Property investors and landlords looking for maximum returns often see the best results in the north of England. Now the north-east is emerging as the most promising region for buy-to-let.
Achieving a good return on investment normally depends on two main factors in the property market: capital gains and rental yields. In new research published by Property Forecaster, the north-east comes out top overall in both of these respects, marking it out as a stellar investment location right now.
In its index, Property Forecaster singles out 171 buy-to-let “hotspots” across the UK. The report identifies “Diamond” properties in each area, which are most likely to rise in value. While the north-west continues to thrive as a top investment spot, the north-east is in pole position.
The top location, according to the data, is Washington in Tyne and Wear. This area has 30 “Diamond” investment properties out of 136 in total for sale. In a score from one to ten based on all factors, Washington scores 6.4. Hartlepool, Sunderland, Grimsby and Newcastle-upon-Tyne all appear in the top 10 list of investable areas in the UK.
Excellent potential yields
Seeking out the best monthly rental yields is a key part in achieving success in buy-to-let. In Washington, cheap average property prices and strong rents mean the area scores highly in this respect. While the average rental yield is 7.9%, landlords can earn a maximum of 23.3%, says the report.
Rental demand in the north-east is going from strength to strength, says Property Forecaster’s Akhtar Hussain. This will affect both future gains and top yields.
“With average Diamond property prices in Washington, Hartlepool and Sunderland of between £48,000 – £53,000, the north-east can’t be beaten for value and offers a very accessible investment opportunity with great future potential,” he comments.
“Property prices in the north-east can only go one way from here – they have already started to rise over the last year and recent inward investment in the area will also support future growth. There has never been a better time for investors to look at what the [area] has to offer.”
Future forecast remains strong
As the summer draws to a close, there tends to be a slowdown in housing activity. The end of the stamp duty holiday is also likely to have an effect, but Hussain thinks this will be short-lived.
“In terms of the UK-wide picture there is still underlying strength in the market despite the reinstatement of stamp duty and the pending closure of the furlough scheme. Although there may be a slowdown in the next couple of months due to seasonality, the next 12 months will remain strong overall. The government has done a fantastic job of preventing a possible housing crash with assistance from the Bank of England reducing interest rates to a record low.”
As Hussain points out, the firm’s past predictions have largely come to fruition. Property Forecaster stated house prices would rise despite the pandemic, which has certainly been the case recently. It also forecast that Brexit would not crash the housing market, and it has continued to gain strength.
He adds: “As the economy recovers over the coming months, 2022 continues to look positive for investors.”