Step aside, London: the Northern Powerhouse is on the rise. Matt Stevens, Director of The Mortgage Genie, shares the buy-to-let hotspots that look set to offer the most competitive returns in 2018
After a difficult year for buy-to-let investors saw profits in London slump, you could be forgiven for thinking it’s a bad time to expand your property portfolio. But, despite a drop in confidence due to Brexit, and following successive tax increases for buy-to-let purchasers, the property market is still going strong — it’s just that investors are moving away from the capital and looking north instead.
The North of England is currently undergoing something of a miniature economic boom, with digital and tech industries driving demand for high-quality rental accommodation among young professionals. Regional regeneration projects, innovative new housing, and exciting new cultural events are boosting the profile of northern towns and cities, shaking up a property market that was once seen as a stagnant.
If you’re looking to invest in a buy-to-let this year, you could see high rental yields and strong capital growth in the north, so it’s well worth taking a look at real estate that’s not in the pricey south-east. Here, I’ve shared three of the most promising northern towns and cities, including which areas and markets are hotly tipped to be a success with investors in 2018. Just read on to find out more.
It’s an exciting time to invest in the unofficial capital of the north. Property prices in the city look set to rise faster than ever, with research from Home Track published in the Financial Reporter claiming that prices could rise as much as 20-30% by 2022. So, property in Manchester looks to be a safe bet for those looking for strong capital growth on their investment.
The outlook for rental yields also looks promising. Following the recently announced expansion of Media City UK in Salford Quays, and the success of the digital and tech sectors in the city’s Northern Quarter, Manchester’s population of affluent young professionals is on the rise. As a result, there’s currently a high level of demand for top-quality rental accommodation.
Given the city’s 80,000 strong student population, it’s also a solid area of investment for those looking to offer student lets. In suburbs popular with students, such as Fallowfield and Chorlton, it’s not uncommon to see rental yields over 6%, according to Leaders.
With the city set to benefit from a £5.5 billion regeneration scheme that will transform the northern docks area (Liverpool Echo), Liverpool is an increasingly desirable place to live. But, despite how popular the city is with young professionals, rental properties are in short supply, and there’s currently not enough available to meet demand.
The popularity of the city and the scarcity of quality rental accommodation are both very good news for investors. With landlords enjoying rental yields as high as 8%, returns in Liverpool are currently some of the highest in the country, beating southern hotspots such as Southampton, Coventry and even trendy Brighton to take the top spot in a survey by This Is Money. There’s also a buoyant student rentals market, with demand driven by the 50,000 students living in the city: the areas surrounding Liverpool Hope and John Moores University are especially lucrative for house and flat shares.
If you’re looking for a low-cost investment with solid rental yields, look no further than Gateshead. Property prices are rising slowly but steadily meaning that, while it’s not one for quick capital growth, it’s still a dependable bet for investors looking for property that will retain its value. The expanding north east job market is attracting a steady supply of professionals to the area, while upcoming regional events, such as the Great Exhibition of the North later this year, look set to cement Gateshead’s profile as an investment hotspot even further.
Average property prices in the north-east town are still 46% under the national average (Telegraph), making it an affordable investment for buy-to-let investors with smaller budgets. In terms of rental yield, investors can expect healthy returns owing to overall low property prices: a one-bed flat in central Gateshead could see an average yield of 7.6%, according to Property Data. While neighbouring Newcastle boasts two large universities, most students are looking for something closer to their place of study, so the focus should definitely be on professionals in smaller homes over large student house shares.
If you’re looking to expand your property portfolio this year, you may want to step away from London and south-east England and take a look at the housing stock in areas like Liverpool, Manchester, and Gateshead. With affordable house prices that are rising steadily, and great potential rental yields, it could be your next big success.