A more muscular Government approach to taxation is encouraging mortgaged buy-to-let landlords to seek out value for money in northern markets.

Looking at the spread of sales in 2018, it’s clear that those parts of the country benefitting from robust rental demand, lower value stock and the prospect of significant house price growth have become a key focus of attention. 

For the first time, the North West has overtaken London as the most active mortgaged buy-to-let market with 8,279 sales vs 8,263, in step with our five-year forecasts which anticipate prices rising by 21.6 per cent in the former and 4.5 per cent in the latter.

By switching their sights to higher yielding property in the Midlands and the North, it’s easier for investors to make a profit despite the increasing tax burden.

Overall, there were 65,932 deals last year compared with 74,303 in 2017 so annual transactions are still falling but more slowly than in the past. And not everywhere saw fewer sales – 95 local authorities bucked the trend (see blue areas in our map below).

The West Midlands was the most resilient region in Britain, with transactions rising in 16 of 30 districts. Birmingham had the largest increase, with 117 more buy-to-let mortgages issued than in 2017 – that’s as many as were issued in Camden last year.

_{Source: UK Finance, Land Registry}

Landlords are buying cheaper properties than before. The average price paid in 2018 was £229,400, down -6.4 per cent on the previous year. At the same time, national house price growth was up 2.5 per cent. 

Only in London were buy-to-let values above the local average – 9 per cent higher, possibly a result of investors buying new build stock and choosing central locations. Outside the capital, the average value of a mortgaged buy-to-let property was 24 per cent lower than the local average.

We expect the regional rebalancing of the mortgaged buy-to-let sector to continue as the markets of the Midlands and the North outperform London and the South, offering attractive returns for canny investors. 

Further information

Contact Savills Research