So far in 2024 Tuscan Capital has seen an increased level of interest from property investors across the county, an incredibly encouraging indication of the health of the market.
But it’s important to bear in mind that the driving factors behind those higher activity levels in different regions are not uniform, and understanding those distinctions gives advisers and lenders alike a better chance of delivering for those investors.
Here is a quick review across three specific regions where we see significant activity and demand, but within which we might see very different needs and demands.
The North West
One of the big attractions of the North West for investors has been the strength of rental growth.
Recent research from Zoopla pinpointed the areas which have seen the highest level of rental growth since 2020, with parts of the North West performing particularly strongly. For example, Bolton, Manchester and Wigan all saw rental growth of above 35% over the time period, some of the most significant growth in the entire country.
In fact, the rental growth has been so strong there have been some investors who opted to sell up a selection of assets last year, given the affordability challenges, but who are now looking to reinvest in the region. The ingredients are there for an excellent return over a sustained period.
The Home Counties
Within the Home Counties, there is a notable turnover of properties among landlords. While some are looking to exit the market as a result of reduced profitability and increased legislation, this has opened the door for remaining investors to take advantage by picking up properties and even portfolios at a competitive price, with the option of optimising those assets.
For example, we have a host of landlords looking at new angles to create profit from these properties, for example, converting a traditional residential property into an HMO, or commercial property into residential.
Crucially, the Home Counties continues to hold appeal due to its popularity among commuters. With greater numbers of tenants moving out of London as a result of the rental increases seen in recent years, towns within the Home Counties are an excellent and more affordable alternative, with many landlords on the lookout for suitable properties in these areas to add to their portfolios.
Birmingham
One of the most eye-catching elements about Birmingham for investors is the fact rent within the city sits below the national average, making it more affordable for quality, young tenants. Despite this, rents have increased substantially over the last couple of years, and with further growth likely, properties in the region are becoming more sought after by landlords.
This has been boosted by the fact the city and surrounding areas are seeing notable levels of residential development, providing greater opportunities for investors to add properties in the region to their portfolio.
Supporting landlords
What’s clear is that landlords are well aware of the opportunities open to them through investing in property at the moment. After the complications of recent years, there is a feeling of stability in the market currently, with inflation continuing to fall, and with the expectation of Bank Base Rate cuts ahead.
The resurgent interest in short-term finance is telling. In many cases this has been down to investors looking to renovate or convert properties, recognising that with a little TLC or simply reorganisation, the property can be placed in a saleable position.
Auctions have been booming – data from the Essential Information Group shows that in 2023 there was a jump of more than 13% in the number of property lots sold, with investors well aware of the opportunities presented.
It was because of this level of demand that Tuscan recently launched a new refurbishment facility, where the entire process – from the underwriting to the drawdown – is managed in-house.
However, across the regions we are also seeing landlords look to make use of the flexibility offered by short-term finance when reoptimising their portfolios, allowing them to sell off those assets which are perhaps underperforming, without worrying about incurring exit fees.
While different regions have different attractions for investors, what unites them is the fact that property remains an enticing investment, and short-term finance a vital tool in tapping into that market.
Jaxon Stevens is sales director at Tuscan Capital
