A growing number of buy to let landlords in the UK are choosing to head north, leaving the previously profitable south behind.
Higher rental yields, the Northern Powerhouse strategy and rising house prices are all contributing to the appeal of the North.
Rising House Prices
The North is showing strong potential when it comes to property price growth. Cities in the North are topping the UK cities house price index for price growth, allowing landlords to benefit from increased capital appreciation in the region. House prices across the UK are growing at a steady 3.6%. Liverpool features strongly, boasting the highest average house price over the last 12 months in the whole of the UK. Glasgow follows with a price rise of 7.2% and Manchester boasts increases of 6.8% and Leeds with 5.4%. Compared to cities in the south, property in the north can really increase in value over the next few years.
Lower Property Prices
Property prices in the north of England are considerably lower than their southern counterparts. This has often been due to poor quality housing and sluggish economies, but new regeneration efforts and increased investment have been increasing house prices across the region. However, these low property prices mean that landlords can get far more for their money. According to the same UK cities house price index, the average house price in the UK in August 2018 was £217,300. In southern cities the average price skyrockets. In Cambridge it is £431,500, in Bournemouth it is £287,900 and in London the average house price is a staggering £485,200. In the North of England property prices are far lower than this. In Liverpool the average is £120,100, in Newcastle it is £129,600 and in Sheffield it is £137,100. Because property is so much more affordable in the North, landlords could purchase four properties in Liverpool for the same price as one in London. This could potentially earn them more rental income and allow for a larger, more diverse portfolio.
Northern Powerhouse
The North has been benefitting from increased investment and construction which are tempting landlords to head North. The Northern Powerhouse strategy has been instrumental in this, with dedicated investment, strategic improvements and boosts to infrastructure making the various key cities more prosperous and more connected. Northern economies are thriving, and an increased workforce who are drawn to the new opportunities available are increasing the demand for property.
Better Yields
Landlords are also moving North due to the better rental yields they can expect there. In a recent study by Totally Money it was found that all the best performing regions when it came to rental yields were in the North. The Northern city of Liverpool topped the tables with its L7 postcode boasting rental yields of 11.79%, and L6 came in second with an equally impressive rental yield of 11.59%. Middlesbrough’s TS1 postcode, in the North East, came third with a yield of 10.94%, followed by Edinburgh’s EH8 postcode which had a rental yield of 10.62%. Properties by RW Invest like Caxton Hall in Manchester offer investors rental yields of 9% which is guaranteed for two years. In fact, when it comes to rental yields, northern buy to let properties continue to outperform their southern counterparts. In some areas of London, rental yields barely pass 1%.
