Research reveals best investment spots for buy to let landlords in UK
Manchester, Birmingham, Leeds, London and Cardiff are the best locations in the UK for residential rental investment and are cities with strong tenant demand, according to new research.
They all score over 45 in a new investor growth assessment tool developed by national lettings and property franchise business Martin & Co. Cambridge also scores highly due to having a significant population of young professionals and growing support for the proposed Cambridge-Milton Keynes-Oxford corridor.
Less obvious investor destinations for buy to let landlords include Aylesbury and central Bedfordshire which score the maximum seven for development. Both have witnessed a 5% increase in housing stock since 2011 and both have a substantial development pipeline.
The analysis report also says that they both have seen increases in population of over 7% in the last four years and currently a quarter of people living there are aged between 20 and 29, compared to England as a whole at 3.2%.
Other factors influencing the attraction of particular locations for landlords include visitor destinations, centres of excellence, cultural elements, investment in infrastructure, inward investment, student population, young professionals and commuter catchment areas.
London is also names as one of the highest performing markets for landlords with Tower Hamlets, Greenwich and Camden all scoring over 49 out of a maximum score of 70 and overall 12 boroughs score over 40.
Barnet is highlighted as a borough with a high level of development activity, with a 5% increase in housing stock since 2011 and a substantial development pipeline. Newham, Croydon and Waltham Forest are still rising by more than 20% annually.
The report also shows that 83 % of landlords want to invest in properties in areas where there is a high demand for rental homes and 90 % plan on maintaining or growing their portfolios over the next two years and of those looking to expand their portfolios some 34 % will pay cash for their next property.
An idea of demand is given in the research which shows that for Martin & Co offices in the first half of 2016 there were an average of 12.4 viewings for every property instructed, 15 applicants were chasing each new property listed to let and 67 % of tenants were aged under 35.
The research also found that 51 % of landlords were aged 55 and over and 59 % of landlords own more than one investment property. Family homes were the most popular with investors, with young professional couples as the ideal tenants.
Investor activity was strong in the first quarter of 2016 as landlords rushed to beat the deadline for the additional stamp duty charge on second property purchasers, reflecting the estimate by the Council of Mortgage Lenders that there was £4 billion more lending in March than usual.
Looking ahead, the research shows that over 60 % of landlords have been affected by the mortgage interest tax relief changes due to be phased in from Spring 2017. In fact, 41 % of landlords who currently have a mortgage on their properties have paid down some of the capital on the mortgage in the last 12 months.