Sequre Property Investment specialises in the provision of discounted, high-income producing, buy to let property in a number of major UK cities.
I asked Graham what his thoughts were on North V South Investments
Q1.
Should potential investors invest solely in either the North or the South for the best chance of a decent return, or perhaps a little of both?
In an ideal world, a well balanced portfolio would include investments in both the North and the South because they have different strengths - the North benefits from very high yields and the South benefits from potential capital growth. However, the truth is that we are regularly seeing deals in the North with genuine discounts.
Therefore, rather than having to wait 3-5 years for investments in the South to realise capital growth, investors in the North are able to achieve the same (instant equity) from day one. There is a strong argument that the North effectively offers both high yields and capital growth, which the South cannot.
Q2.
Is investing in London the recession proof ‘safe-bet’ that many have come to believe?
There can be no denying the fact that many foreign buyers see London as a safe haven to invest their cash and therefore prices have just continued to rise. But how long can this go on for?
We think that a combination of moving interest rates and exchange rates will be the catalyst for changes in the London property market. Prime central London prices are likely to remain stable as wealthy foreigners are attracted to the lifestyle, but average prices in suburbs just can’t continue to rise at the same rate, as people’s standard of living is continually in decline.
Q3.
4 out of the 5 towns and cities with the highest concentration of private rental housing stock are in the North and offer the strongest returns for BTL investors – why do you think this is?
Northern Cities are fundamentally more suited to young professionals because they offer affordable rental accommodation in thriving City Centre locations. In comparison, rental prices in London are so high that it just doesn’t make financial sense for some young professionals to move out of their parents’ home until they can afford to buy their own property.
Furthermore, as mentioned previously, returns for BTL investors are the strongest in the North because property prices are so much lower than the South and rental demand continues to strengthen. Manchester in particular has young professionals flocking there year on year due to continued investment, such as at Media City where the BBC and ITV have relocated to. In addition, Manchester, like London, offers a vibrant lifestyle with a wide range of restaurants, bars and entertainment, but for a fraction of the cost.
Q4.
What would you say are the main differences between investing in the North and the South?
Other than the aforementioned difference between capital growth and yield, the key difference has to be the price point of properties. Investments in Northern cities may require a £25,000 deposit which can be afforded by someone who has saved carefully over time, whereas a typical London investment requires a deposit of at least £60,000 - a substantial sum of money that not many people have lying around. We are seeing many new investors joining us who are being forced out of London by unaffordable prices and they are attracted to the high returns and discounts available in the North.
Q5.
Rising rents and lower capital values are giving a much better return than the banks. So, can a BTL investment give you a healthy profit if you buy now?
Yes absolutely. We are currently sourcing buy to let deals that are safe and secure investments, offering both monthly rental income and genuine discounts which can be realised as a future capital gain by either selling on or refinancing. Now is a great time to buy because prices are at their lowest point since the recession and we are gradually beginning to see upward movement in the market. Investors are now able to purchase buy to let investments that are not speculative or risky, they are low-risk, built, fully managed, income producing investments that offer safe and secure returns.
Q6.
What advice would you give to someone who is thinking about starting their first investment?
Our advice would be that you need to ask yourself what you want to gain from investing in property and then choose the right type of investment that meets the criteria. There are so many different forms of property offering a wide range of risks vs returns. There is no ‘best’ form of investment, we all have different financial ambitions and requirements.
Our investors are predominantly looking for safe investments that give them additional monthly income and are bought at a discount so they can realise the capital growth in the future. Therefore, we focus on buoyant City Centre locations where rental demand is strong, yields are high and there is the potential to negotiate a genuine discount.
