The Northwest of England is offering buy to let landlords the best opportunities of increasing yields, says one vital specialist.
Sequre Property Investment says that the latest index from Hometrack highlights that the UK’s house price inflation has risen from 4% in 2017 to 5% this year.
This growth has been led by rises in Manchester, Birmingham and Edinburgh.
However, Northwest property prices have also increased and in some areas buy to let landlords have achieved rental yields in double-digits thanks to low mortgage rates, growing demand from investors and high rates of employment.
The firm’s managing director, Graham Davidson, said: “We have been championing the North as being the best to invest in and the Hometrack index cements this.
‘Savvy southern investors are looking at cities like Leeds’
“London’s growth has stalled and now savvy southern investors are looking at cities like Leeds, Manchester and Liverpool for attractive yields and growth.”
Buy to let specialists Sequre highlighted at the beginning of 2018 that Manchester will enjoy capital growth of 22.8 to 2022. Now, Hometrack is predicting growth of up to 30%.
Mr Davidson explained that with an average house price of £158,800 means a buy to let property can be bought with £40,000 cash, or a 25% deposit, and as capital growth is predicted at £47,640 that will deliver a 120% return on investment in five years. Much higher than other investment vehicles including shares and ISAs.
He added: “The figures do not account for rental income and investors who want capital growth in the South may find themselves struggle to break even with rental yield or make any profit on capital growth.”
The capital's rent crises is laid bare
Meanwhile, data has revealed the rental crisis in London is now more acute than ever before with the supply of rental homes now 46% lower than the UK's average.
ARLA Propertymark says landlords in London are now being priced out and tenants are up against stiff competition from others for the available rental properties.
The organisation says that London’s letting agents in January were managing 99 properties on average, compared to the UK's average of 184.
ARLA’s chief executive, David Cox, said: “London's rental market should be thriving - it's a hub for culture and business and attracts huge numbers of new residents.
“The prospects for a landlord are less tenable with buy to let investors deterred by complex legislation and increasing taxes. High property prices in the capital make it difficult for landlords to make ends meet.”