Btl Investors Look To The North West

AFS Team·27 February 2019·4 min read
Btl Investors Look To The North West

Btl Investors Look To The North West

Growing numbers of buy to let investors are looking to the North West of England in the search for better returns than can be enjoyed in London, one real estate firm says.

According to Savills, the North West has now overtaken the capital, as well as the south-east, as the country's most popular region for buy to let investment.

The firm says that it has analysed official figures and, for the first time, sales of 8,279 properties to landlords with a BTL mortgage in the North West outnumbered those in London, which saw 8,263 sales. In the south east of England, there were 1,009 sales.

Savills says that investors are looking to the North West because of better prospects for house price growth compared with London and property is relatively cheap to buy, along with a solid rental income means there's a higher yield being delivered.

However, the number of properties in the UK being bought by landlords with a BTL mortgage dropped by 11% in 2018.

The figure comes from UK Finance, the banking industry body, which says that the loss of tax relief, higher stamp duty costs and more stringent mortgage lending has led to the fall.

Now, Savills says the Northwest, which includes Manchester, Lancashire, Merseyside, Cumbria and Cheshire is offering a more robust investment opportunity than London.

However, Birmingham saw the biggest growth in sales to buy to let landlords in 2018, which rose by 117% to 1,791.

An analyst for the firm, Lawrence Bowles, said: "This is evidence that landlords are switching their focus to higher yielding markets in the north and in the Midlands.

"With a higher yield, it's easier for them to make a profit, even as the tax burden grows and property owners can also expect a higher house price appreciation than in the south east and London over the next five years."

The firm says that house prices over the next five years will grow by 21.6% of the North West and by 19.3% in the West Midlands. In London, they are set to grow by 4.5%.

24% of landlords have considered short term lets

Meanwhile, a survey has revealed that 24% of buy to let landlords have considered letting their property on a short term let, similar to an Airbnb-style basis, but only 3% of them have done so.

The findings from the National Landlords' Association (NLA) says that short-term lets currently range from one night to six months and are growing in popularity thanks to the short-term letting platforms.

The NLA says that landlords who consider short term lets may find they are breaching their mortgage terms and they can also invalidate any insurance policy.

The NLA's chief executive, Richard Lambert, said: "We expected to see in increase in landlord numbers letting furnished holiday properties after the taxation changes were introduced last April but that's not been the case for most of the country, while 20% of landlords in Scotland are offering short-term lets."