Seaside town revealed as the UK’s top buy-to-let destination
Southend-on-Sea is the UK’s number one buy-to-let hotspot, according to research carried out by independent mortgage broker Private Finance. Continue reading
Property investment outlook remains positive despite Brexit uncertainty
The outlook for property investment in the UK remains positive, despite the ongoing uncertainty surrounding Brexit negotiations. That’s according to a panel of industry experts interviewed by The Finance Professional Show. Continue reading
Rents rise rapidly in areas surrounding Elizabeth Line stations
New research has revealed that average rental growth around the stations of the Elizabeth Line (excluding zone 1) has been more than double the London average since 2012.
Rents along the line have increased by 16.38% in comparison to the London average of 8.20%, according to the findings by Landbay. One of the UK’s largest transport infrastructure projects, the £15 billion Crossrail scheme has been well known in recent years for the ‘Crossrail effect’ – with many areas along the line experiencing an economic boost, significant regeneration and upped house prices and rents.
The Elizabeth Line, which was set to be completely operational by December this year, will now open fully to commuters in the autumn of 2019 following a delay to the original planned opening date. A spokesman for Crossrail Limited said that more time was needed to complete ‘final infrastructure and extensive testing’ and make sure a safe and reliable route was delivered for passengers.
It’s hoped, once complete, that the Elizabeth Line will offer a boost to London and the South East by lowering commute times and improving access to jobs located in the centre of the capital. With the project only a year away from completion, the Landbay Rental Index has examined the impact it is already having on rental growth along the new rail network. Rents in the areas surrounding the 38 stations analysed along the Elizabeth Line (discounting zone 1) rose from an average of £1,193 in January 2012 to £1,376 in June 2018.
On average, then, tenants have had to pay out an extra £2,196 this year compared to when construction began in 2012. The largest rent increases have been witnessed in areas to the east of zone 1, with average growth of 17.22% since 2012. Meanwhile, areas to the west of zone 1 have seen rental growth of 15.38%. This contrasts starkly with London as a whole, which has mostly experienced a slowdown in rental growth over the same time period – only rising by 8.20%.
Certain areas have experienced more growth than others. Three areas surrounding Elizabeth Line stations have witnessed rents grow more than 30% since 2012, with Southall seeing the biggest rise (up by 38.19%). Southall was closely followed by Manor Park and Romford, which have witnessed rents growing by 37.24% and 30.47% respectively.
Since 2012, rents rising between 20-29% has also been seen in the surrounding areas of eight stations on the incoming line, including Abbey Wood (26.51%), Ilford (27.24%), Seven Kings (26.09%), Goodmayes (25.18%) and Chadwell Heath (27.35%) on the eastern section, and Burnham (26.02%), Iver (28.03%) and Hayes & Harlington (21.05%) on the western section.
Just three areas surrounding Elizabeth Line stations have seen rents decline since 2012, with rents in Taplow falling by 2.02%, by 0.9% in Canary Wharf and by 6.51% in Maryland. “The Elizabeth Line will improve access to the centre of London for thousands of commuters, but it comes at a premium for renters,” John Goodall, chief executive of Landbay, commented. “The prospect of better transport links is creating higher demand for property in these areas. As a result, house prices and rents alike have increased, which for many landlords is an attractive proposition due to the prospect of extra return on investment.”
Home-movers warned to act now to move by Christmas
Average asking prices of newly-marketed property show a fall of 2.3% in August as new sellers launch a ‘late summer sale’, according to Rightmove.
Slightly bigger than the drop last year, this decrease likely stems from the more subdued market in London and the South East. With the two regions excluded, the rest of the country would have a monthly drop of 1.5%. “Sellers who come to market in the peak holiday month often have a pressing need to sell and price down accordingly, and are offering ‘summer sale’ prices to entice holiday-
distracted buyers,” said Miles Shipside, director and housing market analyst at Rightmove. Continue reading
Midlands property market thrives while London market cools
Despite a significant drop in purchase activity in Central London, landlords are still picking up property in the East and West midlands, according to Paragon.
In a recent survey of over 680 landlords carried out by BDRC on behalf of the firm, it was revealed that buy-to-let mortgages for property purchases have fallen by around 40% overall since 2015.
Landlords in the Midlands, however, seem to be bucking the trend, amplified by strong economic growth in the region, a thriving higher education sector and successful regeneration of Birmingham.
There is also a boost from the relocation of head office and operational functions outside of London to Birmingham by financial service firms – including HSBC and Deutsche Bank – with heightened activity ahead of the Birmingham 2022 Commonwealth Games.
What’s more, 42% of landlords in the East Midlands and 33% of landlords in the West Midlands said tenant demand was increasing, compared with just under a quarter of all landlords (24%) who indicated rising demand. Rental yields for landlords operating in the region were also strong, with landlords in the East Midlands reporting average yields of 6.7% and those in the West Midlands achieving yields of 6.2%.
The research also found that landlords operating in Central London were least likely to be buying property, with a net 16% saying they had sold some property in the first quarter. “These findings highlight a big regional difference in landlord experience and buying habits,” said John Heron, managing director of mortgages at Paragon. “Some Central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”
Female landlords still struggle to close the gender pay gap
The income women earn from property investment is lower than that of their male counterparts, according to new data from Knight Knox.
The annual survey of landlords across the UK has highlighted the difference in average rental income between male and female landlords, with men receiving £24,050 annually compared to annual income of £22,550 for women. Continue reading
New breed of property investors being ushered in by changing marketplace
A new generation of property investors is being created by a rise in the number of affordable homes coming to the market and the increasing power of the digital property market. That is according to auction firm John Pye Property.
Recent research has suggested that a wider range of ‘appealing’ properties are available now in comparison to five years ago, which has in turn increased the proportion of fledgling investors getting involved in the market.
Richard Reed, head of property at John Pye Property, said that the concept of a “stereotypical” property investor is no longer accurate, with innovations in technology opening up the market to a totally new audience. “The image of the middle-aged man in a suit with a medium-sized portfolio is giving way to a new breed of investor,” Reed said.
London the region with the highest rent rises for the first time in four years
London was the region with the highest annual rent rises for the first time since the fourth quarter of 2014, according to new analysis by Rightmove.
In Q2 2018 asking rents in Greater London rose to an average of £2,000 per month, fuelled by a shortage of new rental properties coming to the market in the capital (down by 3.5% on the year before). This has helped to push the annual rate of London asking rents to 3.4%, its highest rate for three years.
Outside London, rents increased nationally by 2.7% over the second quarter, broadly the same as the 2.8% increase in the same quarter last year. The annual rate has dropped to 0.7%, dragged down by flat annual change in the South West and a negative rate of -0.4% in the South East. In contrast to London, where a lack of new properties is thwarting renters, new listings are up 2.4% outside of the capital, offering more choice to tenants.
Investors are seeking low cost, high yield properties
Investors are increasingly searching for cheaper and higher yielding properties despite buy-to-let (BTL) investments offering attractive return rates, according to a study commissioned by The Mortgage Lender.
The special report, authored by the UK’s leading housing economist, Martin Ellis, covers the UK economy, the private rented sector, the UK housing market, buy-to-let mortgages, the impact of tax and regulatory changes, forecasts and prospects.
It predicts that interest rates will rise by a quarter in the next few months, with house price growth slowing to between 2 or 3% a year by the end of 2018.
Commenting on the contents of the report, Peter Beaumont, deputy chief executive of The Mortgage Lender, said it also looks at the factors that are likely to influence landlords’ investment choices over the coming years as well as the macro and micro economic environment for buy-to-let investors.
“It highlights the need for a flexible and competitive buy-to-let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased,” he added.
According the report, the key factors impacting the buy-to-let market are as follows:
Property still seen as best income source for retirement plans
Property is still top choice when it comes to long-term investment, according to findings from a survey carried out by Perrys Chartered Accountants.
Despite recent tax changes affecting landlords – including the extra 3% stamp duty surcharge and the phasing out of mortgage interest tax relief – the research found that 35% of the UK population are most confident in property compared to any other investment, including pensions and ISAs.
The survey, which took the views of 1,000 people, was conducted to ‘raise awareness of the importance of planning for the future’. It revealed that 8% are relying on the equity from their property as their main source of retirement income.
The UK’s housing wealth passed the £6 trillion milestone for the first time last year, research by Halifax found, with most of the property wealth concentrated in London and the South East. The average net equity worth – the difference between the value of a home and the outstanding mortgage – is currently estimated to be £247,233.
With research suggesting that approximately £25,000 per year is needed by retirees to maintain a similar lifestyle in retirement, equity from a single property could offer up to 10 years of income. This, though, does not take into account other costs for releasing the equity – such as estate agency and legal fees or any stamp duty charges – which could stretch into the thousands.
What’s more, with an average life expectancy of 81 in the UK, banking on property equity from a first home could mean there is a potential income shortfall of at least six years. With this in mind, Stewart Pope, chief executive at Perrys Chartered Accountants, is encouraging people to plan ahead and think about the prospect of changing circumstances. The rising costs of residential care (more than £29,000 per year on average) should also be factored in – not just the hopes to keep an existing lifestyle in place.
“Whilst maintaining your current lifestyle will always be the first consideration, it is also important to be aware of the other possibilities that life can throw at you, such as ageing relatives, long-term illness, or the chance you might need residential care in the future,” Pope said.
“The recent introduction of auto-enrolment for employee pensions is hoping to address some of the issues we face as an ageing nation. However, only a quarter of those aged between 35 and 54 felt confident in pensions as a future investment with 40% saying that putting their money into property would be their first choice.” He added: “But the Government’s latest changes to tax regulations and the significant increase in the stamp duty charges paid on second homes are making property investment a more difficult and expensive prospect for many.”
Pope said people should take a look at their existing assets to see how they could maximise potential for the future. “With the right advice and some effective tax planning you could find that this makes a long term difference to the shape of your financial future,” he said.