Buy-to-let landlords move north
Canny landlords are moving out of central London to affordable suburbs and beyond, where higher yielding BTL investments are on offer, research from the National Landlords Association (NLA) reveals.
Only 5 per cent of landlords who operate in the centre of London plan to buy more properties in the next three months, a fall of 15 per cent from this time last year.
But in the North East, the number of landlords who plan to buy in the next quarter has almost doubled - up from 10 per cent in January 2016 to 19 per cent – and in Yorkshire, the proportion has jumped from 10 per cent to 16 per cent.
NLA chairman Carolyn Uphill said: “It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent.
“For many tenants the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing.”
She said that landlords have been quick to respond, and are now looking to other areas ‘where the upfront cost of acquiring property is lower, and the potential yields to be had are higher.’
Bootle in Merseyside currently offers a yield of 9.3 per cent, Birkenhead is 7.5 per cent and in Lancashire Burnley’s yield is 7.2 per cent, while Accrington is 7.1 per cent.
Paul Smith, CEO of haart, believes BTL investors will ‘naturally gravitate north’ in 2017.
He said: “In some parts of the country, especially London, a buy-to-let property no longer makes the same return it once did.
“Investors will naturally gravitate north where values are cheaper and yields are higher - you can pick up a portfolio of two-bed terrace properties in Doncaster for the same price as a one-bed flat in a new London development.”
Stuart Law, owner and founder of Assetz, said: “Canny investors recognise that the north, not London, is where the best yields can be found.”
He expects rents to grow by 4 per cent in 2017 as ‘landlords seek to cover the impact of the new mortgage interest tax and capitalise on some potential reduction in the size of the rental property market.’
He said: “London investors have been hounded out by a combination of low yields and the curbs to mortgage interest tax relief, or ‘tenant tax’ as I call it.
“The lesson in 2017 that people must learn is that buy-to-let isn’t dead – it has just gone north.”