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.”

Join our mailing list:

Leave a comment



Latest Comments

Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

view article
maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

view article
maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

view article
zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

view article
Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

view article
Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

view article
RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

view article
sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

view article
Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

view article
Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

view article
Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

view article
Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

view article

Related stories

More articles from Landlords