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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.
Changing work patterns and regional demand
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).