Buy-to-let investors, could you get more for your money in the north?

Category: News

Data suggests that buy-to-let investors could get greater returns on their investment by purchasing property in the north. As soaring interest rates mean landlords are paying far more in mortgage payments, finding properties with a great rental yield could ease the pressure, but so could securing a mortgage that suits your needs.

According to a MoneyWeek report, the north of England is outperforming the south both in terms of capital appreciation and rental yields. 

The annual capital appreciation in the north was 2.7%, compared to 0.8% in the south

The research compared house prices over 12 months to May 2023. In the north, over the year assessed, the average house price increased by 2.7% to £211,392.

In the south, the growth was a more modest 0.8% and the average house price was significantly higher at £388,917.

The value of your property may make little difference to your plans in the short term if it’s let out. However, it could provide you with more freedom when you decide to sell the property and might even mean you could access a more competitive mortgage interest rate if you move into a lower loan-to-value (LTV) band. 

The difference in rental yield between the north and south was 0.5% 

The gap between the north and the south when it comes to rental yield is smaller, but it’s still the north that’s stronger. The average rental yield in the north is around 4.7% compared to 4.2% in the south.

However, there are significant differences across both the north and south. Perhaps unsurprisingly, London boasted the strongest rental growth over the year at 12.5%, putting it well ahead of second place West Midlands, which saw growth of 10.8%. 

As the rental yield will have a direct effect on your income, it’s a valuable way to monitor the value of your property portfolio and whether you’re getting the most out of your investment. 

Keeping track of your rental income and profit is a useful task for landlords at any time. However, as your outgoings are likely to have increased recently, it could be more important than ever. 

Landlords are paying 40% more in mortgage interest compared to 2022 

The Bank of England has increased interest rates over the last two years, and it’s likely to have affected your buy-to-let payments.

In fact, according to estate agents Hamptons, landlords across the UK were paying 40% more mortgage interest in August 2023 when compared to just a year earlier. That’s the equivalent of an extra £4.2 billion a year even though the number of outstanding buy-to-let mortgages has been falling as some landlords opt to sell their properties. 

The average buy-to-let investor handed over 37% of their rental income to cover mortgage costs, up from 28% a year earlier.

The increase was attributed to:

  • New investor purchases at higher interest rates
  • Existing tracker- or variable-rate mortgages increasing
  • Fixed-term mortgage deals expiring.

Even a seemingly small increase in the interest rate could have a large effect on your outgoings.

In August 2023, the average interest rate was 3.4% and landlords were collectively paying £15 billion in interest a year. If the rate increased to just 4%, the amount paid would rise to almost £18 billion.

So, balancing rental yield and mortgage payments could be more important than ever. 

There are steps you can take to improve your rental yield, including assessing if you’re investing in the right property or area. You might also choose to increase the rent of your properties if the market in the area is strong.

However, you shouldn’t overlook the value that reviewing your mortgage could add either. 

Reviewing your mortgage could help you cut costs and make the most out of your investment 

While reducing the cost of your mortgage won’t improve your rental yield, it means you’ll keep more of the profit.

There are lots of mortgage providers in the market, so it may be worth reviewing how competitive your interest rate is, especially if your existing deal will be ending soon. You could benefit from a lower rate or you may want to opt for a fixed-rate deal to ease concerns that your payments could increase again without warning. 

Contact us to talk about your buy-to-let mortgage

Whether you’re researching if buy-to-let could be right for you or if you already have an established portfolio, working with a mortgage broker could help you secure a mortgage that suits you.

We’ll take the time to understand your needs and find a lender that could be right for you, and then offer guidance throughout the application process. As a mortgage broker, we could make searching for a new mortgage less stressful and potentially cut your outgoings by securing a more competitive interest rate.

Contact us to arrange a meeting to talk about your buy-to-let mortgage. 

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your property may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Some buy-to-let mortgages are not regulated by the Financial Conduct Authority.

What our clients say

I was recommended Paul and Bryony as financial advisers by a friend. My husband and I were particularly interested to think about where to invest our savings. They have helped us to think about what level of risk we are prepared to engage with and explained the different possibilities very clearly and thoroughly, enabling us to maximise the potential of our investments. They also provide regular updates. We have been very pleased with their service and have already recommended them to others.

Dr C Oliver

London

I have been a client of RMI since their foundation. Prior to that, I dealt with the directors for my own personal pension and our business pensions. This relationship as existed for the last 25 years. During this time, I have received first-class support and advice. I have always been kept informed on financial trends and opportunities. To this end I was able to plan retirement early if I wished. More importantly, I was able to choose the right opportunity as when to retire. Since retiring, I continue to receive the highest service and advice on fund management.

Mr. M Moore

Ex General Manager

Leicester

We have dealt with Paul and his staff for over 20 years and have received a first-class service that is completely to our entire satisfaction. We would have no hesitation in recommending the company to anyone who is seeking financial advice.

Mr J Channing

Ex Non-Executive Director, Earl Shilton Building Society

Leicestershire

It’s a great comfort to have Paul Eason and his team on call if I have any queries or concerns about my finances.

Ms M Topham

Oxford

Paul Eason and Bryony Evans have competently managed our investments for the past twelve years. Their service has been managed diligently; they have provided consistency of advice for positive results. This has given us satisfaction and confidence in their ability to handle our personal affairs. Their research and advice are in-depth, concise and clear. They have demonstrated a thoroughness in all aspects of our personal financial planning.

Mr & Mrs S Price

Devon

Following a personal recommendation from a colleague some two years ago, Bryony and Paul provided advice to my wife and myself on planning for my forthcoming retirement. Latterly they have helped another family member on how best to invest a lump sum inheritance. On both occasions, they have guided us through the various options available, indicating the pros and cons in an easily understandable way. They continue to provide regular updates on how the investment is performing. We have always found them to be attentive, knowledgeable and a pleasure to deal with. We would have no hesitation in recommending them to a friend seeking an adviser.

Mr & Mrs P Teasdale

Rutland

When you are investing, you need confidence to make decisive commitments. Paul Eason and Bryony Evans at RMI are true professionals that you can trust implicitly for commercial and personal advice and transactions.

Mr D Matthews

Chairman, Cellular Mouldings Ltd

Northants

RMI not only deal with all our company's employee benefits schemes, but also provide invaluable support for us on a personal level. Nothing is too much trouble and we have found their service to be effective, efficient and friendly. We would recommend RMI to any company or private individual looking for a comprehensive and personal service.

Mr & Mrs I Bates

Ex Directors of The Bright Consultancy Ltd

Bournemouth

Paul and Bryony have advised us for over ten years. They bring strong market knowledge and analysis to provide balanced views for investment decision making. This is then backed up by thorough administration - all delivered in a professional and easy-going manner.

Mr & Mrs I Morton

Concept Shape Ltd

Cheshire

RMI Independent Financial Advisers have been assisting our clients with knowledge and insight into the world of pensions and protection for over 10 years. They have helped many of our company and personal clients navigate their options and meet the legislative duties around pensions and auto-enrolment in the most efficient way, whilst giving them the confidence to plan effectively for their future. We have no hesitation whatsoever in recommending their services to not only our clients, but to other professional connections.

Sunflower Accounts Ltd

Accountants

Wiltshire

Paul has been a trusted adviser to our business for over 20 years and he and Bryony continue to support us with our company pension scheme whilst providing first class financial advice. We would highly recommend RMI for anyone seeking a quality financial advisory service.

Mr J Turner

Managing Director, LINAK UK Ltd

Birmingham

I was looking at my potential retirement options and RMI were able to come up with a bespoke pension solution that enabled me to retire earlier than I had expected.

B Kilfeather

Not knowing how to plan for the future, I required advise about pensions and insurance policies and Paul has helped by being constantly available, calm and pragmatic.

Dr R Singh

Director

Paul was recommended to me by one of his clients and I was looking for a financial adviser who could help with a pension scheme for my employees and also for my personal plan.

Paul helped all the members of my team. He had time and patience and everyone individually with their various circumstances. He was also very helpful with my personal pension during the time I have my business. My personal circumstances have now changed and Paul’s advice has been invaluable.

D Harrison

Business Owner

RMI Independent Financial Advice
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.