Property Reporter



The only way is up: BTL investors should head North

Line Spacing+- AFont Size+- Print Forward to a friend
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.”

Got something to say? Leave a comment below:

You must be logged in to leave a comment

More articles from Landlords

Landlords face big clean up at check-out

Scotland sees rent rises fall to three-year low

Rents accelerate to highest levels seen this year

Prime Central London lettings market hit by Brexit wobble

Landlord tip: 1 bed flats to achieve biggest capital gains over next 12 months

Student property sees surge in international investors



Latest from Financial Reporter

April remortgaging soars to post-recession high

The journey into retirement - as complicated as a London Bus Map?

CML: 7-day switching success dependent on start point

shutterstock_7358431.jpg

London growth offsets seasonal dip in Q1


Latest from Commercial Reporter

ASTL: Upward trend for bridging continues

Fleet makes criteria changes for limited company transfers

Are SME overdrafts dying out?

Rise of 'flatpack' lenders prompts warning to SMEs


Latest Comments

HMO Midlands Landlady
HMO Midlands Landlady 24 May 2016

Tenants disappearing into the night is common from shared houses ( licensed and un-licensed HMO's) often when they owe considerable rent- they remove all their possessions, leave key in room and tell other...

view article
CommercialTrust
CommercialTrust 20 May 2016

With the bulk of the market controlled by large developers, profit rather than necessity determine the pace at which homes are built. There are hundreds of thousands of plots that have planning permission...

view article
Johna
Johna 20 May 2016

"Easier said than done" is what I would say. Of course, it would be more than great to have more in quality and affordability, but I do not trust talk anymore.. What is said is not what is happening.

view article
Johna
Johna 20 May 2016

in my humble opinion being fair like THE most important! I myself have had bad experience with unfair landlords... not to mention that I know how to do a proper end of tenancy cleaning since I am a fantastic...

view article
richardrawlings
richardrawlings 18 May 2016

NB - even if we doubled our commission levels in the UK, we'd still be by far the cheapest agents in the entire world.

view article
Agent_PeeBee
Agent_PeeBee 18 May 2016

Clueless. Someone needs to take these people's computers away from them so they can do no more harm than they already have.

view article
richardrawlings
richardrawlings 18 May 2016

Nonsense! The cost of selling a house nowadays has little bearing on the fees charged. Don't believe your own spin on this. Fees have spiralled down to pathetic levels in areas where weak agents have allowed...

view article
Simon Oliver
Simon Oliver 16 May 2016

The best solution is to buy a property that has built-in income generating potential: a nice house with a couple of gites in the grounds is a good start. In France, the rune of thumb is that one 2-bedroomed...

view article
WPD
WPD 12 May 2016

I suggest the answer is to have the notary system being one legal person who represents both parties. Having experienced it a couple of times in France it was a dream compared to our dysfunctional system....

view article
warren
warren 03 May 2016

It's enough to make me weep into my Pimm's :(

view article
james anderson
james anderson 03 May 2016

The sad demise of the croquet lawn...

view article
CommercialTrust
CommercialTrust 11 Apr 2016

".. the stricter lending criteria will reduce the amount of buy-to-let lending by 10% to 20% in three years’ time." The PRA was actually referring to cumulative approvals here. What they believe is that...

view article

Latest Tweets