Posts with tag: investment

Tax changes causing landlords’ confidence to fall

Published On: July 31, 2017 at 8:46 am

Tags: investment,landlord confidence,landlords,properties

The most recent quarterly index from BM Solutions and BDRC Continental indicates that landlord confidence has slipped across all key indicators

Data from the report, carried out with the BDRC Continental Landlord Panel, uncovered that landlords’ confidence in their own business and wider sector has fallen, due to a raft of recent tax changes.

Profitability

Despite the dip in confidence levels, many buy-to-let investors have seen their profitability remain high. 86% of landlords asked said that they still make a profit from their letting business.

31% said that they make a full-time living from their portfolio, while 55% use the income to supplement their earnings from their day job.

Encouragingly, the number of landlords looking to expand their portfolio has increased, from 13% in Q1 to 15% in Q2.

However, almost 20% of landlords are looking to cut the number of properties in their investment portfolio during the next 12 months. This can be attributed somewhat to tenant demand falling further in the last three months, with 19% of investors reporting a decline.

falling real estate prices - conceptual symbol with green arrow

Tax changes causing landlords’ confidence to fall

Gloomier

Head of BM Solutions, Phil Rickards, noted: ‘Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.’[1]

‘This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6%,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/landlord-confidence-falls-as-tax-burden-increases

West End investment market driven by £100m+ deals

Published On: June 23, 2017 at 1:45 pm

Author: Em Morley

Categories: Property News

Tags: investment,landlords,property investment,West End

Property deals worth over £100m are dominating the market in London’s West End, according to a new report from Savills.

Ten deals, totalling £2.175bn have been transacted this year, which is a record for both the number of deals in this category.

Turnover

The property advisor reports that the ten £100+ transactions have made up 69% of the total turnover of the West End market during 2017.

Asian investors have been responsible for nearly half of all deals of this size during the year – in comparison to 19% in the whole of 2016.

Domestic investors are also pursuing larger plots, according to the report. Three acquisitions of over £100m from UK investors recorded until the end of May has equaled the number seen in the whole of 2016.

West End investment market driven by £100m+ deals

Savills said that the 11 transactions that took place in May totalled £583, which took the total investment in the year in the West End to £3bn.

Paul Cockburn, head of the West End investment team at Savills, noted: ‘A key characteristic of overseas demand is their willingness to target both scale and quality. With this comes the current high level of liquidity for large lots. Such is the demand of late there again seems renewed downward pressure on prime yields.’[1]

In addition, Savills said that prime yields in the West End market remain at 3.25% for the fifth straight month.

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/6/londons-west-end-investment-market-dominated-by-100m-deals

Does property investment offer better returns than pensions?

Published On: June 19, 2017 at 8:48 am

Author: Em Morley

Categories: Finance News

Tags: buy-to-let landlords,investment,landlord,pensions,tax

Despite recent Government tax hikes on buy-to-let landlords, alongside tougher criteria for mortgage lending, a new report has suggested that the correct property investment can provide better returns than a pension.

According to the report from Armistead Property, there are a number of surveys that underline the fact property investment is more profitable.

Portfolio

While pensions were found to beat single-property returns, investors with more sizeable portfolios have the potential to exceed pension money.

Further analysis from AJ shows how much £100,000 would grow in both capital and returns over 10 and 20 years in three scenarios.

Using both historic and housing stats, the forecasts compare investing in a pension with someone purchasing a single buy-to-let property without a mortgage and with someone buying three properties with a total mortgage borrowing of £300,000.

The original £100,000 is split into three, where each third becomes a 25% deposit on a property. Tax features, such as stamp duty, are also factored in with property investments.

The table below reveals the results:

Scenario	Value of Investment Over 10 Years	Annual Income Over Period (Pre-Tax)	Value of Investment Over Another 10 Years
Buy-to-Let (1 x property)	£123,095	£4,188	£156,331
Buy-to-Let (3 x properties)	£171,600	£7,242	£217,932
Pension drawdown after first 10 years	£203,612	0	£174,008

Does property investment offer better returns than pensions?

Risks

Peter Armistead, Director of Armistead Property, noted: ‘The research shows that three buy-to-let properties produce £42,000 more than a pension over the 10 years. However, property investment comes with greater risks such as fluctuating house prices and capital growth; void periods; fluctuating rents, maintenance issues, tenant management issues etc. Property is definitely a long term investment and does have many drawbacks as an asset class which a pension doesn’t, the most notable one being lack of liquidity.’[1]

‘In an ideal world, people should be investing in both a pension and property from as early an age as possible and ideally from your 30’s. It is advisable to spread the risk and have investments for the future in more than one pot,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/can-btl-really-deliver-better-returns-than-a-pension.html

Will Stoke-on-Trent be the next investment hotspot?

Published On: June 16, 2017 at 2:08 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,investment,landlords,Stoke-on-Trent

New analysis from Property Partner reveals that Stoke-on-Trent is the best region for buy-to-let landlords- based on affordability and rental return.

The Potteries region was followed by Oldham and Liverpool, with a distinctive North/South divide noticeable in the research.

Efficient

The top-ten most efficient regions to become a buy-to-let in Britain are located in the North, while the least efficient are in the South.

Property Partner’s study ranked the UK’s 100 major towns and cities, looking at average income, average property price and typical rent in every area.

Alongside those regions mentioned, the top-ten was also made up of Leeds, Milddlesbrough, Newcastle, Stockton-on-Tees, Gateshead, Rotherham and Rochdale.

Demand

On the other hand, the South dominated the bottom of the rankings, as a result of demand driving prices up. This in turn leads to high capital requirements in order to enter the market and lesser rental yields.

Landlords in Poole face the most challenging investment, followed by those in Central London and Sevenoaks. The rest of the top-ten was made up of Bournemouth, Cambridge, Oxford, Winchester, St Albans, Chelmsford and Brighton.

Will Stoke-on-Trent be the next investment hotspot?

Yields

For buy-to-let investors seeking income, the research reveals a correlation between low rental yield and investment inefficiency.

Leeds for example had the highest yield of all 100 towns and cities with 6.92% and came in fourth overall. Four other regions featured in the top ten yielding locations and the ten best places to become a landlord overall.

This trend is the same at the other end of the market, with six of the most challenging areas to profit from buy-to-let amongst the ten lowest yielding regions.

Divide

Dan Gandesha, founder of property investment marketplace Property Partner, noted: ‘What our research reveals is a clear North-South divide in the investment opportunities facing buy-to-let landlords. We have always been at pains to point out to investors that prime locations such as Kensington and Chelsea can offer some of the lowest yields available, because prices have raced ahead while rents have failed to keep pace. It just goes to show, you shouldn’t always follow the crowd and the right investment could be on your doorstep where there is far less overall demand.’[1]

[1] http://www.propertyreporter.co.uk/landlords/could-stoke-on-trent-be-the-uks-next-btl-sweet-spot.html

New funding for would-be landlords

Published On: May 26, 2017 at 8:58 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,investment,landlords,property investors

A new £20m funding initiative has been launched with the intention of supporting a generation of first and second-time property investors

The initiative from Market Financial Solutions (MFS) is targeted at refurbishment and restoration projects in the £1.4m empty properties across Britain.

Funding

On-going until June 2018, the £20m funding drive will be made available to nationwide applications through bridging loans in the range from £100,000 to £1m.

With Britain gearing up for another General Election on June 8^th and against the looming backdrop of Brexit, MFS’s property investment drive offers landlords fast access to monies required to support their short-term investment plans.

Over the next year, it is anticipated that traditional asset classes such as property will remain strongly in demand. A recent survey of property owners indicates that 88% expect house prices to increase during the next six months.

This said, many potential investors and homeowners face difficulties in gaining finance from traditional lending institutions. In turn, this is inhibiting many peoples’ investment strategies.

The most recent Bank of England data shows that 66,837 mortgages were approved for property purchases during March – a fall of 1.6% from the previous month. Loans approved for re-mortgaging also fell for the first time this year, to 42,814.

New funding for would-be landlords

Strength

CEO of MFS, Paresh Raja, said: ‘In the face of seismic political events this year, the robust strength of the UK property market has certainly proved its resilience. For the sector to continue this impressive growth, support must be channelled to the aspirational investors who will lead this growth forward, a vital objective we are directly addressing through this initiative. There is tremendous value locked in a variety of properties across the nation; without the finance options in place to access them, this part of the property market will remain dormant. To support the refurbishment and restoration projects that are essential to catalyse further movement across the sector, MFS has launched FlipFinance2017 and is very excited to see the results build into fruition.’[1]

[1] http://www.propertyreporter.co.uk/landlords/20m-funding-drive-launched-to-help-budding-landlords.html

Buy-to-let investment is still a reliable asset class

Published On: May 25, 2017 at 1:47 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let landlords,investment,rental market

Buy-to-let landlords have certainly had a rough time of it lately. A raft of legislation changes, such as alterations to mortgage interest tax relief, Stamp Duty surcharges and the Right to Rent scheme have all provided difficulties for investors.

The fact is that these tax changes mean that buy-to-let does not offer as lucrative returns as it once did. However, many people still believe that this asset class offers a solid, stable investment.

A soaring demand for rental property is underlined by the fact that the average age of a first-time buyer in the UK is now 35 – as opposed to 24 one decade ago.

Rewarding

Offering his assessment, Stephen Reade, letting operations manager at Harrison Murray Lettings, part of the Nottingham, said: ‘Becoming a landlord can be a rewarding experience and, if done correctly, provide a steady and sustainable return as an income investment, especially compared to lower savings rates and stock market swings.’[1]

‘Investors are snapping up property in the hope that it will not only return a reliable yield but also a benefit from capital growth given enough time. Mortgage rates at record lows are helping buy-to-let investors make deals stack up,’ he continued.[1]

Buy-to-let investment is still a reliable asset class

Moving on, Reade urged landlords to make sure their figures add up before investing.

‘One day they [rates] must rise and you need to know your investment can stand that stress test, a criteria sought by many lenders recently. Recent history provides an important lesson in how returns can be hit. Many buy-to-let investors who bought in the boom years before 2007 struggled as mortgage rates rose. A sizeable number were thrown a lifeline when the base rate was slashed to 0.5 per cent. Rates stuck there until this summer and then were cut again after Brexit, but they will rise again.’[1]

‘Even considering the recent tax changes and potential for buy-to-let mortgage costs to rise, there are many positives. We are becoming a nation who sees renting as a flexible lifestyle choice and is far more sociably acceptable. With greater demand from tenants, rents that should rise with inflation and the long horizon for interest rate rises, mean many investors are still tempted by buy-to-let,’ Mr Reade concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/buy-to-let-remains-a-steady-and-sustainable-income-investment