Posts with tag: Buy-to-Let

Is the buy-to-let market as resilient as it appears?

Published On: November 8, 2016 at 12:24 pm

Tags: Buy-to-Let,buy-to-let landlords,investors,mortgages,property market

A recent report from HMRC indicated that one in four properties were sold to investors during the third quarter of 2016. Despite this data not alluding to any kind of buy-to-let issues, perhaps the housing market is not is resilient as it appears on the surface?

Investment

What is not immediately common knowledge is that many of the properties sold in the last quarter to investors were completions of off plan deals. As such, these investors were already interested in buying the property, which were released onto the market following the completion of building work. It is possible that these sales were agreed before the referendum.

Of course, the figures for the next quarter could also include off-plan sales, with housebuilders offering new build properties to potential buyers months or years before completion. With this in mind, perhaps the real impact of the stamp duty reforms and the Brexit decision will not be felt until 2017.

Is the buy-to-let market as resilient as it appears?

Marc von Grundherr, Lettings Director at Benham & Reeves Residential Lettings, notes: ‘These figures bely the true state of the housing market. Having recently returned from a series of property investment seminars in the Far East, I can tell you that investor confidence has fallen off a cliff. No one is buying central London property right now and the only ones who would even consider it are vulture funds and investors aiming to pick up bargains when Sterling plummets in value again, which it invariably will once Article 50 is triggered. UK investors have also stayed away now that changes to mortgage relief and the wear and tear allowance have made buy to let far less profitable.’[1]

[1] http://www.propertyreporter.co.uk/landlords/are-positive-figures-in-the-housing-market-disguising-the-btl-famine.html

Rents are set to rise sharply by 2021

Published On: November 7, 2016 at 11:33 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,landlords,rent rises,rental increases,rents

A new report has indicated that rents in Britain are likely to rise sharply in the next five years, with more people choosing to rent over purchasing property.

The investigation by estate agency Savills forecasts than rents will increase by 19% between now and the year 2021. During the same period, purchase prices are tipped to only rise by 13%.

Capital pressure

Average rents are tipped to rise by 24.5% in London by the end of 2021, with the cost of buying going through the roof.

More pressure on rental prices is being caused by many would-be buyers who simply cannot afford to buy. Recent tax alterations are serving to deter many buy-to-let landlords from making further investments in the sector

With rents set to rise, Savills believe that home price growth is going to be largely flat over the next two years. This, the agency suggests, is due to Brexit negotiations leaving home buyer sentiment ‘fragile.’

Rents are set to rise sharply by 2021

Forecasts

Savills estimates UK house price will stay steady in 2017, then increase by 2% in 2018. Growth of 5.5% is expected in 2019 and 3% in 2020, with a fall to 2% in 2021.

Lucian Cook, UK head of residential research at Savills’ said: ‘Brexit has forced the market to change gear and created uncertainty. The period of negotiation with the EU is likely to be a rollercoaster of confidence.’[1]

‘Buyer sentiment across all sectors of the market is likely to be fragile during the period of negotiations to leave the EU,’ he added.[1]

The table below indicates how Savills projects rents to rise per year until 2021:

Rents
Year	Rents
2017	+2.5%
2018	+4%
2019	+5%
2020	+3.5%
2021	+3%
Five year total	+19%

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/rents-set-to-rise-significantly

Property supply falls in the UK during October

Published On: November 3, 2016 at 11:19 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,landlords,new property listings,property supply,tenants

New research has revealed that four out of five UK towns and cities saw a fall in property supply during October.

Data from the report by HouseSimple.com also shows that the number of new listings were down by 6.9%.

Falls

During September, supply levels increased after the summer’s traditional lull. In October however, new listings slipped in a huge 81% of towns and cities.

The greatest falls were recorded in Swansea and Stirling, where property listings fell by 52% and 37.7% respectively on the previous month.

In order to complete the Index, HouseSimple looked at data from more than 500,000 listed properties to track the number of new properties coming to market in over 100 towns and cities. In addition, the survey looked at all London boroughs.

The table below indicates where the sharpest falls in new listings in UK towns and cities were recorded during October:

Town/City	Region	% fall in new listings in October vs. September
Swansea	Wales	-52%
Stirling	Scotland	-37.7%
Stevenage	South East	-36.4%
Winchester	South	-35.7%
Carlisle	North West	-34.7%
Hereford	West Midlands	-33.3%
Torquay	South West	-31.8%
Solihull	West Midlands	-31.3%
Chelmsford	East	-30%
Perth	Scotland	-30%

[1]

Property supply falls in the UK during October

Activity

Alex Gosling, CEO of online estate agents HouseSimple.com, notes: ‘At this time of year we’d expect to see committed sellers rushing to put their properties on the market before the traditionally quieter period kicks in as we get closer to Christmas. The weather has also been unseasonably mild recently, and that should be encouraging sellers to list their houses as it presents an opportunity to show off their property in the best possible light.’[1]

‘Instead, we have seen new listings stall in October, with supply down in four out of five UK towns and cities. This might simply be a correction after September saw a surge in new properties coming onto the market and the overall drop in property supply is still less than 2% in October compared to September,’ he continued.[1]

Looking forwards, Gosling observed: ‘We may need to wait until the New Year now to see market activity pick up. But there will always be people that have to sell their properties in November and December, and that could mean opportunities to negotiate a good deal for buyers who have their finance in place and are ready to proceed.’[1]

[1] http://www.propertyreporter.co.uk/property/property-supply-down-across-uk-in-october.html

Where in London can you achieve the best yields?

Published On: November 2, 2016 at 11:39 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investors,Buy-to-Let,landlords,rental yields

An investigation from Simply Business has indicated that more than 70% of buy-to-let investors prioritise rents over capital gains when making purchase decisions.

Taking this into account, London based residential agent Portico has revealed which capital locations command the greatest rental yields.

Capital rental gains

The agent’s Interactive Yield Map has shown that the top-ten areas in London for highest rental yields are:

Elm Park, Havering-Highest yield 8.5%

London’s greatest yield can be found in Elm Park in the east London borough of Havering. With rents increasing in the capital, a number of people are moving out of the city to the outskirts, in search of more affordable places to stay. Havering has seen a double-digit growth in the last year.

Chadwell Heath, Barking & Dagenham –Highest yield 8%

Again in East London, Chadwell Heath offers a very good yield and prospects of growth. What’s more, it shares the honour of the only place alongside Havering to achieve double-digit growth in the last year.

The Crossrail will be ready for arrival at Chadwell Heath railway station in May 2017, driving a number of commuters to the region.

Creekmouth, Barking & Dagenham-Highest Yield 6.8%

Despite being an industrial region, a yield of 6.8% is certainly not to be sniffed at. Creekmouth attracts tenants searching for convenience and value for money, despite not having its own Tube.

Little Heath, Redbridge-Highest yield 6.6%

This region is not far away from Chadwell Heath and is attractive to renters looking for great schools, greenery and period housing. In addition, the Crossrail will also increase Little Heath’s desirability.

Where in London can you achieve the best yields?

Yarnton Way, Abbey Wood-Highest yield 6.6%

The Crossrail scheme has led to regeneration work in Abbey Wood, which is scheduled for arrival in 2018. Savvy investors are already purchasing in the area.

Barking-Highest Yield 6.5%

Barking has been in the public eye since the 2012 London Olympics, where it was host borough. A number of projects have served to renovate the area since then, including building shops, homes and leisure facilities.

Cranbrook, Ilford-Highest Yield 6.1%

Ilford is set to become another region to highly benefit from the Crossrail scheme, when it appears on the Tube map next year. Homebuyers and investors will be attracted to a quick commute into the city, alongside cheaper prices.

East Ham-Highest Yield 6.1%

East Ham has benefitted hugely from the investment in the Olympics. It is a very popular location for first-time buyers with a strict budget. Now, it is attracting a number of tenants, due to its good transport links and bustling high street.

Romford-Highest Yield 5.9%

Property values in Romford have risen sharply in recent years, but the region remains affordable compared to the rest of London. As such, it is still a popular location for investors and tenants.

Chigwell-Highest Yield-5.8%

Chigwell now benefits from the Night Tube, attracting a number of young professionals to the area. Landlords and investors can expect yields to remain strong and even grow in the long-term.

25% of properties sold in Q3 either a buy-to-let or second home

Published On: November 1, 2016 at 10:16 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,Stamp Duty

One in every four properties purchased in Britain during the third quarter of 2016 was a buy-to-let or ‘second’ property, according to the tax department.

The introduction of the 3% stamp duty surcharge on buy-to-let and additional properties during April has allowed figures to be published on this type of purchase for the first time.

Soaring stamp duty

Data published by HMRC indicated that some £670m in stamp duty has been raised since the changes.

Of the 235,000 property sales subject to stamp duty charges, some 56,100 were liable to the extra surcharge. These in turn brought in £440m in extra stamp duty.

The number of additional homes purchased in the second quarter of the year, straight after the surcharge, was lower than those recorded in the third.

25% of properties sold in Q3 either a buy-to-let or second home

Sales

Additionally, separate data from the Land Registry indicates that England and Wales, there were 95,300 residential and commercial property sales submitted for registration during September.

Of these, 70,237 were freehold and 11,497 were new builds. 552 properties over £1m were sold, of which, 313 were in London.

Terraced properties are still the most popular, with 26,050 sold during September. Semi-detached came next, with 24,615 sales. Detached recorded 22,763, and sales of flats and maisonettes hit 19,457.

The most expensive residential sale in September was for a semi-detached home in the borough of Kensington and Chelsea, for a cool £10,915,000.

At the other end of the scale, the cheapest transaction was for a flat in Liverpoo, which sold for £12,000.

Average Londoner left with little alternative but to rent

Published On: October 28, 2016 at 11:03 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,London,property market,rents in London

A lack of affordability in the capital is driving chances of potential buyers getting onto the property ladder further out.

While the gap between income and house prices has increased across most-regions of the UK in recent times, the situation is more acute in London.

Capital Pains

The average home in the capital now costs around 12 times the average income. This goes a long way to explaining why many would-be buyers are being priced out of the market in certain parts of the country.

Now, the issue has been highlighted by crowdfunding platform Property Partner. In an extraordinary claim, the platform says it would take an average of 121 years for the average Londoner, earning £34, 320 per year, to save up for a deposit in the average price flat in the capital. This now costs more than £457,000.

It does not come as a surprise to learn that many workers in London are being priced out of the market in all 33 boroughs. Those in the city of London are facing a nigh-on impossible task to ever own a property in the capital.

Even in Barking and Dagenham, the most affordable London borough, a first-time buyer earning the typical London salary would need to wait 31 years to purchase their first property.

In Kensington and Chelsea, it would take around 389 years to save for a deposit for the average flat in the borough!

Average Londoner left with little alternative but to rent

Staggering

Dan Gandesha, CEO and founder of Property Partner, said that: ‘It’s staggering that if you have no help from family or friends and you hope to buy on your own, it’s now almost impossible to afford anywhere in London. Even in the ten most affordable boroughs you’d need to be saving an ambitious 20% of your net annual salary to stand a chance of getting the deposit together before you reached middle age.’[1]

‘The British obsession with owning their own home is now for many, at least in London, a pipe dream,’ Mr Gandesha added.[1]

Concluding, he noted: ‘In Germany, long-term renting is generally accepted and the cohort of long-term renters in the UK is growing, by force of circumstance. Build-to-rent is one of many ideas to help solve the UK’s housing crisis and the quicker we can provide good quality, professionally managed home, for both the public and private lettings sector, the better.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/average-londoner-left-with-no-choice-but-to-rent