If you’re considering purchasing a buy-to-let in Leicester, we’ve got some good news for you: the East Midland’s city has a strong local economy, a thriving multicultural society, and it’s more affordable than most major cities across the UK.
In truth, you aren’t the first to consider Leicester’s potential for property investment. While, historically, the property markets in Birmingham and Nottingham have attracted the majority of attention in the Midlands, Leicester has quietly become an interesting alternative option – not only for local landlords but international buyers too.
In this guide, we’ll explain everything you need to know when considering a buy-to-let property in Leicester – from an overview of the city’s history to why it’s a good choice for investors, and even where the best BTL areas are.
Leicester: An Overview
Sitting on the banks of the River Soar, Leicester is one of the key cities in the Midlands and home to a growing population of professionals, families and students.
The student population is 65,000+ strong, fed by several local universities. The University of Leicester is a world-renowned research facility, whereas De Montfort University is a top destination for those studying art, design, law and engineering. Nearby Loughborough University is famed as one of the best sports science institutions in the country.
Infrastructure and transport links are well-developed, making it easy to get around. And given the city’s convenient location right in the centre of England, there are plenty of connections to the rest of the UK via the motorway and rail networks, and internationally by the East Midlands Airport. In fact, it’s not uncommon for residents to use Leicester as a commuter base – both Birmingham and London are approximately an hour by train.
The city has grown quickly to become the most populous municipality in the East Midlands (just shy of 12% population growth since 2011), while it was ranked as the best place to live and work in the region in PwC’s Good Growth for Cities Index.
It has the second-largest economy in the East Midlands, underpinned by a large manufacturing sector. A growing service industry continues to create jobs and aid the city’s economy.
But what does this mean for you, the investor?
It shows Leicester is doing well on multiple fronts. A diverse economy, solid employment prospects, and a healthy student population help drive demand for rental properties. Additionally, the city’s excellent transport links make it an attractive option for professionals looking to leverage better-paying work opportunities, such as in London, but without needing to live and pay rent there.
Why Is Leicester A Good Choice For Property Investors?
There are several reasons why Leicester is a good choice for investors looking to expand their property portfolio. Here’s our top five:
- Range of properties – Several cities across the Midlands show excellent investment potential, and Leicester is one of them. The healthy mix of properties, from terraces to HMOs to sleek city centre apartments, means there is something to suit every investor’s criteria.
- Accessible house prices – The average price of a property in Leicester is just under £273,000, according to data from Rightmove (as of November 2024, this may have changed). This seems high, but keep in mind it includes properties out in the more affluent rural areas outside of the city. The closer the city you go, the cheaper it becomes. Properties in L1, for example, average at £134,344. Meanwhile, values have nearly doubled (+93%) over the past 10 years.
- Plans for development – Interest in residential property investment has seen several surges in recent years, with many property investors encouraged by positive data and plans for development issued by Leicester City Council. Between 2016 and 2019, the city was named one of the UK’s top-performing cities for three years in a row by PwC.
- Strong local economy – Leicester’s consistently high performance in PwC’s rankings has been underpinned by an increase in jobs, new businesses and skills. It also has one of the fastest rates of population growth in the country, particularly amongst working age 25-34-year-olds, and offers good rental yields, annual rental growth and affordable property prices.
- Demand for student accommodation – The region has a large student population, many of whom settle here following graduation due to the range of employment options. These young professionals are ideal buy-to-let tenants.
Overall, the promise of redevelopment plans, affordable investment prices and a good record of strong rental yields means that Leicester has all the telltale signs of a fantastic location for property investors.
Rental demand is driven by a healthy student population and a strong local economy, both of which provide a stable foundation for prospective landlords. Continued growth is on the horizon as the city continues to attract the attention of landlords looking for high-potential areas and rental properties in strategic locations throughout the UK.
Top 5 Buy-To-Let Areas In Leicester
So, where are the best areas to consider when looking for a buy-to-let in Leicester? Let’s take a look.
1. LE1 – Leicester City Centre
LE1 is the heart of Leicester and offers a vibrant, urban lifestyle close to the city’s main shops, restaurants and bars.
Average house prices currently sit between £130,000-140,000, though there is plenty of choice on either side of that range. The area is well-connected with public transportation, including bus and train services, making it convenient for residents, students, and commuters.
2. LE2 – Clarendon Park, Aylestone Park, Oadby
The LE2 postcode covers a large area to the south of the city centre and offers a mixture of Victorian and Edwardian terraces, semi-detached homes and apartments. It’s a popular location for young professionals and students due to its close proximity to the University of Leicester.
Residents here enjoy easy access to many beautiful green spaces and parks, including Clarendon Park and the Aylestone Meadows Nature Reserve. It’s also where you’ll find the King Power Stadium, home of Leicester City Football Club, and Leicestershire County Cricket Club.
3. LE5 – North Evington, Humberstone, Thurncourt
Lying to the east of the city, LE5 is a largely residential area that caters to a diverse community of families and young professionals. This is one of the most multicultural and vibrant areas of the city and has plenty of local amenities, schools, parks and recreational spaces.
Many see this area as a more affordable option that’s still close to the city centre. It’s also the location of Leicester General Hospital, one of the UK’s busiest NHS trusts, which means that many employees choose to live in LE5 for a short commute to work.
4. LE3 – Westcoates
The LE3 postcode offers a good range of properties to suit every budget and is within walking distance of the city centre and train station. The local shops and restaurants on Narborough Road are an attractive prospect too.
Although it hasn’t traditionally been considered a hotspot for student accommodation, we’re seeing more and more interest from both landlords and students in the Westcoates area due to its handy location on the doorstep of De Montfort University.
5. LE11 – Loughborough
Moving slightly outside of the city, LE11 covers the town of Loughborough. The town is home to Loughborough University – one of the UK’s leading sports and engineering institutions – which makes it an attractive destination for privately rented student accommodation and HMOs.
The area has seen plenty of ongoing regeneration projects and developments in recent years, all of which have greatly benefited local residents. From Loughborough, it’s easy to commute to Leicester or other nearby cities, like Nottingham and Derby.
Types of Property Investment in Leicester
Buy-To-Let in Leicester
Buy-to-let rental properties in Leicester offer investors the chance to enter an affordable property market with high earnings potential.
This potential is realised through capital growth, with the average price of a flat in Leicester increasing by more than 22% in the past 5 years, and rental income, with yields of 7% possible in certain postcodes.
Student Accommodation in Leicester
Purpose-built student accommodation in Leicester is in high demand due to the thriving student population. The city is home to the University of Leicester, DeMontfort University, and nearby Loughborough University, each of which brings floods of students into the city each year.
For landlords, this means there are plenty of potential tenants, leading to reliable, consistent and high rental yields.
Summary
High rental demand, a large student population and plans for continued regeneration are just a few reasons why buy-to-let investors look towards Leicester and the East Midlands.
Our recommendation, if you’re interested in the region, is to focus on off-plan properties. Leicester is seeing good growth, relative to the region, in almost every aspect of daily life, employment, and more. The property market will follow suit, and, as such, an off-plan property offers the best chance to take advantage. You get an asset under-market value, it then benefits from capital appreciation before it’s even ready to rent, leaving you with the option of making a tidy profit immediately upon completion.
If you need support, our advisors can help. Our team draws on years of experience supporting buy-to-let property investors across Leicestershire and beyond. We’re here to help you source and deliver exceptional properties in an ethical manner, at no extra cost.
Whether you’re an experienced or first-time property investor weighing up your options around the Leicester area, feel free to get in touch with our friendly team using the form below to discuss your situation and objectives.
