The buy to let exodus from London is continuing as landlord increasingly realise that they can achieve better returns on this year. Not only are yields historically low due to sales prices rises outstripping the rental market, investors are also realising that it makes more sense to diversify your residential portfolio across multiple lower value properties.
While this trend may have been accelerated by recent regulatory and tax changes for residential property investors, it’s nothing new and has in fact been happening since London property prices began to skyrocket back in the noughties.
It’s not only new landlords who are making the move out of London either. With the capital’s property market more at risk of a Brexit correction than any other part of the UK, many buy to let investors have been selling their properties and looking to spend their cash in other areas, with Manchester, Leeds and Newcastle becoming buy to let hotspots.
Regional buy to let investment makes more sense
Not only are regions like the North East less susceptible to the effects of Brexit on the property investment market, they also offer more stable returns. A buy to let investment property in somewhere like Newcastle is likely to be far less vulnerable to corrections as property in the area has remained largely stable since 2007. Also, if you can create value through the purchase of a property requiring refurbishment, it’s also possible to create a cushion of 25% or more to protect you from market fluctuations.
The other benefit of a diversified portfolio outside London is that you can purchase four or five regional buy to let properties for the price of a London flat. This may mean a few more costs, such as maintenance and insurance, but these will be vastly outweighed by the reassurance of not needing to pay a huge mortgage if your single London property ever stands empty, Put simply, if you do experience a void, the rent from your other investment properties will help to fill the gap.
It pays to invest outside London
While new government regulations and taxes do present a challenge for buy to let investors, anyone going into the market now does so with their eyes open. It’s still possible to make money if you do your research and make the right property investment decisions.
As a residential investment consultancy specialising in Newcastle and the North East region, we are seeing more and more interest from London-based investors seeking to diversify their portfolio in more stable and predictable markets. Of course, we’re more than happy to help.
The truth is that nobody can know exactly what will happen in 2019, whether Brexit happens on March 29th or not. What we do know is that the London property investment is the part of the UK most likely to be affected, whereas regions such as Newcastle and the North East are going to be relatively immune and should offer continued healthy returns.