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London and south becoming buy to let black spots

18 May 2016

London Black Spots

The focus for high returns from buy to let is about to shift away from London and the South East, according to some new research.

The new hot spots for buy to let will move to north of Birmingham with a few exceptions over the next four years as tax changes for landlords start to bite.

Despite high rents in the capital and Home Counties, gross rental yields are pushed down by higher property prices.

The average price of a rental property in Lancashire is just £116,018, compared to £534,785 in Greater London, according to the Land Registry.

A new map of buy to let hot spots and not spots for England and Wales reveals just how phasing out tax relief on mortgage interest for high earners will hit the sector.

Only Ilford, East London looks set to offer the highest growth, while the rest of the Southern England below Birmingham provides slim pickings for buy to let.

North of Birmingham is a different story, with most areas other than Newcastle upon Tyne giving good returns.

The map was put together by property firm buy2let.com from a range of sources, such as statistics from estate agents, peer to peer lenders and government agencies.

The firm offers no information about how the data underlying the map was analysed.

“This a poll of polls from knowledgeable sources,” says the firm’s web site. “Of course, no one knows what lies ahead and the forecast is exactly that, just an estimation of what might happen.

“However, if the figures are right, the map shows some clear rental hotspots for landlords to consider when they make their next investment.”

The map breaks England and Wales into regions and colour codes the likely changes in gross rental yields over the next four years.