Where should I buy my next property investment?

With so many changes impacting buy to let property investment many existing and prospective investors are struggling to find an answer the question of where should I buy my next property investment? London? South East? Northern Powerhouses? University Towns? This article helps you understand a bit more about how the markets are performing by experts in the field.

The factors to consider for property investment

Budget

This will probably be the biggest factor for many.  Buy to let mortgages remain attractive and competitive but lenders are requiring higher levels of deposit.

To secure a prime buy to let property in central London the minimum deposit required is likely to be in the region of £185,000.  In outer London, this might come down to around £120,000.  Better value may be found in the London commuter towns (around £55,000) and the Northern “powerhouse” cities – potentially as low as £30,000.

Tax implications

The more tax you are liable to pay, the higher yielding the investment will need to be to remain profitable.

The highest yields on new investments will be found in the North of the UK where the disparity between capital values and rental income is less and in turn yielding higher returns.

The rate of tax you are liable to pay and whether you are investing as a limited company or not will help determine if the net return on an investment in London or the south east can remain profitable.

Length of investment

How long do you wish to hold the investment for? To generate maximum capital growth, you will need to consider that most area regeneration scheme take some time to achieve significant increases in property prices in the area. The anticipated length of time required before an area grows in value compared to the length of time you are intending to hold onto the property is one of the factors you need to consider when deciding where to invest.

Knowledge

Which areas do you know well?

Having an expert understanding of local markets is key when narrowing down on options, likewise an understanding of existing and potential infrastructure projects such as HS2, Crossrail, Heathrow expansions etc. is also important.

How the different areas work

Northern Powerhouse Cities

The creation of the concept of “Northern Powerhouse Cities” arose out of proposals initially introduced by the previous Coalition government (and since ratified by the existing Conservative government) to boost economic growth in the North of England.

The “Core Cities” of Manchester, Liverpool, Leeds, Sheffield and Newcastle are beneficiaries of the proposals, which include improvement to transport links, investment in science and innovation, and devolution of powers in “City Deals”.

Investment Fundamentals for property investment in this area

Strong rental demand from young professionals

Good rental yield

Low price entry points

Major transport upgrades (HS2)

Major government, private and overseas investment in infrastructure & housing

Strong levels of employment

MINIMUM CAPITAL REQUIRED – £30,000 (assuming 75% “loan to value”)

London Commuter Areas (Under 60 Minutes)

The London Commuter Area covers Prime Towns & Cities which in addition to strong levels of local employment also offer attractive options for London commuters seeking a commute time of less than 1 hour into the central and financial areas of the capital.

There are several Investment Hotspots in this region but most fall within the following counties; Berkshire, Hampshire, Buckinghamshire, Oxfordshire, Sussex, Kent, Surrey, Middlesex, Essex and Hertfordshire.

Investment Fundamentals for property investment in this area

Strong levels of local employment

Strong rental demand from young professionals

Major transport upgrades (Crossrail I & II)

Mix of good capital growth and rental return

Reasonable price entry points

High number of first time buyers driving prices

MINIMUM CAPITAL REQUIRED – £55,000 (assuming a 70 to 75% “loan to value”)

 London Zones 3 – 6

London’s outer core areas covering zones 3-6 have many attractive investment opportunities that are fuelled by the strong demand by young professionals who cannot afford prime London living but need close access to central London’s business hubs.

Investment Fundamentals for property investment in this area

Strong rental demand

Strong levels of employment

Areas benefiting from the improved “All night tube” services appeal to young professionals

Established markets with good track record of capital growth

Lower rental yields

More expensive price entry points

Fast and convenient transport links to central London

MINIMUM CAPITAL REQUIRED – £120,000 (assuming a 65-70% “loan to value”)

 London Zones 1 – 2

London’s prime central area of zones 1 & 2 contain some of the most established, expensive and sought after property markets in the world boasting an unprecedented track record of price growth in the UK.

Investment Fundamentals for property investment in this area

Unprecedented track record and reputation

Strong rental demand

Areas benefiting from the improved “All night tube” services appeal to young professionals

Established markets with good track record of capital growth

Lower rental yields

Much higher price entry points

Convenient access to central London and financial centres

International investors

Strong levels of highly paid employment

MINIMUM CAPITAL REQUIRED – £185,000 (assuming a 60-65% “loan to value)

 How we can help

Faced with the difficult dilemma of where is best location for property invest, many investors have turned to us for advice and guidance. Every investor is different and choosing the correct investment is not a one size fits all solution.

If you are looking for expert help get in touch with Tom today for a free chat to see what might be best for you.  Contact https://sourceinvestments.com/contact/