Mortgage News
Hotspots for buy-to-let investors – LSL
By any measure, buy-to-let lending is faring well. Back in March, one prediction here on Mortgage Solutions was for £20bn in buy-to-let lending this year – a prediction that could easily turn out under-optimistic.
I’d certainly agree with that sentiment for the UK as a whole. Things haven’t had the current level of buzz since perhaps 2006. But there’s also a more detailed picture waiting to be resolved.
Lenders and brokers in different parts of the UK are reporting what could effectively be different countries, going by average statistics.
For example, monthly rents in London are more than twice those in the North East, and around 50% higher than even the surrounding home counties. Rents in Wales have risen by 12.2% since 2009 while in Bristol and the South West the increase stands at only 2.6% in almost five years.
Last month, rents in the North West rose by 0.8% but just across the Pennines rents fell by roughly the same amount, over the same few weeks.
Yields vary seriously by region too – despite the general stability over time. In the North West, yields of 7.2% are getting on for twice those of the South West, where gross yields stand at just 3.8%.
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Capital accumulation adds another whole spectrum of complexity. This is much more complex than the classic sphere of the South East, often varying from one side of the street to the other.
In Scotland, landlords have seen little in the way of capital accumulation for years, with house prices still 1.1% lower than at this point in 2012. However, it seems many Scottish landlords are seeing higher yields than a year ago. And without the same surge of first time buyers seen south of the border, demand for rental properties in Scotland seems set to grow as quickly as any English region.
Naturally this is just a cursory glance at the sheer variety on our doorsteps – from town to town, even street to street, there’s a kaleidoscopic pattern of different deals on offer, good and bad.
That’s not to say national figures aren’t instructive. But local expertise will always be equally important. Given the current pace of change, an accurate and up-to-date snapshot of the local market is more vital than ever.
David Brown is commercial director of LSL Property Services