The Buy-to-Let Property Market: Where To Invest
- 20th July 2018
- Posted by: Loanable
- Category: Resources
If you are a property investor and have amassed a large portfolio of properties, then you know the challenges that have been placed on the buy-to-let property market.
The government has made changes to the stamp duty, increasing it, no more mortgage interest relief, and other changes and challenges make it more and more difficult to be a landlord or property investor, and make a profit.
In certain parts of the country property prices have risen tremendously over the years, and in other areas of the country, prices have become static, or even dropped.
As a landlord in the buy-to-let market, you not only have to wear many hats, you have quite a few balls to juggle to keep things afloat, and profitable.
It is not just as easy as buying a property, getting a buy-to-let mortgage, and wait for the tenants to come in droves.
There is finding the right properties, in the right areas, for the right price, in addition to getting good tenants. Then there is also the repairs, maintenance and upkeep of your properties.
While being a landlord and property investor can be satisfying and rewarding work, it also can be challenging work!
Last year with all the changes in the buy-to-let property market, sales for buy-to-let properties were down over 25%, this according to estate agents Savills.
It used to be for years that down south were the areas to invest in property, London being one of the largest. Then there also were the seaside resorts along the coast. Landlords were guaranteed solid rentals from tenants, and also profits due to the rents that could be charged.
Those days and times are changing and changing quickly.
Supply and demand shows that as the rental market has a glut of housing, rents decrease. Landlords need to look further afield for places where the rental markets are strong, and with more demand then supply.
Go West Young Landlord
If you know the saying from America a couple of hundred years ago, “go West young man”, then the above title explains itself.
During the expansion of America all those years ago, it was said for people to go West to find their fortunes, and that can be said to landlords and those in the buy-to-let property market today here in England.
Look west, west towards Merseyside, Liverpool in particular.
If there is one thing you know if you invest in property, and even if you are just buying a property for yourself to live in, location is everything.
So comparison web site TotallyMoney did some research to save all aspiring landlords some time as to what areas of the county were offering the highest “buy-to-let yields”, and Liverpool did not just place in the top-10, but had three (3) postcodes in the top-10!
The average yields in Liverpool were 11.79%, 11.52%, and 9.36%.
Other cities in the top-10 were:
One of the reasons cited for Liverpool scoring so high, was the fact the city has a large student population.
Liverpool hosts three (3) universities, Hope, John Moores, and Liverpool University. This large population of students, 70,000 in total, means there is a strong need for housing. High demand, can equal a high return, especially for landlords.
Manchester as well is a good buy-to-let property city, sporting four (4) universities, and a student population of 100,000.
The Head of Brand and Content at TotallyMoney, Joe Gardiner stated, “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.”
“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.”
“But, due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever. To maximise their returns, landlords need to be savvier”
Concerns Regarding Changes
Having long been a university city, among other things, Liverpool while attracting students, also sees many of those students stay on in the city, long after graduation.
Having such a diverse population in Liverpool, students from all around the world, families, couples, etc, it is a diverse and eclectic population, which in some parts of the city, can cause a clash of generations and lifestyles.
The Smithdown Road area of Liverpool has long been a hub for student housing. Landlords could purchase a 3, 4, 5 or more bedroom terraced house, and have it used as student housing, letting out the rooms, and being paid a higher amount of rent, then if the property was let to just one family.
These HMO, of houses of multiple occupation, have started to become a concern in Liverpool, especially the Smithdown area, as again it has a high concentration of students in the area.
The concerns brought forth by neighbours in the area involve students “partying” being loud, and general nuisance behaviours.
Students being students.
The local council in Liverpool is looking to make a change, stating landlords who wish to let out houses to multiple students, will need to apply for permission to do so.
The new rule is a part of an investigation, and “crackdown” on issues in the area, which was supported by the majority of residents in the area. Of the 182 residents who were spoken to and asked about the new rule, 175 agreed with it, and felt it should have been implemented a while back.
The council’s new “measure” is known as Article 4 Direction, which states:
“The proposed Direction does not seek to remove students from the Dales area, nor to remove the right of Houses of Multiple Occupancy (HMO) in the area which either have planning permission or have lawfully been changed to a C4 use prior to the introduction and confirmation of the order.”
“Lawful HMO’s in this area will continue to provide a valuable housing resource for students and other single person households, and this will be in addition to newer accommodation provided within the city centre.”
“A mix of student accommodation should be provided.”
As to how this will affect future landlords looking to Liverpool to invest in the buy-to-let property market, has yet to be seen.
However, according to the recent research conducted, Liverpool is still offering high yields and great potential for landlords to invest here.