BTL investors going North for better returns, claims leading agent

Buy-to-let investors are flocking to areas like Hartlepool (main picture) in the North East and Liverpool in the North West in a bid to secure better yields as high mortgage rates and falling house prices put a dampener on profits, research from London estate and lettings agent Benham and Reeves reveals.

Across the country as a whole 19.5% more second homes were bought between 2020-21 and 2021-22 with transactions rising from 230,900 between April 2020 and April 2021 to 275,900 between April 2021 and April 2022 – as the country recovered from the pandemic.

ADDITIONAL DWELLINGS SOARED

Between the two financial years purchases of additional dwellings soared by 27% in the North East, from 11,500 to 15,000. Meanwhile they rose by 26% in the North West, from 34,400 in 2020-21 to 41,900 in 2021-22.

Both Liverpool and Manchester saw a sizable bump in activity for additional homes. The latter saw 5,100 purchases in 2021-22, up from 3,300 in 2020-21, a 39% increase and Liverpool experienced a 37% increase, with purchases rising from 2,900 in 2020-21 to 3,700 in 2021-22.

The lowest growth area was the East Midlands where 16.9% more second properties were purchased, from 19,500 in 2020-21 to 22,800 in 2021-22.

Other regions with lower growth were the East of England and the South West, at 17.4% and 18.2% respectively.

Making strong returns as a second home investor is no longer a guarantee.”

Marc von Grundherr, Director of Benham and Reeves, says: “Making strong returns as a second home investor is no longer a guarantee so it appears that more are prepared to look further afield by purchasing homes in the regions where yields are stronger due to the lower initial cost of purchasing a property.

“Liverpool and Manchester have been popular for some time though growing interest in North-Eastern towns like Hartlepool and Middlesbrough has been aided by low house prices.”

He adds: “For those who are looking to purchase an additional dwelling to live in, rather than as an investment, the beautiful nature of the landscapes in the North of England also acts as a big pull to those that can afford to buy a second home.

“Elsewhere there’s consistent activity in the South East and London, which tend to attract strong capital growth and so are always likely to have a steady flow of activity, even in more subdued times.”

DOUBLE COUNCIL TAX

Meanwhile, Propertymark has questioned the Scottish Government’s proposals to allow local authorities to double council tax rates on second homes not used as a main residence.

The Scottish Parliament will soon debate draft regulations enabling local councils to charge up to twice the full rate of council tax on second homes.

If approved, local authorities would be able to apply the council tax premium on homes that are not used as a main residence.

Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “We recommend that the Scottish Government take the lessons learnt from the decisions made by the Welsh Government and to consider alternative ways to incentivise the reduction of second homes.”