The Prime Minister’s recent decision to increase the surcharge for a second-bedroom purchase from 3% to 5% appears to be pushing landlords to real estate in northern England, where lower purchase prices mean lower stamp duty taxes.
According to Hamptons, the increasing number of purchases (BTL) purchases in the north are derived from investors living in southern England.
Do we see a consistent shift towards the north? This is true for James Gordon, a mortgage consultant and director of Marchwood IFA.
This trend remains a part of the long-term existence, rather than a sudden peak in recent tax changes
“On a very low basis, the search for buying is still increasing.
“Anyone we can get is primarily in Birmingham and Manchester property, mainly to get better rates of return (which has always been the case in the north, of course), but mainly the impact of stamp duty.”
Gordon added: “I can’t tell you the last time my client contacted me in the hope of buying BTL in London or General South.”
Connect Mortgages CEO Liz Syms agreed that the Labor government’s decision to increase the stamp duty land tax (SDLT) other properties prompted investors to explore opportunities outside the capital and southeast.
She outlines how the added surcharge makes it more costly to buy other properties; for example, acquiring a second property for £500,000 (£500,000) would add £25,000 to the SDLT surcharge, up from the previous £15,000.
We should not be surprised to see landlords continue to explore all possible opportunities as they continue to tackle market challenges and continuous “anti-land” government policies
“To cope with these increased costs, there is a clear trend for investors in southern England to shift their attention to the north,” Syms said.
“The North offers several advantages such as lower real estate prices, lower SDLT costs and higher rental yields.”
She added: “Regions such as the Northeast have some of the highest rental yields in the UK, with returns of up to 15.4 per cent in some areas.
“In addition, cities like Manchester, Leeds and Liverpool have experienced substantial housing price growth, enhancing the prospect of capital appreciation.”
The Managing Director of Paragon Bank Mortgage Commissioner Louisa Sedgwick also highlighted the obvious shift.
“In 2014, London and the Southeast accounted for 46% of buy-in purchases,” she said. “Last year this fell to 32%, while Northeast, Northwest and Yorkshire and Honber jointly saw their market share Increased from 22% to 35%.
For many investors, the attractiveness of the northern market lies not only in the lower purchase price, but also in the potential for diversification.
“Our data between 2014 and 2024 shows that homes in the south are often more expensive, naturally with higher upfront costs, which highlights how to prevent taxes from buying much-needed rental properties.”
Black & White Bridge Lending Oli Bland accepted the impact of tax changes on landlord investments, but said it was just downplaying the trend that already had motivation.
“Over the past decade, we have seen a steady migration of buyers to the north, driven by easier-to-access real estate prices and higher yields than the South and especially the Southeast.
“This trend has accelerated in recent years, but remains part of a long-standing pattern, rather than a sudden peak following recent tax changes.”
Bland added that while the increase in SDLT surcharge for a second home purchase undoubtedly increases pressure, quarantine is unlikely to lead to significant changes in landlord behavior.
Queries of purchases are increasing, although from a very low basis
“The continued supply imbalance in the UK continues to mask the impact of these policy changes,” he said.
“For many investors, the attractiveness of the northern market is not only the lower purchase price, but also the potential for diversification, whether through student accommodation, HMOS [houses in multiple occupation] or other models that can provide higher returns. ”
However, Bland is eager to reiterate the overall decline in BTL activity, and landlords are facing increasing inhibitory effects.
“Many people choose to sell their portfolios rather than reinvest, and while some South-based investors are taking risks to the north, the basic challenges in the market – affordability, tax burden and regulatory pressures for installation – mean we are unlikely to look at It’s time to get to the event very quickly.”
Just Mortgages and Spicerhaart CEO John Phillips agreed that the landlord was necessary.
“We should not be surprised to see landlords continue to explore all possible opportunities as they continue to tackle market challenges and the continuous “anti-land” government policies. For those who still want to expand their portfolio, we will likely see to those pockets where they moved into the north and where house prices are under greater pressure compared to the national average.”
I can’t tell you that last time I had a customer contacted me in hopes of buying BTL in London or General South
Phillips added: “Given the challenges facing the streets up and down the country, we may even see more landlords looking to convert commercial venues into rent or HMOs.”
Like all businesses that want to stay profitable and viable for the long term, landlords are logically weighing all options in an incredible test market.
The reality is that they are moving to where they want value, not all the views that require BTL investment to relieve supply pressure.
This article introduces the February 2025 version Mortgage Strategy.
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