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The North West of England offers the best yields on buy to let property investments according to the latest UK Buy to Let report from Shawbrook Bank.
Considering property prices, the research from Shawbrook Bank predicts annual property price inflation to be more subdued in the five years up to 2023 than over the last few years. The report forecasts average annual house price predictions for the years 2017 to 2023 to be at 4.5 per cent, compared to an average of 7.0 per cent for the high-growth years of 2014 to 2016.
Property price growth in London is expected to continue trailing the rest of the country for the next two years, with Brexit and the resulting uncertainty regarding the future of the financial services sector in the City of London looming over activity in the prime end of the market as have higher SDLT rates.
However, with landlord investment in London slowing, this improves the attractiveness of other regions for buy to let property investors.
The research from Shawbrook Bank suggests that the North West region and the city of Manchester in particular, to be the top new investments hotspots due to higher rental yields.
Lower property prices in the North West mean it is easier to achieve better rental yields and the city of Manchester is attracting students and employees from all around the country with developments such as Media City.
The average UK house price is currently £228,000, which is 43 per cent higher than the average house price in the North West at £159,000.
The North West leads the rankings with an average yield of 5.4 per cent, followed by Scotland with 5.3 per cent and Yorkshire and the Humber with 4.9 per cent.
Sales director for Commercial Mortgages at Shawbrook Bank, Emma Cox, commented: ‘Landlords have had a rough ride over the past few years with multiple tax changes, but our research shows that it’s not all doom and gloom for potential investors in 2018. Lower rental yields in London and affordability constraints for investors has driven interest North, where borrowers are chasing the yield and heading to locations with lower average house prices.’
She continued: ‘There are still interesting times ahead for savvy investors and good investment opportunities remain. However, when landlords invest far away from their home turf, they can run the risk of falling foul to local knowledge. Smarter local investors may be seeing an opportunity to divest themselves of their less desirable housing stock, so it’s important for buyers to do their research to make sure they understand the local supply and demand before investing.’