Posts with tag: buy to let investors

Strong start to the year for property market

Published On: May 10, 2016 at 1:19 pm

Tags: buy to let investors,landlords,property market,residential landlords,tenants

A new report has underlined the strong start to the year for the British property market, with the positivity recorded at the end of 2015 continuing.

Data from the research conducted by Connells Group shows the number of active buyers coming into the residential market has soared to record highs. Combinations of attractive factors, such as low interest rates, have contributed to this increase.

Growth

David Livesey, group chief executive, noted that with stock available at record lows, additional pressure from new buyers, combined with buy-to-let investors looking to beat the stamp duty deadline, has lead to widely-restricted choice.

He believes however that the ratio of applicants in comparison to new instructions has evened out and that property price growth has not been as rapid as seen in previous quarters. This in turn is leading investors or first-time buyers to believe that purchasing could be productive in the long-term.

Livesey said, ‘this slight cooling has by no means turned into a chill, with property remaining a valuable asset that will continue to increase in value for the foreseeable future. Supply side initiatives, driven by the Government’s attempt to stimulate housebuilding in particular, may need further support if they are to have any meaningful impact on the level of available stock in the short term.’[1]

Positive

The report indicates that landlords and tenants alike have enjoyed a productive beginning to the new year. Activity from renters has risen healthily, with many looking to move into new accommodation.

Interestingly, the report shows that despite the fresh demand from new applicants entering the market, the ratio of registered applicants is not as high as in the same period in 2015. Average rents across England have also stabilised .

Mr Livesey pointed out that a rise in rental stock is easing pressure on the market, as buy-to-let landlords are moving to purchase less expensive properties. ‘This may not be what the Government had in mind when it aided the construction of such properties, but it has given tenants respite nonetheless. In addition, tenants are also driving harder bargains, securing longer leases at a cheaper monthly rate meaning they need to return to the market less often, which is also attractive to landlords.’[1]

‘The mortgage market has also sprung back to life this quarter, largely propelled by high activity levels in the residential and buy-to-let sectors. Home movers and first-time buyers are seeking to take advantage of the low interest rate, high LTV lending environment,’ he continued.[1]

Strong start to the year for property market

Stamp Duty increases

Unsurprisingly, the report confirms that there was a substantial increase in buy-to-let lending as a result of the 3% stamp duty surcharge on buy-to-let and second properties. The report shows that lending activity fell after the deadline.

Livesey notes however that, ‘this is not a sign that investors have lost confidence, more a short term trend as they simply sought to avoid an unnecessary upfront cost. Indeed, over the long term, the sector is more than capable of riding out the increased levy given its strong fundamentals, namely, high yields, high rental demand and accessible mortgage lending.’[1]

Brexit fears

With uncertainty surrounding the upcoming EU referendum growing, the report suggests that the economic outlook still looks positive.

‘There are some warning lights flashing in certain areas of the global economy and the current Brexit debate is leading to a degree of business uncertainty. The uncertainty is similar to that seen in the lead up to the Scottish Referendum in 2014 and the UK General Election in 2015 and whilst this may introduce some hesitancy to the market during the second quarter of the fundamentals of the UK economy remain strong, with low unemployment, reasonable rates of GDP growth and rising real term wages, ‘Livesey observed.[1]

‘This generally positive climate looks set to be maintained over the coming quarters, regardless of the result of the upcoming referendum and with demand for housing continuing to outstrip supply, the outlook for the hosing market remains positive,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-property-market-outlook-2016051011895.html

Buy-to-Let Landlords have Flooded London Property Market

Published On: April 28, 2016 at 9:10 am

Author: Em Morley

Categories: Property News

Tags: buy to let investors,London,London property market,second homes,Stamp Duty

Three in five property purchases in prime London in the first quarter (Q1) of the year were made by buy-to-let landlords and second homebuyers. This has boosted the number of cash buyers in the capital, reports estate agent Marsh & Parsons.

Accounting for 36% of all property sales between January and March, buy-to-let investors were the most prolific type of buyer across prime London. This comes as no surprise, however, as many landlords rushed to complete on purchases ahead of the 1^st April 3% Stamp Duty surcharge deadline.

The number of buy-to-let purchasers in the capital is up from 26% on the previous quarter, representing a sudden reversal of the recent trend of lower investor confidence. Investor share of the market was in slow decline last year, since peaking at 37% in Q4 2014.

Those buying a second home became the second most prominent type of buyer in prime London in Q1 2016. This buyer saw an even greater surge in market share over the quarter, with second homeowners accounting for almost a quarter (23%) of all Q1 property purchases, up from just 14% in Q4 2015.

Combined, buy-to-let landlords and second homebuyers accounted for three-fifths (59%) of all sales in prime London. In prime central London, this figure was even higher, at 76%.

Second homebuyers overtook landlords as the most common type of buyer in prime central London in Q1, accounting for 41% of all property purchases. Buy-to-let investors were not far behind, however, completing on 35% of all sales.

Buy-to-Let Landlords have Flooded London Property Market

This rush has caused a much higher proportion of cash purchases in prime London. Two-fifths (40%) of sales were made by cash buyers in Q1, up from 34% in Q4 2015. In prime central parts of the capital, this rose to almost half (46%).

The CEO of Marsh & Parsons, David Brown, says: “Investors will always be the stalwarts of the prime London property market – it’s the golden goose of capital returns, and people are still clamouring for a slice of the action. But second homeowners really jumped to it this spring too, and were much more prominent in the market than we would typically expect.

“But this was by no means a typical quarter. Sales activity in the opening three months of this year has been exceptionally skewed by the additional layer of Stamp Duty for both buy-to-let and second home purchases. Naturally, the knee-jerk reaction among these groups has been to hurry through property purchases before the deadline, and make savings while they can.”

He adds: “Now that the ruckus has passed, we’ll see much more orderly transactions over the summer months, as the market rebalances towards first time buyers and other owner-occupiers, for whom it will just be business as usual.”

Over the past 12 months, buyer demand has jumped by 9% in prime London, taking the number of registered buyers for every available property to an average of 14.

However, levels of supply and demand are moving in vastly contrasting directions in the capital. In outer prime London, buyer demand has soared by almost a fifth (19%) since March last year, while in prime central London, it has dropped by 4%. Similarly, the supply of homes for sale in outer prime London has fallen by 12% annually, while supply is up by 11% in prime central locations.

Due to this chronic contrast in supply and demand, outer prime parts of London are experiencing the highest levels of competition in the capital, with 16 buyers registered per property. In hotspots such as Balham, this rises to 21.

This fierce competition has fuelled a significant surge in house prices in outer prime London, greatly surpassing the price growth recorded in other parts of the capital. In Balham, prices have risen by 7.2% over the last year, and by 3.4% in the last three months alone.

Brown concludes: “The market is brimful of buyers, and nowhere more so than the poplar addresses of outer prime London. There’s still a significant price premium to be paid for living in the central confines of our capital, and this has drawn certain geographical battle lines for the next generation, who are increasingly focusing their efforts in outer prime territories.

“For first time buyers and young professionals, these are the places where they can afford bigger properties that offer them room to grow, and for savvy investors, these are the places where prices still have room to grow too.”

Despite this latest research, there have been reports of the London property market running out of steam.

4 Buy-to-Let Hotspots for Property Investors

Published On: April 26, 2016 at 11:42 am

Author: Em Morley

Categories: Property News

Tags: buy to let investment,buy to let investors,property hotspots,property investment,rental returns

It seems that new property hotspots are always popping up. But if you are an investor, finding a secure and reliable location is key to a successful buy-to-let business.

Sequre Property Investment has a dedicated team that sources high yielding hotspots around the UK. While a good deal can often be found anywhere, Sequre has picked out four buy-to-let hotspots where high rental yields and potential for capital growth can consistently be found.

4 Buy-to-Let Hotspots for Property Investors

The firm highlights the North West of England as an ideal buy-to-let spot. With affordable property prices and incredibly high tenant demand, the region is perfect for buy-to-let investment.

In the last several years, the following areas have continuously provided high returns:

Manchester

Often considered one of the best locations for buy-to-let in the UK, Manchester continues to be named a property hotspot. With strong rental yields (an average of 7%) and affordable house prices, landlords can start a lucrative lettings business in this area. The city has a huge student population, and young professionals and graduates keep rental demand high all year round.

Liverpool

Liverpool’s recovery following the financial crisis puts it back on the investor map. Currently undergoing a huge level of regeneration in the city centre, including Albert Dock and Liverpool One, the area is now a hub for tourists. Its several universities also bring thousands of students to the city every year. Despite its strong recovery and rising house prices, Liverpool remains one of the most affordable cities in the country, meaning landlords will benefit from high rental yields.

Warrington

Located between three major cities, Warrington is an ideal commuter spot. It has some of the best transport links in the north, with several motorways all easily accessible from the town. It also has two major train stations, which provide an easy commute to Manchester and Liverpool in just 20 minutes, with daily services to London and Glasgow. Warrington is close enough to these main cities for graduates and young professionals, causing high tenant demand.

Preston

Preston experiences huge tenant demand, with one of the north’s largest student populations. In the past five years, the city has also enjoyed a large amount of investment. Its low property prices allow investors to reap the profitable rewards of high rental income and healthy levels of capital growth.

Will you invest in any of these areas?

Property Investors to Give Away £110,000 Flat in Anti-Osborne Protest

Published On: April 25, 2016 at 11:00 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,buy-to-let property,mortgage interest tax relief,Stamp Duty

Two property investors are set to give away a £110,000 flat in Manchester in a protest against Chancellor George Osborne and his tax attack on the buy-to-let sector.

Property Investors to Give Away £110,000 Flat in Anti-Osborne Protest

Marco Robinson and Simon Paul – who describe themselves as multi-millionaires – are both opposed to the 3% Stamp Duty surcharge, which came into effect on 1^st April, and the reduction in mortgage interest tax relief for buy-to-let landlords, which will come into force next year.

The pair believes that the tax changes will make it too expensive to invest in property and will cause a flood of property sales.

Despite many groups criticising the changes, recent research reveals that homeowners welcome the Stamp Duty surcharge: /homeowners-welcome-stamp-duty-surcharge-landlords/

The landlords are holding a competition to decide who will win the two-bedroom, fully furnished flat in central Manchester. The owner will also be guaranteed a rental income of £6,500 per year for five years. After that, the winner is free to handle the property as they please; it does not have a mortgage on it.

Robinson says: “George Osborne’s new Stamp Duty law is a blatant attempt to cash-in on a booming market. But it is badly thought out and utterly pointless. It is doing all it can to crush entrepreneurial activity in what is a fantastically rewarding sector.

“However, I don’t agree that it is the ultimate death knell of buy-to-let activity. That’s why I am giving away a rental market house. Ideally, I’d like to put a buy-to-let investor on the first rung of what is a fantastic and hugely rewarding ladder, which can lead to financial freedom.”¹

Those wishing to enter the competition for the £110,000 property can play a game on Robinson’s Twitter page – @marcorobinson7. The draw will be made at the end of the year.

Will you be entering the draw?

¹http://financialfreedomguarantee.com/?utm_source=Twitter&utm_medium=competition&utm_campaign=Twitter_Competition

Are Landlords Still Making Money from Buy-to-Let?

Published On: April 25, 2016 at 9:45 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,Buy-to-Let,landlord taxes,limited companies,Stamp Duty,tax changes

Are Landlords Still Making Money from Buy-to-Let?

Landlords have been hit by tax changes in recent months, with more planned for the future. As a result, just one in five believe that there is still money to be made from buy-to-let. So, are landlords still making money?

Research conducted by PropertyLetByUs.com – an online letting agent – shows that over half of landlords purchased buy-to-let property in the last three months to beat the 3% Stamp Duty surcharge, which came into effect on 1^st April.

The study also found that 43% of landlords are thinking of turning their lettings businesses into limited companies to beat further tax rises next year. Recently, the Managing Director of the Association of Residential Letting Agents, David Cox, advised landlords to consider the benefits of doing so.

However, just 5% of landlords have sold their buy-to-let properties due to the tax changes, and only 6% plan to reduce their property portfolio and invest in stocks and shares.

Despite many stories of the death of buy-to-let, just one in six landlords have seen a reduction in their profits. Additionally, Nova Financial’s Paul Mahoney insists that buy-to-let is not dead: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

The Managing Director of PropertyLetByUs.com, Jane Morris, says: “Our research shows that landlords are fairly upbeat about the buy-to-let market and many of them appear to have strategies in place to offset the tax hikes. Many landlords are opting for incorporation at the same time as raising rents.”

Indeed, rents have increased by 3% over the past year, and the majority of landlords are planning to put their rent prices up in the future.

Morris continues: “The surge in landlords investing in buy-to-let property in the first quarter of 2016 has created a bubble of new rental properties in some parts of the UK. However, in the longer term, it is likely that the tax changes will limit the supply of rental property and discourage potential new landlords from investing in the buy-to-let market. The good news is that tenant demand will continue to rise, as unaffordable house prices push home owning out of reach for many people.”

House Prices Increasing at Fastest Rate for 12 Years

Published On: April 22, 2016 at 8:36 am

Author: Em Morley

Categories: Property News

Tags: average house price,buy to let investors,house price growth,house prices

Over the first quarter of the year, house prices increased at the fastest quarterly rate for 12 years, according to the latest data from Hometrack.

The valuation firm believes that buy-to-let landlords have driven prices up as they seek cheap properties in high yielding cities.

House Prices Increasing at Fastest Rate for 12 Years

The UK Cities Index for March reveals that average house prices rose by 4.2% in Q1 2016 – the fastest quarterly growth rate in 12 years.

The greatest quarterly increase of any city in the UK was in Liverpool, at 4.1%, taking the average house price to £113,100. Hometrack has found that many landlords have looked to the city for high yields in order to accommodate forthcoming tax changes.

A quarterly boost of 3.5% was also recorded in Cardiff, where the average property now costs £191,300.

The Insight Director at Hometrack, Richard Donnell, explains: “The acceleration in growth in the last quarter has, in part, been down to stronger demand from investors, especially those searching for higher yielding property and seeking to beat the Stamp Duty deadline.”

As of 1^st April, buy-to-let landlords and second homebuyers are now charged an extra 3% in Stamp Duty. Ahead of the deadline, there was considerable evidence that landlords were fuelling a rush in the housing market.

The greatest annual increase in average house prices was in Cambridge, where values rose by 15.6% to £403,500. London was close behind, at 14.2%, taking the average property price to £468,100. However, recent research suggests that the London property market is finally running out of steam.

House prices in Bristol have also recorded double-digit growth for the year, at 13.5%, to £248,800.

Donnell adds: “In the recent past, periods of accelerating house price growth have coincided with changes in market sentiment and demand, notably following the introduction of Help to Buy in 2013 and after the 2015 general election.

“We believe house prices will continue to rise, but a moderation in investor demand and greater caution in the run-up to the EU referendum will limit further acceleration in prices.

“Most likely, the rate of growth will slow more rapidly in high value, low yielding cities such as London, where prices will be more responsive to weaker investor demand.”¹

Indeed, the Royal Institution of Chartered Surveyors believes that the Stamp Duty changes and the forthcoming EU referendum will cause a dip in house prices and sales.

¹http://www.propertyindustryeye.com/house-prices-rising-at-their-fastest-rate-for-12-years/