2. Characteristics of investors and investment motives
2.5 Regional variation found
The evidence suggests some regional variation in BTL investment levels, although the
geographic coverage of the evidence is patchy. The CML-commissioned survey (Scanlon
and Whitehead, 2004) found the amount of BTL activity in London, the South East and
the South West regions to be disproportionate in relation to the population of these areas.
Activity was found to be considerably less prevalent in the East of England, the Midlands,
the North East and Yorkshire & Humber. However it should be noted that this survey
sample was not strictly representative due to the self-selection of the 12 lenders who took
part. This survey also revealed that a quarter of those landlords owning more than one
dwelling had properties in more than one region.
Some studies have suggested a link between investment in a certain area and the type of
stock available. New-build apartments have often been developed in city or town centres,
part of the urban renaissance drive. The studies back up the generally held view that BTL
investment (as well as buy-to-leave) has been prevalent in these developments. This is
clearly evidenced in the study of London (London Development Research, 2006),
particularly in east London where prices were lower, in Nottingham (Knight Frank
Residential Research, 2007), Leeds (Fox and Unsworth, 2005; Unsworth, 2007),
Manchester and Sheffield (Allen and Blandy, 2004), Liverpool (ECOTEC, 2007) and
Glasgow (Gibb and Nygaard, 2005).
Housing market renewal areas and other lower-value areas with poor property conditions
have developed a different BTL segment. According to Sprigings (2007, but echoed in
CSR Partnership, 2004; Knight-Markiegi, 2006) much of the BTL activity in pathfinder
areas concerned cheaper houses, especially in areas dominated by older terraced
housing. This finding is also reported by Hickman et al (2007) in the case of Beeston Hill,
an inner-city neighbourhood of Leeds with a high PRS and mainly pre-1919 terraced
stock, in the study of Hull (CRESR, 2007) and of the Merseyside pathfinder (ECOTEC,
2007). This last one found a large concentration in low-value terraced housing, making up
some three-quarters of private rented stock. Most of these properties in Merseyside are
small, lack space, have no garden and are overcrowded. Because of its old age, much is
likely to need repairs or improvements and offer poor thermal insulation.
While the above section discussed foreign investment into BTL, and numerous studies
have talked about ‘flush’ investors from London buying elsewhere in the UK, many
landlords still buy property in their local area. Rhodes and Bevan (2003) found that most
landlords preferred to invest close to home, firstly because local knowledge was seen to
be important in making shrewd investment decisions, and secondly because this made
management and maintenance easier. A predominance of local landlords was also found
in the studies of Yorkshire and the Humber (Hickman et al, 2007), Merseyside (ECOTEC,
2007), Newcastle and Gateshead (Green et al, 2007), East Lancashire (Pendle Borough
Council, 2007), Stoke-on-Trent (ECOTEC and SURF, 2006) and Glasgow (Gibb and
Nygaard, 2005). This last study also found that these local landlords, who were often
small-scale, were generally committed to the market for the longer term.