Southampton ranked as a Buy 2 Let hotspot

Landlords looking to invest in buy-to-let properties are still flocking to the capital, as London sits at the top of a list of UK hotspots.

It's closely followed by Birmingham and Bristol in the top 20 areas where buy-to-let properties have been bought in the last year, according to data from Barclays Mortgages. Nottingham, Manchester and Leeds also saw a big jump in demand.

London landlords also unsurprisingly get the biggest monthly rental revenues, with an average income of £1,900 per month.

Greater London locations also pulled in substantial rents, with landlords in Harrow getting an average of £1,402 per month, in Enfield getting £1,268 per month and in Croydon landlords get an average of £1,262 monthly.

Outside of the capital. landlords in Reading, Southampton and Slough receive the next biggest monthly rent revenues.

However, while the Barclays report highlighted rental amounts, it failed to drill down into the yields on offer - rental return as a percentage of purchase price.

The high price of property in London and the commuter belt means that yields on property tend to be lower. Separate research by property lend-to-save firm LendInvest, which used both rents and property prices, showed the best places for returns as Birmingham, Ipswich, Liverpool and Glasgow. 

Barclays compiled its data after analysing more than 5,000 of its buy-to-let customers who purchased a property in 2014 or 2015.

It noted that Birmingham has seen a ‘significant increase’ in the number of buy-to-let properties purchased, potentially due to a new HS2 train line into London, which is set to begin construction in 2017.

Popular university towns such as Bristol, Nottingham and Manchester also continue to feature high on the list, as well as greater London areas such as Slough and Ilford. Plymouth, which received a £90million investment pledge from the government earlier this year, jumped from 212th in the list to 16th place. 

 

As part of the research, Barclays surveyed its buy-to-let property owners with two-thirds of landlords describing the current buy-to-let market as ‘buoyant’. In spite of this, one in ten are still planning to sell their property in the next year.

BUY-TO-LET HOTSPOTS REVEALED: Top 20 areas by volume
Rank (by volume of Barclays completed buy-to-let properties)	Ranking in 2014	Town	Average rent in Q1 - Q2 2015
1	1	LONDON	£œ1,900
2	7	BIRMINGHAM	ϣ766
3	3	BRISTOL	ϣ877
4	17	NOTTINGHAM	ϣ639
5	18	MANCHESTER	£œ693
6	13	READING	ϣ1,169
7	47	LEEDS	ϣ703
8	6	SOUTHAMPTON	ϣ1,067
9	50	PETERBOROUGH	£œ649
10	19	SLOUGH	£œ1,045
11	48	GLASGOW	£œ601
12	5	ILFORD	ϣ1,252
13	4	HARROW	ϣ1,402
14	35	EDINBURGH	ϣ923
15	8	CROYDON	£œ1,262
16	212	PLYMOUTH	ϣ808
17	12	ENFIELD	£œ1,268
18	79	SWINDON	ϣ681
19	62	LUTON	ϣ754
20	28	MILTON KEYNES	£œ873
Source Barclays: Data based on

Andy Gray, Barclays managing director of mortgages, said: 'It’s encouraging to see home owners are still feeling confident about the rental market and view buy-to-let as a valuable way to support their finances. 

'Whilst London still leads all things buy-to-let, areas like Plymouth and Peterborough show there are some great value hot spots outside the capital city that are worth investment as the economy grows.' 

The summer Budget earlier this month put forward a raft of changes for landlords in the UK.

Chancellor George Osborne announced a measure that could boost house prices by raising the inheritance tax threshold by £175,000, allowing couples to pass £1million, including their home, onto their children and grandchildren.

However, the Chancellor also announced a cap on the valuable tax relief on buy-to-let mortgage, which will be phased in over four years starting in April 2017.

Rather than allowing mortgage interest income tax relief on rental income at a landlord’s top rate of tax, investors will have it capped at the 20 per cent basic rate tax level.

Additionally, he announced the end of a policy which allowed buy-to-let landlords to automatically offset ‘wear and tear’ costs from their taxes. 

From April 2016 only actual costs incurred can be offset.

http://www.thisismoney.co.uk/money/buytolet/article-3175921/Buy-let-hotspots-revealed-London-Birmingham-Manchester-Nottingham-rise.html