For professional investors one of the biggest tasks is trying to find where the next buy-to-let hot spots are likely to be. When looking to expand a property portfolio there’s no worse move to make than to buy in an area that’s already saturated or on a downward slide.
With the introduction of new Stamp Duty bands and other landlord tax reforms last year, the Treasury seems to have done its best to ensure that inner-city London is as far from those hot spot lists as possible for the foreseeable future thanks to the extremely high entry prices in the capital.
As noted in the Financial Times, “a 5% rate was created for properties valued at more than £1m in 2010. Two years later, a 7% rate was added for homes valued at more than £2m. In 2014, a 12% rate came in for properties valued at more than £1.5m.” This goes some way to explaining why Stamp Duty changes are having such a huge effect on London boroughs where £1m is considered a standard price bracket for many properties.
This pronounced issue has been given more of a spotlight with the announcement this week that house prices in some areas of inner-London have dropped by as much as 15%. The capital’s richest areas are seeing the steepest declines and have even plunged as quickly as they did in the recession of 2009 according to a report from The Independent.
The article states that average prices fell to £593,396 in January, an annual decline of 2.6% and the news doesn’t get much better as Lucian Cook, head of residential research at Savills, predicted that London will be the weakest performing market in the country over the next five years.
All this begs the question; will the North West, such a strong performer in recent years, become the UK’s strongest performing market? The answer is yes according to new research by LSL Property Services. Their data shows the North West region recorded huge annual increases of 4.6% in comparison to the national average of 0.5%.
Manchester, Liverpool and Blackpool all saw largescale house price increases, rises in rental demand and rental growth in the month of February and across the year as a whole, leading many to agree that the North West will become the nation’s top performer in the long term.
The area’s only serious competitor is now the South West, which saw annual growth of 4.1%, but realistically the numbers are suggesting that there isn’t really a worthy competitor for the top spot over the next five years.
Landlords now looking to expand their portfolios in the North West have the potential for large capital gains, big price rises, high demand and rental increases.
With the added help of local agents, many with some of the best reputations across the UK, tenant relations and the ease in which new tenants are found means that many landlords are enjoying one of the most fertile buy-to-let environments for many years, and it isn’t expected to lag any time soon.