Buy-to-let landlords are being advised to turn to the North West of England in a bid to increase their annual yields following the release of the latest UK Cities House Price Index from Hometrack this week.
The index reveals that house price inflation is up 5% this year from 4% last year, led by gains in Edinburgh, Birmingham and Manchester.
Property prices in other parts of the North West, where some buy-to-let landlords are still achieving double-digit rental yields, have also increased, supported by low mortgage rates, high rates of employment, and growing demand from buy-to-let investors.
Graham Davidson, managing director of buy-to-let specialist, Sequre Property Investment, commented: “We’ve long championed the north and the HPI from Hometrack cements our notion that the north is best to invest. Growth in London has been stalling for quite some time now and savvy southern investors are turning to investing heavily in cities like Manchester, Liverpool and Leeds due to their scope for growth and their very attractive yields.”
Davidson pointed out that at the start of this year Sequre Property Investment had predicted 22.8% capital growth in Manchester over the next five years, and yet Hometrack is now anticipating up to 30% growth.
He continued: “If average prices currently stand at £158,800, a property can be purchased as a buy-to-let with as little as £40,000 cash [circa. 25% deposit] and with capital growth prediction of £47,640, that’s nearly 120% return on investment over the next five years – far surpassing other investment options like ISA’s, stocks and shares.
“That doesn’t take into account any rental income either. Investors who continue to chase capital growth in the south rather than switching to the north west may find themselves struggling to not just break even on rental yields, but struggle to make any capital growth profit too.”