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Buy to let property returns up almost 10% year on year in England and Wales
Total returns for buy to let property in England and Wales rose to 9.57% in the 12 months to the end of March, according to the latest buy to let index to be published. Overall buy to let portfolios fell 0.31% month on month, were up by 2.31% quarter on quarter, and by 9.57% year on year, the data from the Property Partner residential market index shows. The growth over 12 months has been led by London where buy to let returns increased by 16.49%, followed by the East of England with a rise of 13.18%, the South East 12.1% and the East Midlands 8.59%. The North West was not far behind with a rise of 8.44% and the South West at 8.42%. The West Midlands saw a rise of 6.08%, Yorkshire and Humberside 4.51% and the North East 2.57%. According to Rob Weaver, Property Partner’s director of investment the strong growth in the year to March 2016 was probably affected by property investors rushing to beat April’s additional home stamp duty deadline. ‘This was especially true of London, where annual returns were in double digits, reaching an eye-watering 16.5%. The East was strong too, and from first hand experience the Northern Powerhouse regeneration plan is boosting investment activity in the North West and in particular Manchester,’ he said. He pointed out that monthly figures can be volatile. ‘What’s clear is that regional disparities in the housing market are widening, with Yorkshire and Humberside and the North East regions looking fragile,’ he explained. He also pointed out that property investors are showing caution ahead of the referendum in June on the future of the UK’s position in the European Union. ‘But the fundamentals of high employment, wage growth, cheap borrowing and the chronic shortage of supply remain in place and are positive,’ he added. The index is the first regular dataset to combine rental income and capital growth to show the total rate of return of residential property investments over time. It is based on research carried out by the property crowdfunding platform Property Partner of Land Registry and ONS data. Continue reading
UK residential property market saw strong start to the year, report confirms
The UK property market started 2016 at breakneck speed with even stronger and more buoyant activity than the positive sentiment seen during the final quarter of 2015, according to a new report. The number of active buyers entering the residential property market reached new heights, partly driven by the continuation of positive economic trends, such as low interest rates, says the analysis from Connells Group. This has tempted those on the fence to make their first move onto the property ladder sooner rather than later, according to David Livesey, group chief executive. But he pointed out that with the current level of available stock at historic lows, the additional demand from these new buyers combined with increased buy to let activity from investors looking to extend their portfolios before the higher stamp duty changes came into effect on 01 April, many of these first time buyers faced restricted choice and additional competition as they sought to find their ideal property. However he explained that the ratio of applicants to new instructions has evened out in the short term, while property price growth has not been as rapid as it has been in previous quarters, making climbing up or onto the housing ladder a less daunting feat for many. ‘This slight cooling has by no means turned into a chill, with property remaining a valuable asset that will continue to increase in value for the foreseeable future. Supply side initiatives, driven by the Government’s attempts to stimulate housebuilding in particular, may need further support if they are to have any meaningful impact on the level of available stock in the short term,’ said Livesey. The report shows that landlords and tenants have also enjoyed a positive and productive start to the year. It says that activity from renters has grown at a healthy pace, as this group often uses the start of the New Year as an opportunity to move into new accommodation. Despite the fresh demand from new applicants entering the lettings market in the first quarter of the year, the ratio of registered applicants to new instructions is by no means as high as it was during the first quarter of 2015 and average agreed rents have broadly stabilised across England, in the short term at least, the report points out. Livesey said that an increased supply of rental stock is easing pressure on the sector, as buy to let landlords purchase less expensive properties, some of these new build. ‘This may not be what the Government had in mind when it aided the construction of such properties, but it has given tenants respite nonetheless. In addition, tenants are also driving harder bargains, securing longer leases at a cheaper monthly rate meaning they need to return to the market less often, which is also attractive to landlords,’ he explained. ‘The mortgage market has also sprung back to life this quarter, largely propelled by high activity levels in the residential and… Continue reading
Trend of letting to rent becoming more popular in UK
There is growing evidence that the concept of let to rent is becoming more popular in the UK where a home owner rents their property out and then rents a place in another location. While let to rent isn't a new concept, it's becoming a great deal less niche as an alternative owning and living option. ‘One of the biggest factors in this trend is the massive and rising cost of moving, and the difficulties that many owners are encountering in replacing their existing mortgage with a similar deal,’ said David Brooke Smith of Stacks Property Search. He explained that there are lots of reasons and schools are one of the main drivers. ‘Families who want to live in a specific catchment area, or who want to be close by for a child's limited time at a particular school, are letting out their home and renting close to the school,’ he pointed out. ‘It's also a great way of trying out a new area without committing to it fully. So for those who are contemplating a move from town to country, vice versa, or from one part of the country to another, or wanting to try out a specific village that has caught their eye but about which they know nothing, it reduces the risk of buying in haste and repenting at leisure,’ he added. Other scenarios include short term work contracts, taking time out, such as on a sabbatical and some even want to move, but can't bear the idea of selling their much loved property. ‘There are huge benefits to let to rent. Selling and buying is a big step both emotionally and financially so if there's ever any doubt that it's the correct long term decision, letting to rent makes a lot of sense,’ said Brooke Smith. But he warned that while let to rent is often a win-win scenario, there are several issues that need careful consideration before making a decision, most importantly the figures. He pointed out that that big disadvantage is that the rental income will be taxable income. ‘You can offset costs related to the property you're letting, but you can't offset the actual cost of renting. So if you want an even playing field, the figure you have available for your rental may need to be less than the figure you can achieve for letting your property out,’ he explained. ‘Depending on where you're moving from and to, the figures could stack up very nicely. Letting in London, and renting in the country, should mean you're well placed financially. But going in the opposite direction will mean you have to be pragmatic about what you can afford,’ he added. He also explained that availability can be a challenge in rural areas as rental homes are often in short supply and the choice can be further limited if landlords choose not to welcome children and or dogs. Home owners will also need to get consent to let their… Continue reading
