When considering buy-to-let property investment opportunities in the UK, it is important to decide whether to invest in the North or the South. Each region offers distinct advantages for investors, but it is crucial to understand the differing rental yields, capital growth potential and property prices. In this article, we will explore the key differences between these regions, helping you make a more informed decision about where to invest in the UK.
The differences between the North and South
The UK has been characterised by a north-south divide for centuries, with the South historically associated with higher wages, more job opportunities, and greater affluence. In contrast, the North has often been linked to industries such as manufacturing and mining and has faced more challenging economic conditions.
However, the landscape is evolving. Regeneration efforts in key cities like Manchester and Liverpool have led to significant improvements in the quality of life, transforming these regions into vibrant, thriving areas. For property investors, this shift presents exciting opportunities, as these cities offer significant growth potential.
Key Factors to Consider For Buy-To-Let Investment
Rental Yield
Northern cities, particularly in the North West, consistently rank as top performers for rental yields. In Liverpool, buy-to-let properties can achieve rental yields well above the national average, with some areas reaching as high as 9%. Similarly, Manchester offers attractive returns, with rental yields in certain areas at 12%.
In contrast, southern regions generally see lower rental yields. In London, the average rental yield for 2024 was just 4%, largely due to higher property prices, which tend to reduce overall returns. However, there are still areas in the South where rental yields are more competitive, such as Bristol, where yields can reach up to 7%.
Property Prices
The average property price in the UK stands at £268,087, with regional variations offering unique opportunities for both buyers and investors.
Properties in the North tend to be more affordable, making them more accessible. For example, the average price of a house in Liverpool is £176,000, while in Manchester, it is £245,000, and in Newcastle, £201,000. These lower prices offer excellent opportunities for investors to enter the market and grow their portfolios. With property prices in the North expected to rise by 29.4%, there is significant potential for strong future returns for buy-to-sell investors.
In contrast, properties in the South, particularly in London, are generally more expensive. The average property price in London is £543,240. While entering the southern property market can be more challenging due to higher initial costs, the region still holds long-term value, due to the strong demand for accommodation in the area. Despite the higher upfront investment, the potential for long-term appreciation and rental income remains promising.
Capital Growth
Buy-to-let investors should also consider how their property’s capital is set to appreciate.
Due to the lower property prices in the region, the North has more scope for a property’s capital to appreciate, particularly the North West. Savills predicts 28.8% growth for the North West up to 2028, the highest in their table for growth. Similarly, the North East is expected to see a 25.2% growth. The ongoing regeneration efforts are stimulating demand for residential property in these regions, contributing to the long-term appreciation of their value.
In contrast, southern regions of the UK are projected to experience slower capital growth. For example, Savills forecasts a 14.2% increase in property values in London, which ranks lowest for growth potential across UK regions. As a result, buy-to-let investors in the South may see slower capital appreciation compared to their northern counterparts, making the North a more attractive option for buy-to-let investors seeking higher returns from property value growth.
Tenant Demand and Demographics
Tenant demand in the North and South of the UK differs significantly, driven largely by the demographic make-up and regional economic factors.
In the North, affordability is a key driver of demand, with rental prices typically lower than in the South. For example, the average rent in Liverpool is £810, making it more accessible to a broader range of tenants. In contrast, higher rents in the South, particularly in London, tend to attract more affluent demographics.
Both regions experience strong demand from student populations, with cities like Manchester and Liverpool hosting a combined total of over 150,000 students, creating high demand for student accommodation. London, with a student population exceeding 500,000, also has a thriving market for student housing, making purpose-built student accommodation a viable investment opportunity.
Regeneration efforts across the North are further boosting demand, with growing business sectors and expanding job markets attracting young professionals. As regeneration progresses in the North, cities like Manchester and Liverpool are increasingly popular with workers seeking affordable living options and career opportunities. Meanwhile, London, as the financial and business hub of the UK, maintains steady tenant demand due to its strong economy and continued appeal to professionals in various industries.
Regeneration Efforts
The North has seen significant regeneration in an attempt to raise the economic floor of the region to match the economic power of the south. Cities like Liverpool and Manchester stand out as particular examples.
Liverpool
Liverpool has undergone significant regeneration in recent years, recovering from the economic decline of the 1980s and 1990s to become one of the UK’s top investment hotspots. The city has seen substantial investment in its infrastructure, business sectors, and quality of life, with the Liverpool City Council’s mission to ‘remember, reimagine, revitalise’ guiding its progress.
Previously underutilised areas like Liverpool One and the Baltic Triangle have been transformed into vibrant, thriving hubs. The Baltic Triangle has become a key destination for creative businesses, employing over 3,000 people, while Liverpool One has emerged as the city’s commercial epicentre, with major retailers, office spaces, and leisure facilities. This transformation has significantly boosted the city’s economy, propelling it into the top five most popular shopping destinations in the UK.
The £5.5 billion Liverpool Waters project is the next phase of this regeneration, aiming to revitalise the iconic waterfront with a dynamic mix of residential and commercial spaces across five distinct neighbourhoods. With the upcoming Everton Stadium and ongoing housing developments at Central Dock, the waterfront is quickly becoming a prime property investment spot for buy-to-let investors.
Manchester
Manchester has undergone a remarkable transformation since the 1980s. Once facing significant economic decline, the city has made a strong comeback, becoming a key economic hub in the North. Landmark projects like MediaCity have played a pivotal role in this revitalisation, positioning Manchester as the digital hub of the North. Home to major broadcasters such as the BBC and ITV, as well as numerous production studios, MediaCity now houses over 7,500 residents and is one of the city’s most sought-after areas. Since its development, property prices in this area have grown by 70%.
Click here to explore our exclusive Media City UK property
Neighbouring areas like Salford Quays and the city centre have also undergone extensive urban development. Improved public transport infrastructure, including a fully integrated tram system and new bus routes, has enhanced connectivity throughout the city, making it easier for residents to travel between districts. These developments have not only created new jobs and residential spaces but have also driven up property values, further solidifying Manchester’s status as a thriving, dynamic city.
Making The Decision: North V South
Buy-to-lets in the North and South of the UK both offer unique benefits, and the best investment choice depends on your individual investment strategy. The North is ideal for those seeking affordable entry points, high rental yields, and strong potential for capital appreciation. In contrast, investing in the South requires careful research to identify the highest-yielding properties due to the higher property prices.
At Advantage Investment, our award-winning property investment consultants are here to help you navigate the market and find the best opportunities available. Contact us today for a free consultation and start your property investment journey with confidence!
