Buy-to-let landlords are being advised to invest in properties in the North West of England for the best chance of achieving high annual rental yields, following the release of the latest UK Cities House Price Index from Hometrack.
The report reveals that house price growth is up to an average of 5% this year, from 4% last year, led by gains in Edinburgh, Birmingham and Manchester.
House prices in parts of the North West, where some buy-to-let landlords are still achieving double-digit rental yields, have also risen, supported by low mortgage rates, high levels of employment and growing demand from investors.
Graham Davidson, the Managing Director of buy-to-let specialist Sequre Property Investment, comments: “We’ve long championed the north and the House Price Index 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 points out that, at the start of this year, his firm predicted average capital growth of 22.8% in Manchester over the next five years, but Hometrack is now anticipating up to 30% increases.
He explains: “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 ISAs, 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.”
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