London rental investors are purchasing more and more buy to let properties in northern England.
New research from Sequre Property Investment has revealed that over one in three (35 per cent) of buy to let investors buying in the North are actually based in Greater London. In total, 61 per cent of investment comes from people based somewhere in the South East.
The director of the company behind the study, Graham Davidson, said that the buy to let market in northern regions, especially in hubs like Manchester and Liverpool, is now being driven mainly by funds coming in from the capital and the South East.
He continued to explain how investors have been benefiting from massive house price growth in the South in recent years, which has led to equity in their homes and buy to let portfolios "soaring".
He also stated that buyers are now looking towards the north of the country with the intention of making new investments that will ensure strong rental returns; particularly as there is some uncertainty about the future of the London market at present.
Better prospects in the North
The research also revealed that the average gross yield for properties in Manchester is 8 per cent, in comparison to just 4.5 per cent in central London. The average two bedroom home in a northern city costs around £90,000 compared to the huge £300,000 average price tag seen in London.
Out of all the investors buying properties in the North, almost half (42 per cent) are cash buyers as lower prices mean the need for borrowing is lessened.
The figures released by the study are good news for letting agents in the North because investors are living in London and the South East will need their services to manage their purchases.
The Association of Rental Letting Agents (ARLA) reported a rise in the number of long distance landlords as early as 2012 and the number is predicted to continue to rise as long as returns in the North remain so attractive when compared to the South East and London.
According to HSBC, northern seaside location Blackpool is now one of the top buy to let "hotspots" in the UK - supporting the trend further.