The north west of England is the most lucrative market for buy-to-let landlords, according to analysis by LendInvest.
Looking at data from Zoopla and Land Registry, the online property portal’s quarterly research showed that Manchester, Liverpool, Cardiff, Coventry and Oldham come out top for rental yields, followed closely by Sunderland, Blackburn and Durham.
London and the south east still lead in terms of house price growth, with all the top 15 highest performing postcode areas for capital gains being located in London and surrounding regions.
Inner London took only 18th place for rental yield, but claims first position for capital gains.
Christian Faes, chief executive of LendInvest, said despite changes announced in the Autumn Statement last month, this quarter’s findings are surprisingly similar to the previous period.
“If a buy-to-let bust really was just around the corner, we should be seeing more differentiated findings in these numbers,” he commented.
“Next year, we could see some weakening in London’s dominance of capital gains tables if house price growth does soften slightly as forecast, and as new buy-to-let stamp duty hikes take effect.
“Inner London margins may narrow slightly, creating opportunities for house prices in other postcode areas, particularly those in the south of England, to better compete.”
The chancellor’s planned changes to mortgage interest tax relief and stamp duty tax for landlords will help to professionalise the buy-to-let market, according to Mr Faes.
“Landlords whose tax payments under the new regime make letting their properties unsustainable, may make arrangements to leave the market.
“In turn, we will see fewer highly geared rental properties that push up prices and take stock out of the housing supply for aspiring owner-occupiers and first-time buyers drawn to densely populated urban area for work.”
The LendInvest boss added 2016 could be the year of the “cross-country landlords”, or those who live in one city and rent out houses in another.
“We could expect to see more landlords letting property in the North and Midland’s major urban areas for more immediate upside, without moving from their family homes in which gains can be longer to materialise.”
peter.walker@ft.com
