Buy-to-let properties in the North East far out-value the South
Thinking of investing in a buy-to-let property? Then be prepared to cast your net further than London and its surrounding areas.
According to data crunched by RentTech platform Goodlord, potential yields for buy-to-let properties are highest in the North East, while the South East comes in last of all areas of the UK.
Taking into account factors including the average cost of a property, average rental income, interest rate and average rental costs, the North East came out a clear winner, followed by the North West, the East Midlands, the West Midlands, Greater London, the South West and, finally, the South East.
Based on the figures used in Goodlord’s model, a buy-to-let landlord would break even after two years if they had a fully-leased property in the North East, while the same landlord would be down more than £8,000 had they chosen to buy in the South East.
The buy-to-let market has become increasingly fraught in recent years, with rising interest rates, rental reforms giving tenants more power and the upcoming cut to the capital gains tax-free allowance all conspiring to hit landlords in the wallet.
While reforms to help renters are to be applauded, estate agents have criticised the government’s heavy handed approach, which they say is exacerbating the existing rental supply crisis.
“The government has been trying to make it harder for landlords to enter the market and help first time buyers get on the housing ladder,” Jack Reid, founder and managing director at Orlando Reid told City PM in September.
“The main impact has been on tenants because rents have increased and more landlords are quitting the market, reducing the amount of supply. The current rate of price growth in the lettings market in London is the highest I have seen in the last decade.
“The government needs to encourage landlords to return to the market in the short to medium term to help stabilise the market.
“It needs to be easier and more cost effective to be a landlord. This will also benefit tenants and normalise rental prices during a difficult time when it comes to bills and inflation.”