London landlords are opting to invest in properties outside of the capital and in the North of England according to a new report released by the Telegraph, as they look beyond London in favour of earning potential and more profitable opportunities.
According to a new report released by the Telegraph this week, landlords based in London are “increasingly” choosing to invest in properties located in the North of England due to their earning potential and while seeking more “lucrative” investment opportunities beyond the capital.
The Telegraph’s report states that approximately 66% of London-based landlords and buy-to-let investors have purchased properties in the North of England this year and chosen to invest in other parts of the country outside of London as the rental yields in the capital continue to decrease while property values stagnate.
London investors have begun to move their money outside of the capital and into the northern regions which have specifically benefitted from the exodus and ongoing trend of landlords fleeing the capital, the report claims, now constituting 24% of all property purchases made by London-based landlords in the last 12 months. The increase in property purchases by London-based investors in the northern regions has exponentially increased, from the 1% observed a decade ago to the reported 24% currently.
The higher taxes imposed on landlords in London have diminished the profitability of the rental market in London according to one estate agent in the capital, which has in turn prompted investors to search for investment opportunities further afield and more profitable deals in the northern regions, such as the North West and the North East.
“That [the higher taxes] means if you’re going to use a mortgage to fund a buy-to-let you really need to be buying one that has a much higher yield. Naturally, that has pushed people further north where those returns are more likely to be available and achievable.”‘‘
At Beech Holdings we regularly speak with investors and clients who are in the process of selling up their investments in London and looking to use that capital to purchase multiple units in the North West, thanks to the level of affordability in the North and the higher rental yields that are obtainable.
With a number of investment opportunities available in our portfolio that sit below the £150k mark in our developments such as Westpoint and 115 Princess Street, our clients are eager to purchase multiple units in Manchester with the money they made from the sale of their properties in London and receive guaranteed returns of six or seven per cent compared to the three to four per cent average in the capital.