North West tipped for best buy-to-let returns

Residential buy-to-let in the North West of England is set to be one of the property market’s top performers this year according to Savills.

Good news for landlords in Stockport and the wider North West as leading property experts Savills has said that residential buy-to-lets in this region, together with industrial property and retail warehouses in London are going to be the top performing areas in 2024.

The company predicts that both areas should secure annual investment returns of between 8.5% and 9.2% between 2024 and 2028.

The agency’s annual cross-sector forecasts suggest a stronger outlook and opportunity for UK property investment in 2024 as interest rates steady. But returns will continue to be driven by income potential instead of capital growth.

It noted that turbulence in the mortgage markets, an uncertain planning environment, increased build cost inflation and regulatory changes in the private rented sector, suppressed transactions and growth in the residential sector in 2023. But with inflation now heading back towards the target rate of 2% and a more stable mortgage market, the primary sources of financial disturbance should ease over the course of the year.

Despite tougher conditions for landlords, with Savills forecasting rents to grow by a further 18.1 per cent by 2028 there is still significant opportunity for those less reliant on debt, particularly for those with a portfolio furthest from London, with Savills forecasting 9.2 per cent returns for the North West.

Richard Merryweather, Savills joint head of UK investment, said “The factors that drove falls in UK property values and transaction levels over the last two years are expected to improve in 2024. There will be significant opportunity – especially in the commercial and residential spaces – for investors to buy at the bottom of the market, with a focus on opportunities where capital values have either over-corrected, or where rental growth prospects might be accelerating.

“We are seldom able to see the bottom of any cycle this clearly, but we are confident that 2024 and 2025 will be the years in which normal service will be resumed.”

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