Regional Focus: Spotlight on the North East
In our recent blog post, The Changing Nature of the Buy to Let Market, I made reference to the interesting opportunity the North East presents.
The 2008 financial crisis hit the North East particularly hard and unlike large parts of the rest of the country, it has not yet recovered from it.
For example, as part of our due diligence process for the management of our investment funds, we constantly assess the whole of the UK property market. We look for niche opportunities that will help us deliver on our guarantee of a double digit return on investment.
During this process, we uncovered the fact that houses in certain colliery villages with a value in 2008 of £80,000 are now routinely sold for £30,000 or below. It is therefore hardly surprising that negative equity is commonplace. The more vibrant cities and larger towns are also fighting the depleting value of residential property.
Spotlight on the North East
So consider this:
- If you buy stock now, it is difficult to see how your property could devalue any further.
- Demand for rental stock is at a very high level so rental yields are better than in most areas of the UK.
- Local authorities and Housing Associations are looking to the private landlord market to secure additional footprint.
- Responsible landlords charging fair rents for good quality property can build sustainable portfolios.
Buy to Let often leads the way where there is economic opportunity. London, the South East, Manchester and Liverpool are all testament to the power of Buy to Let. It is true to say that capital growth in the North East will be modest for some time but rental demand & the yield it delivers makes capital growth almost a secondary concern, certainly in the short term.
Comparisons with the North West of a decade or two ago, particularly Liverpool, are interesting. In hindsight, everyone claims to have known all along that Liverpool would become the thriving hub we now see. It is strange that very few seem to be turning their attentions to the North East ,we believe there are many opportunities there for property investors.
Those who can see an opportunity may well buy now, become a good landlord with a large portfolio, and then wait. Rental yields of over 15% means that the North East will be an area to watch for quite some time.
If you are interested in joining our group of property investors who fund all of our deals, call me today on 01923 797181 to ensure that you don’t miss out on the profits available.
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This is blog post number 26.