Glasgow/Leeds/Manchester or save for a year to buy in London

[vlad]

Hello all,

I would like to invest some savings that I've got into a property through buy to let (min 25% LTV). Unfortunately my savings are not big enough to purchase even a small property in London for now. So I have a choice:

- save for another year and hopefully get small property in London
- purchase a new build (off-plan) property in Glasgow/Leeds/Manchester

I've done some research and looks like yields in Glasgow/Manchester/Leeds are higher than I can get in London (approx 7-8% in those cities against 5% in London). But the problem is that property prices in those cities have mainly fallen in recent 5 years but in London they went in the opposite direction. So yield-wise those cities are more attractive but in long-term perspective London hypothetically wins (as you can make money on selling rather than on rent).


So, bottom line, I'm a bit lost and would kindly ask for local community advise on this.


Thank you,
Vlad

[Richlist]

I wouldn't buy in any of those areas.

I'd just stick to an area that is close to where I live & that I know very well.

Why aren't you considering this option ?

[Mortitia]

Yeilds in London are notoriously low and have been for some time so don't bother.

Buy to let is just about to explode IMO as over 55s get their hands on their pension pots and this will push up purchase prices. Mortgage interest rates are already increasing.

Agree with what RL writes - if you do buy do so near to where you live so you can manage your own property easily.

[Melboy]

I cannot believe how house prices in my area have exploded in such a short time of less than 18 months Mortitia.

Any property coming for sale in my my preferred buying area is sold within 48 hrs AND my EA contacts tell me that there is an acute shortage of seller's which is driving prices up AND it is the Pension Pot Releaser's that are gearing up to buy property as well.

For me it would appear I am out of the buying renovating game for what could be forever now.

To answer the OP question though. Stick with the area you know well and you can deal with.

Long distance property/owning /renting /tenanting can be a major headache for any landlord.

[Richlist]

I live just outside of the 'Greater London' area in Essex. One of my son's went to university in Bournemouth. We considered buying a property for him there and spent a pleasant few days in Bournemouth looking at anything suitable.

We very quickly came to the conclusion that owning a 100+ year old property, full of students, 150 miles from home was not going to be one of our best ideas.

Think carefully.

When prices are rising, availability is scarce and you worry you may miss the opportunity....thats when you are at your most vulnerable and can make poor choices.

Good luck.

[Mortitia]

On the flip side could be as that as these new landlords find out how difficult things are and suddenly sell up after a year or so.

I'm with you Mel in looking for distressed sales ( as mentioned in a previous post) or making more out of what I have got - I've maximised that now.

Students are big business in Bournemouth and Poole now especially with the new Arts Uni opening. (I'm sure we need plenty of people with Art degrees .)

[fionaf]

I wouldn't be buying now unless I had a very large wedge of cash sitting in the bank earning zilch and I could buy outright or practically outright. I live in Greater London and have three rental properties, rents have gone up quite a bit and we bought at the bottom of the market, otherwise our model would look quite unsteady. We manage them ourselves as they are all within 2 miles of where we live. I work full time and it is perfectly manageable when you have a good list of tradespersons to call on. 25% LTV on a buy-to-let is still quite expensive, I would expect to be putting at least 40% down so I had more of a cushion. Have you got a lot of equity in your domestic property?

If you do go ahead, think laterally, my first investment property we drew down on our domestic property and could pay the fantastic deal we had with them rather than the extortionate rates that buy to let have - of course there are risks for your own property, but for us it still meant we had 50% equity in our property and we had a stupidly cheap lifetime of mortgage deal that no longer existed in the market place and so was a no brainer. It will be paid of in-time for retirement so just right for us. Our second property was 60% LTV buy-to-let and so was the final third property. We don't tend to have void periods in our properties, out-in in about a week as we manage the process ourselves but some I know account for two months void a year so in my mind that makes the maths tough if on a low LTV.

New builds are priced at a premium - you pay for shiny and new and the price will (generally) go down, just like a new car for the first few years and depending on area, can take many many years to then compete in value with other equivalent properties in the area. Purpose built student accommodation may be an exception to this rule - I don't know enough about that market place to advise.

If I had a modest amount of cash I'd be buying up garages as storage costs in London rocket, you can get some quite nice returns for 10K on a garage.

Good luck.