.
- Dubbed The Outdoor City, Sheffield is one of the few cities in Europe with a national park in its borders. In addition to the array of green spaces inside the city, this gives Sheffield a uniquely natural feel that other metropolitan cities could only dream of. With 61% green space, it’s one of the greenest cities in the world and boasts a wealth of leafy suburbs that suit families and retirees.
- Sheffield is a city many people turn to for affordable city living. On average, rent is 62.8% cheaper than in London. The cost of living (excluding rent) is 21.6% less expensive than in London. It’s also great for commuters, with the M1 running right by it and the long-touted HS2 set to be connected.
- Many booming industries underlay the economy in Sheffield. It’s a far cry from the days when Sheffield was only known for its steel production. Since then, Sheffield has diversified into advanced manufacturing and engineering, health, and digital and technology. As such, Sheffield’s economy is worth £11.3 billion. This is great news for job-seekers. Sheffield is also an exciting option for entrepreneurs. Startups.co.uk named it the number one UK city to start a business in 2022.
- Sheffield is a hub of sports and culture. Residents can enjoy many galleries, theatres and museums, as well as an exciting food and drink scene. Host of the Tramlines Music Festival, Sheffield has a strong musical heritage and nightlife. Socially, Sheffield provides the best of big city and village life.
- Regeneration is central to Sheffield’s plans for the future. Now in phase two of the 470m Heart of the City scheme, the city centre is undergoing a transformation that will only add to its appeal. 300m is also being spent on the West Bar scheme which could create 8,000 new jobs.
What does Sheffield’s rental market look like?
Thanks to all these merits, Sheffield’s rental market is in a very healthy state.
A report by Zoopla in December 2022 found that rent prices had increased by 12.5% on the previous year. The supply of high-quality rental properties is inadequate to meet the growing demand. Thus, rent prices are being driven up. This presents excellent opportunities for investors.
Investors can look to target several demographics who are turning to the Sheffield rental market.
For one, there’s an abundance of young professionals in Sheffield due to the city’s job opportunities, social scene and affordability. This makes buy-to-let especially appealing to investors who see young professionals as ideal tenants. Keep an eye on Kelham Island and Hillsborough as these areas are popular with this cohort.
Since the year 2000, the number of households living in private rented accommodation has more than doubled, per data from Statista.com. Many families are looking to rent in Sheffield to take advantage of the good schools and family-friendly suburbs.
The golden goose for investors remains university students. Together the University of Sheffield and Sheffield Hallam University have over 60,000 students. The majority of them turn to the rental market for accommodation during their studies. Areas like Crookes are a hotspot for students, and rental properties here don’t spend long on the market. They are the heart of Sheffield’s rental market. Investors can also consider purpose-built student accommodation as a means to diversify their portfolio.
What rental yield can investors expect?
As you can see, there’s a strong demand for rental properties in Sheffield. But what returns can landlords expect on their investment by way of rental yields?
Currently, the rental yield in Sheffield is 4.2% on average, which is higher than the UK average of 3.6%. Keep in mind that this covers the whole of Sheffield, including areas that are not known for being rental hotspots.
In certain neighbourhoods, rental yields can exceed 8% for residential and student properties. For example, the S3 postcode is the pick of the bunch due to its average rental yield of 6.8%. This encompasses the trendy neighbourhoods on the edge of the city centre like the previously Kelham Island and St. Vincents, a popular student area. S5 is a close second with rental yields of 6.5%
Capital growth in Sheffield
Capital growth is the other way investors aim to get a return on their investment. And it’s here that Sheffield really comes into its own.
According to HM Land Registry data, the average price paid for a property in Sheffield is £225,560. This is about two-thirds the price of the average property in England which costs £342,297.
The great thing as far as investors are concerned is the rate at which Sheffield prices have increased. Since 2012, the average price paid has increased by 4% per year. If this trend continues, the average price will be £263,510 in 2025.
In terms of flats, Sheffield also presents excellent value to investors. The average price for a flat in Sheffield is only £150,906. New investors or those with a lower budget could find a lot of value in city centre flats which are likely to increase in value over time as Sheffield continues to become more popular.
Large houses in family-friendly areas like Ranmoor, Norton Lees and Fulwood are likely to provide massive capital growth. The price paid for detached houses in Sheffield has risen by 46.9% since 2012, taking the figure to £413,654. Lower yields can be expected in these areas but the capital growth potential could make up for it.
Keep in mind that Sheffield is a very competitive market, with properties selling in 95 days on average. This is cut to just 81 days for three-bedroom houses.
How can you become a landlord in Sheffield?
If you like the idea of investing in property in Sheffield but you don’t know how to get started, don’t worry. Becoming a landlord is a simple process. First, you’ll need to acquire a property. You could buy one outright or get a buy-to-let mortgage. After that, you’ll have to become licensed and begin searching for tenants. Due to all that we’ve covered, it shouldn’t be difficult finding tenants in Sheffield if you pick one of the top rental locations. However, make sure you have a detailed plan in place before becoming a landlord. Do careful research and don’t hesitate to get financial and legal guidance. Before you know it, you could be the proud owner of several investment properties in The Outdoor City.
What happens if you want to stop investing?
Perhaps you’ve decided property investing is no longer for you, or you’ve played the long game and now want to cash out. Whatever your reason for opting out of property investing, know there are many ways to do so. You can sell your properties and make a profit from capital growth. You could also begin occupying your property, although illegibility will depend on many factors. Also, if you’ve had trouble trying to sell, you can consider a cash house buyer like We Buy Any Home. We’ll help you sell your tenanted property in Sheffield with no stress and no waiting around.
