UK seaside town that's bucking major housing market trend despite Labour red tape

This English port city is the ultimate buy-to-let hotspot for landlords this year, according to new figures.

By Rosie Jempson, US News Reporter

11:28, Tue, Sep 3, 2024 | UPDATED: 11:31, Tue, Sep 3, 2024

Aerial photo of the UK town of Middlesbrough a large post-industrial town on the south bank of the River Tees in the county of North Yorkshire, taken

This UK port town is a hotspot for buy-to-let landlords (Image: Getty)

One city in the north east of England appears to be bucking housing market trends and defying Labour's red tape, new research shows.

Despite a challenging landscape for many buy-to-let investors - burdened with high interest rates, decreased tax relief, heavy paperwork and looming regulations from the Labour Government - some regions are still offering substantial gains for landlords.

Ryan Cresswell, 28, owns over 13 properties in Darlington and is actively looking to buy more.

He told the Telegraph: "I'm massively actively buying. I really want to grow my portfolio. I'm in this for the long haul."

But some landlords are concerned about the potential impact of a Labour government on the buy-to-let property market as they fear they could introduce 'anti-landlord' legislation.

Hamptons, the estate agency franchise, revealed that buy-to-let property purchases have experienced a record low this year but some areas in England and Wales still have a high demand for rental properties.

Middlesbrough tops the list as the ultimate buy-to-let hotspot for the year - a huge 40% of residential purchases were made by landlords. Derby followed closely with 35%, Peterborough claimed 33%, while Darlington and York both appealed to 30%.

Aerial photo of the River Tee in Middlesbrough a large post-industrial town in the county of North Yorkshire, England, taken on a bright sunny day

More regulation is expected to be introduced by the Labour Government for landlords (Image: Getty)

The Office for National Statistics revealed that each of these locations posted a rise in rent by at least 6% compared to last year in July 2024.

Landlords are flocking to areas like Middlesbrough and nearby Darlington, enticed by the high yields the annual return on property investment which stand at 9pc, towering over the UK average of 7.3pc.

Cresswell, who was only 24 when he bought his first property in Darlington in 2021 while living in Salisbury, was drawn by the financial prospects.

He said: "I was looking at a map of England with average prices and yields for rental properties. Even though the North East was on the other side of the country, it was the best on what sort of return I could get."

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Buy-to-lets are now much more likely to be snapped up by investors treating it as a business (Image: Getty)

The shift in investor appetite, particularly in London, is a prime example of how demand has changed following the buy-to-let crackdown.

In 2014, 62% of London-based investors purchased their buy-to-let properties within the capital; fast forward a decade and this figure has dwindled to 32%, Hamptons revealed.

Aneisha Beveridge, from the estate agency, explains: "What we've seen over the past couple of years with tax changes for landlords and mortgage rates going up is that investors have had to become a lot more yield-focused."

She added: "If you're not buying a home where you get a pretty good yield return, and where your rental income is quite high relative to your mortgage payment, you're probably not making any money."

"That's why a lot of the places on this list tend to be the more affordable areas in the country where yields are higher, and that's where investors are doubling down on."