July 2023

Buying Property in Manchester: A Guide for Investors

Investment

Manchester is widely regarded as the UK’s second city, offering a more compact less frenetic alternative to London. With a rich cultural and industrial heritage, it’s full of character and is a popular destination for global visitors, students and urban dwellers.

Property investment in Manchester is an attractive prospect for several reasons:

It’s a great place to invest, and considerably more affordable than London. Follow this guide to find out everything you need to know about buying property in Manchester.

1. What are the requirements for buying a property in Manchester?

Getting a mortgage

Buying a property in the UK is done via a mortgage loan. You will usually pay a ‘deposit’ up front, and the larger the amount you pay, the lower your monthly repayments will be. You will pay less interest if you opt for a larger deposit. Banks will grant you a loan based on the perceived risk of lending you money. This will depend on things like:

  • Age
  • Income
  • Deposit size
  • Loan term
  • Financial history

Conveyance

There is a lot of legal red tape to get though when buying a property in the UK. Fortunately you can hire a specialist legal advisor, a conveyancer, who will handle all of this for you.

2. How much tax will I pay when I buy a property in Manchester?

When you buy, you may need to pay VAT and/or stamp duty.

How much is VAT?

Some commercial property providers may choose to charge you VAT on your purchase. If this is the case, then the VAT will be charged at the standard UK rate of 20%.

Will I have to pay Stamp Duty?

You will have to Stamp Duty Land Tax (SDLT) if the property you are buying costs more than £250,000. You can use the Government’s SDLT calculator to work out how much you’re likely to pay. There is a 2% surcharge for non-UK residents.

How much will I pay in rental income tax?

Income tax is payable on money earned through rent in the UK. If you’re a non-UK resident, you must register as a non-resident landlord. The exact amount of tax you pay will depend on how much you earn, but generally it’s 20% up to £31,785 and a 40% ‘higher rate’ between this and £150,000. You will need to register and fill in a self-assessment tax return.

If I sell my property investment in Manchester, will I have to pay Capital Gains Tax?

Yes Capital Gains Tax (CGT) is due after the sale of property you own in the UK that is not your primary home. How much you pay will vary, and you can find out more about CGT on the Government website.

3. How to find a property in Manchester

There are several ways to find your ideal Manchester property.

Real estate agents

A real estate agent will work hard to find a property that’s right for you. Popular Manchester estate agents include Savills Manchester, Reeds Rains and Stevenson Whyte.

Property websites

If you’d rather delve deep into finding your own property to buy in Manchester,  you can find many advertised for sale on dedicated property listing websites such as Right Move, On the Market and Purple Bricks.

Property auctions

You can also find many potentially lucrative properties through auction houses, such as Auction House Manchester, SDL Property Auctions and Pugh Auctions.

4. Where to buy property in Manchester?

Manchester is a compact and densely populated city. Though buying property in the city is generally a sound investment, the following areas are particularly recommended.

Northern quarter

The Northern Quarter is renowned for its contributions to UK culture, and was the birthplace of Britpop. It’s crammed with independent shops, restaurants, clubs and more. This makes it a popular area for short stays, and average rental yields of 5% make it a sound investment. 

Castlefield

Castlefield is an attractive area close to the city centre, home to canals lined by bars, and its own outdoor music venue, the Castlefield Bowl. Rental yields of almost 6% and average prices of £385/Sq foot are a desirable proposition for savvy investors. 

Manchester city centre

Short-term lets in Manchester City Centre are particularly popular with tourists and business visitors, and provide a perfect city base to enjoy your investment yourself. Rental yields are around 5%, and properties cost an average of £337/Sq foot, compared to prices well in excess of £1,000/Sq foot in Central London.

Fallowfield

Close to the university of Manchester, Fallowfield is a popular area for students. The area has many terraced houses that can be converted into HMOs (houses in multiple occupation) for short and medium term rentals. Rental yields are a high 9% on average.

5. What pitfalls should I look out for?

When buying property in Manchester, it’s important to avoid being caught out by avoidable mistakes or scams, particularly if you’re a foreign buyer. The following broad guidelines will help you steer clear of these:

  • Check the title – There are two types of ‘title’ (the ownership of the property). With a ‘freehold’, you own the property and the land, permanently. A ‘leasehold’ means you only own the property for a set period, and not the land it’s built on. Make sure your conveyancer checks this for you and that your aware what you’re buying.
  • Beware of scams – There are unfortunately many scammers impersonating property companies in a bid to steal buyers’ money. Protect yourself by making sure you verify that any website links, email addresses and phone numbers you use are genuine.
  • Check there are no debts owed – You can find out whether there is an existing unpaid mortgage on the property you are buying by checking with the Land Registry.

6. Is now the right time for property investments in Manchester?

In short, yes. Demand for short-term and long-term rentals in Manchester is booming. Lonely Planet named it as one of its ‘Best in Travel 2023’ destinations – the only UK city to make the list. The city continues to grow meanwhile, with a population increase of 50,000 between 2011 and 2021. The popularity of property investment in Manchester is clear by the fact that between October and December 2022, the average number of days to sell a property in the city was just 14.

7. Let GuestReady manage your investment

If you want to buy property in Manchester and rent it out without the hassle, talk to GuestReady. We can take care of everything for you, from advertising it for rental to coordinating check-out and cleaning. Get in touch today to find out more. In case you would like to see trendy properties that we manage, visit our direct booking website.

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