If you are thinking about investing in property and are still undecided whether to invest in the north or the south, then the points below might be able to give you some guidance.
With recent changes in stamp duty for landlords, investing in the south is becoming increasingly less attractive for a number of reasons. So let’s take two landlords as an example. Dave, who invests in the South and Mike who invests in the North.
On the whole, rental returns tend to be much lower in the South. In the north, Mike enjoys higher returns of 6-7% returns whilst Dave is lucky to hit 4%.
This is where historically over the last 10 years, the South has seen greater capital growth, in comparison to the North, where investors have predominately purchased for higher rental returns.
Entry level of investment
With average property prices touching £400,000 in and around London, Dave has to invest up to around £100,000 in deposits each time he invests in a new property. In the North-West Mike however only requires around £25,000. (assuming 75% LTV mortgage)
I know we all don’t like talking about a higher stamp duty threshold, but it looks like it’s here to stay (for the short-term) at least, after the recent budget was announced. So for Dave, buying a £400,000 property in the south, he now needs to account for £22,000 in stamp duty whilst Mike, who is buying properties in the north for around £150,000, has to pay only £5000.
In summary, both the North and South offer great opportunity to buy to let landlords. Every investor is different, and the purpose of this article is for you to identify what type of investor you are before entering the market.
Good luck, with whichever path you take.
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