A new report from the experts at Savills has outlined a trend in investors searching for property investment opportunities outside of London.
Best location for buy-to-lets
The search for higher yields has led many people to consider locations beyond the capital.
Savills outlined 29 cities outside of London which represent some of the best areas for buy-to-let property investment.
The list was compiled based on cities which have a shortfall of housing, the city’s economic prospects, NET returns and how the rental market has evolved over time.
The report described Manchester, Reading, Edinburgh and Bristol as ‘cities [which] represent some of the most attractive opportunities.’ These cities have made the top spot due to their strong economic growth prospects and their overall reputation as a desirable place to live.
The future of buy-to-let property
Despite the government’s proposed changes which are on the cards for the UK’s buy-to-let market, Savills expects that the sector will expand by more than one million households over the next five years.
The introduction of a new stamp duty levy, which you can read more about here, is expected to slow down the supply chain. Savills predicts that this measure, coupled with the reduction of tax relief on mortgage repayments, will reduce the portfolio expansion of private investors.
The UK government is keen to address the shortage of affordable housing across the country. It has committed to deliver 400,000 affordable homes aimed at first-time buyers. This number will comprise 200,000 Starter Homes, 135,000 Shared Ownership homes and a larger amount of equity loans via Help to Buy in London.
Savills forecast that without these policies in place, the market would expand by 260,000 households per year.
Despite these policies, the report also highlights the large gap between supply and demand.
“Mismatch between supply and demand will continue to underpin rental growth and attract increasing numbers of institutional investment at scale. We recorded investment deals worth a total of £2.6 billion in 2015 – a third of which was supported by institutional investment,” the Savills report states.