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  • Property Yields

    Shawbrook Bank reveals top rental hotspots



    Shawbrook Bank reveals the UK's top rental hotspots for landlords

    The North-West and Scotland are revealed as the top UK hotspots to invest for yield

    New analysis of the BTL market forecasts an opportunity for landlords, revealing exactly where the best investment opportunities are in 2018.

    In spite of a barrage of tax changes making it harder to make money on buy-to-let, there are still pockets of the market where investors can achieve an average yield of 5.4%, according to the 'UK Buy to Let' report, produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR).

    Looking at house 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%, compared to an average of 7.0% for the high-growth years of 2014 to 2016. Stretched affordability ratios, years of weak wage growth and the prospect of further interest rate rises all weigh in on the outlook for house prices in the UK for the next few years.

    House price growth has slowed in the capital particularly, 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.

    The Shawbrook Bank report expects price growth in London to continue to trail behind the rest of the country for the next two years, with new figures from estate agent Aston Chase already showing the percentage of high-end purchases from overseas in London’s most expensive postcodes dropping from 44% in 2016 to 35% last year.
     

    Figure 1: house prices in London from January 2016 to March 2018

    With landlord investment in London slowing, this improves the attractiveness of other regions for BTL investors. Shawbrook Bank’s research shows 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 mean it is easier to achieve better rental yields and the city is attracting students and employees from all around the country. The average UK house price is currently £228,000, which is 43% higher than the average house price in the North West - £159,000. 

    Emma Cox, ‎sales director for Commercial Mortgages comments: 

    “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.

    “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.”

    SEE ALSO  -        Shawbrook Buy to Let Report 2018

    UP NEXT -           Shawbrook help experienced investors step up

    DON'T MISS -      Optimum property value for BTL?

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    Not all doom and gloom for new potential investors

    what about the investors who are already landlords


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    It is great to see this research from Shawbrook and CEBR. We definitely agree that now is the time to invest and fantastic returns can be achieved. We believe that these returns could be far more spectacular.

    We believe you can find a good return in any area.  Sometimes averages can be misleading and cause investors to purchase properties in an area which are not convenient for them.  People often ask the question which is the best area for me to buy property but they are not buying the area.  They are only buying ONE property.

    An Intelligent Investor would ask what is highest return I could get in the area I desire to buy property in?

    Look at what can be achieved near St John's Wood I bet not many people would have carried out a Rightmove search for a high yield in that location!

    It is always best to do specific research, as you could miss out on some good investments.

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