The Best Areas of Derby to Invest in Buy-to-Let

Nestled in the heart of the East Midlands, Derby has emerged as a compelling destination for buy-to-let investors who seek stable returns and long-term growth potential. With its thriving economy, growing population, and attractive rental yields, Derby offers a wealth of opportunities for savvy investors. Stick around to find out where the best areas of Derby are to invest in buy-to-let properties. 

Derby and the River Derwent Valley are considered to be the two birthplaces of the Industrial Revolution, having been responsible for many groundbreaking innovations and inventions since. The city has always been associated with the textile trade, too. 

Currently housing a population of around 247,000 people, the population is said to rise to 312,000 by 2037 which is great news for landlords looking to invest in a buy-to-let or two here. And if you need information on the best type of landlord insurance for when you invest in a buy-to-let in Derby, be sure to contact CIA Landlords on 01788 818 670. 

Why Derby is a Hotspot for Buy-to-Let Investment

Derby’s appeal stems from a combination of factors that collectively create a favourable environment for property investment. Landlords will be able to benefit from a range of benefits by investing in a buy-to-let here. 

Equally, there are a few indicators that suggest the profitability of investing in property in Derby, including: 

• Being one of the UK’s fastest-growing regional economies

• A continuing population growth

• Billions worth of inward investment secured in the last ten years

• Major regeneration projects

• 4,500 jobs created since 2017

• Having the second-highest average earnings in Britain

• Large rental demand

• Affordable property prices

• Strong rental yields

• A large university student population

Strong Economic Fundamentals: 

Derby boasts a diverse economy with a strong focus on manufacturing, especially within the automotive and aerospace space, technology, and healthcare. There are also companies such as Rolls-Royce and Toyota that have manufacturing operations in the area. 

Derby also has a growing tech sector, with several startups and established companies contributing to the city’s innovation and growth. The city is home to the University of Derby, which plays a significant role in fostering a skilled workforce and promoting entrepreneurship.

Additionally, Derby is a healthcare hub, with several hospitals and medical centres providing employment opportunities and supporting the city’s well-being. The city’s healthcare sector is also attracting investment in new facilities and research initiatives.

These strong economic fundamentals contribute to Derby’s stable employment market and high disposable income levels among its residents. This, in turn, drives demand for rental properties, making Derby an attractive destination for buy-to-let investors.

Economic Key Indicators

There are a few key indicators that support the argument of Derby being a profitable city to invest in buy-to-lets in. 

• Derby’s GDP growth has consistently outperformed the national average, with an annual average growth rate of 1.8% between 2017 and 2020, compared to 1.5% for the UK. 
• Derby’s unemployment rate is lower than the national average, consistently falling within the range of 2-3% in recent years, compared to the UK average of 3-4%. 
• Residents in Derby have a higher than average disposable income, with an average income after housing costs of £20,200 per year in 2019, compared to £18,700 for the UK as a whole

Affordable Property Prices: 

Compared to many other UK cities, Derby offers relatively affordable property prices, making it an attractive option for investors seeking to maximise their returns. The average house price in Derby is around £221,551, significantly lower than the national average of £255,000. This affordability is particularly evident in the city’s suburbs, where properties can be found at even more competitive prices.

As a result of these affordable purchase prices, landlords have access to higher rental yields. The average rental yield in Derby is around 4.2%, compared to the national average of 3.9%. This higher yield makes Derby an attractive investment destination for those seeking to generate a solid return on their investment from their buy-to-let. 

The combination of affordable property prices and high rental yields makes Derby an attractive option for buy-to-let investors seeking to build long-term equity and achieve a consistent rental income stream. The key statistics on property prices in Derby are as follows:

• Average house price: £221,551 
• Average rental yield: 4.2% 
• Highest rental yield area: City Centre (DE1) – 6.1% 
• Lowest rental yield area: Normanton (DE11) – 3.5%

Diversified Rental Demand: 

Derby caters to a diverse range of tenants, including young professionals, couples, families, and students, ensuring a stable rental market for investors throughout the year with consistent demand for properties across various property types and sizes.

Young Professionals

Derby’s strong economy, particularly in the manufacturing and technology sectors, attracts a sizable population of young professionals seeking employment opportunities. These professionals often prefer to rent rather than own, creating demand for well-maintained apartments and studio flats in convenient locations near their workplaces and amenities.

Couples

Derby provides a good quality of life for couples, offering a balance of affordability, amenities, and access to green spaces. Couples often seek spacious, well-maintained properties, and located in family-friendly neighbourhoods with good schools and play areas.

Families

Derby’s suburbs, such as Allestree, Mickleover, and Heatherton, offer excellent schools and family-friendly amenities, making them popular choices for families. Families often seek properties with a minimum of three bedrooms, a garden or outdoor space, and proximity to schools, parks, and recreational facilities.

Students

Derby University contributes to a significant student population, creating demand for student accommodation in the city centre and surrounding areas. Student accommodation typically consists of purpose-built studio flats, shared flats, and halls of residence. Derby houses 11,300 students in total. 

Top Areas for Buy-to-Let Investment in Derby

It is safe to say that Derby is a smart area to invest in to expand your property portfolio. Several areas within Derby stand out as particularly attractive for buy-to-let investment, offering a combination of high rental yields, strong rental demand, and potential for capital appreciation.

City Centre (DE1): 

The city centre is a hub for employment, amenities, and nightlife, attracting a high demand for rental properties. With average rental yields of around 6.1%, the city centre is a prime location for investors seeking high returns on their buy-to-let investments. 

Equally, the city centre is always a great area for student accommodation and young professionals looking to live a life filled with excitement and busyness. 

Allestree (DE24): 

A sought-after suburb with excellent schools and family-friendly amenities, Allestree offers a stable rental market catering to young professionals and families. Average rental yields are around 4.4%.

Mickleover (DE3): 

A well-connected suburb with a mix of traditional and modern housing, Mickleover provides a balance between affordability and rental demand. Average rental yields are around 4.5%.

Heatherton (DE23): 

Another popular suburb with good transport links and a blend of family homes and apartments, Heatherton appeals to a variety of tenant profiles. Average rental yields are around 4.5%.

Ashbourne Road (DE24): 

Located in the heart of Allestree, Ashbourne Road offers a range of properties close to local amenities and transport links. Average rental yields are around 4.4%.

Uttoxeter New Road (DE1): 

Situated near the city centre, Uttoxeter New Road provides easy access to employment opportunities and amenities. Average rental yields are around 4.3%.

Burton-on-Trent (DE14): 

A satellite town with strong manufacturing and retail industries, Burton-on-Trent offers a more affordable entry point for investors. Average rental yields are around 4.8%.

As you can see, there are many different opportunities that you as a landlord can seize in the beautiful city of Derby! The key to finding the best opportunity for your portfolio is to understand your target market and find properties in the area that offer that target market. 

Considerations for a Successful Buy-to-Let Investment in Derby

While Derby presents a promising landscape for buy-to-let investment, it’s crucial to conduct thorough research and make informed decisions. Here are some key considerations:

• Invest in properties in good condition to minimise maintenance costs and attract tenants. 
• Prioritise areas with strong rental demand, good transport links, and proximity to amenities. 
• Consider the type of tenants you want to attract, such as students, professionals, or families, and choose properties accordingly. 
• Seek guidance from legal and financial professionals to ensure compliance with regulations and manage your investment effectively.
• Ensure that you have the best-suited type of landlord insurance for your buy-to-let property portfolio. 

For more information on landlord insurance with prices that are never beaten, contact CIA Landlords today at 01788 818 670.