New data has revealed which are the most attractive UK locations for landlord investment and Manchester is quickly closing in on London.
The figures from UK Finance, an industry body, says that landlord investment has dropped since April last year by more than 50% when the stamp duty surcharge for second homes was introduced.
The organisation reveals that in the first three months of 2017, buy to let landlords undertook 1,126 mortgage purchases in London. That figure compares to an average of 2,500 in 2014 and 2015.
UK Finance says that the property market in the capital has been dented with growing uncertainty over Brexit, mortgage constraints and inflated house prices.
Rents in London will fall
Indeed, Hometrack has published research that is predicting rents in London will fall by between 1% and 2% which will mean lower returns for buy to let landlords.
The figures also reveal that while investors in Manchester were also hit by various tax hikes they were less significant as the city is experiencing a residential building boom.
There's also the offer of higher average yields for landlords than London offers with a strong media presence and growing student population fuelling demand for rental homes.
Hometrack’s data reveals that buy to let purchases led to 840 mortgages were approved in the first quarter of this year which compares to an average of 1,000 in 2015.
New lending rules warning for portfolio landlords
Meanwhile, landlords are being reminded that new lending rules for portfolio landlords will come in from September 30.
The new underwriting requirements for mortgage to buy to let properties will affect landlords with more than four rental homes.
The new Prudential Regulation Authority (PRA) criteria will see landlords providing more details of their liabilities and assets and they must declare future intentions for property investments.
Buy to let mortgage applications
For those landlords with a complicated case, which is assumed to be a small number of all buy to let mortgage applications, they will need to provide cash flow figures as well.
The Leeds building society has already announced that it is increasing the maximum portfolio size for rental properties from 8 to 10.
Other lenders have also announced their approach to handling portfolio landlords before the September deadline and these include Coventry, Nationwide and BM Solutions.