The only way is up: BTL investors should head North

The only way is up: BTL investors should head North

According to Assetz for Investors, buy-to-let investors should head north to see better returns as London loses its appeal.

The Conservative government has made it clear that buy-to-let investors are no longer welcome in London. The implementation of a 3% additional stamp duty levy on second homes and investment property combined with property prices in the Capital being at an all-time high are big deterrents.

The introduction of the new Help-to-Buy equity loan in London which offers a 40% interest free loan up to £600,000 from early 2016 will inevitably add further upward price pressure in this already-overheated location as first time buyers begin to have the upper hand.

So where does Buy-to-Let still pay dividends, how do you mitigate the latest tax on Buy-to-Let mortgage interest and the new 3% stamp duty and which areas offer the best opportunities for realising a good return on investment? Assetz for Investors advises landlords to look North where lower acquisition prices, better potential for capital growth and higher yields can all be found.

With the Northern Powerhouse set to benefit from a variety of new infrastructure projects and greater prominence and investment over the coming years, Assetz for Investors has identified a number of hotspots and key areas which provide better opportunities for investors than many of the South’s traditionally popular locations.

As the table below illustrates, the best yields can be found in Manchester, Liverpool and Leeds with each offering market yields above 6%. Investors purchasing through Assetz for Investors however can expect yields of closer to 8% in these areas through their range of exclusively sourced investment properties. 


Stuart Law, CEO at Assetz for Investors, comments: “The inevitable increases in property prices in the Capital following the foolish 40% regional Help-to-Buy policy means many home owners will be pushed into negative equity when the unavoidable price reversal takes hold. Buy-to-Let investors have an easier choice of where to invest and should look further afield.

The impact of the new tax on mortgage interest is very pronounced in the overpriced South. An investor with £200,000 to invest in the capital would need a £400,000 mortgage to buy a typical £600,000 property. If the gross yield was a typical 4% and the mortgage interest rate was 4% and the investor was a higher rate tax payer, they would actually have to pay £4,400 per annum to own the property and live in hope of further price growth to avoid losing money year after year.
 
If the same investor bought two £100,000 properties in the North for cash at a typical 7% gross yield then the investor would receive £9,100 per annum on their cash, before tax, and still benefit from full house price growth in that location.
 
For investors seeking income rather than speculators hoping for house price growth perhaps now is the time to heed the Governments messages about Buy-to-Let and investing in London generally and look to the North.

“For people based in the South investing on your door-step should not be the first option. As prospective home owners are increasingly priced out of the Capital more people based in the South will be heading from here to build their livelihoods in the emerging Northern Powerhouse. The balance of power is now starting to lean towards the North.”

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Latest Comments

AbbieP.
AbbieP. 22 Jul 2016

"While house prices in the most expensive eleven boroughs have declined values in the cheapest eleven boroughs continue to rise" - not a nice way to even out the price range. London is overrated as it

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AbbieP.
AbbieP. 21 Jul 2016

And try to profit from your decisions, I may add

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CommercialTrust
CommercialTrust 19 Jul 2016

Retirement investment has always been one of the biggest draws of buy to let. And the buy-to-let demographic is, on balance, older. (Over a third of our applicants are over 50 at the time of application.) It...

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Forrest Wheatey
Forrest Wheatey 11 Jul 2016

I find the time perfect for ever home-owner wannabe. Prices should slowly, but steadily drop, at least for the inner buyer. Making it harder for outsiders to buy properties (the whole Brexit thing means...

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property guru
property guru 11 Jul 2016

Why should Ajay even have to be looking for it. It should be public knowledge. Why is not just publish each years and to were it is and be AUDITED. Accountability.

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property guru
property guru 11 Jul 2016

Surprise suprise

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CommercialTrust
CommercialTrust 30 Jun 2016

This is great news for buyers and investors in a period of significant uncertainty. The 10-year buy-to-let fix at 3.99% in particular is excellent, a clear 100 bps ahead of the nearest competition. Though...

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Lee
Lee 30 Jun 2016

Let's see what happens to north-east property prices when Nissan announce they're leaving.

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DmitriKara
DmitriKara 29 Jun 2016

I just read another article about eviction rising and this was exactly what was on my mind, Housing has become "cat and mouse"...

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DmitriKara
DmitriKara 29 Jun 2016

I am really not surprised. I've seen one too many impudent tenants and in my humble opinion renters have one too many privileges and options to abuse heir landlord in so many ways...

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DmitriKara
DmitriKara 29 Jun 2016

There is still so much uncertainty and I will surely step back and see what's happening before I could make any decisions on my end.

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ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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