1. Great ROC with yields typically outstripping the residential buy-to-let market.
2. PBSA attracts no Stamp duty.
3. Low cost of entry typically associated with this type of property.
4. Rents charged to students tends not to fluctuate too much, regardless of the cities they are in as students typically pay similar rental amounts wherever they are.
5. This sector of the market is becoming more attractive to funds and the like, this may in turn push up the price of this sector where typically prices remain steady and never move too much.
6. As these properties receive income that rarely changes, the price will typically stay strong when a market may drop locally, a very favourable factor to any investor.
7. Typically low maintenance as students are nowhere near as fussy as residential tenants.
8. High occupancy rates, typically 100% as there is a lack of good student property in many of the areas these developments pop up in.
9. PBSA market is a typically a cash only market given the lower values of property, and as a result with the cut in mortgage interest relief for Landlords this sector's has not been impacted.
When it comes to investing in property, be it a buy to let investment or purpose built student accommodation, location is key. Many assume that London will be the prime location for investing in property, although with cities such as Liverpool and Manchester being awarded the UK’s property hotspots, with incredible growth over the last two years alone, it may be wise to think again.
Some investors also feel the only way to manage a property efficiently is through investing locally. This simply isn’t true. Although it may seem daunting for some first-time investors, the best returns are rarely on your doorstep. By letting geographical issues get in the way of a sound investment, you can expect to lose out on high rental yields and often even assured income. For example, If you lived in London and a Building society based only in Edinburgh offered the best interest rate in the country would you refuse to put your money there because it was too far away? No? The same ideal can be applied to property! Modern management companies can deal with all aspects of renting your property. Being near the property to manage it is no longer an issue, as the cost of professional agents are minimal, and removes all stresses that can come with self-management.
When looking for the prime property in a fantastic, high occupancy location, it is important to consider the value that can be added to certain areas. For example, HS2 rail link has and will add more value in places like Manchester, Birmingham and Liverpool than it would in London. Manchester in particular has seen a fantastic increase in the demand for quality property, with Media City and the city centre now becoming one of the most sought after locations in the country.
For more information about the developments available in the UK’s prime property hotspots, call us today and speak to one of our expert property consultants for more information and advice. Our consultants are dedicated to finding a property solution tailored to your needs, so make the most of a fee-free opportunity and contact us today!
The Property Investor’s Guide is back and due to popular request, we are going to shed some light on payment structures and deposits when investing property. It is important to firstly consider that there is no universally set payment structure for investing in property, as this can vary due to the type of development, the location, if you are a residential buyer, or if you would like to invest in student accommodation. Therefore, we have listed below the typical payment structures and deposits based on some of our latest developments.
There is no set or typical Buy to Let payment structure, as this is often highly dependant on the developer and the structure that they set in place. Deposits can typically be in the field of 10%-50%, depending on the developer and how close the property is to its completion. In most cases, lenders will offer around 75% LTV for buy-to-let, although we do tend to err on the side of caution and suggest around 30% deposit and therefore a 70% LTV for the mortgage. Remember, BTL mortgages are typically interest only. Although, there are repayment options too, but these are obviously more expensive and will in turn limit the amount you can borrow, given that the gap required between rental income and mortgage payments should be between 25%-30% lower.
As aforementioned, most landlords choose interest only, as the interest on the payment is tax deductible (and obviously landlords are looking to generate income only and maximise the funds they have). When the term of the mortgage is over, the landlord will either re-finance or sell the property and take any uplift (if there is any), and as a result will be subject to capital gains tax.
Most PBSA property is non-mortgageable given both the size of a typical apartment and the sector it is involved in. That’s the generalisation you make when looking at PBSA as most mainstream lenders baulk at lending to this sector. However, there are lenders that will, this includes the latest pier-to-pier lenders that have entered the markets in the last few years, but generally these are few and far between and as such you must consider that when you come to sell this property on, the potential buyer will probably have to be a cash buyer in order for you to exit easily.
In terms of the payment structure and deposit for a residential development, this is far more straightforward. The two main protagonists being the classic repayment mortgage, or again interest only, although you will have to have a method of repaying the capital lent when the term finishes in place before a mortgage lender will advance you the money on the latter product. Also, as a residential purchase the amount lent on a LTV basis will be higher than that of a buy-to-let mortgage. Typically a minimum of 10% is required for a deposit, although certain companies do offer a mortgage on a lesser deposit, but typically 10% represents the cut-off point.
The last thing to remember with off-plan property is that any lender will have to offer a mortgage in principal only as the structure will not be in place and therefore there is nothing for the valuers to value. Again this is normal for this sector, but solicitors always get nervous when a client exchanges with a mortgage in principal only, but this in most cases is the only way to proceed, which is why off-plan in the past has been the area of the market where investors lurk and residential buyers who require a mortgage are less prevalent. Only when a development is nearing completion do residential buyers come to the fore.
If you are thinking about purchasing your first residential property, or you are an investor looking for a spectacular development with high rental yields, contact our award-winning property team today for helpful advice and a solution that is tailored to your needs.
Many property investors believe that the only way to earn high returns and deal in a risk-free property investment is to manage their property themselves. However, in reality, in order to earn a higher income, it is strongly advised to have an agent manage your property for you. There are several reasons why this is the case, among which, time saving is a key factor. However, there are also a few others that should be considered and the first of these is maximising your returns. In most cases, the best returns gained in the buy-to-let market do not exist on your doorstep, and therefore any investor restricting their search for yield to say, a 20 mile radius from their home, is automatically placing restrictions on their business. So the first question you should be asking is the location in which you can achieve the best returns. More often than not, this will typically see you look elsewhere in the country, making the use of a management agent key.
As an example, let us say locally you are able to achieve 4-5% returns. That's if you are lucky, and you manage the property yourself, so beyond the personal cost to yourself of time, effort and void periods, the costs are zero. Now let us look at a property in Liverpool where you can achieve 9% returns. Typically, management companies charge around 8% of the rental figure to provide a service (this equates to a drop of roughly 1% on your rate of return). This means you are not involved in the day to day running, yet still receive payments monthly and are covered for void periods through the insurance that they offer. By shifting your focus to Liverpool, you have increased your total return on your money by some 3%-4% per annum, and at the same time alleviated the burden of maintaining and dealing with all the issues associated with renting properties out.
In order to build a portfolio you need to use a trusted management agent, allowing you to concentrate on the key elements of buy-to-let, and that is finding the highest rate or return for your money. From this, it is fair to say that managing your own property is simply not efficient, and as these companies have become more proactive the ability to run multiple properties is made easier by entrusting it's running to a reputable management company, often with a Nationwide reach.
If after this, you still insist on managing your development yourself, we can help. Call us today and speak to one of our expert consultants for a few pointers to make this arrangement a more simple one, whilst finding a development that is tailored purely to you and your needs as an investor.
It can be clear to see that currency valuations have a massive impact on foreign buyers, but have little or none on domestic customers. It is important to note that the currency moves we have witnessed over the last year or so have been very positive for foreign investors looking at the UK, offering across the board discounts on everything of around 20%, as the value of the pound continues to languish. Obviously this is where the currency value does impact on domestic buyers as they see a continued flow of foreign investors pushing UK prices ever higher. But the question we ask is, is this a problem?
From the developer’s point of view, many would argue that this isn’t in fact a problem. This is because the demand continues, and they continue sell more properties. However, from the domestic buyers side, this may well be an issue as foreign buyers start to price the average UK buyer out of certain areas (as has recently been seen in London). On the flip side if you have property already, this move simply increases the value of your portfolio and therefore the impact is lessened as you will have had the benefit of the latest moves.
If you are looking to add then the move higher does impact. This is when you have to look further afield as an investor and start looking at areas that perhaps foreign buyers would not be aware of, at least not as obvious as London. This has led to other areas of the UK outperforming the usual hotspots of London and the South East. A major focus of investors has been to the North West of England, an area that has had large investment into it by the Government, creating this Northern Powerhouse initiative. All of this has seen cities like Liverpool and Sheffield becoming the number one buy-to-let cities, and the focus on these and Manchester is set to continue, albeit with an interest now from foreign investors too as returns on offer here become more apparent.
So where will the pound be in a week, a month or even a years time? This is a question that for many is difficult to answer and continues to be a problem for market participants. The main problem facing the FX market is that currency movements in the pound are dominated by Brexit, and little to do with the economy and other influences. For example, if the UK economy was doing well and the market was expecting a rate hike in a months time, then the value of the pound would be trading higher against foreign currencies, as it should. But, lets say we get a politician that comes out and states that negotiations are to be delayed for a time or there is strong disagreement on several points of the Brexit negotiations, then the GBP would fall, regardless of the economic situation. So my point here is that whatever happens to the UK all normal influences do still apply to currency moves, but any bad/good news around the Brexit story will force the value of the pound to move in the opposite direction, regardless.
So this is very binary, it is a good news, bad news scenario, and one that will be with us for some time yet, and therefore currency levels are difficult to predict.
There is a view held that the currency still has even further to fall, and that good news will be tempered quickly as the leaving process is so complex and has many stumbling blocks, and as such the ability for it to go lower is far greater than it is to go higher. Some market participants out there are expecting to see the price of the pound drop another 10% before it settles seeing the pound vs. the Euro at parity, and everyone knows the Foreign Exchange market loves a target!
So plenty to think about with the currency there, but generally of a positive nature for foreign investors as the price of our currency looks to remain on the soft side for some time to come.
Market forces are what they are and there is little you can do, so competition to search out and find good property will be a continuous problem, although it may make sense to perhaps keep an eye on the value of the pound, as that may help you determine whether there is a disproportionate demand from foreign buyers for properties you are looking at in certain areas, typically larger cities, and in most cases cities with an International profile. One thing to finally remember as an investor in property in the UK, we are an island that is obsessed with property, and they are not making any more land!
The rental market in the UK has drifted over the last year or so with rents in London actually falling year on year according to research from HomeLet. This has led to rental rates nationwide growing by a modest 0.4% in April of this year. In London this figure in fact dropped by 1.7% month on month from March to April 2017.
What does this mean for the rental market, and why have rates been dropping? In general as inflation picks up real wages are in drifting lower leaving households worse off month by month as the pound in their pocket becomes worth less. With this affordability issue in mind Landlords are reluctant to push prices too high for fear of making their properties unaffordable, despite there still being a great demand for properties. This phenomenon has been particularly an issue in London and the South East where inflation in the rental rates, and house prices was greatest leaving rental returns in the last few months at all time lows. Average yields in properties in the South East sits around 2.5% presently.
However, in the North of England and Scotland, areas that have not been subject to this excessive inflation, prices are pushing higher offering better returns to the investor who is comfortable to look further afield to achieve returns that on average sit nearer the 6-7% level. In these areas demand for housing in the rental sector looks set to remain high and with this in mind pressure on rental rates will remain, but landlords will have to be careful how they price their properties in the future as real wages across the country continue to fall. Landlords will have to decide carefully how to react to changes such as the reduction of tax relief on mortgage interest, and whether to pass this onto the tenant.
Demand for property in the rental market has been questioned of late with the National press suggesting that UK rental property demand had in fact dropped in the last 2 years, with ARLA property mark saying there were just 26 prospective tenants registered per branch in December.
These figures sit in stark contrast to our experience where demand still outweighs supply with demand for property in major cities throughout the UK still at record levels.
This trend is set to continue as perspective Landlords have now decided to refrain from entering the property market as increases in stamp duty and the reduction on mortgage relief has seen the cost of becoming a landlord in many cases prohibitive. This has left to a drop in stock available, in turn keeping pressure on prices, and demand.
Some say that with rates sat at an all time low and lenders once again beginning to respond by offering ever greater deals (Yorkshire Building Society offering a mortgage at a rate of 0.89%), it is cheaper for people to buy their property than pay rental rates. Lets put that into context though, with most mortgages deposits are required, the above example requiring a 35% deposit, and with real income dropping and house price inflation rising markedly over the past few decades affordability is an issue. Presently house prices according to the office for National statistics have risen 259% since 1997 with wages in the same period rising by just 68%. This means if we take our 35% deposit required by the Yorkshire Building society it would take a person saving 5% of their salary a year a staggering 24 years. So although rates are low the ability of people to save for these deposits has diminished keeping many would be buyers out of the market. This in return means all these people are still in the rental market looking for properties, where recently Landlords have been shying away from adding to their stock due to raised costs.
So how does this void get filled, well the answer in many areas has been the rise of Buy to Rent properties. These are purpose built properties, a little like hotels, where people can rent apartments for set periods. These properties are run by a company and not sold on to individual landlords, meaning that standards are maintained across the board with a product that offers the tenant maximum satisfaction. One company in this sector SDL group has said that their portfolio of B2R property is forecast to grow six fold by 2020.
All this looks set to see the rental market across the UK remain in rude health, and with a younger more mobile working generation, and a more accepting approach to the rental market akin to the European model, generation rent looks like it is here to stay for sometime to come.
Over the years, there have been a number of fluctuating reports on buy-to-let investment. Some say that buy-to-let is dead, others are more than keen to express their passion for property investment and it’s promising future. We’ve taken the opportunity to prove why the latter is in fact the reality in 2017, and what buy-to-let can offer investors in comparison to other investment vehicles on the market, such as stocks and investment bonds.
Don't just take our word for it. A report from Shawbrook Bank, undertaken by the Centre for Economics and Business Research (CEBR), predicted that professional landlords will continue to enjoy good investment opportunities despite a decline in yields from an average of 5 per cent in 2016 to around 3.5 per cent by 2027. This could lead us to believe that with the average house price cost set to rise to £336,846 by 2027, over 59% more than in 2016, that there is still a strong market for buy to let property investment.
When comparing the Buy to Let investment market to stocks and shares, it is important to note that FTSE 100 is close to its all time peak, and with an uncertain economy and outlook for the UK at present, the market is a little nervous and could see equity markets drift as a consequence. What’s more, property is a tangible asset, and with many developments providing assured rental income, it can be viewed as stable and opportunistic in comparison to other investment vehicles. Demand on housing is at an all time high, with around 200,000 homes a year needed with just 140,000 homes being built at present. This fact alone will maintain an upward pressure on prices for the foreseeable future. In addition, it is important to consider if you are not an expert in the field of stocks and shares, you are operating in a market where you have little control, and are certainly playing against participants that are extremely well informed, leaving you in the short term at a massive disadvantage.
Lastly, buy-to-let property investment can be seen as a long term dual income opportunity, as you will be earning assured rental income of up to 9% per cent NET in locations such as Manchester and Liverpool, with the added advantage of property price growth expected in these areas as they benefit from the massive regeneration and investment from the Government in the North West region of the UK. If you are thinking about investing in Buy-to-let properties and would like professional advice, we have created a Buy-to-let guide full of tips, tricks and resources to help you invest the smart way (read it here). Alternatively, you can contact one of our helpful property consultants for more information on: 0207 183 0646.
"Why invest outside of my local area, why don't I invest in a property near to where I live, then I can see it whenever I want and I can manage it myself.”
This statement is one we hear on many occasions, typically from a first time investor as they enter the market with knowledge of their local area and possibly surrounding towns. Our advice to them is to first of all create a business plan and state it's objectives, as this will be the yard stick by which you should invest. Once you have set out your objectives for your business (because this is what it is), then you can begin your search. If you can find what you are looking for in the way of returns from where you live then great, but if you can receive a much better return from elsewhere in the country then why limit your search?
Many will say that they want to manage the property themselves. This isn’t by any means a cost-effective factor. Any costs associated with not running your own property, that is, engaging a management company, are small as these companies will charge as little as 8% of the rent to look after your property so that once purchased you can just sit back and relax and watch the money hit your account monthly. With no late night calls in mid-December saying my boiler has broken and the aggravation of collecting monies, many agents have policies that guarantee rents, so you are never without what can in many cases be crucial payments to cover borrowing costs. Surely your time is better used doing more productive things than being at the beck and call of a tenant. Once you realise that you don't have to look after the property yourself then your choice of location is limited only by your imagination, and of course, the criteria you set up in your business plan.
If you are looking for the best returns then these are obtained in areas where initial prices are often low, but where there is a buoyant rental market as potential owners locally find it difficult to get onto the property ladder. You also look at regeneration areas, as here prices are often lower than other parts of a particular region you are looking in and not only offer great returns , but also may provide an opportunity for greater increases in the value of your property than would normally be expected as the area smartens up.
Typically most would be investors look for income first, as they should, but at this point many can begin to vary, as often the highest returns on capital investment don't always correspond with the next criteria , and that is appreciation. At this point homework is key, look for regeneration areas as mentioned earlier, places where new businesses are moving (Manchester for example where the Media industry has begun a mass exodus from London) and also places with major infrastructure projects linking them to a greater network nationwide or further afield. (Crossrail and HS2 for example) All of these factors provide distortions to normal market valuations and can offer fantastic returns if timings are right.
Since it’s launch in 2008, Airbnb has rapidly become one of the most affordable, quick, and simplest ways for individuals to rent a place to stay, both in the UK and overseas. For example, in March 2016, London was named as one of the top five cities in terms of places to stay in an Airbnb rental, with business growing at a rapid rate of 75% a year.
Properties that were once only available for long term letting, are now being used as Airbnb’s. This means that not only is the tenant turnover quicker, this can be a significantly better option for investors in terms of receiving higher income and in many cases less wear and tear on their property as a visitors rarely spend much time in the properties. The fast turnover is achieved as people can use Airbnb for a short stay in a particular location, either for business or leisure, providing a more personal and private alternative to that of a hotel. Not only this, but landlords can easily find a local host to take care of the property whilst they are away. Featured destinations include London, Miami, and even Tokyo, though UK investors can benefit from knowing that there isn’t often a City without a wealth of Airbnb opportunities.
There are however, a few legal issues which must be considered by landlords when renting out an Airbnb. For example, anyone renting a property must ensure that their property is inspected annually by a Gas Safe Registered engineer, with rules applying in the same way as they do on AST landlords. Many landlords will be aware of this, and it is important to note that these legalities do not outweigh the advantages that this type of rental offers.
We would love to hear your thoughts. Do you think Airbnb is a better alternative to traditional letting, or is it destroying the property market? let us know in the comments, or email us at firstname.lastname@example.org.
To find out more information about the options of traditional or Airbnb letting, call us today to speak to one of our helpful advisers who will guide you through the process.
On Wednesday 3rd May Parliament dissolved, as Politicians vacated their seats and once again returned to their constituencies to canvas votes for the general election on June 8th. It will be almost a year to the day that we were voting on Brexit, a vote that has set in motion a series of events that has left markets nervous, and rocked confidence in all sectors, property included. Or has it?
For us as a company, the Brexit result saw a large influx of foreign investors who wanted to take advantage of the drop in the value of Sterling, identifying this as an opportunity to enter the UK property market at a discount (as the value of the pound dropped against the value of all major currencies). This interest continued, and with economic data for the UK showing healthy signs, the market in off-plan property has continued to move forward. However, given the drive by the incumbent Government to pursue a ‘Hard Brexit’, and the recent announcement of a snap election, market activity has now been impacted, albeit only slightly.
In our view, short term market sentiment can indeed be driven by political events, although investors should look beyond any noise as politicians hit the campaign trail, and keep focused on their own long term goals. In many cases, as we have seen throughout events in recent history, these slight interruptions can in fact be opportunities to enter the market at better levels.
Previous events also suggest that the market prefers a win for the incumbent Prime Minister, as voters know what to expect. Given that Theresa May is likely to win with a very comfortable majority as the lack of credible opposition makes this almost inevitable, one suspects that post June 8th, the world will continue to spin, people will continue to work, and the lack of housing in the UK will continue to be a problem, meaning pressure on prices and rental figures will remain for the foreseeable future.
In our opinion the election will probably just mean less transactions as people sit and watch, but once Theresa May walks back into Number 10 with a greater majority, the result that most pundits predict, then the markets - property included - will continue to push on as confidence grows that Theresa May, with a strong Mandate from the public, can deliver a Brexit that places the UK in the best possible position.
Whether you are looking to buy the perfect family home in some secluded woodland paradise or looking for high returns on buy-to-let student housing, presented below are some of the best hotspot options for both buyers and investors alike.
Areas of outstanding natural beauty
In terms of pure desirability, areas of outstanding natural beauty (AONB) can be considered the hottest property spots of all. Following research carried out by Hampton International in 2015, which sought to uncover the places where ‘desirable meet affordable’, Project Leader Johnny Morris concluded that, “Life in the country, a good view and not too many neighbours seem to be the secret formula to happiness”. However, as one can probably guess, this secret formula typically comes at a high price. So where, amongst AONB, are the most affordable properties to be found? The answer is in the Cumbrian district of Allerdale. While still not cheap – house prices in the market town of Keswick, for example, stand at around 77% more expensive than the average in Cumbria – properties in Allerdale are still amongst the most affordable for AONB, offering the best balance between house price and resident satisfaction.
The incredible draw of the city of Liverpool is reflected in the doubling of its population between 2001 and 2011. The resulting economic growth is being used to redevelop large parts of the city, such as the docks and China Town, as well as giving a new injection of life to Liverpool’s already popular culture. Plans for the UK’s new HS2 rail system will also see Liverpool linked up with many other major cities, including Manchester which will become reachable in just 20 minutes. The good news for would-be buyers is that, while the demand for modern downtown properties, such as the popular Silkhouse Court, currently outweighs the supply, average house prices in Liverpool still sit comfortably below many other areas of the UK. Flambard Williams has a great a selection of Liverpool properties from which buyers can expect to yield high returns on.
The Northern Powerhouse
Although Liverpool is placed to become 2017’s most affordable property hotspot investment-wise, the government’s Northern Powerhouse scheme will make all of the UK’s major northern cities ripe for investment, too. After some initial post-Brexit uncertainty, all forecasts for development in cities such as Leeds, Sheffield, Manchester and Newcastle look set to be realised. Extortionate living costs in London and increased student numbers in these northern cities have contributed to a booming buy-to-let market.
Hotspots for commuting to the capital
In recent years, the surrounding towns of London (Brent, Slough, etc.) have proved to be affordable, if slightly less desirable, options for city workers. Properties in south-eastern beauty spots meanwhile, although reasonably close to the capital, are simply unaffordable to many. The best balance to be found here might be in the properties of East Cambridgeshire, which also ranked highly in the Hampton International research. According to the Cambridge News, there are plans to build 11,400 new houses so that the area’s “extraordinary quality of life” can be shared by more people.
So there you have it; the most affordable property hotspots in the UK today.
There has long been the assumption that London is the place to invest in property development or housing. Not only is the capital attractive because of its high rate of growth, but because of its sheer size and cultural dominance as the centre of many of the country’s most well-respected establishments and public services. While indications suggest that London will continue to dominate the property investment market, there are many promising signs in the North of England.
Property and Infrastructure Development in the North
Four of the top five best places to invest in properties in the UK are in the North of England, with Leeds, Liverpool, Sheffield and Sunderland each being considered as important as the nation’s ‘second city’ Birmingham in this regard. The wave of investment opportunities within these locations has coincided with the same northern cities investing significant sums in infrastructure and property development with upwards of ten huge architectural changes coming to Liverpool in the next five years. Neighbouring Manchester has also been presented as the best city in the UK for landlords, with low prices and high returns making for a beneficial alternative to nation’s capital.
Manchester as a Leading Example of a Commercial Northern Hub
The City of Manchester has become a major hotbed for big business, with major national institutions like the BBC growing wise to it having a cheaper property market than London and choosing to re-house in Greater Manchester in recent years.
This has brought about more opportunities for work, with Manchester itself being set to outperform Berlin, Tokyo and Paris for jobs growth over the next five years. This has helped the city become an even more encouraging location for property developers, small and large businesses, and landlords to invest in courtesy of the increased number of employees set to migrate to the city.
The city is also expected to achieve two percent Gross Value Added (GVA) growth between 2016 and 2019, the highest of all Northern cities during this time, according to the latest UK Region and City economic forecast released in December 2016.
The Infrastructure of a Developing Manchester
The Greater Manchester area is supported by an infrastructure that's ready-made to handle influxes of people on a day to day basis as well as the developments it currently has in progress. It is home to the UK's third busiest airport, with 13.5 million passengers from 225 locations passing through its gates in the first eight months of 2013, and has a world-class tram facility working to transport visiting passengers and everyday citizens to and from the city’s many workplaces, shopping facilities, event venues and cultural portals.
Manchester is also situated on one of the UK’s busiest and most accessible train lines, with Manchester Piccadilly being a hub for travellers and business people from across the UK. These elements, combined with the ongoing outreach of the city’s cultural, artistic and sporting prowess, make for a noteworthy and easily accessible business location alternative to the UK’s capital, London.
It seems clear, then, that Manchester is the fastest growing city out of the south of England because of its growth as a hub for business, how easy it is to access, and how suited the already existing infrastructure is to supporting such changes. The internationally recognisable growth of the city’s job prospects, when coupled with the relatively cheap price of property investment within the area and its place as one of the more heavily trafficked locations in the country, make it one of the most promising locations for development in the north of England and rank it among the best potential business locations for 2017 and beyond.
The end of 2016 was upon us, and through the last sips of wine and the bountiful conversations you had with your relatives, you may find that you’re happy and fulfilled; but you were left wanting a little more substance in your later life, especially as you move towards, and into, retirement.
If you are in this frame of mind, it might be wise to put your time into property investment as a means of reaffirming your personal growth as a business, as well as providing motivation if you are, or soon to becoming, retired.
To this end, we have reached the Golden Age of investment. With house prices doubling every ten years, and the demand for houses increasing yearly; we have reached a period where property, and holding property, has become a powerful tool, and a great New Year's resolution for you to have.
Where to Start?
With the rise of student applications in the past year, estimated to have increased by 3%, which has resulted in the new total number of applications reaching 592,290, we can see that a larger amount of students will need properties to hold during their studies.
Students will always be needing properties to reside in, so why not invest now? With the lull in the property market, due to financial implications of Brexit, with property only increasing in value over the next few years
, it would make it financially viable to start accumulating additional income and assets.
How can you do this?
Simply by investing in buy to let properties and renting them to students.
For those that don’t know, buy to let properties are those that have been bought by an investor, with the intention of letting the property out to an individual. These properties can be a financially esteemed option for pensioners, as they can be bought with residual funds and will return an 11% investment each year until 2024. This accounts for a £1000 profit on each £12,000 they placed into the property, per year.
This can be an extremely accessible means of additional income, especially when you have free time to manage the property. With property values only increasing, you’re bound to make a profit on the resale. As well as this, the security of the property can also be held by buying in cities such as Manchester, Leeds, Liverpool, or Sheffield: cities which have at least two universities and collectively held approximately 240,015 students in 2014/15, which will only increase in the coming years with the rise of students.
Other cities are attractive in this regard, but they fail to meet the various cultural attractions and diversity that students find in these four cities. It can be difficult to find your feet, which is why Flambard Williams offers a range of properties in all four of these cities that gives you the flexibility to expand into new territory, as well as providing information helpful tips to get you started on your next new adventure.
The current climate of volatile stock markets and low interest rates makes property an especially attractive investment for many. However, whether you are new to property investment or an established player seeking better returns, you should tread carefully – so here are some of our quick tips.
As This is Money advises, you should carefully assess both the risks and benefits of property investment. That way, you will be better positioned to carefully manage the former and maximise the latter. Also, if you know someone who is more experienced than you in property investment, don’t hesitate to turn to them for invaluable advice.
There are various reasons why a particular locality could be promising. For example, it could be a commuter town with good public transport links, have favourably rated schools, or be home to a university at which lots of young adults wish to study.
Before embarking on your search for properties in which to invest, note the costs of those that you are considering and, if you are contemplating a buy-to-let property, how much money in rent you would likely enjoy. This will enable you to figure out whether your investment is likely to be worthwhile in the long term.
This includes looking at different lenders’ websites to see the differences in what they offer. Resist heading straight to your bank, as you could find a more attractive mortgage deal if you are choosier.
If, for example, they are students, look for a property that will be comfortable and easy to clean. Alternatively, opt for somewhere roomier if you are targeting families.
Let’s imagine that it’s buy-to-let investment on which you are set to embark. For this kind of endeavour, experts advise investing for income – in other words, rental yield – rather than short-term capital growth.
While you might initially decide to look at properties close to where you live, we would urge you to peruse options elsewhere as well, simply because the best opportunities might not necessarily be in your hometown.
Once you no longer rely on selling a property to purchase another, you are less likely to see the sale collapse. This can really help you when you negotiate a discount, so don’t shy away from making low offers to resist overpaying.
Before you proceed with an investment, you should consider whether there are any negative aspects especially warranting attention. In doing so, you should consider whether there are any trends that are likely to emerge and threaten your investment strategy in the near future.
We regularly update the news section of the Flambard Williams site with fresh and informative articles on various aspects of property investment, plus key factors that should influence your investment decisions.
With one in five homes in the UK now owned by landlords, according to one mortgage lender cited in The Telegraph, it’s clear that we are firmly in the era of widespread property investment – so you should be careful to make sure that you don’t get caught out.
In the past, if you had asked landlords where the best place to invest in property in the UK would be, there's a good chance that London would have been one of the top answers.
When you consider that you can achieve a return on your investment of more than 31% in certain parts of central London, you can see why the capital would be a popular answer. However, is the North West city of Manchester now staking its claim to be the very best city for landlords?
Manchester is one of the best for rental yields
This proud city has undergone considerable regeneration in recent years. It has moved slowly away from its industrial past and is now becoming a hub for technology, business and media. This regeneration has seen people flock to the city and its surrounding areas in record numbers recently. In fact, between 2001 and 2011, Manchester’s population shot up by 7% to 2.68 million people.
When you couple this increase with the fact that Manchester has one of the largest student populations in the UK, currently sitting at around 105,000, it's clear to see why there is such huge demand for rental housing in this city, from all segments of the population.
According to an index reported by the International Business Times, the rental yield for buy-to-let properties in Manchester stood at 6.8% between 2010 and 2016, making it the most profitable area for landlords out of all of the postcodes in England and Wales.
Manchester is an affordable place to invest
Given the city’s size and the considerable regeneration work that has taken place in recent years, you might have presumed that Manchester’s house prices would be on a par with those of London. However, the two cities are actually markedly different in this regard.
In Greater Manchester, the average price for a three-bedroom property stands at just over £165,000, while a terraced property costs just under £139,000. However, if you're new to this area of the country and have yet to look into what types of properties are available, don’t hesitate to check out our comprehensive portfolio of buy-to-let investments in Manchester here at Flambard Williams.
When you consider that house prices in London are rocketing at the moment - increasing by more than 14 times the capital’s average salary to an average of just over £482,000 - it's easy to see why increasing numbers of landlords are tempted to take their buy-to-let investment away from the capital. After all, you would need a fairly large pot of disposable income or a sizeable mortgage to invest in buy-to-let property in London, and many people struggle to find such resources.
The surrounding areas also present good investment opportunities
The extortionately high property prices in London make it difficult for landlords to achieve a good rental yield, but Manchester has up-and-coming boroughs that help to ensure plenty of choice for investors. Salford is one of the best examples - with the BBC headquarters situated here in addition to a vibrant student population, respectable rental yields of around 4.5% can be achieved.
If you are looking for a budget-friendly city to ensure a good return on your investment property, Manchester makes an excellent alternative to London. With a continuous demand for housing, strong investment taking place and attainable prices, Manchester may just represent the golden property investment opportunity for which you have been waiting.
While the UK capital's house prices have seen increases above the rate of inflation in the years since the credit crunch, it looks like this growth is now slowing considerably.
One index, which analyses property prices in major UK cities, recently revealed that London prices had seen year-on-year growth of 9.1%; however, over the next two years, various factors will come into play as the capital's housing market is expected to record much more sluggish price growth.
A big turning point in London's housing market
Given its various obvious attractions as a place to live, it should surprise absolutely no one that London's property market has been growing faster than those of other major UK cities. Nonetheless, as reported by PropertyWire, the aforementioned index has still shown year-on-year growth of 8.4% for the UK’s cities as a whole.
However, the above index also reveals that the impetus for price rises is now shifting from relatively unaffordable southern cities to those in the North and the Midlands, where much housing is still considered to be within easy financial reach.
According to the index, London prices have reached a £482,800 average; however, the annual house price growth rate has reached its lowest point of the last three years. We should expect further deceleration in that area, as it is believed that this price growth will be in the low single digits during the coming six to 12 months. This will be due to more modest demand influenced partly by economic uncertainty arising from the UK's vote to leave the European Union.
House prices have grown faster than wages
Another particularly notable sign of things to come is a central London index, accounting for the top 5% of the capital's market, showing house price growth of 0%. One of the biggest factors behind this is likely to be the widening gap between how much London properties cost and the ability of local people to afford them. Indeed, the capital’s current 14.1 price-to-earnings ratio is the highest on record.
In fact, the capital's house prices have shot up by 86% since 2009, far outpacing earnings growth. By comparison, the price-to-earnings ratio for the UK as a whole is just 6.5. It seems that as affordability declines, many more households will be barred from participation in the market, leading to reduced levels of turnover and in turn, a slowdown in the house price growth rate.
Watch out for opportunities in the coming years
However, there remain crumbs of comfort for both property investors and aspiring homeowners. For example, while mainstream house price growth of just 2% is expected by the end of 2018 and a total of 13% by 2021, prime markets may be faring better than the mainstream sector by the end of that period, according to another PropertyWire report.
That means that now could be a good time for investors to buy prime property with a view to later selling it for a profit, or for others to buy such property for living in before it becomes too pricey.
It's fair to say that 2016 has been a turbulent year for the property investment market here in the United Kingdom, with both Brexit and a range of tax relief proposals causing uncertainty. However, with 2017 fast approaching, can we expect to see some stability in the property investment sector next year?
Your earnings may drop
George Osborne, in 2015, announced changes that would drastically alter the way some landlords calculate the profits they make on their buy to let properties. This change is due to be phased in during April 2017, and it's something to take into consideration before investing in property.
Currently, landlords can offset the cost of their mortgage interest from their rental income, and the amount of relief they can claim depends on their income tax bracket - 45%, 40% or 20%. The new legislation will see a flat rate of 20% for landlords, meaning that those at the top end of the income tax bracket will see their profits tumble. Those already in the 20% threshold should see no change.
There will still be some uncertainty
It's been over six months since the UK voted to leave the European Union, but Article 50 is yet to be triggered. However, Theresa May has promised to put the action in place by March 2017, an event that is expected to coincide with a 1.25% property price fall. You may be able to take advantage of this uncertainty by picking up a property at below-market value, giving property investors a boost during difficult market trading conditions.
Foreign investors could swell the property market
If Brexit is triggered next year, then it could be a lot harder for UK investors to get onto the property market. The pound is very unstable at the moment, and its value is continuously fluctuating. Overseas investors could get a great deal more for their money if they choose to invest in UK homes. In fact, one estate agent saw a 50% increase in the number of clients from China and Singapore who were looking to invest in UK property, compared to the weekend before the vote. It's an opportunity for them to make a strong return on their investments.
However, with this trend looking likely to continue into next year, this could lead to an oversaturation of the market - especially in prime locations like London - meaning it could be harder for UK investors to find a property that's right for them. With so much change expected to hit the sector next year, it's vital that you take advantage of the services we offer at Flambard Williams.
With a portfolio of investment properties in cities like Manchester, Leeds, London, Liverpool and Sheffield, we are sure to have something that falls in line with your current financial situation and your future aspirations.
If you do your research and look at investment properties outside of your preferred catchment area, then you could pick up a real bargain and come away with a sizable yield at the same time. Due to its high prices and demand for housing, London is often seen as one of the most desirable places to invest. However, here are five other great locations you may not have thought about before.
With a large student population and some of the best transport links in the UK, Sheffield should place high on your list when looking to secure an investment property. The student population will create a demand for affordable housing all year round - meaning you shouldn't have to wait long to fill your property - while its focus on the arts, media, business, science and technology means it's a highly attractive proposition for families and young professionals, too.
With some property prices coming in at around £70,000, you could generate a yield as high as 11%. If you are interested in Sheffield-based properties, or properties from other UK cities, then please feel free to have a look at our extensive property portfolio.
Despite its prime location, exceptional transport links, an extensive student population and booming service sector, you can still pick up a property in Leeds at a reasonable price. The city suffered a huge blow during the recession. Prices have still not quite recovered to where they once were, and this is why the city is so attractive to investors. In fact, it's possible to see a yield as high as 8% on your initial outlay.
With the average house price at just £90,000, you could stand to make a 6.9% yield if you invest in Sunderland. The city is currently in the midst of a huge regeneration scheme, and it's quickly becoming one of the most vibrant and dynamic cities in the North East.
What's more, the city has an expanding university population, and Newcastle is right on its doorstep, so it's ideal for students and professionals alike.
With a population of over a million and two top-class universities within walking distance of the city centre, you might think that an investment property in the UK's Second City would be out of your price range. However, the average sold house price in this area comes in at just £116,000. When you combine this price with the strong demand for rental housing in the city, you could be looking at a yield as high as 4.5%.
This city is one of the best locations for property investment. In fact, in certain parts of the city, you could see your yield rise as high as 8%. Extensive renovation work on areas such as the docks has made this city incredibly desirable. It's boutique bars and luxury developments are a far cry from the city's maritime heritage, although this is still celebrated. There are over 50,000 students in Liverpool, meaning the demand for rental housing is exceptional. You could stand to make a profit almost straight away. Liverpool is a city on the up, but it's house prices are still reasonable - meaning you could benefit from a good re-sale value in the future.
The first half of this decade has seen the UK property market undergo a wealth of changes, both in terms of the demand for housing and its affordability. With factors like Brexit due to come into play in the next few years, we have decided to take a look at what could be in store for the property market in the next ten years.
What will become the most popular property type?
The need for space and land is at a premium now - especially in places like London - so it's fair to assume that this problem will escalate in the next ten years as more people look to get onto the property ladder and more people decide to settle here from abroad.
You can expect to see more high-rise buildings and flats dominating the skylines of our cities in the next decade. At the moment, this is one of the best ways of housing more people without seriously impacting on the amount of land being used.
Housing could be built on brownfield sites
This was a major talking point of this year's London mayoral elections, and plans are already being put in place to start building homes on brownfield sites and disused pieces of land in the next few years. Communities Secretary Sajid Javid plans on using a £5bn fund to build homes in run-down town centres and abandoned shopping centres.
There are over 63,000 hectares of brownfield land in England, and Javid wants to use this as a platform for building up to 250,000 new homes. There are some arguments that brownfield sites are not situated in the places where the housing is needed the most. However, with land at a premium, this method could be one of the only viable ways of alleviating the housing crisis.
House prices could rise
Of course, whether this prediction actually comes to fruition or not will depend on how the housing market responds to Brexit. However, a survey carried out by the National Association of Estate Agents and the Association of Residential Letting Agents found that the average house price will rise to £419,000 by 2025.
These figures are representative of the housing market outside of London, but it's actually property in the Capital that will see the biggest increase. If the survey is correct, then average prices could almost double to a staggering £931,000.
While these figures could pose a headache to potential buy to let landlords now, they should start to see some benefits in the future. The average cost of renting a home is forecast to rise to £171 a week, and landlords could potentially rake in up to £314 a week by investing in property in London.
It's very hard to predict what the housing market will look like in 10 years time. After all, house prices are fluctuating seemingly every month at present. Our team of property consultants here at Flambard Williams will be able to offer you expert advice on securing a great investment property that meets your long term goals.
The buy-to-let market is about to undergo some significant changes, due to be rolled out in the spring of 2017 and fully implemented by 2020. George Osborne, the former Chancellor, made the proposals in 2015, and many landlords may have to accept a slash in their profits. To enable you to make plans ahead of the new rules coming into force, here are some of the essential facts you need to know about.
Buy-to-let tax relief is set to be slashed
Under the current regulations, landlords can offset their mortgage interest payments against their profits. At the moment, the amount you can claim back as tax relief is determined on your tax band - so those in the top band of tax could potentially claim back 45% while those at the lower end of the scale could claim back 20% - the UK's basic rate of tax.
The new laws, which are due to be phased in over the years, will discard the idea of landlords claiming back against their tax threshold. Instead, the maximum amount that all landlords will be able to claim back in tax relief will be set at the UK's basic rate of tax - 20%. Although smaller landlords who are already in this band are unlikely to notice much change, those in the 40 and 45% brackets are likely to see their profits slashed.
MoneySupermarket’s example shows just how adverse the impact would be for the wealthiest landlords. Under the old rules, if a landlord received £10,000 a year in rental income but pays £9,000 a year in mortgage interest, they would pay tax on that £1,000 profit - the percentage of which would be determined on their tax band.
Under the new rules, a landlord in the 40% tax bracket would only be able to claim 20% on that £9,000 interest - £1,800. Subtract this from the 40% you'll now have to pay on the overall turnover of £10,000, and you'll now have to pay £2,200 in tax - up £1,800 compared to the old system. As you can see here, there are a lot of things to think about before diving head first into a buy-to-let investment.
Expert property advice can make all the difference between finding an investment that works for you and one that doesn't, so get in touch with the property consultants at Flambard Williams today. We will tailor a strategy that falls in line with your budget and aspirations to soften the blow of the tax relief cuts.
Stamp duty is also on the rise
From April 1 2016, buy-to-let landlords have had to contend with a 3% hike in stamp duty. This regulation applies to all homes that are not going to be your main residence, and will be applied in addition to the rates you already have to pay when purchasing a home - which is based on the overall cost of the property.
So, for a second home that costs £300,000, you will have to pay the standard stamp duty rate of 5% and then an extra 3%. This works out at an extra £14,000 slapped onto the final bill.
To restore some confidence back into the economy after the shock Brexit vote in June this year, the Bank of England has taken the decision to cut UK interest rates to 0.25%. This figure represents the first cut to the base rate in nearly seven years and is a record low.
With savers and people on the verge of retirement likely to be the worst affected by this decision, now could be the time to explore other avenues of maximising the return on your savings pot. With this in mind, could property investment now be the way to go?
Low-interest rates could make it easier to get a mortgage
The International Business Times reported that The Bank of England has set up a fund of around £100bn, called the Term Funding Scheme, which it will lend to banks at cheaper rates to encourage lending. This loan is expected to come with interest rates at just above or on the base rate, so customers should see the cost of taking out a mortgage fall.
This cheaper rate of lending could represent great news if you're looking to get into the property investment market because your monthly mortgage repayments could fall dramatically - meaning you'll have more disposable income each month.
In fact, The Telegraph reported that interest rates could remain at their current level until 2019 or 2020, and not breach the 0.5% threshold until 2021, so there has arguably never been a more affordable time to add to your property portfolio.
Demand for rental properties is still incredibly high
According to a study by This is Money, they found that house prices increased by 0.7% in September. Although this figure would represent a higher initial outlay for property investors - despite the cut in interest rates - the rising costs of owning a home outright could force potential homeowners to look towards the rental market.
The volatile nature of the housing market could be good news for investors, because despite all of the issues the economy is facing, people still need somewhere to live. In a report by The Guardian, the publication found that rents outside London rose by 5.1 %, while prices in the Capital shot up by 7.7%. Providing you purchase a property that is well within your financial boundaries, you could see an incredibly high return on your investment. Thoroughly understanding the market is vital if you're looking to make your money work harder, so contacting trusted property consultants such as Flambard Williams could help you create healthy quarterly revenue streams in these incredibly unpredictable times.
A change in exchange rates could help foreign investors
In the immediate aftermath of Brexit, the pound slipped to trade at just over $1.31 against the dollar - a significant fall from previous years. The UK property market could now become an attractive proposition for American investors, with buyers now set to get a lot more for their money than they would have done before the vote.
When the UK voted to leave the European Union back in June, the country certainly faced a brief period of uncertainty. The value of the pound fell against the dollar, and the Bank of England cut the UK's base interest rate to a record low of 0.25%. The housing market also faced some turbulence, but this is to be expected after such a monumental result. Now, after nearly three months elapsed since the vote, what does the long-term future look like for the UK's housing market?
House prices in the Capital did drop just days after the vote
The Brexit vote caused a lot of panic among UK homeowners, with many looking to make a return on their initial outlay before any issues impacted the long-term health of the economy. Many sellers got so desperate to complete the sale of their homes that they slashed their asking prices just to tempt buyers in. In fact, a report in the Independent said that there was a 163% increase in cuts to asking prices in the 12 days that followed the referendum. It's thought that these cuts lead to a 1% fall in the average UK house price, while The Guardian reports that some areas of London experienced a huge 12.9% decrease in property prices, including Hammersmith, Chiswick and Mayfair.
There appears to be conflicting reports over how badly the Capital was affected post-Brexit, but the consensus was that the result sent house prices tumbling - even for just a short period.
The London housing market is on the road to recovery
After the initial shock of Brexit, it looks like some normality is being injected into the housing market. In fact, latest reports seem to suggest that property prices in the Capital are actually on the rise. This is Money reported that average asking prices for London properties shot up in the opening weeks of September - rising by 1.9%. This figure goes some way in putting the London property market back on the road to recovery, but there is still work to be done before we return to the levels that were seen pre-Brexit.
Although the rise in prices may represent good news for current homeowners, who stand to get a higher return on their investment if they decide to sell, first-time buyers may find themselves priced out of homes in London, and may have to expand their search to find a home that's affordable. If you're looking for a property, but are unsure of which location represents the best value for your budget, then let Flambard Williams help. We boast a huge portfolio of properties that are suitable for all price ranges.
The road ahead is still unclear
Until we officially leave the European Union, it's hard to predict what lies ahead for the London property market. This process will only begin once Article 50 has been triggered, and even a concrete date for that has not been set yet. The fact that housing prices in the Capital have fluctuated over the last few weeks just goes to show how volatile the housing market is. Property prices could plummet or rise, but it will depend on what sort of deal the UK manages to get from the European Union that will determine which way it goes.
With the pensions landscape set for a major overhaul in 2016 and 2017, there are more choices open to you than ever before about what you can do with your money once you reach retirement age.
If you have a defined contribution pension scheme, you will be able to access the money you have built up over your working life and withdraw all or some of it to help pay for home refurbishments, provide support to family members, or you could reinvest it into property.
Benefits of a private pension scheme
At present, there are two different types of private pension schemes: Defined Contribution and Defined Benefit.
A Defined benefit pension is set up by your employer, and the amount you will receive will depend on how long you have worked for the company and your salary. Your employer will give you a fixed payment in regular instalments - allowing you to budget and set out a plan, while the Defined Contribution pension revolves around shares. The money you put in will be reinvested, and the amount you get will depend on how much you put in and how strongly the shares have performed.
Be careful with this because you may come out with less than you expected if the money is not invested wisely.
Can property investment provide a more stable form of income?
With the Bank of England cutting interest rates to 0.25%, your savings may struggle to reach their full potential, so it may be worth looking into withdrawing your savings or taking a lump-sum out of your pension pot and investing it in property.
According to the Guardian, the average rent prices in London rose by 7.7% in the last year, and by 5.1% outside the Capital. These rapidly increasing prices could represent a lucrative return on your initial investment.
The Office for National Statistics calculated that the average house price in London has climbed to £472,000, while prices have risen to £214,000 outside the Capital. You will need to think about what you can afford to risk before you go ahead with property investment.
The experts at Flambard Williams can help you with making these important decisions. We will discuss your needs, aspirations and budget, and then find a property that is suitable.
Get in touch today and let us make your money work hard for you.
The risks of property investment
Apart from the initial outlay, you will need to pay for refurbishments to bring your home up to the required standards to make it suitable for rent.
With all of these costs, it's only natural you will want to see some gains quickly. However, what happens if you don't find a tenant? You will still have to pay towards the upkeep of the home.
What's best for me?
To begin with, a pension will be the safer option because it offers you a regular stream of income and provides you with the option of accessing a lump sum straight away. However, the amount you will have coming in will be lower.
If you want to take on a challenge, you can grow your pension pot by taking on property investment. Although presenting an initial outlay and the challenge of finding tenants - which may mean that payments will not be as regular - in the long term, there's a good chance you will make a high yield on your investment.
Investing in property can be an expensive way of building up your income stream. All landlords want to see a large return on their investment, and homeowners want a home that will grow with them, but this is not as simple as it sounds. There are many factors you have to take into account. In fact, as you'll find out, the best time to purchase property will change depending on the buyer. Often, there is no one size fits all solution.
What's your budget?
Whether you're buying to let or becoming a homeowner, the amount of money you have to spend will be different compared to everyone else.
The housing market is turbulent, so carrying out research is vital to see how far your budget will stretch. According to the BBC, house prices in 2016 are rising fastest in London, the South-East and the Shetland Islands, and falling fastest in West London, County Durham and Aberdeen. The perfect time to buy will depend on your desired location.
Your personal circumstances
Whether you have a young family, are a first-time buyer or looking for somewhere to settle down after retirement, the specifications you will look for in a property will vary greatly.
You need to find a property that can cater for your needs both now and in the future, so forward planning is essential.
Will you need to be within close proximity to a primary or secondary school? Will you need to have access to transport links to allow you to commute to work? Or are you looking for a property that requires minimal redevelopment to allow you to move in straight away?
If you fail to do your research on a property before you go ahead and buy, you could end up in a home that doesn't provide everything you're looking for.
When you have a clear idea of want you want from a home, you will be well-equipped to enter the market.
Will interest rates affect my decision?
This will depend on how much money you already have saved up to help you buy.
At the moment, interest rates have been slashed to 0.25%; this means that your potential mortgage repayments would be lower. This can be good for the housing market because it means vendors are keen to sell before the rates increase and possibly force buyers out of the process again.
It's wise to keep an eye on the state of the financial situation in the UK because this should allow you to make an informed decision of when you can afford to buy.
Where can I turn to get informed advice?
Buying a home is not as easy as it sounds, everyone has different criteria to take into consideration before going ahead - whether they're a landlord or potential homeowner.
It can be hard to know when the right time to buy is, so let the property consultants at Flambard Williams guide you.
We work with a network of property developers to provide you with an extensive range of buy to let, residential and overseas properties. Our consultants will provide a tailored solution that's based on your requirements - allowing you to find the home of your dreams.
London has established itself as one of the world's leading players in the fashion and banking sectors. New, imposing structures are being built every day, seemingly. Take The Shard as an example. With its restaurants, hotels and offices, this city seems like the ideal place for any business looking to establish themselves to set up.
While the business sector is growing, many people have raised concerns over how the Capital will cope in providing adequate housing for a booming population.
In fact, housing was such a controversial topic leading up to the mayoral elections that it was covered by local and national media, and was also debated by the Housing Committee in the London Assembly.
In the run-up to the election, The Telegraph estimated that at least 50,000 houses have to be built each year to cope with an estimated population growth in London of 2.4million by 2030. That's a lot of work that needs to be done, and that doesn't take into account that there's already a shortage of affordable housing in London.
The Guardian obtained results from a YouGov poll that found that housing was the top priority of voters. This is hardly a surprising stat, seeing as access to good quality housing is vital to our way of life. It was vital that the candidates listened to the concerns of the electorate on pressing issues such as this.
Zac Goldsmith's stance on housing
The Conservative candidate wanted to leave London's Green-Belt untouched - preferring to build on Brownfield sites, instead. He also wanted to help first-time time homeowners get on the property ladder by regenerating housing estates and providing full support to councils that showed a desire to increase their stock of social housing.
Sadiq Khan's stance on housing
The Labour candidate set himself a target of building 80,000 new homes a year and making those that are built affordable to the average buyer. He also wanted to introduce a vetting system for landlords to help provide reassurance to tenants. These processes would have been carried out using the £400million Affordable Homes Budget, according to Khan's manifesto
Perhaps some of the biggest concerns the targets set by both candidates raised were the ideas of where the money was going to come from, where the houses were going to be built and who was going to build them. However, the crisis in the Capital was, and still is getting worse each day, so drastic action had to be taken by both candidates to try reassure the electorate that they had plans in place to tackle the problem.
Even though Khan tasted victory in the polls, whether his ideas, policies and techniques will ease the housing crisis in London remains to be seen. Housing is such a controversial topic, and it seems like every new solution has its critics.
Perhaps Khan's focus on tenant protection, his promise of genuinely affordable rents and a large target to achieve proved enough to convince the voters, but you can rest assured that this topic will rear its head again if Khan fails to deliver on his promises.
Location, location, location! No, we aren’t talking about the popular Channel 4 property show hosted by Kirstie Allsopp and Phil Spencer – instead, we are referring to what should be at the forefront of your mind when deciding what move you should next make in property investment. But why is location such a crucial factor to consider here? Below, we detail several good reasons.
Up-and-coming locations can be the best bets
You might think that London would surely be the most promising part of the UK for you to invest in, especially if you are relatively inexperienced with property investment. However, one big problem with that assumption is that many other investors have already made it before you! Hence, London has actually become a painfully saturated market for many investors.
In light of this, it probably won’t surprise you that many investors now consider London incapable of offering a decent rate of return and so are now exploring options in other cities with better growth potential. The current list of up-and-coming cities for fruitful property investment can read like a “what’s what” of the most popular and cosmopolitan parts of the country…
Major cities with major promise
You could consider, for example, Manchester – which, having been lined up for serious investment with the government’s Northern Powerhouse plan, could soon attract an even greater number of ambitious people who want to make their mark in the city and, naturally, buy or rent appealingly-located accommodation there. You could be among the people providing that accommodation if you act while Manchester is quickly on the up!
Other leading cities that can provide good return for property investors include Liverpool, where the over 60,000 resident students can make buy-to-let especially attractive, and Leeds, which pairs healthy economic growth with below-average house prices. And then there’s Edinburgh – which, as Europe’s fourth largest financial hub, often attracts professionals seeking accommodation to rent.
Be choosy and you could be rewarded
For everything we’ve just said about the major cities, keep in mind that, by carefully perusing the opportunities in places off the beaten track, you could snap up a few bargains capable of pulling in surprisingly large amounts of money over the long term.
To this end, it’s worth checking out some of the quaint little cathedral cities which, not least thanks to their peacefulness and abundance of beautiful historical architecture, can attract many big spenders not interested in the more hectic environment of somewhere like London or Manchester. Earlier this year, The Telegraph named Truro in Cornwall, Norwich in Norfolk and Winchester in Hampshire among the best places for financially rewarding property investment outside London.
We can help you to spot really good deals
However experienced you are with property investment, it could really pay for you to keep a close and constant eye on our portfolio of properties in your search for the best big investment deal. We update this portfolio regularly, so you can increase your chances of grabbing our most attractive properties before anyone else does.
To say that Manchester is up-and-coming in the property market would be a serious understatement. According to property agents Cushman & Wakefield, commercial property investment in the North West city totalled £2.3bn in 2014 and 2015 – exceeding that of any other English city except London. There are various good reasons why Manchester is emerging as a property investment hotspot – and, at Flambard Williams, we can help you share in its success.
A city going from strength to strength
Manchester has long been a magnet for many people seeking an exciting and cosmopolitan city life. Last year, an international survey by the Economist Intelligence Unit saw Manchester again voted the best place to live in the UK. The city’s tempting choice of restaurants, bars, galleries, museums and shops appears to have led more young professionals to make Manchester their home – and this choice looks likely to grow even further, considering the entrepreneurial spirit that abounds locally.
All of this is before we even take into account that Manchester is considered a crucial element of the government’s Northern Powerhouse strategy. Significant investment, favourable taxation and, for local government, increased power are all seemingly on the way and set to take the already buoyant development of Manchester to an even higher level. All of this should encourage even more people to move to Manchester, and so the area’s success story will continue. It will also provide a wealth of exciting opportunities for property investors, many of which already eyeing Manchester…
Manchester v London
While London might seem like the most obvious land of opportunity for ambitious property investors, the capital’s rising prices have led many investors to try their luck elsewhere. Furthermore, they could soon find a surprisingly high number of people set on moving to Manchester and looking for attractively-located accommodation there.
Ian Simpson, an architect who has significantly influenced Manchester’s regeneration in the last two decades, has observed to the Financial Times: “London doesn’t need any more people — its infrastructure is struggling to cope. In a city like Manchester we are getting the infrastructure in place to encourage an increase in the population.” Indeed, some investors are already partly betting on Londoners and London businesses mulling moves up north due to the capital’s hefty rents.
A thriving city welcoming investment
Simpson says that “in a city like Manchester you feel that change is embraced. People are holding out their hands and welcoming that investment.” And, if you personally take a closer look at Manchester, you could be especially encouraged by the healthy demand for rented student accommodation in the city. Manchester has the UK’s largest student population, its four universities accounting for over 100,000 students and other education institutions thousands more – while a recent HSBC survey has indicated that the city’s landlords benefit from the UK’s best rental yields.
For an even greater insight into the property investment opportunities Manchester has to offer, we invite you to get in touch with our team here at Flambard Williams for tailored help and guidance.
A quick look over various figures relating to the UK property market since the start of the year suggest that the market had been growing rapidly up until the shock Leave victory in the EU referendum, which has provided something of a hiccup. However, property price trends across the country have been more complex than the picture painted here, as we will explain further…
A year of two quarters, a country of two halves
According to the Land Registry, property prices in England and Wales rose, on average, by 6.7% during the first quarter of 2016. Nationwide has alternatively reported a slightly lower rise of 5.3%; however, this takes into account only mortgaged property prices across the whole of the UK, including Scotland and Northern Ireland. Furthermore, these figures provide what is far from a comprehensive picture, as price trends have differed hugely between particular areas.
For example, the Land Registry and Nationwide agree that London prices soared; they have respectively reported growth rates of almost 14% and 11.5%, while, at the opposite end of the scale, those in the North East declined by about 1%. Taken as a whole, the data suggests that, in the first quarter, there was especially strong price growth in London, the South East and the East of England, but double-digit rises eluded the North, the Midlands and other parts of the UK.
When London stopped calling
Growth of the UK property market remained largely buoyant during the second quarter, albeit with a major slowdown in the capital. The Halifax House Price Index, compiled by research firm Markit, has estimated that, across the UK, the three months to June saw prices rise by 8.5%. However, six of the 12 regions, including London, failed to grow at all. In Scotland and Wales, year-on-year house prices even experienced respective falls of 1.6% and 0.6%.
Markit chief economist Chris Williamson has observed: “The second quarter stagnation still left house prices in the capital some 14.6% higher than a year ago, the highest annual rate of increase of all UK regions, but that’s down from 21.2% in the first three months of the year.”
The Brexit effect
An analysis of the year’s property price trends would not be complete without a look at the impact of the Brexit result. Already at a standstill as the referendum approached, largely due to uncertainty over whether the Remain or Leave campaign would triumph, the London property market has since slightly dipped, the capital’s asking prices having fallen by 1.1% since the UK voted to exit the European Union. That drop was the largest for any of the country’s regions.
If you’re concerned about how various factors, such as Brexit, could affect your own property investment efforts, then please contact our thoroughly knowledgeable and experienced team here at Flambard Williams. Together, we can talk through what you’re looking for; then, we can point you towards the most attractive opportunities while helping you to avoid pitfalls. Key to property investment success is knowing where both opportunities and pitfalls are!
Investing in property can be a daunting task, but by focusing on the right areas, you can make a serious return on investment. Surprisingly, London and the South East is falling away from the top spots of many property investors, as major Northern cities are becoming more attractive options. Here at Flambard Williams, we’ve rounded up four areas of the UK we think provide the best investment opportunities for 2016.
With over 60,000 students living in Liverpool, buy-to-let property investment just makes sense.
As well as a growing local and international student base, Liverpool is investing in a £1.5bn regeneration project, which will include a sports complex with an Olympic-standard ice rink, a television studio and a music venue. With 12,000 construction jobs and 4,000 permanent jobs expected, the city has a lot to offer. Despite house prices rising an incredible 41% over the last year, the average home costs just £120,000, making it the perfect investment opportunity.
Manchester and Salford
After significant investment in Manchester and Salford over recent years and the successful launch of MediaCityUK, Greater Manchester is becoming an incredibly desirable location for young people and families who want the buzz of London without the cost, and therefore makes for a great investment opportunity.
One of the best things about Manchester is its affordable and accessible housing market. For example, our Adelphi Wharf apartments offer high quality living at a below market value with a net income of 6% per year. With a picturesque waterfront view and its proximity to Salford City Centre, these flats start at just £94,995 and are fully managed so you can enjoy a stress-free investment.
Thanks to strong local economic growth and below-average house prices, Leeds is becoming one to watch when it comes to property investment. Take our X1 Aire apartments, for example. With a £105,000 starting price and a 6% yield, Leeds can offer an affordable way to make your mark in the buy-to-let market, and with regeneration projects in development, it is a smart investment decision.
Scotland’s capital makes for a fantastic investment opportunity, with a large student base and an impressive 4 million tourists visiting the city each year. Edinburgh is a student magnet, thanks to its fantastic University and enviable social and cultural scene. Student accommodation in the city is in fierce demand, and there is a shortage of student houses on offer. Buying to let in the capital offers almost guaranteed occupancy.
Edinburgh is great for business too – it’s Europe’s fourth largest financial centre, and is home to eight £1billion+ companies. As a result, professionals from across the globe come to Edinburgh on business, and most seek accommodation to rent during their time.
If traditional letting doesn’t excite you, Edinburgh has a £2 billion per year tourism trade, with 4 million visitors stopping by the city every year, many looking for accommodation. Events like the Edinburgh Fringe Festival bring thousands of people into the city and offer you fantastic opportunities to sell your accommodation at inflated weekly prices.
When it comes to investing in property, it can be difficult to measure every important factor – in fact, sometimes you can miss some obvious things altogether! Below, we’ve rounded up twenty factors you need to take to take into consideration when you make a property investment.
It sounds obvious, but the location is everything when it comes to property investment. For maximum success and profitability, choose up-and-coming areas which show real promise of growth. Manchester, for example, is now the best place in the country for buy-to-let investments, with an average annual yield of 6.02%.
If you are buying to let, make a fair and generous valuation of monthly rental. Most lenders suggest the valuation of a property's rent should be at least 125% of mortgage payments.
Take into account the core purpose of your investment – is it to make a quick buck or is it a change of industry?
Take a look at the bigger picture when considering investments – how will your money be working for you in five years’ time?
Expected cash flows
A good accountant is everything. Ensure you’ve carefully calculated your cash flows to guarantee a return on investment, and prepare for unexpected costs.
Analyse various factors, like renovation, sale, mortgaged loans, and value appreciation when calculating potential profit opportunities.
Most experts argue mortgages are essential when it comes to property investment, even if the funds are available to buy outright. Consider leverage to maximise on your investments.
Investment in new buildings
With attractive pricing and opportunities in customisation, investment in new buildings is often a great way to start a career in property.
Understanding your potential customer base is essential to success with property investment – if you’re buying to let, what do your clients need? If you’re buying to renovate and sell, how can you maximise profit while giving potential buyers their dream property?
Although the rental market is currently strong, the Residential Tenancies Board (RTB) shows that rents grew by just 0.5% in the first three months of 2016, compared to 1.6% in the previous six months. Is the rental market stable enough for your investment plan?
Is there a genuine demand for properties in your chosen location? How long does it usually take for properties to rent out or sell?
How much time do you have available to generate a return on investment? If you can’t afford to wait, consider quick-buck investment opportunities like renovations or splitting properties into apartments to sell on.
Residential vs. Buy to let
Although buy-to-let is a popular choice, there is still money to be made in selling properties on. Consider both options and weigh up the effort and cost involved.
Different properties and locations come with different tax brackets – consider these when making an investment in property.
State of property
Never take on a property that requires extensive repairs or renovations – find well looked after properties which can be modernised and made more attractive quickly and easily.
Work out how you will manage your new property investments. If you’re happy to take on the day-to-day running yourself, do you have the required skills? If not, can you comfortably afford a management service for your buy-to-let properties?
Although property can be a popular choice, other ways to make your money work include buying shares, which can offer similar returns without the effort involved in property management. It’s important to consider the opportunity costs and weigh up the risks and rewards.
Your overall financial situation
Investing in property is not risk-free, and your personal financial situation needs to be strong – not only to secure mortgages and finance but also to act as a safety blanket in case unexpected costs are incurred. Will you be able to stump up for a new boiler if a kitchen breaks down?
Knowledge and expertise
Never overestimate your knowledge or expertise of the marketplace, and don’t assume you’ll be able to generate return just because you’ve managed to do it before. Be sensible and get professional guidance and help. For example, at Flambard Williams, our buy-to-let portfolio offers guaranteed yield, and we can give you detailed cost-investment breakdowns to find tailored properties which will fit your needs.
Indirect investment opportunities
Consider researching into indirect property investment, which requires relatively no time and effort on your part and can offer a great return on investment.
Regardless of your choice, whether you’re investing or you’re looking for a home in the capital, London presents a unique set of opportunities and is a great place to live. Here at Flambard Williams, we’ve rounded up six of the best areas in London to buy into this year, whether it’s as an investment or you’re buying a new home.
Southall is a fantastic area of investment this year thanks to Crossrail, Europe’s largest infrastructure project. The project, set for completion in 2019, consists of 42km of tunnelling beneath London, with ten new stations being built to help bring an additional 1.5 million people within a 45-minute commute of central London. In 2017, a brand new state-of-the-art ticket hall will open in Southall, and Crossrail will help cut travel time to Bond Street from 34 minutes to just 17 minutes. Although you may not think transport plays a substantial role in property prices, experts are predicting the district will see growth of 45% between 2015 and 2020 thanks to the investment.
As one of London’s most central locations, Victoria is a small district in the City of Westminster and is a fantastic investment opportunity in 2016. Over the next decade, an eye-watering £4billion is set to be invested in the district as part of a regeneration project, creating new office, retail and residential areas. Part of these regeneration plans have already come into play, with companies like Google moving into the area.
To many people, the SW1 postcode is a desirable selling point – simply being so close to central London, and having access to such great transport links, is enough to shift a property. As well as modern features and buildings, Victoria can boast of its stunning architecture and proximity to landmarks like Westminster Cathedral, so it is an area which can appeal to everybody.
Tower Bridge remains one of London’s undervalued neighbourhoods and features excellent transport facilities, amazing sights and local regeneration projects. Properties in this area are well below the market average, offering high-potential returns on investment in the heat of the capital city. For example, our Tower Bridge Collection in London features properties from £ 678,410 with a 4% guaranteed yield for two years, and offers stunning sights set in luxurious apartments across two boutique properties.
Although many investors tend to focus on Zones 1 and 2 of London’s transport map, stepping outside of the central areas is a great idea if serious return on investment is your goal. In Zones 3 to 6, you can get more property for your money, and these areas have yet to reach their potential. Colliers Wood, for example, has an average property price of £393,139, making it a more affordable investment opportunity with room to grow.
Since the 2012 Olympics, Newham has been thriving. After investment in transport and local tourism, Newham has been nicknamed ‘Olympicopolis’. The area has a large amount of land to build on, and it’s close to the newly opened Westfield Shopping Centre, so experts are predicting the area will continue to rise. The current average house price in the borough is £321,005, which is up 40% in two years.
Old Oak Common has been earmarked to become the home of a new transport super-hub, and regeneration in this area is likely to see house prices skyrocket in the years to come – making an investment early could see healthy rewards in the coming years.
While many investors lease their properties to offset the costs of mortgages, eventually it will become more profitable to sell off your assets and capitalise on house price inflation. We have listed some handy tips for properties you’re looking to sell, which will help ensure you reap the biggest rewards.
If there’s one room in the house that benefits from refurbishing, it’s the kitchen. As a central living area of the home, having a sharp and sleek room can add thousands to your house price. If a complete remodel is too expensive, consider just replacing worn out implements with shiny new ones: a stainless sink and microwave will give the impression of modernity at a fraction of the cost.
Research from the last ten years has been suggesting that UK homeowners don’t actually use their garages: only 24% of people store their car in it. Turn your garage into an extra ground-floor room to maximise living space.
There’s a noticeable price difference between a three-bedroom and a four-bedroom house, and one of the quickest ways to add an extra bedroom and bathroom is to go for a loft conversion. It’s a relatively hassle-free building project which, for £20,000, could add an average of 12.5% to the selling price.
Think about what kind of person will buy your property and adjust any extra rooms accordingly. Young families will want a playroom while a working couple will be happier to see it as an office or home gym.
Carpets naturally trap dust and allergens, so consider getting in a specialist to test your house’s air quality. If it needs improving, replace threadbare carpets with contemporary hard floors. A new lick of paint can also help freshen up rooms for a low cost: go for cool neutrals and light off-white shades.
Buyers today prefer the flexibility of open-plan living to the rigidity of small rooms, so consider knocking down non-loadbearing walls to expand the floor space. It will improve the natural flow of the house, and make it feel larger.
Gardens are an asset to any property if managed with care. Think about the best way to maximise your property’s potential. Glass doors and a patio help a garden to feel more like an extension of the house in rural or suburban areas; alternatively, pave over a front lawn in city properties to add some highly prized parking space.
Double glazing helps to make houses more sellable as they help keep heat in during the winter. It may cost up to £20,000, but experts agree that it can add up to 10% to the value of a house.
If there isn’t already a central heating or air-conditioning system in the house, installing one makes sense. Buyers want to feel comfortable in their new property, and creature comforts are an excellent way to add value.
Even if your property is perfect, its new owners may have other ideas. Applying for planning permission means the possibility of further work is there, even if you don’t want to carry it out, and can further increase your property’s value.
With the UK housing market on a seemingly perpetual upwards swing, buying a property can seem difficult. It is also an incredibly popular market with foreign investors, particularly in London. Therefore, for many investors in different situations, it may make sense to purchase an overseas property for gain and profit. Whether you want to use it as a summer holiday home and rent it out for the rest of the year, or merely diversify your assets, Flambard Williams has you covered.
When thinking about purchasing property abroad, many UK investors may be drawn to sunny countries that they like to visit. Spain and France are incredibly popular holiday home destinations for Britons, and Greece has also seen an upswing in investors. However, it’s important to thoroughly research the market of any country where you are considering buying property.
It may be harder to deal with laws and taxes in a country where English is not the primary language. Also, buying a holiday home for rental purposes only, ensures a stream of income during peak holiday season: for the rest of the year, an overseas property could remain empty and represent a drain on your finances.
America is a growing market for overseas investors, as houses are comparably cheaper than similar assets in the UK. Thanks to the growing trend to rent rather than buy, houses in the USA are fairly easy to rent out to families or young professionals to ensure year-round income. However, house prices can vary by state: Florida’s prices fell by 30% after the financial crash, and have only recently started to pick back up, and these figures may be different depending on where you are looking to buy.
There have been horror stories of unknowing buyers being duped into purchasing unsuitable property. Make sure to use trusted property investment consultants like Flambard Williams to help you with purchasing overseas properties.
Advice on foreign market trends, reputable sellers, and how laws vary by country will help you to make a sensible decision and protect your investment. Read all paperwork carefully, and if possible try and visit any overseas purchases in person, as well as taking independent legal advice.
With high rental yields being a crucial factor in deciding where to invest, overseas properties need tenants to ensure a steady income revenue which can be difficult is you spend most of your time in the UK. Marketing your overseas property through a local estate agent will allow for more potential renters to find it, thus maximising your chances of having a filled property.
Alternatively, using a website dedicated to holiday lettings could work, but this is only viable if the property is designed as a holiday home and does not work for those looking for full-time clients.
Rental income is still taxed even if it comes from abroad, but it can be reduced by deducting relevant business expenses from it. Properties will also need to reach rentable standards, to make sure to set aside enough funds to cover maintenance and cleaning costs.
If you rent many properties, a company accountant will sort all of this out. Even if you only have one property, it may be worth hiring someone to ensure you are organising everything efficiently and correctly.
The three months leading to April 2016 saw the smallest quarterly increase in property prices since November 2015, making some investors concerned for the future of buy to let in the UK. While the market is constantly changing, this isn’t a bad thing: there are as many opportunities as ever to become involved with investment properties and earn money from the best-performing asset class.
Higher Stamp Duty
We have seen an influx of houses being purchased in the first few months of the year as landlords and second-home owners alike looked to avoid the increase in Stamp Duty tax. Changes to the law meant that properties bought as second homes or buy-to-let investments have increased Stamp Duty to pay on them: buyers now pay a three percentage point surcharge, as well as the usual rate of stamp duty, meaning tax on some properties may double – or more.
As a result, we are likely to see a down turn in market action for the moment due to the fact savvy investors had already bought properties before the changes came into play. However, these changes are probably here to stay, meaning they will affect all landlords at some point. The property market will bounce back to expected levels soon, and with it, house prices look set to continue their increase.
Another change in the UK housing market is caused by the impending EU referendum. The potential for the UK to leave means that foreign buyers are especially unsure of whether to invest in property, as the vote could have an impact on the sterling exchange rates. In fact, the housing market may be affected by this wider political issue for the rest of the year.
Despite uncertainty and wariness over the future of EU membership, house buyers are predicted to continue to outstrip demand. As foreign investors are most likely to be focused on the London real estate market, this means there may be more of a gap in the market for buyers of central property. Equally, London house prices are likely to be the most negatively affected; those who are considering buy-to-let purchases in the near future should focus on other areas as they can offer a much better return on investment.
Despite the tumultuous market, buy-to-let properties remain one of the most effective classes of investment. Landlords have made average returns of 9.6% on many properties across England and Wales during the year ending in March, while by comparison, the FTSE 100 has fallen by 3.9%. Even top-performing ISAs have returned less than 2%, making property the go-to investment choice for those looking for a profit.
These figures are for cash investors; in some cases purchasing a buy-to-let house with a mortgage was found to have almost 27% improvement on investment. However, these figures are harder to quantify due to the variations in mortgage amount which landlords are eligible for.
Regardless of any volatility in the buy-to-let housing market at present, Flambard Williams can help you make smart, informed decisions about property investments.
In March, Chancellor George Osborne unveiled his latest Spring Budget, describing it as one "that puts the next generation first" - but it was also one greeted with plenty of scepticism with regard to its merits for the UK property market.
In its executive summary of the Budget, the Government outlined a number of plans for the UK economy, including a commitment to make additional austerity savings, as well as a lower corporation tax rate, small business rates and Capital Gains Tax (CGT).
Bad news for beleaguered investors
With the Chancellor having previously talked up purchase initiatives like Help to Buy and Help to Buy ISAs, it was a surprise to some that the latest Budget paid so little attention to the need to boost new-build property supply.
Instead, the Budget seemed to continue a trend of Government antagonism towards the housing market, buy-to-let landlords and second home owners alike being hit by a hike in stamp duty land tax (SDLT). The former group was additionally punished by the imminent slashing of tax relief for higher rate payers.
There was hope that these adverse changes would be compensated for in part by the announced drop in CGT from 28% and 18% to 20% and 10% respectively in accordance with earnings - only for it to then be revealed that residential property would be exempt from the cut.
Disappointment at a lack of measures to boost supply
Not only did Osborne leave second property owners in a continued struggle to sell their already hard-hit assets, but he also missed the opportunity to set out measures to compel councils to identify land to be built on and developed to boost the currently severely strained housing supply.
Certainly, budding home buyers are unlikely to be have been heartened by the Budget. Osborne's decision to push ahead with the rise in stamp duty - instead of postponing or discarding it altogether, as had been hoped for by some observers - risks many landlords deciding to quit the sector, thereby reducing the availability of rental properties still further.
Rental costs are likely to continue climbing as a result, meaning that many prospective homeowners will be forced to save for longer before being in a position to put down a deposit - surely not the state of affairs that Osborne would appear to have aspired for when he introduced Help to Buy in the first place.
Little help for 'Generation Rent'
Contrary to Osborne's avowed aim of prioritising the needs of the "next generation", it was the younger generation of aspiring first-time buyers that looks especially set to lose out as a result of the Budget's inadequate attention to boosting housing supply.
Recent statistics suggest that some 40% of the UK's young adults - those aged between 15 and 34 - live with their parents, as between 1996 and 2015, the total number of young adults still living at home jumped from 5.8 million to 6.6 million.
Although the Budget did contain some measures that won the approval of property market observers - such as stamp duty equalisation on the purchase of commercial properties - there is nonetheless a widespread feeling that Osborne will need to do much more in future Budgets to safeguard the long-term health of the UK property market.
Talk to Flambard Williams' property experts today about the property investment decisions that you are best-advised to make this year in light of the developments in this year's Spring Budget, as well as your own specific requirements.
Here are five of the UK property hotspots that are particularly catching our eye here at Flambard Williams.
A recent analysis by The Huffington Post found that landlords in the northern metropolis enjoy a rental yield of as much as 8%, thanks to a combination of a £104,244 average property price and average rents of £693 a month.
There's great demand for rental property in the city due to the considerable student population across its three universities, with its central role in the government's Northern Powerhouse initiative - including a new £110 million theatre called The Factory - another aspect likely to keep its name on property investors' lips for many years to come.
The "city of dreaming spires" may seem an unlikely inclusion in this list, given the hefty average property price of £254,514. However, the sheer expensiveness of its rents - at £1,489 a month on average - also delivers landlords here healthy yields of just over 7%.
Oxford property will seemingly always be in demand due to its combination of historic charm and the presence of so many students and technology contractors here, serving to push up rents. Indeed, private rented accommodation accounts for more than a quarter of the city's housing stock.
Two universities - Coventry and Warwick - as well as the close proximity of other major cities like London (95 miles), Birmingham (19 miles) and Leicester (24 miles) largely account for Coventry's increasing appeal to buy-to-let investors, as does a 7.2% yield, according to a HSBC analysis.
The high street bank found that average monthly rents in the West Midlands city were £702, a figure that we expect to rise given the continued shortage of rental properties here amid high demand from graduates and young professionals.
Kingston upon Hull
The East Riding of Yorkshire city has attracted a greater share of the national spotlight as of late due to its status as 2017 UK City of Culture - the year in which the Ferens Art Gallery hosts the prestigious Turner Prize.
Certainly, Hull's cultural offer is more impressive than many cynics may imagine, but for budding property investors, the 7.81% yield may be a greater draw. While The Huffington Post found average monthly rents here to be only £425, low average house prices of £68,243 help to ensure stunning yields for local landlords.
Average rents in this popular destination for students, graduates and young professionals are a relatively high £550, and yet, property prices here remain fairly cheap at £86,000. It means that you could enjoy a yield of almost 7.7% from your buy-to-let property in the city.
Nottingham certainly has all of the ingredients of an up-and-coming city, including a strong cultural and sporting offer, but last year, it was also ranked one of the UK's top 10 cities for job growth (2013-14).
Contact the Flambard Williams today team for tailored guidance and assistance with regard to the investment property opportunities that may best suit your own ambitions in 2016.
The recent news that, according to the most recent monthly report from the Royal Institution of Chartered Surveyors (Rics), more estate agents and surveyors anticipate a near-term decline in UK house prices rather than a rise, indicates a lingering uncertainty starting to grip the housing market.
It marked the first time the Rics survey had made such a finding since 2008, as the recent stamp duty changes and the EU referendum have been blamed for causing jitters in the market that could significantly influence the direction of UK house price growth in the months ahead.
What is the most recent UK house price picture?
Rics may have already found evidence of such 'Brexit'-related worries exerting downward pressure on prices, with some areas of London reportedly the subject of falls. Otherwise, however, values are still on the up - at least for now - as observed by the group for most UK regions in March.
Meanwhile, the Office for National Statistics (ONS) issued its latest house price index in April, recording a 7.6% rise in values in the year to February 2016, although this was down from the 7.9% seen in the year to January 2016. Even when London and the South East were excluded, a 5% increase in UK house values was still recorded for the 12 months to February 2016.
The index also showed just how stiff a challenge many UK first-time buyers face in attempting to realise their dream, as they paid 8% higher prices on average in February 2016 than in the same month the previous year.
Different fortunes across the regions
The fortunes of the nine English regions also varied greatly in the ONS analysis in the year to February 2016, with the South East recording the steepest annual rise of 11.4% and the North East the shallowest, at 1.4%.
When all 13 regions of the UK as a whole are considered, Scotland was the only region to see a decline in house prices over the year at -0.8%, while England, Wales and Northern Ireland's overall rises were 8.2%, 2.8% and 2.4% respectively.
UK big cities see sharp uptick in home values
It seems that the UK's larger metropolises could be a particular focal point for house price increases in the months and years to come, at least according to property market analyst firm Hometrack, which recorded pronounced rises in home values over the first three months of 2016 in such cities as Liverpool, Southampton and Cardiff.
The Merseyside city and London topped the list for house price growth in the first quarter, at 4.1%. Cardiff wasn't too far behind on 3.5%, followed by Bristol and Southampton, tied on 3.3%.
However, Hometrack insight director Richard Donnell mimicked other observers' warnings about a cooling influence on prices from the prospect of 'Brexit', commenting: "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."
Keep abreast of the UK property market with Flambard Williams
When you are seeking to keep tabs on the state of UK house prices and other key indicators of property market health, you could not hope to have experts by your side who are more informed about the critical issues than those of Flambard Williams. Allow us to assist you in making winning property investment decisions in 2016 by contacting our friendly and professional team now.
Given the current climate of unstable stock markets, rising house prices and record low mortgage rates - with the average interest rate on a two-year fixed mortgage dropping to 2.52% in February 2016 - it's unsurprising that property is an asset class to which many more investors have looked in recent times.
Here are 10 things to consider beforehand to ensure you really are making the right decision when investing in a property.
1. Why are you looking to purchase property?
Are you investing in property to diversify your existing investment portfolio, or perhaps as a direct alternative to the stock market or a pension scheme? What returns are you looking to generate? Would you like to rent out the property or simply sell it on for profit at a later date?
Your answers to questions like these will affect the type of investment that you need to make.
2. What is the best property investment option for you?
Here at Flambard Williams, we cater for the requirements of those wishing to invest in any of a wide range of property types, from buy-to-let and residential to overseas and completed developments.
Our experienced property consultants can advise you on how to invest in property, not just on what kind of property to invest in.
3. What geographical area do you wish to purchase in?
Area matters for a variety of reasons - buy-to-let investors, for example, will need to consider the type of tenant that they would like to target and where they would be more likely to rent.
The nature of the local market, as well as the demographic of the local population, amenities, crime levels and so on, can make a big difference to precisely what you are able to do and achieve with your investment property.
4. How much can you afford or are willing to spend?
Affordability is a key factor with any investment property, with such expenses as the mortgage, deposit, stamp duty and legal fees all needing to be factored into your calculations.
It isn't just purchasing, but also selling an investment property that can incur significant costs, so also bear in mind the likes of estate agent and surveyor fees, land tax and conveyancing fees before making that first investment.
5. What legal responsibilities will you need to bear in mind?
There is typically a wide range of legal responsibilities that apply to property investment, in particular buy-to-let property, which will need to be declared for tax purposes via an annual Self Assessment tax return.
Gas safety certificates, energy performance certificates and the protection of the tenant's deposit are just some of the legal requirements to which buy-to-let landlords are subject.
6. How will you react if things go wrong?
Investment property comes with risks, much as any other asset class does. The value of your property may decline, forcing you to plough in more money, or you may encounter problem tenants or struggle to rent out the property at all.
Appropriate building, contents and rent guarantee insurance can all help to minimise the risks associated with an investment property, but those risks can never be entirely eliminated.
7. How will you maintain and manage the property?
It takes time and money to look after a property so that it remains in the best condition. This is why many investors opt to purchase a property in close proximity to where they live.
If you live further afield from your property, you may enlist the services of a property management company that can oversee maintenance efforts and deal with any tenants directly.
8. Will you be buying the property with a loan or mortgage?
There are extra risks associated with the use of a mortgage or loan to purchase a property, including mortgage costs potentially rising and rent that is insufficient to cover loan repayments.
Remember that your bank or building society will be able to take back the property if you fail to keep up with repayments.
9. Will you be truly committed to the property?
Property is not the kind of investment that you can simply make and then simply leave alone, instead requiring constant attention to ensure it continues delivering the results that you need it to.
You should not therefore invest in a property unless you have fully acknowledged and researched the associated risks and responsibilities and are prepared to deal with the consequences of your investment decisions.
10. Will your investment be part of a broader portfolio?
The risk of over-investing in property - and therefore encountering problems during housing market slowdowns - may prompt you to complement your property investment with involvement in other asset classes.
While property offers many advantages as an asset class, including potentially very healthy rental and capital growth returns as well as the ability to invest without a great amount of specialist knowledge, to gain the best results from your property investment, you are urged to request advice from the best-informed property consultants like those of Flambard Williams.
With house prices continuing to show exponential growth and buy-to-let yields indicating a rental market in rude health, there may have never been a better time to invest in property across the many categories represented in our portfolio here at Flambard Williams, including buy-to-let, residential, overseas and completed developments.
Here are some of the questions that are most frequently asked about property development today.
Why should I invest in property?
Reasons to choose property over other investment asset classes include the steady growth that a well-chosen investment can deliver over time. The combination of capital growth and regular monthly rental returns can make the right property a highly lucrative investment.
Property is also frequently chosen as an investment on account of its safety, with the asset able to be insured against risks like fire, damage and the exit of a tenant. Nor does property investment require a significant amount of expertise or capital, and it is an asset class over which the investor has a great degree of control.
How much money is required for property investment?
Depending on the nature of the property investment, it can be done via funds for just a few thousand pounds, or for £300,000 or more in the case of a property investment franchise.
What returns can investing in property deliver?
This naturally changes with the type of investment and the period of time for which one invests. Buy-to-let investors, for example, can often benefit from a 4-7% gross annual return, in addition to capital growth of around 5% over a 10-year period.
Meanwhile, there are also investors who buy land (off plan property) and build from scratch, gaining a 100% return on investment (ROI) within 18 months. However, achieving such success may be highly dependent on market conditions and the right advice from the best-informed property consultants.
When examining the potential return from buy-to-let investment, you should also investigate how rental income is taxed.
What is the quickest way to generate a return on property investment?
As the old adage goes, the quickest ways are so often the hardest. While many investors gain rapid returns from purchasing what they know to be a discounted property and immediately selling it on for profit, this is often dependent on a good level of professional experience and a rising market.
Another means of gaining a relatively quick return is developing or self-building a property, for which turnaround times can be 12 months or less.
How risky is property investment?
Property's status as a medium to high risk investment relative to other asset classes makes it all the more crucial that you receive the most informed advice.
The 2008 financial crash demonstrated the risks associated with property, including that if the value of your investment falls or you are unable to cover the costs of holding your investment, more money needs to be put in - otherwise, you may lose the property and even potentially go bankrupt.
How does property compare as an investment to the stock market?
This is a complicated question that is affected by many variables, including your attitude to investment risk and the amount of money that you are able and willing to invest.
We would advise that you get in touch with our experienced and knowledgeable property consultants for a more detailed discussion about the suitability of property investment for you, taking into account your own circumstances, goals and dreams with regard to property.
We will then be able to help to create a personal solution that caters for your individual profile. Contact Flambard Williams now for more information about the highly tailored services that we can provide if you are a prospective or current property investor.
The UK property market since the mid-2000s may be characterised by many positive indicators for prospective property investors and current owners of a property portfolio, but this has not always been the case, with much change having been observed from the perspective of all stakeholders.
Considerable insight into the current state of the UK property market in the context of the last 10 years is provided by the English Housing Survey that is conducted on a yearly basis by the Department for Communities and Local Government (DCLG) - with the most recent, 2014/15 survey having recently been released.
Below, Flambard Williams' property experts run the rule over the last 10 years of the UK property market, considering what has changed, what has stayed the same and what could be in store for the next few years.
The rise of buy-to-let
One of the most notable trends of the last decade has been the rise of the private rented sector on a backdrop of declining home ownership - at least until very recently.
More than 1.7 million buy-to-let loans have been advanced since such activity began to be monitored by the Council of Mortgage Lenders (CML) in 1999, with the private rented sector having also doubled in size over the last 12 years, in stark contrast to the steady decline observed over preceding decades.
Meanwhile, homeownership in England fell from a peak of 71% in 2003 to 64% in the 2013/14 survey. However, in the 2014/15 survey, this rate remained static, indicating that long-term efforts by the Conservatives to promote owner-occupation - including Help to Buy - are finally bearing fruit.
Today's youth is 'Generation Rent'
In February 2015, The Telegraph reported on what it described as "extraordinary house price growth", noting that over the past decade, the value of homes in Great Britain had ballooned from £1.412 trillion to £5.752 trillion, surpassing the combined GDP of France, Germany and Italy.
In a period also defined by flat-lining or falling wages and a housing shortage in some parts of the country, it therefore shouldn't be such a great surprise that many Britons now struggle to get onto the housing ladder.
As the latest English Housing Survey has observed, "Over the last 10 years there has been a significant increase in the proportion of younger households in the private rented sector." Whereas in 2004-05, 24% of those aged between 25 and 34 lived in the private rented sector, this had almost doubled to 46% by 2014-15.
That same period also saw a steep drop in the proportion of 25 to 34-year olds purchasing with a mortgage, from 54% to 34%. Since 2012-13, 25-34 year old households have been more likely to rent privately than buy a home of their own.
Home ownership strikes back
There have, however, already been signs in the last few years of an impending reversal of these trends. In addition to the unchanged homeownership rate, in 2013/14, the proportion of outright owners of property overtook that of mortgage holders, with the respective figures in the 2014/15 survey being 33% and 30%.
With the housing bill that is presently passing through parliament set to extend the recently revived Right to Buy to housing association tenants, there can be little doubting the government's determination to make ever-higher levels of homeownership a key trend of the property market of the coming 10 years.
That determination may be needed - according to the Office for National Statistics (ONS), UK house prices went up by 7.9% in the year up to January 2016, a firm indication that property affordability will remain a key issue for UK property investors, householders and policymakers for a long time yet.
1. Manage your borrowing – Many investors understand the benefits of investing into property however many also have a gun ho approach. Most work out what they can afford now without thinking 1, 3 or even 10 years down the line. You have to ask yourself can you afford the mortgage if the property is not tenanted and importantly can you afford the mortgage if interest rates rise?
2. Always vet your tenant – Its very exciting getting your very first tenant in your first buy to let. Unfortunately this excitement can soon turn to despair if the tenant becomes unruly, fails to pay the rent or even worse refuses to leave. You can prevent many of these by simply completing thorough checks at the beginning.
3. Keep tabs on income and spending – By keeping thorough records of all incoming and outgoings you can benefit from landlord breaks in regards to tax. This will also help you any disputes you may encounter with what has been paid and what hasn’t.
4. Don’t rely on growth – Many property investors are adamant that their property will grow in price. Whilst this is more than likely the case over the medium to longer term we have also seen in recent years mini crashes. This has to be in every investors mind in case they need a quick sale and could potentially have negative equity.
5. Know your rental market – Are you within the commuter belt, are you letting to students or is your house near great schools for young families. Make sure you know your market and who are your potential tenets. There is no point having a 5 bed family house in an area where the majority of renters want 1-2 bed apartments. Again like any investment, do your research.
If you would like more information about becoming a property investor, or if you are an existing investor and would like further advice about our tips, call us today to speak to one of our helpful consultants. We provide tailor-made solutions based on your requirements, free of charge, to ensure you maximise your property portfolio.
The initial outlay to purchase a property inside London can be staggering to first time investors. Some investors have even been turned off from property ownership due to the high initial costs. Looking outside of London offers investors a wider variety of more affordable investments, which in turn, means lower initial costs. Properties tend to be far cheaper outside of London because competition is lessened. Better Properties, Less Maintenance With space at a premium new build property developments are rare in London. The trend is towards refurbishment of existing buildings – many of which are beginning to show their age. Wear and tear on those existing buildings can lead to costly unforeseen maintenance bills. New property developments outside of the city, provide for more efficient buildings and being new require far less maintenance and upkeep. Room for Growth Most of the provisional towns outside of London are growing at pace, with many people realizing there are advantages to moving out of London. An investor who gets in early on this trend can experience much higher growth over the medium to long term, than a mature market. Better Return on Investment (ROI) You would think that the sky-high rents within London mean a better ROI, but in many instances that simply isn’t the case. In recent studies, properties in Hull, Nottingham, Southampton, and Blackpool were all shown to have approximately three times more income potential when compared with similar properties in London. This report collaborates with our own experience, were we have consistently seen yields for Buy to Let for properties outside of London earning 3% more than those in the capital. Widening Appeal of Commuter Belt Working in London can be attractive due to the job opportunities created when large amounts of people populate one area. Although people may work in London, unaffordably high city rents are pushing people to live beyond London and to commute greater distances. Demand for rental accommodation within these commuter belts is at all time high since for many professionals these areas offer the only rental options they can afford. Less Competitive Market Within London, competition to attract tenants is fierce. With so many buildings and such a huge population, property owners need to do whatever it takes to attract new tenants. (The truth of the matter is that within London almost everything becomes a competitive marketplace). There are times where competing with other property owners just is not worth the hassle. Using agents and management companies only reduces your potential yield. Towns outside of London are far less likely to have such a competitive market. Investors that buy properties outside of London gain the advantage of not having to compete with those within the city. Therefore investors have far greater opportunity to receive their asking price, since they are unlikely to be undercut. Summary While it is undeniable the growth of the London property market has been meteoric since 2007, there are strong signs of a change in the status quo. The average Londoner is now quite simply unable to afford the rental prices demanded within the city and is forced to look outside the capital. Therefore a great deal of opportunity now lies beyond London. Investors who limit themselves to within the capital, may not fair as well as they think. If you would like to find out more about property investments and how Flambard Williams might be able to benefit you, please don’t hesitate to get in touch.
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