First-Time Landlords Flocking to Northern Regions for Higher Yields

Why More First-Time Landlords Are Investing in the North

The North of England is proving to be a hotspot for first-time landlords, thanks to lower property prices, affordable rental costs, and stronger yields. According to Fleet Mortgages’ latest Buy-to-Let Barometer for Q4 2024, 25% of all mortgage applications from landlords in the North East came from those entering the market for the first time. Yorkshire & Humberside followed closely with 13%—a stark contrast to the South West, where only 4% of applications came from new landlords.

So, why is the North so appealing? Simply put, the numbers make sense. Property prices are lower, rental demand is strong, and mortgage requirements are less daunting. The North East, for example, boasts the most affordable rental stock nationwide, with an average monthly rent of just £706. On top of that, landlords in this region borrow significantly less, with average loan amounts standing at just £77,000 per mortgage.

Buy-to-Let Yields Are Driving Northern Investment

For investors, rental yield is a key consideration, and northern regions offer some of the UK’s best returns. Fleet Mortgages' data shows that the North East delivers an impressive 9.3% average rental yield, while Yorkshire & Humberside and the North West follow at 8.6% and 8.3%, respectively. Comparatively, landlords in London and the South are seeing lower yields—Greater London at 5.8%, East Anglia at 6.3%, and the South East at 6.4%—due to higher property costs and larger mortgage loan requirements.

Limited Company Landlords on the Rise

Another interesting trend is the increase in landlords using limited company structures for their investments. In Yorkshire & Humberside, 91% of all buy-to-let applications came from limited company landlords, compared to just 60% in the South West. This shift reflects tax efficiencies and strategic portfolio management, particularly for those scaling their buy-to-let business.

Are Landlords Still Buying Property?

Despite reports suggesting that landlords are hesitant to expand their portfolios, Fleet’s data tells a different story. In regions such as the North East, East Anglia, and Greater London, new property purchases are nearly equal to remortgage applications. In Yorkshire & Humberside, purchases even exceeded remortgages, with 60% of applications focused on acquiring new rental properties.

With mortgage rates stabilising and tenant demand remaining strong, landlords—both new and seasoned—are seizing opportunities where property values and yields align. Steve Cox, Chief Commercial Officer at Fleet Mortgages, emphasises that despite rising ownership costs and higher stamp duty surcharges, landlords remain committed to expanding their portfolios, recognising the strong fundamentals of the private rental sector (PRS).

The Future of the Private Rental Sector

The ongoing demand for rental properties highlights the crucial role landlords play in the UK’s housing market. With supply remaining constrained and rental prices continuing to rise, investing in buy-to-let properties—particularly in high-yield regions—remains an attractive prospect.

As the market evolves, savvy investors are focusing on regions that offer strong returns and long-term growth potential. If you're considering your first buy-to-let investment, exploring opportunities in northern hotspots could be a smart move.

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