Is now a good time to buy my first buy-to-let in the north of England?

I'm in my thirties and am considering buying my first buy-to-let property. I already own a small flat in the south of England which I live in.

I've read that buying a property in the north of England could be a good investment and provide me with strong returns.

Is now a good time to enter the buy-to-let market? What factors should I take into consideration? I've seen reports about changes coming in, but haven't delved into the details yet.

Jane Denton, of the Daily Mail, replies: In the current climate, there is a lot to consider before becoming a buy-to-let landlord for the first time.

Recent data from the Bank of England showed the number of buy-to-let loans agreed between June and August fell by 12.5 per cent compared to the previous quarter.

Landlords have been viewed as targets for boosting the Treasury's tax-take in recent times.

Since April 2020, landlords have not been able to deduct any of their mortgage expenses from their rental income to reduce their tax bill. Instead, landlords now receive a tax credit, which is based on 20 per cent of their mortgage interest payments.

They are also subject to a 5 per cent stamp duty surcharge when they buy properties, which is something you need to factor in.

There is speculation Rachel Reeves could use the Autumn Budget to target landlords further, potentially imposing National Insurance on the money they make from rent. At this point, it is not known whether this move will or will not be implemented.

If you go ahead with your buy-to-let plan, you will also need to factor in the impact of the Renters' Rights Bill.

Once the bill becomes law, Section 21 'no-fault' evictions will be banned, tenants will be given greater rights to challenge rent rises and it will be illegal to discriminate against prospective tenants on benefits. Data shows some landlords are selling up ahead of the bill coming into force.

However, there are plenty of people who are still interested. Millennials like yourself comprised a record 50 per cent of new buy-to-let investors in England and Wales in the year to date, figures from Hamptons showed.

Your plan to look north could also be fruitful. Data from Zoopla in September said Aberdeen, Burnley and Sunderland topped the charts for the highest rental yields in the UK, with average gross yields over 8 per cent.

I asked two property experts to take a look at your question.

Liam Gretton, owner of Liam Gretton Bespoke Estate Agent on the Wirral Peninsula, says: Entering the buy-to-let market in your early thirties is a strong financial move, providing it is done with the right research, support, and expectations.

With one property under your belt, you have got an insight and initial foundation to build on.

You are right that many investors are now looking north for stronger rental yields.

Property prices in parts of the north west, Yorkshire and the north east remain far more accessible than the south, while rental demand continues to rise, especially in cities like Liverpool, Manchester, Leeds and Newcastle.

Commuter belts and regeneration areas can all offer promising long-term returns if you choose wisely.

However, when it comes to the question of is now a good time, the answer depends on your strategy and financial position. Buy-to-let is not quite the easy win it was a decade ago.

If you are prepared and thinking long-term, now can still be a smart moment to start. Mortgage rates are higher, and there is more regulation than ever before. However, that also means we are seeing a healthier, more professionalised rental market and long-term investors with a smart approach can still do very well.

There are some key points to consider before jumping in.

Financing: Buy-to-let mortgages typically require a 25 per cent deposit and will be subject to stress testing. Work closely with a broker who understands the market. Make sure the monthly rent can cover the mortgage comfortably, even if rates increase again.

Rental yields versus capital growth: Northern properties often deliver better yields, or monthly returns, on your investment, while southern homes tend to see stronger long-term capital growth. Identify what is more important for your situation: cashflow now, or building equity over time.

Tax and stamp duty: You will pay a stamp duty surcharge, and need to be aware that mortgage interest relief has been scaled back significantly.

Many landlords now purchase through a limited company structure to maximise tax efficiency, however this comes with its own pros and cons, so always speak to a specialist before making any decisions.

Tenant demand: Always buy with the tenant in mind, rather than what you want from a home. Is the area walkable, close to transport, universities, or employment hubs? A high-yielding area is useless if you struggle to find or keep good tenants.

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Regulation and legislation: Landlords are now required to meet stricter energy efficiency standards, licensing in some areas, and the Renters' Rights Bill will see Section 21 'no fault' evictions scrapped.

It is important to stay informed or use a professional, well-reviewed and industry-educated letting agent who can guide you through the compliance minefield.

Maintenance: If you go ahead, you will need to budget for repairs, void periods and management costs, especially if you live in the south and plan to invest hundreds of miles away.

Ultimately, buy-to-let is no longer a hands-off income stream. However, done well, it remains one of the most powerful investment vehicles for long-term wealth building.

If you are willing to treat it like a business, surround yourself with the right advisors, and think long-term, then, yes, now could be a great time to get started.

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, says: The prospect of stricter buy-to-let regulations and higher costs have been driving many landlords out of the business.

Others are switching from London and the south east to the north of England where property prices and mortgages are cheaper, returns tend to be higher and the impact of tax rises less costly.

Concerns about additional, not just property, taxes in the forthcoming Autumn Budget have resulted in slower sales and uncertainty. More confidence will hopefully return once economic policy is clarified after the end of November.

However, buy-to-let can still prove to be a good investment if you do your research and go into it with your eyes open.

It should be regarded as a long-term investment and there is a lot to think about, including where to buy, how much to pay, anticipated rent and return, strength of demand and how much you want to be personally involved.

Will your target tenants be students, young professionals or families? Properties which remain empty for extended periods will compromise returns and quickly eat into any profits, so you want to avoid this as much as possible.

You will need to factor in purchasing costs, as well as ongoing charges such as long and short-term maintenance and possibly cladding, insurance and letting agent fees.

Newer properties tend to require less work and maintenance. If you are based in the south and buy in the north, self-management may prove to be a false economy.

A minimum E Energy Performance Certificate rating, and gas, electrical, fire and furniture safety certificates will be required too.

The Renters’ Rights Bill, which will almost certainly be introduced later this year, will add to the 168 rules and regulations which already impact residential lettings and management.

No-fault evictions will be banned, with fixed-term tenancies becoming periodic and rent rises limited to once a year.

Subsequently, it will be harder to take back a rental property if problems occur, and better-quality tenants will be more highly prized so robust referencing and inventories will be even more essential.

If you buy a house in multiple occupation there are other rules and regulations to consider, depending on the location of the property.

Another consideration is whether to buy in your own name or via a limited company and this requires independent mortgage and tax advice.

Nothing stays the same – circumstances change and trying to anticipate change in and around government policy is tricky.

It is safe to assume higher costs and longer voids than expected, so make sure you pay for a survey and seek advice from local agents with appropriate knowledge and experience.