With northern cities flagged up as the next investment hotspots and falling yields down south, buy-to-let investors are now venturing past the Watford Gap in search of lower house prices and bigger profits.
Liverpool is often cited as the country’s best city for buy-to-let yields, with new research by JLL singling out the city, along with Manchester and Leeds as “ones to watch” over the next five years.
With the BBC relocating much of its activity to MediaCity in Manchester and the new superport development in Liverpool there is the combination of strong local economies and shortage of homes that inevitably sees rents increase.
According to JLL, average house prices in Manchester will grow by 4.2% per year over the next five years, with 50% of university graduates planning to stay in the city – the highest figure outside London.
Rental values in Leeds are expected to increase by 3.5% per year over the next five years, and in Liverpool new development sales prices are expected to perform well over the same period, with average price growth of 3.6% per year an average 5.1% surge in 2017.
All three cities have high student populations and areas such as Salford are becoming more and more popular among young professionals unable to afford Manchester city centre.
The northern boom comes as stiffer tax and mortgage rules make being a landlord in London and the South East, where property prices are highest, far less profitable.
While London rents remain the highest in the country, changes to mortgage interest relief, stamp duty and the interest coverage ratio has seen landlords give greater consideration to how – and more importantly where – to expand their portfolio.
With cheaper homes and more scope to increase rents from a (lower starting point) the north is becoming a much more profitable prospect for traditionally southern investors.
She said: “There is no question that serious landlords are looking to buy up north due to the high cost of property prices/compliance in the South, making it harder for landlording to pay on new properties.”
So how so you prepare for the southern invasion and make sure you are one step ahead of the game?
That is where the RLA comes in.
At our Future Renting North conference next week experts from across the sector will be looking at how the PRS is likely to change over the coming years – and how you can futureproof your lettings business.
Why not join us, and property professionals from throughout the region, at Manchester’s Concorde Conference next Tuesday.
For more information and to book visit out conference pages.