Is it time to invest outside of London?

The British property market is about to dramatically change. It is now predicted that due to weaker consumer confidence, London will experience two very static years in terms of capital growth.  Throughout history it has been consistently clear that the property market doesn’t like uncertainty and the effect of Brexit and certain government interventions, the shift in investment maybe pointing towards outside our capital.

Why’s this likely? Well after years of huge growth, investors will find it difficult to find the return they are after in the capital. Firstly Stamp duty changes that were introduced fairly recently have already started to have an impact at the top of the market, for example if you were to buy an investment property for £10 million you would have to fork out a whopping c. £1.4 million in tax!  To make a profit on the sale your house, the capital growth would have to be north of 15% before any costs at all.

More changes face landlords in 2017 with additional stringent affordability checks on mortgages and now the withdrawal on the mortgage tax relief, investors margins are being squeezed. These changes will mean that investors have smaller budgets and therefore they may have to look out of London in order to invest. Manchester is set to live up to its name as the ‘Northern Power House’ and with Gross yields of around 6% investors would be silly to turn away. Not only can high yields be found here but Manchester has a large rental sector, this is helped by the fact that it is home to c.60% more 25-30 year olds than anywhere else across the UK.

Liverpool, Leeds, Nottingham and Sheffield have also been tipped as investing hotspots in 2017. Many people have heard of a term called ‘The Ripple Effect’ and it may just be the case that London’s last few years of boom will now be creating ‘waves’ of growth around the UK.