Landlords are looking to the regions for BTL investment

Buy-to-let investors seem to be turning away from London and looking towards the regions to optimise their rental yields, according to the latest industry research.

Scott Hendry
13th June 2017
Scott Hendry
"Very high house prices in some areas of the capital seem to be discouraging landlords from purchasing property as they will be able to get higher yields elsewhere"

Provincial cities with large populations of university students in the north and Midlands have been named in the top ten buy-to-let hotspots in the UK, with only three London boroughs - Southwark, Newham and Tower Hamlets – making it into the top 20.

It seems that many landlords are thinking carefully about location when deciding to buy affordable property, with the confidence that its value will appreciate at a higher rate than mortgage borrowing.

Very high house prices in some areas of the capital seem to be discouraging landlords from purchasing property as they will be able to get higher yields elsewhere.

For example, in Liverpool, which was named top of the list for buy-to-let hotspots, the average house price is £122,283, the average annual mortgage cost £2,421, and the average annual rent is £12,252. That’s a net rental yield (before taxes) of eight per cent.

The Midlands is may also prove attractive to buy-to-let landlords, with yields of 5.6 in Nottingham and 5.4 per cent in Coventry. Greater Manchester (4.3 per cent) and Portsmouth (4.2 per cent) also made the top five.

Compare this to London, where yields are just over three per cent according to one estate agent’s buy-to-let index, and it seems there may be more profitable options outside the capital.

At Together, we’ve seen resilience in the buy-to-let market, despite changes to taxation and regulation, and data published last month revealed that record numbers of buy-to-let landlords are running their portfolios through limited companies.

What is clear is that people are adapting to the changes; we’re seeing them using larger deposits for their purchases and focusing on lower loan-to-values to make the most of their investments.

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