Although fears that fewer landlords would invest in buy-to-let properties appear to be unfounded, there have been changes as to where they are putting their money. Following the hike in stamp duty which came into effect in April, investors are looking to buy cheaper properties and therefore pay less tax.
Buying cheaper may mean investing in a different area which can often bring better rental yields as well as lower stamp duty bills. Buy-to-let specialist LendInvest says that there are major investment opportunities for landlords who look outside of the London area. It says ‘cross-country’ landlords, who live in one area but invest in another, can buy up to 10 properties in the region for the price of one in the Capital.
Chief executive officer Christian Faes said that these properties offer a more impressive rental yield whilst also attracting less stamp duty.
The study shows that for less than the price of a three-bedroom house in North-West London costing about £750,000 you could buy 10 studio apartments in Sunderland which would earn a 28 per cent higher annual rental yield and attract 55 per cent less stamp duty. For £250,000 investors could buy two three-bedroom properties in Durham, which has a prestigious university, offering rental yields that are 200 per cent higher and stamp duty costs which are 30 per cent lower than a studio flat in South-East London which could cost about the same, the report says.
With commuters also looking to live further away from London for a better quality of life or more property for their money, towns such as Brighton and Southampton are worth looking into. If the high-speed HS2 railway comes to fruition, this will open up the commuter belt further into the Midlands and Birmingham, so these could be good areas in which to invest too. Properties in towns with leading universities such as Durham, York, Manchester and Cardiff are also sound investments, particularly student flats or apartment blocks.
News and business websites will also have articles about significant developments in certain towns or cities, such as a new shopping mall, tourist attraction or major employers moving in or expanding, which could attract more people to move there and push up demand for rental properties.
Buy-to-let investors can always employ local agents to arrange viewings or inventory clerks for inspections, if they live some distance away. Investing in specialist software will mean that they can keep on top of their properties since all data such as invoices, rental income, contracts, check-ins and check-outs, and checks on tenants can be managed via the software.