Buy-to-let investors desert capital

Research from Landlord Mortgages, the specialist buy-to-let broker, revels that sky high property prices in London have seen investors desert the capital for more lucrative opportunities in other regions.

Only 8.56% of all rental properties purchased over the last year were in London, which boasts the most expensive average buy-to-let properties (223,997).

This is 5% down from 2003/04 despite the fact that over 15% of England’s viable residential stockis in London.

The most popular region to invest in over the last year was the South East (22.54%) as many London landlords looked further afield for investment opportunities.

The North West (13.41%) and East Midlands(10.13%) were also popular investment choices.

The least popular regions to invest in were Scotland (2.71%), Wales (3.42%) and East Anglia (5.71%). However, Landlord Mortgages believe that the low levels of investment in these regions may be due to a lack of suitable buy-to-let properties rather than investors choosing to invest elsewhere.

Lee Grandin, managing director of Landlord Mortgages, says: “Despite the fact that London has traditionally had a strong buy-to-let market, over the last few years investors have started looking elsewhere.

“The capital is simply too expensive to provide the type of yields and potential capital appreciation that investors are looking for.

“If a landlord took the average 15% deposit they would need to put down on a London property (33,599) and looked at buying in others part of the country, they would be able to get much better value for money.

“In fact, if they invested in the North East, Scotland, West Midlands or Yorkshire and Humberside, they would be able to purchase two properties rather than one. While owning two properties will create a greater amount of work, it will spread your risk and help to secure your portfolio against the impact of rental voids.

“Over the longer term, we believe the trend towards investors looking outside London for investment opportunities will continue. Following the rate reduction earlier this month, we have seen a great deal of interest from investors and anticipate that many of them will take this opportunity to invest in ‘good value’ properties outside the capital.”