There are many issues for investors to consider when identifying where best to buy in the residential rental market.
For many this is probably the most crucial factor.
Although there is still a good range of choice of competitive buy to let mortgages, lenders are demanding relatively high levels of deposit.
Because prime buy to let properties in London are probably going to need a minimum deposit of around £185,000 (central locations) or £120.000 (in outer suburbs) investors searching for value may be better to look in the London commuter towns (around £55,000) and particularly the Northern “powerhouse” cities – potentially as low as £30,000.
The highest rental return on capital invested will be found in the North of the UK where the disparity between capital values and rental income is lower than in London and the South East and therefore yield higher returns.
Length of investment
The planned length of investment is also an important consideration.
To generate maximum capital growth, it is necessary to consider that most area regeneration schemes take some time to achieve significant increases in property prices in the area.
The anticipated length of time required before an area grows in value compared to the length of time the investment is intended to last will influence the amount of capital growth obtained.
Having an expert understanding of local markets is key when narrowing down on options, likewise an understanding of existing and potential infrastructure projects such as HS2, Crossrail, Heathrow expansions etc. is also important.
Why investing in Northern Cities works
The creation of “Northern Powerhouse Cities” has provided a boost to economic growth in the North of England and opened the way for lucrative investments in the buy to let market.
The “Core Cities” of Manchester, Liverpool, Leeds, Sheffield and Newcastle have been the primary beneficiaries with improvement to transport links, investment in science and innovation, and devolution of powers in “City Deals”.
Investing in Sheffield
We currently see Sheffield as one of the best to buy opportunities in the North because the investment fundamentals stand out –
- Strong rental demand from young professionals
- Good rental yield
- Low price entry points
- Major transport upgrades (HS2)
- Major government, private and overseas investment in infrastructure & housing
- Strong levels of employment
The entry level of investment capital is only around £30,000 which is significantly lower than Manchester, Leeds and Liverpool whilst rental demand from young professionals is high.
The ratio of rental return to capital investment works well.
How we can help
Faced with the difficult dilemma of where best to buy, many investors have turned to us for advice and guidance. Every investor is different and choosing the correct investment is not a one size fits all solution.
If you are looking for expert help get in touch with me today for a free chat to see what might be best for you. Contact me initially at https://source.investments/contact/