The UK buy-to-let market has been recognised as one of the most lucrative asset classes for many years and has recently attracted many South African investors who are taking advantage of the weak pound following the shock EU referendum result last year.
There is no surprise that UK buy-to-let is becoming even more popular, with the Private Rented Sector projected to grow significantly in the years to come. According to Knight Frank, almost one in four households in the UK will be renting privately by the end of 2021 as a result of surging house prices and stagnant salaries across the country.
It is further predicted that the total number of rental households in the UK will reach 7.2 million by 2025, with limited supply and spiralling house prices making it increasingly difficult for first time buyers to get on the property ladder. Currently there is an annual shortfall of at least 70,000 new homes in the UK and, with the current levels of construction, it is hard to see how this gap will be closed.
This means that there are more people in the UK renting privately than ever before, and generational attitudes towards purchasing a home are changing, with many content to settle down and start a family in a rented property. This goes some way to explain how the average tenancy length has risen by 18% from 2014, which is great news for investors who are likely to benefit from higher occupancy rates.
So, where should you look to invest? Historically the Central London market has been considered the best option for buy-to-let investment, however the city has been experiencing a prolonged slowdown for some time, with soaring house prices forcing thousands of people to move elsewhere. Since 2012, the number of people moving out of London each year has risen by 80% with the majority leaving to rent elsewhere.
The attention has now turned to the north of the UK where many ex-Londoners are finding a more affordable, higher quality lifestyle on offer. This influx of young people has had a remarkable effect on major northern cities such as Manchester, Leeds and Liverpool where the shortage of high-quality homes is becoming more noticeable. Over 40,000 newly built homes will be required to meet the demand in these northern cities according to industry experts JLL, but this figure is unlikely to be met.
Manchester is a prime example of a city where house-building is lagging far behind demand. Analysis from this year suggests that the city’s population is growing almost 15 times faster than homes are being built, meaning that the housing crisis will only get worse in the future. Across the Greater Manchester region, the situation is not much different, with the population in Salford and Stockport growing three times faster than homes being built.
The current situation paves the way for South African investors who can benefit from discounted property due to the weak pound. Investing in northern buy-to-let property will help bridge the gap between supply and demand in the key cities and in return, has the potential to provide investors with a profitable investment.
Looking to learn more about buy-to-let property in the UK? Knight Knox is a market-leading property consultancy with a particular focus on city centre residential investments in the UK’s northern property market. With more than 80 developments launched to a value of over £1 billion, of which 58 are completed and occupied, Knight Knox is an investment company that you can trust.
At regular events held across the country, our team will present our extensive portfolio of premium, high-yielding buy-to-let investments and will be on hand to answer any questions that you may have. In addition, attendees will have the chance to listen to presentations which will go into greater detail about how to invest in UK buy-to-let and provide more information on the UK’s property hotspots.
Alternatively, please contact our head office on +44 (0)161 772 1392 for further information about our properties.