North West Most Popular UK Region For Investment Properties
Attractive rental returns and continuing price growth has seen the North West region of England leapfrog London and the South East as the UK’s most popular region for investment properties. A recent Savills report showed that 8279 investment properties were acquired in the region over the course of 2018. That compared to 8263 investment properties bought in London and 8009 across the South East. The figures are based on the number of properties purchased through a buy-to-let mortgage so does not include any investment properties purchased outright in cash.
It marks the first time that a region outside of London has seen the highest buy-to-let activity in the country. A stronger capital gains outlook, cheaper sales prices and higher rental yields compared to London and the South East has seen property investors migrate north. However, overall, the number of investment properties acquired by landlords across the UK was down 11% on 2017 transaction numbers.
Sales to investors were still down 7% year-on-year in the North West. However, that represented a less significant drop-off than in other regions. In London buy-to-let sales were down 18% and 21% in the surrounding South East. Birmingham actually saw the number of investment property acquisitions increase. 1791 properties purchased through buy-to-let mortgages was 117 more than in 2017.
The staggered withdrawal of tax breaks, particularly being able to deduct mortgage interest charged on buy-to-let properties, has tightened the business model for landlords in recent years. The higher yields available in the Midlands and North West are making it easier for landlords in these regions to absorb the increased cost. While rental yields have always been lower in London and the South East, stronger capital gains kept investor interest. However, with selling prices also either stagnant or down in most regions of London and the South East, and a similar outlook forecast for the next couple of years, that incentive has, to a large extent, fallen away over the last 12 months or so.
Over the coming five years, Savills predicts total property price growth of 21.6% in the North West and 19.3% in the West Midlands. London property prices are expected to gain just 4.5% over the same period.
Buyers of investment properties in the Midlands and North West are not all local with many based in London and the South East, say local real estate agents. Some have cashed in on properties closer to home to reinvest in the better returns currently available further north.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.