The trend towards investing in the North West has led to exciting build-to-rent schemes in major cities in the region. RWinvest’s latest off-plan launch, West One, is located in Manchester and investors are primed to benefit from strong rental demand and excellent capital growth projections of 28.8% in the next 5 years.
So what made the North so attractive to property investors? According to Paragon Bank, there are four crucial factors that have made the North of England the new focus for buy-to-let investors. These are:
Stamp Duty Considerations
As Stamp Duty is calculated as a percentage of a property’s sale price, the more affordable properties in the north will incur a lower Stamp Duty liability compared to the typical southern property. For example, the average Stamp Duty payment in the North West is £6,816, compared to an eye-watering £46,633 in Greater London.
Affordability
The North offers comparatively affordable property, offering good value for investors. The ONS determines affordability in an area by looking at average house prices relative to average gross annual earnings. On average, properties in England in 2023 were bought for 8.3 times the average full-time employee’s annual salary.
The least affordable region was London, where 82% of local authorities had affordability ratios above 12. The most affordable local authorities were in the North West, North East, and Yorkshire and Humber, where only four local authorities were found with ratios higher than 8.
Strong Returns
Northern cities boast some of the highest rental yields in the UK, which is another reason buy-to-let investors are being lured to this region. According to Paragon Bank’s data, the North West has an average rental yield of 7.84% – much higher than the 5.56% recorded in Greater London.
High Demand
There is also high rental demand across the North of England, thanks to employment opportunities and strong industry boosting demand among working professionals, and the many popular universities in the area drive demand from students. The report states that 81% of landlords in the North West report strong tenant demand, the highest amount of all English regions.
Paragon Bank also found that six of the 15 top-yielding popular student postcodes are in the North of England.