Back in 2014, the Northern Powerhouse announced a large-scale investment in the regional economy and infrastructure. Such investment would help reinvigorate the North. Whilst drawing numerous buy-to-let investors into the area as Northern buy-to-let market is booming.
This investment begins with Northern Powerhouse Rail which will connect a number of the northern cities. Destinations include Liverpool, Manchester, Manchester’s airport, Leeds, Sheffield, Newcastle and Hull. Investment will also lead to emergence of Leeds as a digital tech hub, and a £1 billion upgrade of Manchester’s infrastructure. Such will be the power of connections / enhancements within northern cities, that property developers and population growth thereafter will dramatically improve.
The low entry prices, high yields (though usually moderate growth) and broad rental market particularly entice investors. The North was left exposed during the 2007 economic crash. In present times the current mix of job creation, investment, build-to-let and owner-occupier properties mean the region is much more secure this time round.
The Northern Powerhouse Effect
Liverpool and Manchester are seeing the greatest effect from the Northern Powerhouse. The private rented sector (PRS) booming in both cities. This is potentially leading to the emergence of Manchester as the UK’s second media hub, overtaking Birmingham. Then there is Liverpool’s Superport has led to considerable investment in new PRS-only developments that will house the region’s growing population. On top of the booming business economy, that is attracting swathes of young professionals, universities are bringing in many new students. With both groups entering the cities in volume, demand on centrally based quality apartments in central is increasing dramatically. Many of these new PRS developments currently developed are offing prime locations, gyms and concierges to fill this demand.
Mortgage broker Private Finance named Liverpool the best city for buy-to-let yields in June 2017. Richard Forman, Delph Property Group’s head of sales and marketing passed comment on the Liverpool and Manchester areas. The cities offer “Good buys” as they have a “strong local economy and housing shortage.” The proof is in the pudding though, with B Daily News reporting on Delph Properties recent venture in Liverpool. The group invested in a new site “Orleans House, located on Edmund Street. Which once served as a warehouse for the cotton exchange”. They went on to report, “More than 20% of the homes within the first three days of going up for sale were snapped up by buyers.”
Salford: “The Place to Watch”
Salford is an up-and-coming city for property investors and has been dubbed “the place to watch” by Jonathan Stephens (M.D for Surrenden Invest) According to home.co.uk the area demonstrates average rental yields of 5.4% with a “real yield” (rental yield plus capital appreciation) of 32.3%.
Although outside the core Northern Powerhouse cities, university students and millennials alike who are looking outside of Manchester city centre. Salford to many of these property seekers balances a more suburban lifestyle and better work-life balance.
With property prices at 30% lower than in central Manchester. It is somewhere for investors to bear in mind when looking north.
Other Key Buy-to-Let Cities
When thinking of an investment in a Northern Powerhouse city York and Sheffield should also be considered. Numbeo rates Sheffield city centre as having the best rental yields at 12.1% as northern buy-to-let market is booming.
“York is one of the strongest areas for buy-to-let from a capital growth perspective” says David Sinclair, Carter Jones’s lettings manager. Investors should focus on city centre apartments with parking and upmarket flat shares as these will always be in demand.
We believe in the North, and welcome much of the additional investments being made here. We will be supporting many investors seeking buy to let opportunities in the Northern cities. Should you wish to be one of those, find out more on our website.