Buy-to-let investment in cities

Returns on have been extremely encouraging so far in 2006 and the sector is unsurprisingly becoming increasingly popular with those looking to prepare for retirement.Investors are also beginning to show a much greater understanding of the way in which the industry works, with an increased awareness of the importance of a long-term investment plan and an instinct for the most lucrative areas.Keith Astill, managing director of UCB , recently advised potential investors that the market is in good health and that the returns will be impressive if adequate research is carried out.Mr Astill's advice was that location is the key, in that investing where there is an expanding business sector tends to be profitable.Investing university cities is also generally advisable, as demand from students is typically high throughout the year. Manchester and Liverpool are notable examples in this respect, while Sheffield is similarly popular because of its two universities in close proximity. According to Mr Astill, buy-to-let investment is also advisable in cities experiencing a growth in population. A rising population inevitably means a need for more homes, but getting a foot on the property ladder is often out of the question for many.The basic consequence is that rented accommodation is becoming more popular than ever, with many young professionals choosing to rent for a number of years before making a purchase.Other factors to consider include an improving employment market as well as an influx of new industries, both of which lead to greater demand for rented accommodation. Some of the UK's regeneration cities are particularly popular in this respect, with the buy-to-let sector booming.Buying an is typically as much if not more about capital appreciation than rental income, however, and investors are also looking for areas enjoying notable house price growth.With this in mind, the April housing market survey from the Royal Institution of Chartered Surveyors (Rics) has provided some good news. House prices in the UK have risen for six months in succession, while 15 per cent more chartered surveyors reported a rise in house prices than a fall in the three months to April.The amount of property on the market has actually fallen by ten per cent compared to the figures a year ago and so demand is naturally high in the UK. At the same time, surveyors have also seen a 17 per cent rise in sales activity, with buyers keen to complete the transaction in spite of the limited choice.Just as Mr Astill suggested that cities could provide the most attractive returns for buy-to-let , Rics has found that London is one of the strongest areas for house price growth.Investors are certainly much more astute in the way that the approach property investment now than they were five years ago and it is a fact borne out in the vastly improved success rates.