London and the South East have long been the focal points of the UK property market, drawing both domestic and international investors. However, signs of a shift in investment potential are emerging, as buy-to-let investors increasingly turn their attention to the North West, North East and Wales in pursuit of stronger returns.
Ryan Etchells, the chief commercial officer of Together, spoke to Yahoo Finance Future Focus about this changing landscape and why regional property markets are now offering some of the best growth potential in the UK.
“Over the past couple of years, what we have seen is a change in approaches that landlords are taking in order to maximise their investment, and we’re seeing a shift,” Etchells said.
“A decade ago, the two biggest places that we supported customers in buy-to-let were London and the South East, now fast forward to today, and it’s the North West and the North East.”
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This shift is primarily driven by the need for higher yields. While London and the South East have traditionally been seen as prime property investment locations, soaring property values in these areas have made it challenging for landlords to achieve substantial returns.
In contrast, more affordable property prices and stronger rental yields are now drawing investors to cities like Manchester, Liverpool and Newcastle.
Etchells highlighted that recent research shows average rental yields in the North West, North East and Wales remain above 8%, a level that is increasingly difficult to achieve in the capital.
“That’s a great yield considering everything that’s happened over the past couple of years,” Etchells said.
More affordable property prices and stronger rental yields are now drawing investors to cities like Liverpool. · REUTERS / Reuters
Beyond financial factors, shifting lifestyle and work patterns are reshaping the property market, according to Etchells. The rise of remote and hybrid working models has increased demand for rental properties beyond traditional urban hubs like London.
Cities such as Manchester are experiencing notable growth in both city centre and suburban rental markets.
“In Manchester, you can see more and more new high-rises being built,” Etchells said. “The rental market in the city centre is thriving, but so is the suburban market as people change the way they work and live.”
Changing work habits have also fuelled a surge in self-employment and gig economy jobs.
“The way people live and work is evolving, and we’ve seen a massive rise in self-employment,” Etchells noted, citing recent data from the Office for National Statistics (ONS).
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According to the ONS, over a million self-employed individuals in the UK are now aged 60 or older — a demographic shift that presents new opportunities and challenges for property investors.
The Labour government’s recent policy changes have also had a notable impact on landlords and property investors. Rising interest rates, changes in taxation and new regulations have placed additional pressure on the buy-to-let sector.
“We haven’t got enough housing stock in the UK. We’ve been saying it for a long time now,” Etchells said. “We were really happy to see the £5bn investment earmarked by the Labour government for building property. But we really need to see that coming through.”
While large-scale housebuilders can deliver major developments, Etchells emphasised that smaller and medium-sized builders will play a crucial role in addressing the UK’s housing shortage.
These builders, often working on projects of 50 to 100 units, are more agile and able to meet the growing demand for new homes in regional areas.
Despite current economic pressures, Etchells remains optimistic about the long-term prospects for the UK property market. He shared projections that property values are expected to rise by 20% over the next five years, while rental yields are forecast to increase by 17%.
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“As an investor looking through the cycle, yes, there are more upfront costs now, like increased stamp duty, but the long-term view remains positive,” he said. “Property investment will always help investors reach their ambitions.”
Etchells emphasised the importance of adaptability for landlords navigating the evolving market.
“Landlords are now looking beyond traditional property hotspots. They’re focusing on up-and-coming regions and seeking out new opportunities that align with changing tenant demands.”
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