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  • Buy-to-Let

    Newbie investment advice for Northern cities

    We have many discussions on this topic so I thought I would just jot down a few thoughts on this.

    Many newbies are being tempted into northern cities with shiny new flats, guaranteed rent schemes, interest being paid on deposits, and stamp duty incentives and, on the surface, it does seem very tempting. 

    Then there is also the lure of low value pre-owned properties that have a much smaller stamp duty liability than more expensive stock in London and the south east and are also generally believed to have higher yields.

    Buying flats and off-plan flats

    Straight up, I will say that I have never been a fan of leasehold flats in the first place, and I would be very mindful of buying anything off-plan in the current market conditions as I would regard it as exceedingly high risk.

    Furthermore, in the recent Deloitte Cranes Survey, Manchester was right up there, meaning there is a huge amount of building going on, meaning that supply is dramatically increasing.

    Also worth noting the Liverpool property developer Paul Nicholson, in an article for Property Tribes wrote:

    "I have recently moved away from investing in the ever-popular cities of the North which are becoming over-crowded with investor-led development and investor activity soon creating an oversupply depressing not only values but rental demand – the more stock the less demand so prices will drop".

    If a lot of flats are purchased by investors, then you will all be competing for tenants at the same time when the block completes.  Rental guarantees are very often just a higher purchase price, where you are paid back your own money in rental instalments, and developers do not always honour them.

    Off-plan is a high risk strategy, but, in the right market conditions it can be high reward.  With Brexit in the mix, no one could possibly guess what the conditions will be when your flats complete, so essentially you are gambling.  It could of course all exceed expectations but each person must assess their own risk threshold and if they feel that risk is worth speculating on.

    Interesting, new figures released today show that flats and maisonettes have all experienced a slight price reduction while other property types have gone up slightly.

    The price dip coincides with a raft of tax and regulation changes widely seen as being a disincentive to buy to let investors, who have traditionally been amongst the biggest buyers of smaller housing units.

    Likewise in recent years, first time buyers - also keen purchasers of flats - have been delaying their purchases because of high deposits.

    It is thought these factors may have contributed to reduced demand for flats and maisonettes and prices reducing.

    Full/source story 

    Remember that leasehold flats come with management/service charges and ground rents, so be sure to factor these in when crunching your numbers as they can significantly bite into your cash flow.

    As LandlordAgent said on another related thread:

    "Due Diligence is key, knowing the developer, how they are funding it, competition, realistic rent analysis with ALL your other associated costs, management, services charge and ground rent etc".


    No one is building any more Victorian terraces and they are exceedingly popular with owner occupiers who like their sturdiness, large rooms, and character features, which makes their values robust.  With scarcity comes value. 

    At the other extreme, there are very cheap newer houses in poor areas that seem to have above-average yields.  Whilst these properties might look attractive at first glance, they may come with additional problems that need to be considered before diving in:

    See - Curated : Buy cheap or expensive for BTL? 

    I am hearing that some banks are declining to lend in certain postcodes and areas in Northern cities, due to fears of over-saturation, particularly with regards to HMOs, so extra due diligence is required, even for houses.

    My view:

    If I was going to purchase in any of the Northern cities I would be buying a two/three bed Victorian terrace in a good street near transport links on the outskirts. 

    These will benefit from all the investment into the area, but, unlike shiny new flats, will not become over-saturated and there is always a steady demand for family homes, especially for those in a good school catchment area.

    In a tricky market, it's prudent to have investments that can be sold into the "mass" owner/occupier market, rather than something that would only appeal to other investors.

    If these houses are in high demand, whilst they may not capital appreciate, their value is likely to remain robust in challenging market conditions, meaning that they will, over time, do better than a property type that has "crashed".

    All booms are typically followed by a bust, so make sure you do your up-most to protect yourself, should that eventuality occur, and that means being able to weather the storm or even to exit if needs be.

    Here is a salutary lesson from another recent thread:

    Bob The Dog 2 hours ago

    Looking back to 2007 & 8 & 9 in Birmingham and probably Manchester,  apartments were going up like Meccano sets (showing my age) .   

    Huge blocks of apartments sprung out of the ground in the form of steel skeletons, with no innards. 

    I remember driving around Piccadilly and the Quays in Manchester and Salford,  and also around Brum along Broad Street and Bristol St,  and seeing probably thousands of units that had been abandoned in the property crash.

    At the time I wondered who the hell is going to buy these or rent them out?   

    As the economy improved they were all eventually finished but they stood empty for years.  Personally I don't buy the doom and gloom about house prices crashing to that extent again.But you need to be very careful and totally honest with yourself about the costs involved.

    In 2007 a friend of mine bought an apartment at a 15% "discount" off plan in Brum city centre.  I did warn her not to,  but she was lured in by the glossy brochures and attraction of living in a city centre.  I may have some of the figures wrong but it ran along the lines of.

    Original Selling  Price £140k.  The brochure spoke of great capital growth and rentability.

    She signed for the off plan price of £119K - 15% off.

    The agent also set her up with a mortgage in principle, with a major bank of 80% LTV based on the £140k.  Banks were very generous in those days.

    So she intended to borrow £112k and find £7k deposit.

    Prices crashed. The now not so generous bank revalued the apartment at  £95k on which they were prepared to lend 80% LTV - £76k.

    However she had signed a contract to buy for £119k.   Now she was faced with the prospect of finding £43k deposit to  complete on a property only worth £95k.

    The developers would not budge on the deal as they were nearing completion.

    I can't remember the final details,  but I think she eventually sold the apartment back to the developers at a knock down price. She gave them a chunk of money to escape the contract, and walked away with a load of personal debt and no apartment.

    The other thing about apartments is the service charge.  It can cripple the financial case for doing a BTL.   I have dealt with several management companies.  Some are quite good. Some are out and out shysters.  But they are always expensive.  My guess would be that you are probably looking at £2500 per annum for a smart city centre pad.

    Do the figures, factor absolutely every possible doomsday scenario into the spreadsheet, READ THE CONTRACT, CAREFULLY,  see if it still works financially,  and then have a think about it.

    So my summary is this:

    As a general rule to consider when buying up North or indeed anywhere - with scarcity comes value.  With over supply when not enough demand, comes a reduction in value. 

    The smart landlord looks to where there is scarcity of stock and abundance of people who want it, not abundance of stock and scarcity of people it appeals to.

    Assess the demand BEFORE you go around creating a supply.

    Here is a round-up of some of our discussions on this topic:

    2019: Manchester, Liverpool or Birmingham?

    Snapshot of North East property performance 

    Northern Powerhouse - property perspective

    13 years of stagnant value in the North East

    Reflections on investing in the North East 

    The North/South divide - property perspective 

    Stacking an actual deal in the north east ... 

    High yield strategy - invest North or South? 

    Investing in the North West - great intel!

    Cheap Houses in North-West: Dangerous? 

    Terraced house or apartment – in the North

    The North South Yield Divide?

    Buying in North East

    Some interesting data about the North East property market

    Is there a "cultural" difference between BTL up North compared to down South?

    City specific:

    Location Spotlight: Liverpool

    Best areas to invest in Liverpool?

    BTL in Liverpool

    Liverpool Central

    Liverpool new build developments

    Buy to let in Manchester

    Manchester city centre flats or suburban?

    Is now a good time to invest in Manchester?

    Opportunity knocks for landlords in Leeds?

    Also worth remembering that Selective Licensing is operating in many Northern cities, so factor that into your costs.

    What do PT members have to say on this topic?

    SEE ALSO  -          New build vs. old investment property

    UP NEXT -              Off-plan vs. ready built property

    DON'T MISS -        Terraced homes are the Landlords favourite ...



    I am happy to chat with anyone looking to invest in the two or three bed terraced houses in the Manchester area. The suburbs within a 10 minute drive into the city center is great place to invest. I am an investor/letting agent/ builder in the area and born and bred Manchester. 

    (*Moderator note: Content removed*).


    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724

    I would also add to find a good local lettings agent before you do anything for advice, they know the market and the area on a road by road basis, don't buy anything without one checking your 'deal' over first.

    Ps. I have never used his services but I have met Mike Brown who owns Brentwood Lettings for a chat (he has posted above) and can confirm he was really helpful and knows his area really well, a good contact to have if you're interested in Manchester.


    Sorry “London Chap” not sure who you are or were we met but thank you for your kind comments


    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724

    Wonderful thread Vanessa!

    Very insightful and helpful for the new investors who aren't sure what to do. A lot of useful tips and other threads shared here for people to find great properties in the North.


    Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.

    That house in Liverpool is not going to give you that yield !  Even as a HMO your not taking into account refurb costs utiliities cleaning council tax and all other associated costs . Or am i missing something?


    I hope the inside looks better than the outside as looking at the competition at that price they're much nicer.


    Wonderwebb you are correct if you take into account refurb costs etc the ROCI would be lower than 81%.  The yield will also be lower than 22.29%.

    It is our opinion properties in this area can potentially achieve £1,040- £1,300.

    If no refurb is required that yield would be achievable.

    Even after Council tax the return is something phenomenal.

    You could add the potential refurb cost to the deposit amount on the calculators provided and it would give a more precise reflection.  You could subtract the council tax from the monthly rent and then it would give the yield that you feel is correct.

    I think some people are missing the objective of OneandOnly Pro is not to say that this property will exactly give 22.29% yield.  The objective is to make it faster to find the best deals.  We are impartial to the market and simply give our honest opinions we are not going to gain anything extra by upselling particular properties.

    What do you feel the refurb and council tax charges would be for this property?


    Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.

    I would first say that the only way you can achieve the types of rent your search is showing is to turn it into a HMO as a single let no chance ! To turn it into a HMO you will have to spend in excess of 20 k if you want to compete with the local market . I have two HMOs that i manage myself the expenses on both of these come to around £450 pcm

    Councill tax   £130

    Cleaner         £100

    Gas/electric £100

    Broad band  £45

    Water            £70

    You then have mortgage on top of that  and im guessing on the figures your looking at  lets say 90k if your lucky the mortgage is going  be around £200  .

    Then im guessing you figures are based on full occupancy which if you can manage for a full year you would be very lucky.  And maintenance? and management .  It soon adds up  and by doing a quick search on rightmove in L15 the market appears to be flooded with HMOs.

    I havent even added the licencing element to the above  which is mandatory.


    Thank you for the cost breakdown.

    How much do you think you could generate per room after refurb for that property?


    Transparency notice: OneandOnlyPro is a commercial partner of Property Tribes.

    As a general rule to consider when buying up North or indeed anywhere - with scarcity comes value.  With over supply when not enough demand, comes a reduction in value. 

    The smart landlord looks to where there is scarcity of stock and abundance of people who want it, not abundance of stock and scarcity of people it appeals to.

    This has worked well for me. I started by buying properties just to give myself an income, but when I switched to using a company I started to think a bit more about potential capital gains. The latest housing report by Tameside council said there was a surplus of 2 bed properties but a shortage of larger ones in the area. So in 2016 I bought a 3 bed semi for £127.5k.  This week I was told it is worth at least £180k.  The fixed period of the mortgage is nearing its end so I am thinking of remortgaging at a higher valye and using that as a deposit for another property. (This makes up for the 6 months without rent I have had due to a non-paying tenant.)

    On the other hand one of the properties I am looking at is a detched apartment - scarce but unusual. Basically the developers squeezed an extra propertu into the estate by building an apartment over the drive way.. You could call it a 2 bed detached house with most of the ground floor missing.