Interesting new statistics may have revealed where the future of buy-to-let will be most prominent.
Research from the National Landlords Association shows that the half as many landlords in the North East have decided to sell their property during the past year than those in the rest of England. But just how will this affect the area moving forwards?
Northern Rule
In comparison to those in the North East, the number of landlords looking to sell in London has quadrupled since the announcement of increased stamp duty and cuts to mortgage tax relief.
Over the same period, the total of landlords looking to offload their property in the North East rose by only 7%. This was 40% less than the national average rise of 12%.
Further figures released by ARLA indicate that demand for rental properties in the North East rose by 17% between January and February of this year.
Property values in the North are still around half as much as those in the South. The average home in the North of England costs over £150,000 less than a similar property near to London.
Is the North East the buy-to-let hub?
Attractive
Ajay Jagota, founder and Managing Director of North-East sales and lettings firm KIS, observed, ‘there’s already been speculation that the tax changes could see 500,000 rental properties sold this year, but that doesn’t mean that their owners aren’t going to buy elsewhere-and anecdotally there seems to have been a real uplift locally in enquiries from investors from outside of the region looking to invest in property in the North East.’[1]
‘There’s no question that the region will become more attractive to investors in the coming months. Not least because the North East’s lower house prices will mean that the 3% rise in Stamp Duty on additional properties introduces last week and Bank of England plans for new affordability tests and stricter borrowing limits for buy-to-let mortgage won’t be so painful in this part of the country,’ Jagota continued.[1]
Yields
Mr Jagota went on to say, ‘the return on a typical buy-to-let property in London is currently something like 5.2% compared to as much as 7% in somewhere like Gateshead. You get a similar rental yield on a property in Peterlee than you do in London, with the added attraction that you can buy almost five properties there for the price of one in the capital.’
‘We don’t offer the same capital appreciation as other regions of the UK, but it’s clear that the North East has a lot to offer property investors-and as more competition can lead to lower rents and better homes, they have a lot of offer renters too,’ he concluded.[1]
[1] http://www.propertyreporter.co.uk/landlords/could-the-north-east-become-the-uks-new-buy-to-let-capital.html