You CAN still make money from buy-to-let... if you know these secret hot spots revealed by experts
The buy-to-let market is having a shocker. Landlords have been selling up in droves, squeezed out by high interest rates, harsher tax rules and tightening regulations.
The value of buy-to-let mortgages shrank for the first time last year, according to industry body UK Finance.
Meanwhile, estate agent Hamptons estimates that by the end of the year, private landlords across Britain will have sold 328,750 more rental homes than they’ve bought since 2016.
And the problems are only set to intensify under a Labour government that seems intent on targeting landlords.
But it’s not all doom and gloom. Northern towns and cities are bucking the trend and continue to offer opportunities for those willing to invest in bricks and mortar.
In northern regions, landlords say they plan to invest more, not less.
So which cities boast the best rental yields and cheapest house prices? Wealth and Personal Finance has spoken to letting agents in the North’s landlord hotspots.
!['Northern towns and cities are bucking the trend and continue to offer opportunities for those willing to invest in bricks and mortar,' writes Samantha Partington](https://i.dailymail.co.uk/1s/2024/08/18/13/88649849-13754845-image-a-2_1723983791069.jpg)
'Northern towns and cities are bucking the trend and continue to offer opportunities for those willing to invest in bricks and mortar,' writes Samantha Partington
Reversal of fortunes for North’s buy-to-let Market
A decade ago, just 22 per cent of all house purchases in the North, North West, and Yorkshire and the Humber were made for buy-to-let purposes, compared to 46 per cent in London and the South East, according to lender Paragon Bank’s analysis of industry data.
Now, fortunes have shifted.
By the end of 2023, the northern regions’ share of buy-to-let purchases had risen to 35 per cent, while London and the South East had slumped to 32 per cent.
Richard Rowntree, managing director for mortgages at Paragon Bank, says: ‘Historically, the south of England has been the bedrock of buy-to-let investment.
‘Now it is the North where we’ve seen a notable increase in the proportion of buy-to-let purchases in recent years.’
This has been driven by growing tenant demand, generally better rental yields, cheaper house prices and therefore lower stamp duty bills, he says.
Hamptons’ analysis paints a similar picture. In the first six months of the year, landlords purchased 10 per cent of all homes across the UK – the lowest share since the agent’s records began. In the North East, however, landlord purchases made up 25 per cent.
Attractive North East boasts best yields
![](https://i.dailymail.co.uk/1s/2024/08/18/14/88649881-13754845-image-m-17_1723987025710.jpg)
Paragon Bank analysed the average portfolio of properties owned by a professional landlord in the North East and found that they typically earn a 7 per cent rental yield, beating the UK average of 6.1 per cent.
That is not to say landlords in the North collect the highest rents but, in comparison to the price they paid for a property, they achieve the best returns.
Typically they own 12 properties, five more than the country’s average, worth £1.5million in total. This is below the UK average of £1.8million, due to lower property prices in the North East, and is dwarfed by the value of a central London portfolio, which is typically worth £4.5million.
The average home in the North East cost £164,886 in June – 43 per cent less than the average UK home, at £287,294, according to the Land Registry.
Properties in the region also collect the lowest amount of rent at an average of £7,470 per year.
So what makes the North East so attractive? High interest rates mean it is now extremely tough to buy properties in expensive areas such as London. Landlords cannot charge high enough rents to satisfy the banks’ affordability checks.
But in lower-value regions it is much easier to get a mortgage and expand your buy-to-let business. A quarter of landlords operating in the North East say they plan to add to their portfolios next year.
This compares with just 10 per cent in central London and 9 per cent in the South East.
Newcastle offers a mix of tenants
![Newcastle (pictured) and Durham rank in Paragon¿s top six most popular postcodes for landlord investment](https://i.dailymail.co.uk/1s/2024/08/18/14/88649867-13754845-image-a-18_1723987045226.jpg)
Newcastle (pictured) and Durham rank in Paragon’s top six most popular postcodes for landlord investment
Within the North East, Newcastle offers some of the best opportunities for prospective landlords.
Gregg Cameron, branch manager for letting agents Bridgfords in Newcastle Upon Tyne, says: ‘The city centre rental market is strong. We’ve got two universities in the heart of the city creating an influx of students.
‘We’ve also got a lot of big businesses, hospitals and Government departments like HMRC based here, which are all on recruitment drives to attract professionals from all over the world. This gives landlords access to good quality tenants.’
Cameron says that, coupled with the city’s convenient transport links to other big employment centres in Durham and Darlington and its reasonable house prices, the area is an attractive location for landlords to make strong returns. Both Newcastle and Durham rank in Paragon’s top six most popular postcodes for landlord investment.
Cameron says a two-bedroom apartment in Newcastle city centre costs between £150,000 and £200,000 and can yield rents of £1,100 – rising to £1,500 a month for high-end properties.
![A two-bedroom apartment in Newcastle city centre costs between £150,000 and £200,000 and can yield rents of £1,100](https://i.dailymail.co.uk/1s/2024/08/18/14/88649883-13754845-image-a-19_1723987079819.jpg)
A two-bedroom apartment in Newcastle city centre costs between £150,000 and £200,000 and can yield rents of £1,100
Rents reach an all time high in Teesside
Teesside has become another landlord hotspot, where properties are being snapped up by tenants within days of going on the market.
Marie Wilmot, director of estate agents My Property Box, says rents are at an all-time high in Teesside and yields of 8 to 9 per cent are common.
Properties are generally let within five days or less. Professional houses of multiple occupation (HMOs) are popular across Teesside while en-suite rooms for single professionals command rents of up to £650.Wilmot says: ‘Darlington is one of our hotspot areas.
‘We have the multi-million pound railway regeneration, the Treasury offices relocation and other large employers such as Amazon and Cummins Engineering.’
The average price for a two-bed terraced house in Darlington is around £85,000, which can be let for £650 a month, offering a 9 per cent return.
![The average price for a two-bed terraced house in Darlington is around £85,000, which can be let for £650 a month](https://i.dailymail.co.uk/1s/2024/08/18/14/88649873-13754845-image-a-20_1723987163841.jpg)
The average price for a two-bed terraced house in Darlington is around £85,000, which can be let for £650 a month
Manchester tops Postcode charts
The North West also boasts an impressive spread of buy-to-let credentials. M14, Manchester’s vibrant student quarter, is the most popular postcode for landlords in the UK. Crewe also makes the top 10 rankings.
HMOs, typically let to students, have risen in popularity across the region. Between 2014 and 2024 the proportion of HMO mortgages offered by Paragon in the North West has risen from 14 per cent to 34 per cent.
Professional landlords in the North West typically hold ten properties worth £2million in total, generating £9,383 per property a year before tax and costs are deducted. The average yield is 6.3 per cent.
Rental demand is particularly high in South Manchester, says Rebecca Whitehead, lettings director for estate agents Gascoigne Halman. This is because it offers an easy commute into the city centre.
She says: ‘There is a huge young professional market in Stockport, Cheadle and Marple. Yields average 6 to 7 per cent on terraced properties and apartments, and we usually have up to 12 good applicants interested in every property we list.’
Spotlight on Skelmersdale
![Skelmersdale in West Lancashire has been picked by experts as a particularly attractive investment location](https://i.dailymail.co.uk/1s/2024/08/18/14/88651669-13754845-image-a-21_1723989553088.jpg)
Skelmersdale in West Lancashire has been picked by experts as a particularly attractive investment location
Cheryl Cain, property agent body Propertymark’s regional executive for the North West, picks Skelmersdale in West Lancashire as a particularly attractive investment location.
This is thanks to below-average property prices, a diverse range of tenants and strong yields. A strong sense of community in the town means long-term tenancies are common.
The average home in West Lancashire cost £237,798 in June, which is 17 per cent below the UK average of £287,294, according to the Land Registry.
Cain says: ‘As regeneration projects progress and the local economy continues to develop, property values and rental demand in Skelmersdale are expected to rise.’
Some areas experience challenging socio-economic conditions, which means there is a good demand for rental properties as residents are less likely to own their own home, she adds.
![Some areas, such as Skelmersdale (pictured) experience challenging socio-economic conditions, which means there is a good demand for rental properties as residents are less likely to own their own home](https://i.dailymail.co.uk/1s/2024/08/18/14/88651671-13754845-image-a-22_1723989574945.jpg)
Some areas, such as Skelmersdale (pictured) experience challenging socio-economic conditions, which means there is a good demand for rental properties as residents are less likely to own their own home
Growth for M62 corridor towns
Average yields of 6.6 per cent in Yorkshire and the Humber are second only to those achieved in the North East.
Professional landlords hold around 12 properties worth a total £1.7million, generating £9,631 of rental income per property each year.
Some 13 per cent of landlords in the region say they plan to buy more properties next year, compared to 6 per cent and 10 per cent in Outer and Central London respectively.
Adam Powell, director at Yorkshire estate agents WS Residential, says: ‘Cities like Leeds and Manchester are benefiting as businesses decentralise from London.
‘Consequently, smaller towns along the M62 corridor such as Brighouse, Halifax and Huddersfield are seeing growth.’
Increased publicity from successful TV shows and films shot in Yorkshire, such as Happy Valley and Gentleman Jack, are enhancing its appeal, says Powell.
A three-bedroom semi-detached family home is typically rented out for between £1,000 and £1,250 a month in reasonable locations. More desirable areas or city suburbs can see rents approaching £1,800 per month.
‘While these rents may seem modest compared to the South, landlords benefit from greater purchasing power in Yorkshire due to lower property prices,’ Powell adds.