Buy-to-let investors in the UK are increasingly turning to the North West, North East, and Wales in search of stronger rental yields and more affordable property prices. Cities like Manchester, Liverpool, and Newcastle are becoming hotspots for investment, as traditional locations like London and the South East become less accessible due to high property values.
Ryan Etchells, Chief Commercial Officer at Together, discussed this shift with Yahoo Finance Future Focus, highlighting the growing appeal of regional property markets. “In the past few years, we’ve seen a significant change in how landlords are approaching investments, with more focus on northern regions,” Etchells explained.
The Shift to Higher Yields
London and the South East have long been the top choices for property investors. However, soaring property prices in these areas have made it increasingly difficult for landlords to achieve substantial returns. In contrast, the North West, North East, and Wales offer more affordable options with rental yields above 8%. This level of return is hard to achieve in the capital, making regional markets a more attractive investment choice.
“These yields are great, especially considering the challenges of the past couple of years,” Etchells said, underscoring the financial advantage of regional property markets.
Changing Work Patterns Drive Regional Demand
The rise of remote and hybrid working models is reshaping the property market. As people move away from urban hubs like London, cities such as Manchester are experiencing strong growth in both city centre and suburban rental markets. Etchells noted the increase in new developments, with more high-rises being built to meet the growing demand.
“Manchester’s rental market is thriving, not just in the city centre but in the suburbs too,” Etchells added, pointing to changing work habits as a key driver behind this trend.
The shift in work patterns has also contributed to a rise in self-employment and gig economy jobs. The Office for National Statistics (ONS) reported that more than one million self-employed individuals in the UK are now aged 60 or older, a demographic shift that brings both opportunities and challenges for property investors.
Labour Policy and Its Impact on Property Investment
Recent policy changes from the Labour government, including rising interest rates, new taxes, and regulations, have put additional pressure on the buy-to-let sector. Etchells emphasized that while the UK’s housing stock remains insufficient, there is hope for improvement with the government’s £5 billion investment plan for building new properties.
However, Etchells pointed out that small and medium-sized builders, focusing on projects with 50 to 100 units, will play a key role in meeting demand for new homes in regional areas.
Strong Growth Projections for the UK Property Market
Despite economic pressures, Etchells remains optimistic about the long-term prospects of the UK property market. He forecasts that property values will rise by 20% over the next five years, with rental yields expected to increase by 17%.
“While there are upfront costs now, such as increased stamp duty, the long-term outlook is positive,” Etchells said. “Property investment will continue to help investors achieve their financial goals.”
Etchells also emphasized that landlords must remain adaptable as they navigate this evolving market, with many now looking beyond traditional hotspots and focusing on emerging regions that align with shifting tenant demands.
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