Preston - The Third Big North West City

In a number of recent posts, we've talked about a reversal of the traditional North South divide. For serious buy to let investors (those who are in it for the long term and for whom rental yields are the prime concern) the lower priced markets of the North are where money tends to work the hardest.  There are exceptions. Recent rental data has indicated some good performers in the Midlands, for example, but it is the northern towns and cities that are leading the tables. Scotland produces a few winners, as do parts of the North East, but the greatest concentration of high-yielding properties lies within a triangle bounded by the three largest cities in the North West. Liverpool is one, Manchester is another, and we've covered both in previous reports.

The other point of the triangle is the North West's third largest city: Preston. 

For years, it had showed lacklustre economic performance and, like many parts of the region, it had seen a slow recovery in local property values. However, since 2013, it has begun an important transformation. In very short order, it has moved up the property investment charts and now routinely sits in the top 10 of buy to let hotspots.  TotallyMoney's 'Buy-to-Let Yield Map 2018' puts Preston in 8th place nationally, with districts of Liverpool and Manchester dominating the slots above. It finds that yields in Preston are averaging around 8.65%. That's based on a typical asking price of £125,341 and a mean rental value of £903.

The Student Market

One reason for Preston's attractiveness to investors is undoubtedly its huge student population. The University of Central Lancashire has played an important role in transforming the city, introducing new blood in the form of around 30,000 students and a veritable army of staff. UCLan is one of the UK's largest universities and the fifth biggest employer in the whole of the North West. The university's presence underpins rental demand and is one of the chief reasons why well-informed institutional investors are now sinking millions into student property developments.

Rising Population

The City of Preston has an estimated population of a little over 141,000 but forecasters expect the number to rise steadily over the next 20 years. The projected increase is only modest - an upturn of around 4,500 residents by 2039 - though that figure could rise more quickly if new investment projects gain the expected traction. In any event, the city's growing population will undoubtedly help to sustain rising demand for accommodation, thereby buoying up both rental and capital values for the foreseeable future.

Economic Regeneration

The biggest news for property investors has been the signing of the Preston, South Ribble and Lancashire City Deal. This landmark agreement has secured £434m of funding, accelerating investment in transport infrastructure and promising the creation of around 20,000 new jobs . The collective impact of the deal should see the local economy grow by approximately £1 billion over the course of the next ten years. 

The City Centre

Although TotallyMoney's latest rental report puts Preston eighth in its list of "the best buy to let areas in Britain", the city looks even more attractive as one gets closer to the centre. Earlier this year, TotallyMoney found that yields in the central PR1 postcode were hovering around 10.04%. That's a return that puts the district in the UK's top five.  This is understandable in many ways. The university sits within this postcode, as do many new student residence developments; the area also encompasses some attractive properties around the city's marina. Desirable properties and city centre convenience often combine to generate strong demand, and here is no exception. However, PR1 is also home to concentrations of some very low priced properties that, while they might not be high-spec, certainly produce solid and dependable rental incomes.

But there's a risk in reading too much into these numbers. The 'centre' is actually a very large area, particularly if one defines it in terms of postcode. East to west, PR1 measures over 8.5km; north to south, it's nearly 6km. The total area encompasses everything from luxury riverside properties to housing association flats. Judging the market on these terms alone is likely to be misleading; it makes more sense to focus on the areas of greatest market potential.

The very centre of the city is where serious investors might wish to focus their attention. It's here that much of the City Deal funding is being spent. Recent improvements have included the city's main high streets, Fishergate and Friargate, and a £50 million facelift for Preston's Market Quarter. In addition to recently completed structural refurbishments, the markets will see the construction of a new cinema, retail units, parking facilities and restaurants.

Preston Railway Station

Another beneficiary of inward investment is the railway station, which, set on the West Cost Mainline, affords access to both London and Edinburgh in approximately 2 hours. The station is widely tipped to benefit from a future HS2 extension and, already, Virgin Trains has committed £1.5 million for improvements to its entrances and facilities.

Winckley Square (seen in the blog image)

Bounded by the offices of legal practices, accountants and other professional agencies, Winckley Square is a historic garden square set right in the heart of the city. In recent months, it has benefited from a £1.2million improvement programme, supported by the Heritage Lottery Fund, which has delivered new paths, seating, planting and lighting. Adrian Phillips, Preston City Council's director of environment described it as "one of the finest examples of a Georgian square in the North of England," and noted that the improvements had precipitated a surge in its popularity.  Properties in this immediate locale benefit from a beautiful central location, the shortest of walks to the high street, and proximity to some of the city's most important employers. County Hall - the main seat of Lancashire County Council - is just a few hundred metres away, while the university and the offices of Preston City Council are both within easy walking distance. The first property was erected here in 1799, the square being conceived as an exclusive residential area. Commemorative notes set into the square's central seating area indicate many of the surrounding properties and the names of their original residents - individuals who included judges, doctors, a mayor, and the notable suffragette Edith Rigby. Today, thanks to significant investment, Winckley Square is rediscovering its identity as the city's most sought-after address.  Accordingly, new office conversion schemes are creating some of the region's most appealing residential properties.


Very low property prices, together with robust rental demand have helped to propel Preston to the top of the charts for buy to let investment. Capital growth may not have been so startling as in some other regions, but for those looking for healthy yields rather than quick, high risk gains, it's a market worthy of serious consideration. 

Properties of an exceptionally high quality are readily affordable, and those in the very centre will be ideally suited to the needs of higher-spending professional tenants. More generally, investors can have real confidence in local rental demand. Preston benefits from a large student body, a rising population and the expectation that the City Deal will create 20,000 new jobs. Not only that, but, millions more have yet to be spent, and that's to say nothing of the potential economic impact of HS2 and Northern Powerhouse funding.

Widely cited as an example of best practice in economic regeneration, Preston is a city that is quickly finding its feet. For investors, it represents a rare and appealing opportunity.

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To find out more about investment opportunities in Preston, please call our advisory team on 01244 343 355 option 4.  or contact one of our advisors here.

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