North steals buy-to-let advantage

Buy-to-let investors may well be scouring the north of England as they plot their investment strategies this summer, after experts advised it is beginning to take over from the south as a key property hotspot.Traditionally, economic activity has been at its strongest in the south and in London in particular. Thanks to phenomenal growth in cities including Liverpool and Manchester, this is now beginning to change, according to industry experts.The and Homebuyer Show will take place in Manchester at the beginning of June and 72 per cent of the exhibitors said that investors are now able to take advantage of healthy opportunities and impressive capital growth in the north.Buy-to-let investment has proved to be particularly lucrative in regeneration areas and so it is unsurprising that Liverpool and Manchester have performed well in recent years.Experts suggest that one of the key catalysts for growth in Manchester was its successful hosting of the Commonwealth Games in 2002. Manchester had already developed into one of Europe's most dynamic cities by this point, but the publicity received during the Games added fuel to the growth and made it yet more attractive to new businesses and young professionals.Furthermore, the BBC is now making plans to shift some of its operations to Manchester, which will lead to greater levels of employment in the city and a higher profile for existing businesses.With Liverpool the European Capital of Culture in 2008, the north-west is clearly beginning to steal some of the thunder from the south and the repercussions for buy-to-let investors are becoming evident.Louis Mann, sales director of Validus, advised buy-to-let investors to keep an eye on the north. "Property prices are still lower than in the south and for the investor this means a lower 'ticket price' to purchase the property which is great for cash flow. Admittedly this has to be weighed against expected lower rents but rental returns are still favourable at 4.7 per cent annually and, encouragingly for the long-term, property prices in the north have room to grow," he added.Nick Clark, managing director of the forthcoming show, also pointed out that the north is seeing high demand from workers, tourists, students and immigrants. The potential for capital growth in the north is certainly one of the biggest attractions for investors as buy-to-let is very much a long-term strategy. Nicola Severn, marketing manager for Trust, points out that most investors will approach the sector hoping for a combination of good rental income and healthy capital appreciation, but to maximise the potential of both it is crucial to avoid short-sightedness.Experts from the Property Investor and Homebuyer Show argue that while the south certainly still offers good returns, higher house prices are making it more difficult to pay off the investment.