Savvy property investors looking to maximise the return on their yields should shun the nation’s capital in favour of the North West, new figures suggest. Soaring house prices in London over the past 12 months have outstripped increases in rent during the same period, meaning relatively lower returns for buy to let landlords. Whilst the national average rental yield stood at 6.2 percent from April to June, those investing in the nation’s capital received an average of just 5.5. Compare this to the North, where rental yields sit at 6.4 percent – a significantly more attractive option.
The recent Government focus on the ‘Northern Powerhouse’ has given those investors who may have previously been unsure about investing further afield, the encouragement needed to take advantage of attractive rental yields in the North West.
Manchester and Liverpool in particular offer attractive investment opportunities for landlords. Both cities have experienced a revival in their local economies, the product of various regeneration projects over the years. Take the relocation of the BBC and ITV to Salford Quays, which has since established the area as a leader in media and communications and created an increase in demand for rental properties outside of the city’s central business district.
As always with buy to let investment, the key to securing the maximum return lies in research. Although it may be more convenient to focus on properties in your local community, restricting yourself to certain areas can have significant financial ramifications.
Inflated property prices in London are limiting the housing market to a smaller and smaller pool of buyers, leading investors to look at areas further afield with lower housing prices.
However, amidst the optimism, buy to let landlords should still be cautious with their investments. Potential for capital growth and high rental demand are two vital elements that investors should carefully evaluate against the earning potential of their property, as well as factoring in the cost of maintenance.