Posts with tag: buy to let investors

EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack

Published On: February 26, 2016 at 1:05 pm

Tags: buy to let investors,homebuyers,housing market,property market

Uncertainty over the outcome of the EU referendum is expected to slow the UK housing market in the next few months, according to property firm Hometrack.

The company, which supplies data to mortgage lenders and property developers, reports that the amount of home sales in the country’s 20 biggest cities already dropped by 2% last year and activity is likely to fall further in the run up to the 23^rd June vote.

The Director of Research at Hometrack, Richard Donnell, comments: “After a three-year upturn in housing market activity and house prices, the outlook for the market appears increasingly tied up with policy impacts and the potential outcome of the referendum, rather than the operation of market forces.

EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack

“Businesses operating in housing face risk and uncertainty, which will have to be managed and monitored carefully.”¹

Yesterday, CBRE said that property investors and owner-occupiers are likely to behave in the same way as they did in Scotland ahead of its 2014 independence referendum, by delaying decisions until after the vote.

It stated: “After the Scotland referendum, there was a catch up effect and CBRE expects the same for the UK, assuming that it decides to remain in the EU.”¹

A survey of its investor clients found that almost three-quarters felt that the UK would be a worse place to invest in if it leaves the EU.

Activity in the housing market slowed ahead of last year’s general election, especially in London’s prime property market, where buyers were worried about the possibility of a mansion tax.

Donnell reports that there is evidence of a 10% decline in sales in Scotland during the 18 months before its independence referendum in 2014. Buyers were concerned about the threat of businesses relocating if voters chose Scottish independence.

He believes that a vote to remain in the EU would trigger a return to housing market activity in the second half of 2016, while a vote to leave would raise uncertainty and dampen activity over a longer period.

The latest UK cities house price index from Hometrack shows that property values continued to increase in 2015, recording an average rise of 10.2% over the year.

Double-digit price growth was recorded in London, Cambridge, Oxford and Bristol. The average house price in the capital rose by 13.4%, to £455,100.

As buy-to-let landlords are currently rushing into the housing market ahead of the 1^st April Stamp Duty deadline, it is also likely that activity will dampen after this date.

¹http://www.theguardian.com/business/2016/feb/26/eu-referendum-uk-housing-market-hometrack

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

Published On: February 11, 2016 at 9:26 am

Author: Em Morley

Categories: Property News

Tags: average house price,buy to let investors,first time buyers,house prices,London,Stamp Duty

A shortage of properties for sale and a surge in buy-to-let landlords rushing into the market are pushing up house prices, according to the Royal Institution of Chartered Surveyors (RICS).

The RICS reports that while supply has increased slightly, it is not enough to meet a sharp rise in demand from buy-to-let investors, who are seeking to beat the 1^st April deadline for a 3% Stamp Duty surcharge.

Housing stock grew over January, from 44.5 properties per branch in December to 46 at the start of the year. However, this is still down 21% compared to January last year.

The Chief Economist at the RICS, Simon Rubinsohn, explains the figures: “The rise in new instructions in January, although modest, is very welcome.

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

“However, with buy-to-let investors rushing to get into the market ahead of the Stamp Duty hike, the near term pressure on prices is, if anything, intensifying despite a higher level of supply.”

He continues: “How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen, but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.

“Against this backdrop, it is perhaps not surprising that the key RICS indicators point to further rent, as well as house price, increases.”¹

As this news arrives, as does the latest data from LSL Acadata, which states that the average house price in England and Wales is now £290,642 – up 0.2%, or £700, over January.

Valuations firm e.surv expects there were 85,432 house purchase mortgage approvals in January, up by more than 20% from the 70,837 recorded in December. It predicts that January’s approvals will be the highest for almost nine years, since October 2007. It names the cause of the rise on a surge in buy-to-let mortgages.

Yesterday, we reported that rent price growth for new tenancies in London is at its slowest rate for around two years, announced by HomeLet. Find out more: /london-rent-price-growth-slowing/

SpareRoom has also seen price growth slowing in London, with rent increases in commuter towns such as Swindon and Luton rising by up to four times faster than in the capital. The most expensive room rents in the country are in Reading, at an average of £548 per month.

Another index has also launched, a buy-to-let study by Property Partners, which combines rental income and capital growth. It believes that the best returns for buy-to-let landlords are in the East of England, at 13.2%, with the lowest in the North East, at 4.1%.

London-based estate agent Marsh & Parsons has experienced a 24% increase in applicants over January compared to January 2015. It believes the significant rise is from a surge in first time buyers. The CEO of the firm, Peter Rollings, reports that first time buyers now account for 66% of sales, up from 49% last year. It is believed that this will rise further, as a huge 15,000 prospective buyers have already shown interest in the Help to Buy London scheme. Read more: /over-15000-hopeful-buyers-interested-in-help-to-buy-london/

¹http://www.telegraph.co.uk/finance/property/news/12150353/Rare-rise-in-number-of-homes-for-sale-but-its-not-enough-to-satisfy-huge-demand.html

Why Landlords Should Buy in East London

Published On: February 9, 2016 at 4:05 pm

Author: Em Morley

Categories: Landlord News

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

With changes to buy-to-let taxes looming, landlords are seeking the most profitable investments before they are hit by major financial changes.

Recently, we reported that buy-to-let investors are rushing to buy new rental properties ahead of the 3% Stamp Duty surcharge, which will be brought in on 1^st April. Read more: /landlords-rushing-to-avoid-buy-to-let-tax-changes/

And opportunities are rife in east London, where the capital’s homebuyers and renters are moving.

The area has been experiencing a wave of activity since Stratford was selected to host the 2012 Olympic Games back in 2005.

Over the past decade, house prices have surged by over 300%, and they continue to rise. Last year alone, property values rose by 22% in Newham – more than in any other part of the UK.

The change in the east of the capital is continuing. More Londoners now live east of Tower Bridge than in the west, and east London’s population is expected to grow by a further 600,000 in the next 15 years.

Why Landlords Should Buy in East London

With so many Londoners heading east, this area is proving profitable for property investors. And while prices may have increased significantly, there are still good value homes to be found.

A new wave of professionals – think the digital/design community – is sitting alongside Canary Wharf’s bankers to form a sophisticated spot. East London is also becoming a cultural hub; the English National Ballet recently relocated from upmarket Kensington to Canning Town.

But all of this is unsurprising – over £13 billion was invested in the area over the Olympics period. New infrastructure projects, such as Crossrail, are bringing more and more people into this thriving, yet still affordable, zone.

Boris Johnson has also revealed a City in the East master plan, suggesting how 203,500 homes and 283,300 jobs can be created over the next 20 years. With transport improvements such as an Overground extension to Barking Riverside, a new river crossing and train stations, the expansion seems likely.

The area in question stretches from London Bridge, through the Docklands, to Rainham Marshes in Essex and Dartford in Kent.

The Mayor of London’s document contains several maps that show how the city is moving eastwards. The individual areas’ growth can be seen here: http://www.london.gov.uk/press-releases/new-city-in-the-east

Alongside a change in residents, a building boom in east London is bringing better new homes.

New luxury high-rise housing at Canary Wharf is attracting wealthy buyers from Fulham, Putney and Chelsea. Meanwhile, modern lofts in Spitalfields and popular spots around Victoria Park are still affordable for young Londoners, especially due to shared ownership schemes.

While Whitechapel, Bethnal Green, Mile End and Bow might traditionally be known as rough-and-ready, they are now becoming cool places to be for the capital’s youngsters.

Additionally, inner-city quarters are being created through the release of disused public land. One example is a former postal depot in Stephenson Street, Hackney, where Berkeley Homes is building 3,500 new homes, a new school and shops.

The London Legacy Development Corporation, which owns most of the land, has taken control as the planning authority and is fast-tracking change.

Could you find a sparkling new investment with great promise of strong returns in east London? It seems so!

Landlords Rushing to Avoid Buy-to-Let Tax Changes

Published On: February 3, 2016 at 9:29 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,buy to let mortgages,landlord finance,landlord taxes,mortgage interest tax relief,Stamp Duty

New research suggests that landlords are rushing to invest in the sector ahead of key buy-to-let tax changes.

As the 1^st April Stamp Duty surcharge deadline approaches, many property investors are seeking to avoid the hike.

Landlords Rushing to Avoid Buy-to-Let Tax Changes

Meanwhile, more individual investors seem to have turned their lettings businesses into limited companies in order to be exempt from Chancellor George Osborne’s clampdown on the buy-to-let sector.

Limited companies accounted for 43% of all buy-to-let deals in January, up from 38% in December, according to specialist broker Mortgages for Business.

The total number of buy-to-let mortgage applications – by both individual investors and limited companies – increased by 27% in January from the previous month.

From 1^st April, buy-to-let landlords and second homebuyers will be subject to a 3% Stamp Duty surcharge when they purchase a property worth over £40,000.

The Managing Director of Mortgages for Business, David Whittaker, explains how this is changing the market: “The increase is due to landlords trying to get as many purchases as they can completed before the Stamp Duty surcharge comes into effect on 1^st April, after which I would expect transactions to return to more considered levels.”

Additionally, landlords face the forthcoming change to buy-to-let mortgage interest tax relief, which will be cut to the basic rate. However, limited companies operating lettings businesses are exempt from this change.

Whittaker comments: “Landlords have woken up to the fact that transacting via a corporate vehicle is a feasible option, and in many cases, the most prudent route going forward.

“I wouldn’t be surprised if the percentage continues to rise as landlords, especially those paying the higher tax rate, prepare for the forthcoming changes to relief on finance costs.”¹

Have the planned changes affected the way you are investing in the buy-to-let sector?

¹http://www.mortgageintroducer.com/ltd-buy-to-let-takes-43-share-in-january/#.VrHGmFtLH8s

Legal & General Launches £600m Build to Rent Fund

Published On: January 28, 2016 at 9:28 am

Author: Em Morley

Categories: Property News

Tags: build to rent,buy to let investors,private rental sector

Legal & General has launched a £600m fund to build large-scale rental accommodation. The news arrives as many other firms look to make private rental homes an institutional asset class.

The new fund will take the total amount of institutional money in the private rental sector since the start of the year to over £1 billion – largely fuelled by insurance companies and pension funds seeking long-term, stable rental yields.

Initially, Legal & General will commit £300m from its own balance sheet, with Dutch pension fund PGGM adding the extra £300m.

Legal & General Launches £600m Build to Rent Fund

However, the fund, which could borrow up to a further 50%, is likely to expand once developments are built.

The Managing Director of L&G Capital, Paul Stanworth, says the fund will seek to capitalise on increasing demand for rental homes, after tax changes for buy-to-let landlords push small-scale investors out of the sector.

He comments: “The rental sector has so far been dominated by individuals with buy-to-let properties, and there has been quite a bit of involvement from local authorities, but both of those are set to fall away. This will exacerbate the supply-demand imbalance.”

Additionally, institutional investors are likely to be attracted to the steady yields that Build to Rent schemes offer.

“The value of rents is significantly more stable than the value of house prices,” believes Stanworth.

The Build to Rent sector is already well established in countries such as the USA and Germany.

However, investors have been more willing to commit to UK funds this year, after support from local planners and the Government, which has exempted large, corporate developments from its crackdown on buy-to-let.

The Government’s proposed reduction in mortgage interest tax relief for buy-to-let investors will not apply to those operating through limited companies, and the extra 3% Stamp Duty charge for landlords will not be levied on those purchasing 15 or more properties in one transaction. Find out more about the changes and how they will affect you here: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

Last week, Invesco Real Estate launched a £250m fund, with cash from five international, institutional investors. Additionally, LaSalle Investment Management, a US firm, bought property worth £55m as part of a plan to invest £500m into the sector. Gatehouse, a Kuwaiti-owned investment bank, also committed £100m.

Companies believe that a shift to renting among young workers will prove a huge change in the housing market, while house builders continue to fall short of the Government’s target of building 200,000 new homes each year.

Legal & General’s fund will begin with investments in Bristol, Salford and Walthamstow, northeast London, creating 650 homes. It seeks yields of 3-5% on completed assets.

The firm is also researching the use of modular construction in order to boost efficiency and avoid the skills shortage in vital trades, such as bricklaying.

Stanworth says the fund will take on the development risk of the new units, all of which will be purpose-built, and may split into two funds – one for developments in progress and the other for completed blocks, which will offer investors varying levels of risk.

He adds: “We have built this on a scalable model so we can add investors without having to restructure at all.”¹

¹http://www.ft.com/cms/s/0/3f42ab82-c41d-11e5-b3b1-7b2481276e45.html#axzz3yWnpPo8L

Housing Demand Exceeds Supply by 12 to 1

Published On: January 21, 2016 at 12:35 pm

Author: Em Morley

Categories: Property News

Tags: buy to let investors,first time buyers,house price growth,house prices,London,property market

House prices hit a record high of £233,947 at the start of this year, according to research by haart estate agent.

Housing Demand Exceeds Supply by 12 to 1

The firm has used its own data on average prices of properties sold subject to contract.

The new price record is 14.6% higher than at the same point last year.

haart reports that the average price of a first time buyer home sold subject to contract was £170,812 and the average London property price was £555,952 – a huge annual increase of 23.5%.

The agent estimates, based on its own figures, that there were 58,623 exchanges of contract in the UK over December, a decrease of 5.8% on December 2014. It also puts the ratio of new buyer demand to homes on the market at almost 12 to one.

CEO of haart, Paul Smith, comments on the data: “While December is generally a slow month for the property market, as people turn their focus to the festive season rather than buying or selling their home, there were a staggering 12 buyers chasing every property to come onto the market.

“The high level of competition sustained throughout 2015 has pushed house prices up by 14.6%, or £29,814 in monetary terms, over the year. This is more than the UK average salary, according to official Government data, throwing the price rise into sharp relief – certainly good news for those looking to release the equity in their home.”

He also offers his predictions for the year: “Off the back of this, I expect 2016 to be a particularly active year for the property market, especially for the first few months as buy-to-let investors clamour to complete purchases by April and the introduction of the 3% Stamp Duty surcharge.

“With interest rates likely to stay stable, generous mortgage packages will continue to be available, including those that require just a 5% deposit. This will be particularly helpful for first time buyers, and will also push up demand among homeowners and investors. As a result, I expect to see house prices increase by 9% throughout 2016.”¹

It was recently reported that landlords are rushing to buy ahead of tax changes in the buy-to-let sector. How is this changing the market? Find out: /valuations-firm-confirms-that-landlords-are-rushing-to-buy/

¹http://www.propertyindustryeye.com/house-prices-set-yet-another-new-record-as-demand-outpaces-supply-by-factor-of-12-to-1/