Nottingham is the place to invest
Nottingham city price growth has outperformed London, Leeds, Cambridge and many other traditional ‘safe haven’ cities, only just beaten by Manchester (8.4%), Leicester (7.7%) and Birmingham (7.7%).
London has only achieved 3.5% growth, down from 13% reflecting a severe cooling off, almost certainly, due to recent increased stamp duty levies, resulting in less buy to let investment purchases. South east investors have subdued their activity in this area, choosing to migrate investment to the provinces where capital values are significantly less and thus stamp duty tax is reduced.
It’s no surprise, an average buy to let property in Nottingham city of £144,400 attracts stamp duty of £4720 and an average property in London of £489,400 attracts stamp duty of £29,152. Gross yields in Nottingham are circa 8% and in the south east 3.5%. These yields in the south east, backed up by high capital value rises were acceptable but as capital values are decreasing, now investors are flocking to the provinces.
Such high acquisition costs reduce initial yields and forward yields, so investors are looking towards the ‘unfashionable’ provinces, like Nottingham, where acquisition costs are reduced and so yields increased.
Ricky, Walton & Allen Investment Manager, agrees. “We are seeing a large amount of south eastern investors buying in Nottingham for the obvious reasons mentioned above. It’s incredible, these investors are buying apartments in the city centre without even viewing them, such is the frenzy that seems to be occurring”.
We find it hard to believe, but it’s happening. There are many reasons why the foreign or ‘London’, money is coming up to Nottingham but now London is no longer seen as the only location in the U.K, but us small time provinces are the places to invest now.
The ego purchases of foreign investors in London is diminishing now. No longer are the wealthy Russians, Chinese, Greeks etc buying trophy properties in Kensington and Chelsea but they are seeking the better financial yields in the provinces and Nottingham is one of those.
This is further good news for existing owners in Nottingham as demand is increasing, and this is why prices are still ‘robust’, according to hometrack.com.
If you own a property then this may be the time to sell or if you are looking to invest in Nottingham, let us find something suitable with a decent yield.
What do we see as happening in the future?
Like hometrack.com, I believe that prices will continue to increase outside of the south east in 2017 as households take advantage of low mortgage rates and an improving economic outlook. Despite the results of the general election, confidence in the U.K. Economy is likely to continue, although Brexit will cause some uncertainty over the next period.
Whatever the political situation, the supply of decent housing will still be in short supply, compared to demand.