Landlords should avoid investing in London property and head north for better buy to let returns, recording to research.
Assetz Property says that following the Brexit vote to leave the European Union, the best returns will be enjoyed in the North of England.
The firm says that buy to let landlords can achieve yields of 8.5% with such property in Leeds whereas gross yields in London average 3.5%.
In addition, the research reveals that the disposable income for people in Leeds is much higher than those in London despite the capital’s average salary being £40,087 which means tenants there have a disposable income of £6,600 – and that’s before paying for food, travel expenses and builds.
However, in Leeds the average salary is around £10,000 less than is found in the capital but they can rent a quality home for an average of £11,244 a year.
Investors should concentrate on the return on their investment
The chief executive of Assetz Property, Stuart Law, said: “With interest rates set to fall on savings and London house prices set to drop, investors should concentrate on the return on their investment and yields.
“The potential relocation thousands of highly paid city workers to Frankfurt, Paris or Dublin who might rent or live in London can only have a negative effect while the market for Leeds will be more stable.”
Mr Law pointed out that properties in Leeds are £400,000 cheaper than in the capital and the city makes an ideal location for those wanting a higher standard of living than they would get in London for a less money.
Trend for landlords to set up limited companies takes hold
Meanwhile, lenders in the UK say that the number of buy to let investors who are obtaining mortgages via a limited company has grown by 30% in the first six months of 2016.
In addition, the number of lenders willing to offer mortgage products to a limited company has also grown to 14 compared with 12 last year – though the rise is down to existing buy to let lenders growing their offerings rather than new lenders entering the sector.
The managing director of Mortgages for Business, David Whittaker, said: “The trend for limited company for buy to let clearly represents a real step change in behaviour for landlords adapting best strategies to mitigate the growing costs brought about by the recent tax regime changes.”
He added that the number of completions and applications being made by limited companies for buy to let lending has now stabilised and is accounting for one in three of all buy to let new business.
