We've received an interesting question from Maggie in Kensington: "What's the difference between investing in London and the North of England?"
In this video, Johnsy addresses the main differences between living in the South and the North and compares property costs and standards. Despite being based in Chester, Johnsy gives an outside, unbiased view on the differences to simply present facts instead of opinions. He focuses on transport, deposits, yields and finally, property costs and value.
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Please see below the full transcript of the video:
Hi, welcome to Ask Johnsy, a series of videos that delve into the life of an investment consultant. Please hit the subscribe button below, so that you’ll be informed of all future videos in this series. Let’s look at today’s question, which is…
[‘What’s the difference between investing in London, and investing in the North?’ – Maggie, Kensington]
Well, the first difference is the reason for investing really. Historically, a lot of people have invested for capital growth in the capital. However, a lot of people are now realising that yields are more achievable – higher yields are more achievable in the North of England. What we say in the industry is, yields are real, they actually land in your bank account every month. You know, capital growth, you only really get any benefit from capital growth if you’re either re-financing or selling the property. But yield is something that can give you a regular income. So, the yields achievable in the North of England, you’re talking sort of between 5 and 8 percent really in inner cities in the North. Whereas in London, you’re talking really now between 1 and 3 percent in key areas of a net return of the price.
So, the next difference is the deposits. Deposits that you’re going to put down on an off-plan development in London, you’ll be used to putting 5-10 percent down. You’re not going to get that in the North. In the North, due to restrictions in developer funding by the banks, we are seeing deposits being put of 20% upwards.
Also, the size of the city. A lot of people don’t realise but London is huge. It’s much bigger than any other city in the North. So, Manchester’s actually quite a small city, which makes transport links critical. We haven’t got an underground up here, so, proximity to bus stops and tram lines and train stations is really important. Another massive difference is parking. Parking in the North is critical. We’re used to driving everywhere here, we don’t have the underground, we don’t really like walking. The government has also put planning on a lot of parking spaces now, with new developments, because they want to encourage people to use public transport. But still, most people drive.
The final one is cheap pricing. Don’t get carried away by cheap pricing. You might be able to get a £30,000 terraced house in the outskirts or the suburbs of the city, but you’re not going to be in the right area. You’re going to be spending a good amount of money on a city centre investment. Otherwise, a lot of people get attracted to the wrong areas and therefore get attracted into renting to the wrong type of tenant. Ok, and they’re the main differences. Thank you, Maggie, and thank you for watching Ask Johnsy.
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