It seems that there are potentially greater gains from investing in buy-to-let properties further north and away from the capital.

When everyone was enjoying the property boom at its height, Northern terrace flats and houses were snapped up by new homeowners. But of course all things come to an end and with the economic situation as it is, buy-to-let is very much in the forefront
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The opportunity from Buy-to-let, is providing people with retirement funds and those who are fed up with low interest on their savings to give them back a decent return on investment. Many potential investors are moving their horizons from the South up to the North of the country.

A Property investment specialist says that London and the South East is high cost and less lucrative on returns, so  it is urging buyers to look at  “economically sound” community areas in and around the cities of the North West and Yorkshire that are enjoying better times. In general homes are more affordable and the rental yields are greater.

 

Its latest report shows that the typical gross rental yield in the North is seven to 10 per cent, whereas in  London it  is only four to six per cent.

The CEO for the Property Investment specialist Stuart Law said: “Property investment has become mainstream again in the last year and, with interest rates so low, people cannot see a downside to buy-to-let. However, we are now at a critical point where property prices will start to rise faster than rents; this will happen first in Greater London, which has seen tremendous price increases in recent months.

“Investors who are keen to not miss out on property price growth and stunning yields, currently achievable in the rest of the country, ought to invest there now.

“In the current climate, by investing in the North, it is difficult to lose out. Property prices are yet to experience the headline-inducing giddy heights of London and the South East, but it is important to focus investment on the in-demand city centre and suburbs clustered around cities like Manchester, Leeds, Birmingham and Liverpool where employment is high.

“The potentially lucrative yields of the North are now starting to enter many landlords’ consciousness. The savviest investors will start to look away from London and head north to really make their money work.”

Graham Bates, chief executive of a lettings agent, feels that people from the South have always looked to the North for a good deal but he does have a warning.

“If you are interested in rental yield it makes sense to buy here but it’s vitally important that people don’t get carried away with rock bottom prices. If you buy a cheap, poor-quality property in a poor area it could be fraught with problems. You’ll have high maintenance and other issues. Even if it was on your doorstep it would be a problem, never mind if you are in London.”

Mr Bates,  pointed out that is of high importance that “distance” landlords must check over a potential property rigidly.  “Income from the rental yield is important but so is the quality of the asset. The number one mistake is buying a property without looking at it.”

Potential landlords looking to invest must investigate rental potential and ensure that they have significant deposits if they need a mortgage.

“Another mistake in the boom is that people were getting buy-to-let mortgages with a 15 per cent deposit and that’s not enough. I think you need a minimum of 40 per cent, especially if you are a novice. That gives you a cushion for voids and repairs. People should also know that property is not an armchair investment. You have to keep your finger on the pulse.”

Mr Bates believes that if these rules are followed then investors could look  forward to a good return.

 “There are still affordability issues for first-time buyers,” he said. “Plus more people are getting divorced and we have a growing population. The fundamentals are there. Renting is here to stay.”