While the property investment landscape continues to shift, parts of some regions in particular are showing no signs of slowing down for buy-to-let landlords.
Towards the end of 2022, house prices in many parts of the UK had begun to contract slightly, amid the onset of a price correction after the highs of the post-pandemic flurry of activity and soaring values.
Yet overall, house prices in some places across the country rose by as much as 15% over the course of the year, in the face of rising mortgage rates and the cost of living crisis. From a property investment perspective, investors in these locations will have made notable capital gains that will guard against inflation.
While London remained one of the few markets whose house prices were muted over the year, this trend began well before the pandemic as buyers’ affordability constraints were already pushing them to look elsewhere, and this applies to homeowners, renters and investors alike.
Property investment hotspots
Some new data released by price comparison website Quotezone at the end of December revealed its top three regions in the UK for property investment. This was based on the average yields landlords were receiving, as well as house price gains over the past year.
Perhaps unsurprisingly for anyone who has kept abreast of house price trends in recent years, the three areas pinpointed for the most success were in the north of England.
1. In top spot was the north east, where house prices have increased by an average of 17.3% during 2022, according to government figures.
According to Quotezone, rental demand in the north east is high, particularly in areas outside cities due to the ongoing hybrid working trend. This has pushed renters towards larger properties, often in rural, coastal or riverside locations, which have seen the greatest surge in demand.
2. In second place is the north west, where the likes of Manchester and Liverpool in particular, as well as outlying cities and towns, are often touted as the most promising property investment locations.
Quotezone notes that house prices in the north west have increased by 16.1% over the past year, and points out that one of the major draws of the region for property investors is the 400,000 university students it attracts each year. Average rental yields in Manchester, it says, are now 9.8%.
3. Yorkshire is in third position for its property investment outlook, with house prices rising at a rate of 15.1% and rental yields sitting at a healthy 9.2% on average.
One of the biggest attractions of the region, says the report, is its countryside, with the area often being voted as the best place to live in the UK.
Buy-to-let is gathering pace
Greg Wilson, founder of Quotezone, says: “As property prices slow in London, buy-to-let landlords should look to areas like the north east, north west, and Yorkshire when trying to maximise their return on investments. These areas are booming, and as more people flock to the north, there’s little sign of it slowing down.
“Although the buy-to-let market has been gathering pace, it’s wise to beware of recent pressure from tax increases, interest rate spikes and EPC reforms – which will require some landlords to make costly energy efficient updates to their property.
“This will contribute to a squeeze in landlord income, so it’s essential that they take all the necessary precautions such as insurance, to help avoid any additional unexpected costs. Policies that include ‘rent guarantee insurance’ can also cover them if a tenant stops paying their rent.”
BuyAssociation has a range of property investment opportunities available across the UK, with a particular focus on the north west of England. Get in touch for more information, or browse some of our latest projects.