Mortgages  

Northern regions remain strong for buy-to-let investment

Northern regions remain strong for buy-to-let investment
 Credit: Ian Forsyth/Bloomberg

Buy-to-let properties in the North continue to present an attractive investment opportunity for landlords, offering some of the highest price rises and rental yields.

The UK house price index for February showed the North West was the English region with the highest annual price growth. Average prices in the region rose by 11.9 per cent to £184,351 in the year to February, up from 10.5 per cent in the month before.

By comparison, London saw the lowest annual growth, where average prices increased by 4.6 per cent over the year to February, down from 5.7 per cent in January. 

Rental yields in Q1 2021 were also highest in the North, particularly in the North East (9.1 per cent), Yorkshire and Humberside (8.2 per cent) and North West (7.8 per cent), according to data from buy-to-let lender Fleet Mortgages. London had a rental yield of 5 per cent.

Angus Stewart, chief executive of buy-to-let broker Property Master, said: “For landlords it is all about yield – how much rental income versus the price they pay for the property.

“For quite some time this has meant a shift away from London and the South East where historic higher house prices have outweighed the rental income available. This has been exacerbated by the Covid crisis that has hit rental income in London in particular.

“So, it’s not surprising to see in these figures house prices have been rising in the North West and Yorkshire in particular as investors chase those higher yields. At the moment these areas still look attractive for landlords as they are providing the rental income and the opportunity for capital appreciation.”

Average rental yields by region, Q1 2021

Region

Average rental yield

North East9.1%
Yorkshire and Humberside8.2%
North West7.8%
East Midlands6.7%
West Midlands6.5%
South West6.0%
Wales5.8%
East Anglia5.6%
South East5.1%
Greater London5.0%
Source: Fleet Mortgages, Rental Barometer Index

Anthony Rose, director at LDNfinance, added: “Buy-to-let investors are viewing areas in the North as having very strong rental yields and the opportunity for further house price growth.

“As currently they only have to pay the 3 per cent stamp duty surcharge, this is offering very attractive investment opportunities with relatively small initial capital outlays, which is further increasing demand in these areas.”

chloe.cheung@ft.com

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