By 2017, there will be more Brits renting their home than owning it – a product of rising house prices and a crowded property market.

This is based on research by the estate agency group Countrywide, who report how the rental market is fast becoming the more desirable way for would-be buyers to live in the current climate.

Johnny Morris, the Countrywide research director, notes that:

“As some would-be buyers and sellers sit on their hands, this has continued to boost the rental market … September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends 2017 could be the first time since the 1930s that more homes are let than sold.”

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Affordability

It seems that the main stumbling block for first-time buyers is the simple fact that house prices are too expensive for average earners.

Data from the Office for National Statistics shows that the median house price has risen by 25% since 2013, a period where wages haven’t increased at the same rate. This has pushed many would-be buyers into the letting market by circumstance and not by choice.

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This increase in house prices means that renting long-term has become less expensive than buying. Real estate experts Savills say this is compounded when the cost of repaying capital is taken into consideration alongside mortgage repayments.

Lucian Cook, the director of Savills’ residential research, points out that:

“…it’s not only the challenge of funding a mortgage deposit that was constraining people’s ability to get on to the housing ladder, but also the extra expense of paying down a capital repayment mortgage over time.”

Booming Buy-to-Let Sector

The thriving rental market has been good news for landlords across the UK throughout the 21st century, and although many thought the rise in stamp duty on second homes and looming tax changes would cripple the market, confidence still remains.

For example, enquiries by prospective landlords at Rightmove have risen by 30% since June. This in turn led to the number of properties being available to rent increasing by 6% across the country.

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These positive signs are despite the government measures to reduce tax relief in 2017, reducing the possible 40/45% respite down to a flat-rate of 20%. In fact, these changes may make it easier for new buy-to-let investors to delve into the market as the playing field is levelled-out.

In terms of tenant numbers, it’s perhaps the easier nature of renting that has seen levels rise higher than house sales for the first time in over 80 years. There’s less risk involved, especially in what some consider a volatile period, and often comes with much less hassle than buying outright.

For investors, knowing which route to go down will depend on your personal circumstances, as well as possible market trends and how future tax implications will affect profit margin. However, to minimise a risky buying strategy, it’s recommended to seek professional advice from a reputable estate agent before deciding on your next move.

If you found this helpful, you might also be interested in Why Brexit Can Be a Great Opportunity for Property Investors.
If you’re ready to make a move into the buy-to-let sector, then contact us today.

Despite the warnings of pro-EU campaigners that a Leave vote would affect the state of the housing market, prices have remained stable. The balance of supply and demand has remained largely unaffected, showing that excessive fears of a property crash have not manifested.

This is great news for the UK economy as a whole, mainly because a major slump in house prices would indicate a bleak post-Brexit outlook. This hasn’t been the case however, and there’ are some encouraging signs for the housing market as the country prepares for the onset of Article 50.

Price Slowdown

A short-term forecast model from BI Economics shows that, although no market crash is forthcoming, the steady incline of house prices has subsided since the Referendum result. House values are still going up, but not at the rate they were before 23 June 2016.

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However, this could be a positive sign for first-time buyers looking to get on the property ladder. Less expensive properties with the potential to still increase in price is a desirable outlook for average buyers, especially against the previous state when house prices were rising more rapidly than earnings.

Improving Activity

Although activity in the domestic market was expectedly cautious in the initial Brexit aftermath, recent indications show that this may be changing. A former chairman of the Royal Institution of Chartered Surveyors (RICS), Jeremy Leaf, has noted:

“Since the beginning of September we have seen an increase in activity, although buyers are still relatively slow to commit until they are sure they have achieved what they think are the best possible terms.”

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The initial slowdown in activity didn’t put the amount of pressure on house prices many experts expected – this shows that confidence remains in the UK market. There could be further reasons for this however, notably that mortgage rates remain cheap and we are likely to be in a low interest environment for an extended period.

A large nationwide survey completed by estate agent Jackson-Stops & Staff also validated that no market crash occurred post-Brexit. They actually found the number of properties put up for sale made a marginal increase from mid-June to mid-September. However, the survey also showed that the proportion of properties sold did decrease, but only by 2.5% – a figure certainly nothing for investors to worry about.

Moving Forward

With a liquidity injection from the Bank of England, there’s been no financial market dislocation and despite a drop in the pound, the stability of the housing market goes a long way in proving that the UK will avoid recession. On top of this, promises by Theresa May to build a far greater number of houses over the next five years are also encouraging signs for the housing market.

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In conclusion, a BI Economics forecast anticipates that house price inflation is set to slow but remain positive. The fact that it doesn’t forecast any sharp regressive behaviour, something that would be likely to standout in the analytics, is a strong indication that a crash isn’t forthcoming in the foreseeable future.

If you would like to know more about where to invest your money, you may be interested in Is the North Driving Property Growth?
If you’re looking to invest in property, take a look at our current UK property opportunities.

It would be a lie to say that the uncertainty that has arisen from this year’s Brexit vote in the UK hasn’t touched almost everyone in the country – and those who have an interest in the country. Whether you are a low skilled worker in the UK, British family who has moved to another European country for a lifestyle change, a parent of young children, or work for an international company, it is likely that the country’s leaving the EU will have some sort of impact on your life.

Part of the uncertainty which is occurring stems from the fact that, whilst having the vote to remain or leave the EU, British voters were never given more details about how a post-Brexit Britain will look – and indeed when it will happen.

Theresa May’s recent announcement that Article 50 is to be triggered by March 2017 is the first sign of the dust beginning to settle after such a huge decision, allowing us to finally begin to see where the country is heading.

What We Do Know

Whilst it is still very much in the air, what Britain will look like once Article 50 is triggered, and of course afterwards once all of the negotiations have been resolved, there are some things which we can be sure of.

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The main difference is that we will be in control of our own destiny, so to speak. For example, we will be negotiating our own tariffs and trade deals as Britain and (hopefully) discarding the parts of the EU tariffs and deals which aren’t beneficial to the country. This could mean better trading within Britain – between ourselves, and the possibility of better deals trading with other countries worldwide – not just in Europe.

Of course the specifics of the new deals and tariffs are still unknown (depending on the negotiations carried out), but we can be sure that the British negotiators will be working on behalf of the people and businesses of Britain – and not of the whole of Europe.

The Property Market

One of the potential benefits to property investors in Britain is that we might see a reduction in the number of foreign investors wanting to buy property in the UK. This means a lower demand and therefore could turn into lower prices. Properties to rent (especially in London), however, are still likely to be in huge demand – another bonus for investors. Statistics today nevertheless point towards demand of property still tremendously exceeding supply. In Fact, according to the parliament’s research publications the need for additional housing in England is estimated to be between 232,000 to 300,000 new units PER YEAR, a level not reached since the late 1970s and two to three times current supply!

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One thing that lessened the impact of the European financial crisis on Britain was its independence from the euro. Whilst we are expecting a bumpy road during the Brexit negotiations, and maybe for the first couple of years afterwards, the financial stability of the country is likely to become stronger. We should have even more control over our economy and spending, meaning a potentially stronger pound and healthier financial outlook.

A healthy financial outlook is of course great for the property and investment market, creating good movement within the market. With plenty of buying, selling and profit to be made by everyone.

Property Abroad

Of course, the new deals and tariffs which are to be negotiated will have an impact on overseas property investment, although that doesn’t mean that it will be worse. A strong pound against a weaker euro would mean that even if negotiators don’t manage a situation which is tariff free, property investors can still get great deals and make good profits.

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In a country with an ever increasing population, even with the government’s house building programmes, and the possible reduction of immigrant numbers, it’s unlikely that the demand for rental property will fall. Quite the opposite actually, renting has never before been so popular. At least 1.8 million more households will be looking to rent rather than buy a home by 2025 according to the Royal Institution of Chartered Surveyors (Rics). And this is why the future is bright for property investors. A stronger pound, trade deals and tariffs which are tailor made for British businesses and investors mean that the outlook is looking good – even with the understandable uncertainty which has come with Brexit.

The triggering of Article 50 is the beginning of an end to the uncertainty and a future of more control – something which the sooner it can get started, the better.

If you’re ready to start your buy-to-let journey, get in touch today.
If you’d like more information on how Brexit is currently affecting the UK’s buy-to-let market, you might be interested in this article.

The UK’s decision to leave the EU has had many political and social commentators speculating over its possible effects on the country. One such area of debate lies with the future of the housing market, notably with the flourishing buy-to-let sector.

Some estate agents are predicting that it will be harder now to obtain a mortgage for a buy-to-let property during the post-Brexit aftermath. However, other reports don’t seem to indicate the Leave decision will play a major part in the autonomy and profit margins of landlords.

Bank of England Regulations

Earlier in the year, before the EU Referendum, the Bank of England laid down tighter regulations for landlords looking for buy-to-let mortgages. Borrowers were required to pass more rigorous income tests and prove they could make repayments at higher interest rates than usual.

The stricter regulations were implemented in the hope of cooling the UK’s overcrowded buy-to-let market, reducing mortgage approvals by around 10-20% in three years’ time. This way, the government hoped more first-time buyers would get their foot on the property ladder instead.

Post-Brexit, the Financial Conduct Authority is again looking to reduce the number of buy-to-let mortgage approvals, this time for smaller lenders who fall outside regulation of the BoE. Philip Salter, director of retail lending, has compounded this warning to non-bank lenders to reduce poor standards of lending.

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Brexit Aftermath

The onset of Brexit may further reduce mortgage approval rates as banks and building societies wait until the dust settles before going back to aggressive lending. The crowdfunding group Property Partner believes minimum buy-to-let deposits could rise to 60 per cent in some areas due to the Leave decision.

Although the reverberations of Brexit aren’t totally clear yet, credit ratings agency Moody’s suggests the purchase of buy-to-let properties will decrease rapidly. The firm predict that the increased demand for credit and higher stamp duty for additional homes will “reverse previously positive market conditions for the UK mortgage market”.

Moody’s also expect that lenders will look more favourably on traditional mortgage applications rather than those for the renting sector:

“Post-Brexit, we expect building societies to be more reliant on growth in deposit gathering and reduction in lending to help bridge their funding gap. In the UK market, most future issuance from building societies will be concentrated in the prime mortgages segment, rather than buy-to-let mortgages.”

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Positive News

Alternatively, some prospective landlords may see the current economic climate as an attractive buying opportunity. The minefield of changes imposed by George Osbourne earlier in the year were not all that discouraging for experienced landlords with the capital to cope with his tighter controls. In any case, the new Chancellor Philip Hammond may decide on reducing these changes with his first budget announcement.

In another twist, the potential effects of Brexit may offer relief to the strict regulations imposed on the buy-to-let sector earlier in the year. If house prices were to fall faster than rental incomes, potential yields could rise. Additionally, the chance of obtaining a mortgage for certain properties could be improved as rental income would now cover more of the interest cost.

Overall, interest rates of buy-to-let properties remain on the low side from a wide selection of lenders. In many regions of the UK where house prices are below the national average yet are on the rise, notably in Liverpool, Manchester and Leeds, big gains are still to be made on buy-to-let investments.

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Cash Rich

For cash rich investors who won’t require a mortgage, these stricter regulations won’t affect them too much in any case. In fact, it could actually clear space in the market and push down prices, especially in the case of property auctions as bidders will start lower to counteract increased stamp duty charges. Similarly, richer buyers who can afford to pay in cash will avoid punitive changes to mortgage interest relief.

For those who’ve been put off the buy-to-let market, there’s still plenty of opportunities to buy homes in need of minor renovation work and then sell them on for profit. Alternatively, buying off-plan has never been a better option for property investors -seen as a safe haven for people keen to have a good return on their money in uncertain times.

As opposed to the inflexibility of home ownership buy-to-let provides much needed affordable rented accommodation in city centres for young professionals and indeed relieves pressure on the UK housing stock.

If anything, we can be certain that as the population and house prices keep increasing, the housing issues that the UK faces aren’t likely to be alleviated without a long term look at the UK housing stock and the buy-to-let sector.

If you’re interested in finding your next buy-to-let property, you might enjoy our Top 6 Postcodes in Liverpool to Invest In.
Alternatively, if you’re at the beginning of your landlord journey, you might be interested in Can You Really Make Money with Buy-To-Let Investments?

The momentum in the UK housing market is now more focused in the northern regions. Property prices are on the rise, notably in cities such as Liverpool, Manchester and Leeds, yet remain affordable with historically low mortgage interest rates.

There are plenty of investment opportunities in the buy-to-let market also. This is because, although house prices in these cities are on an upward spiral, they still fall below the national average so produce the most attractive rental yields.

Fears for the UK housing market post-Brexit have not materialised – in fact, activity in the housing market remain healthy and more sales were completed in July than in June. It appears the north is driving this positive surge.

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London

In the case of London, the effects of Brexit have seemingly left the capital reeling from the Leave decision. Some of the most coveted properties in the city have stagnated in price, with some investors having cold feet over making a substantial investment.

With the gap in wealth inequality widening, the average earner is really struggling to buy property in the city, especially as salaries remain stationary whilst the cost of living continues to rise. This is one reason why more and more people look to the northern regions to help them get on the property ladder.

The average house price in Liverpool is around £113,000 compared with London’s whopping £468,000. Savvy investors can acquire three or four properties for the price of one at this rate, again with distinctly stronger rental yields to boot!

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The North

The economic prospects are looking good for the ‘Northern Powerhouse’ – a recently published report shows that northerly regions have the potential to add nearly £100 billion and 850,000 more jobs to the UK by 2050. Commercial investment in the major cities has been constant throughout the 21st century with no signs of slowing down.

Living standards are also on the rise, with jobs and disposable income reported to be increasing. As another bonus, the construction of the HS2 railway will boost transport links between London and across the north over the next two decades or so.

Some properties in Manchester and Liverpool are producing rental yields of around 5-6% on average, with some reaching 9%, an attractive prospect for landlords. Demand for rented accommodation is also very strong, especially with the large student numbers heading north year on year.

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Likewise, house prices across Yorkshire are expected to rise by 2020, notably in the more affluent areas of York, Harrogate and Leeds city centre. Because the more lucrative housing here isn’t within the same price bracket as London’s, there also won’t be as much stamp duty land tax to pay – one more added bonus.

Another promising sign for the north actually comes out of adversity. Many more homes are needed to cope with demand, something Theresa May has promised to address during her administration. A housing alliance ‘Homes for the North’ are at the forefront of calling for a major increase in new builds which is expected to happen over the next few years.

With this, it seems that the north is the place to look for both property investors and first-time buyers moving forward.

We have a number of guides to investing in properties in northern cities, including our Guide to Investing in Student Property in Manchester.
If you’re ready to invest in the north, you can check out our UK investment opportunities.

As the new Prime Minister, Theresa May has to bear the brunt of a potential housing crisis that is threatening the UK in coming years. Even now, average earners are struggling to purchase their own homes and instead are forced to rely on inflated rental properties.

Some polls show that around a third of Brits don’t believe they’ll buy a property in the current climate, whilst most could only do so with family help. This means more people rent, which of course takes up a lot of their income, or are forced to take out risky mortgages that stretch them financially.

This means that demand is high for rental properties right now, which is great news for those who have already invested in property, and it doesn’t look like that demand will be decreasing any time soon. But the future may also hold some good news for those currently struggling to buy their first home.

Housing Pedigree

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Luckily for those looking to take a step onto the property ladder, Theresa May has been a strong advocate for new building schemes throughout her political career. Even before being announced as PM, she addressed the problem specifically:

“Unless we deal with the housing deficit, we will see house prices keep on rising. Young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments”.

Without her own personal mandate to lead the country, it’s expected she will still try and honour the promises made in the Conservative manifesto from the 2015 General Election. They include the building of 200,000 new Starter Homes for first-time buyers at a 20% reduced rate, along with extending the Right to Buy scheme where eligible council and housing association tenants can purchase their home with a substantial discount.

May’s Promise

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As Prime Minister, May made an inaugural speech highlighting the need for a fairer society which serves ‘the many rather than the privileged few’. One recognisable way she can do this is to address the consequences of an unstable housing market, especially during the immediate post-Brexit aftermath.

With her reference for the “need to do far more to get more houses built”, the Prime Minister will be looking to push the 156,000 new homes registered in 2015 closer to the 250,000 figure required to ease pressure.

Possible Policies

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One solution that Theresa May and her new government don’t appear keen on is building new homes on the contentious green belt, especially in the south of the country. Sajid Javid has quashed rumours of doing so, saying “the sacrosanct Green Belt remains special”.

However, some critics of this approach point out that declassifying a very small percentage of green belt can see hundreds of thousands more houses built at minimal environmental cost. This is one option May should consider if the housing issue becomes a more serious concern in the public eye.

There’s also a call to obtain all surplus public sector land owned by local authorities such as the NHS. This could allow the construction of over 100,000 new homes in London alone.

It would be quite controversial to go against the policies of the former Chancellor George Osborne, but one option could be to scrap the demand-side subsidies for prospective first-time buyers that have angered some landlords and investors in the buy-to-let sector.

This alone shows how difficult it is to please everyone who has an interest in the housing sector, along with green belt policy, whilst also satisfying the huge demand for new homes. Only time can tell how Theresa May will attempt to solve these problems as her premiership unfolds.

For more information the housing crisis, check out why so many millennials are choosing to rent.