By 2021 the Buy-to-Let Sector Will Have Grown by 24%

Good news for buy-to-let investors comes with the latest tenant survey from property specialists Knight Frank. Their research shows that the proportion of households in the private rental sector will grow by 24% over the next four years.

This means that 1 in 4 Brits will be renting by 2021.

For prospective investors, this should come as a wakeup call to the vast potential of the market – one that is becoming a more robust asset class by the day.

If you’re looking to take advantage of these positive forecasts, we have plenty of exciting opportunities at Aspen Woolf. Our properties span the whole of the UK, with low-entry prices and guaranteed yields per annum.

Contributing Factors

Many people can't afford to buy homes in the UK, so are forced into rental properties.

Low wage growth, rising living costs and a severe housing shortage will see more and more people relying on rented accommodation as we move further into the 21st century. Would be first-time buyers are accepting that renting is their only viable route into their own homes, for now in any case.

Also consider that many simply prefer the flexibility renting offers, with others seeing it as a chance for independence from their parental home.

What’s more, the Knight Frank report shows that nearly 70% of those surveyed still expect to be living in the rental sector in three years’ time. This is great news for investors as long-term tenants are usually the most reliable, guaranteeing a regular income.

Who’s Renting?

Young professionals and couples make up the majority of the UK rental market.

The findings profile the type of people most likely to become tenants. As expected, young couples and single occupancies make up the majority of rented households (59%), with families at 29% and house sharers at 12%.

Young professionals aged between 25 and 34 are the most likely renters, with the majority of these expected to stay put until 2021 at least. According to the report, not wanting to be tied down to an expensive mortgage is the rationale behind this.

Of course, the student factor also plays a big part. Purpose-built flats are now strongly favoured by contemporary students, mainly for their modern amenities, high security and independent living.

At Aspen Woolf, we have a range of student flats in buy-to-let hotspots across the UK.

Positive Forecast

The private rented sector has doubled in size over the last decade in the UK.

Official projections from the Private Rented Sector (PRS) Research Consultancy show that 790,620 new rented households will be created by 2021. Their representative Dr Diana Babacic notes that:

“This growth will be largely on the demand side, but as specifically designed units for these age groups come to the market, we expect supply to start drawing more households to the sector. There will also be an increase in the number of mature professionals 35 to 49 years old living in the PRS.”

The Knight Frank report shows how the private rented sector has doubled over the past decade and will continue to grow until 2021. For buy-to-let investors, knowing your investment is likely to attract tenants provides peace of mind, as well as guaranteed rental yields over the next few years.

 

If you’re interested in becoming a property investor or adding to your portfolio, you can find out about opportunities across the UK, our student accommodation opportunities or get in touch for a chat.

What Could the Election Results Mean for Property Investment?

A hopeful period of strength and stability didn’t turn out as planned for Theresa May. The snap election has muddied the waters, meaning some property investors may remain a tad more cautious until things settle down.

However, if speculators believe this time of political uncertainty will negatively affect the property market, one glance at the sector post-Brexit should be of comfort. In the year since the Referendum, the average property price has risen by 5.6%.

Likewise, although the Conservatives didn’t get the extended majority they were looking for, they still have mandate to govern effectively and will be able to guide the country through the EU negotiations.

Therefore, property speculators shouldn’t worry too much about the seemingly ambiguous future of UK politics. The law of supply and demand will remain, especially in the consistent rental and student sectors which are more immune to outside influence.

The UK general election led to a lot of political uncertainty.

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Expert Views

Many estate agents inside the industry have experienced election fallout before, as well as the 2008 economic crash and last year’s Referendum. Of course, any uncertainty is not welcomed by investors, but because the UK has a chronic housing shortage problem, the demand will always be there.

Sales director at Seven Capital, Andy Foote, echoed these sentiments in the wake of the election result:

“While the London market may be more sensitive to a change in central government, for the short term, growth markets around the country will remain robust and resilient, delivering capital growth for investors,”

“Despite the change in government, the imbalance of supply and demand in the UK property market still persists.”

Housing Minister

Alok Sharma is the new UK Housing Minister.

Image credit: Foreign and Commonwealth Office via Flickr

Adam Challis, the head of residential research at investment management company JLL, has noted that the loss of Gavin Barwell as housing minister will have mixed results. Although some may believe this will create more ambiguity, if the new minister, Alok Sharma, can continue government house building pledges then confidence will return.

Challis says:

“It will be crucial that the new champions of housing market policy in government can reaffirm commitments to the current policy direction rather than to create further disruption or uncertainty,”

“It’s important the policy direction as set out in the white paper on building more homes across the range of tenures will be upheld.”

International Investment

Brexit and the election both saw a drop in the pound. This has mixed results for the economy, where one positive is a rise in foreign spending. International investors will be attracted to the UK in increasing numbers due to the more favourable exchange rate.

This has been evident within the student market in particular. Over 70% of investment in the purpose-built student sector was from overseas buyers last year. The spending behaviour of accomplished and wealthy foreign buyers is a good indication of where growth will occur.

No Real Impact

Just as Brexit didn't have much impact on the UK property market, the election likely won't either.

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Nationwide’s chief economist Robert Gardner has maintained that the results of the snap election won’t have too much impact on people’s buying and selling behaviour. Broader economic effects are the main factor, something proven by previous election trends.

As house prices remain out of reach of many traditional first-time buyers, the rental sector is expected to grow in demand as well as rental income. A typical tenant won’t really have the state of UK politics in mind when considering a move, meaning the election isn’t likely to affect the overall property market too much either way.

 

If you’d like further evidence that the property market is still healthy despite current politics, then you might be interested that Demand for Rented Homes is on the Up as Renting is Now Cheaper Than Buying.

Optimistic Outlook for Property Market in Next Five Years

According to new research by Barclays Bank, the UK property market is set to thrive over the next five years. They predict house prices will rise by an average of 6.1% during this period, with high value areas experiencing the largest growth.

The study factored in numerous components that can influence the market. This includes rental trends, employment levels, commuter accessibility and the expected behaviour of high worth investors.

For prospective investors, this is great news after some post-Brexit uncertainty. Knowing your initial outlay is likely to increase in value means you’ll always have a stable exit strategy to fall back on.

Regional Performance

London property looks set to gain the most over the next five years, where increases of as much as 12% could be made. This is mainly due to extremely wealthy investors who are always drawn to the capital.

Significant gains are also expected in East Anglia (9.38%), the South East (8.74%) and East Midlands (6.67%), as well as the West Midlands and Scotland at 5.88% each.

In the northern regions, house prices are generally lower to begin with. Although this means increases in the North East, North West and Yorkshire of around 4% aren’t as high, it still allows low-entry buyers to enter the market with confidence.

Positive Investment Climate

For buy-to-let investors, any positive forecast makes for great reading. A purchase that’ll increase in value whilst generating rental profits along the way is the ultimate goal.

The chief executive of Barclays wealth and investments division, Dena Brumpton, has echoed these thoughts with his comments on the study:

“There is an increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fueling growth in hotspots across the UK.”

estate agent signs

Image credit: Rachel H via Flickr

Contributing Factors

The main factor behind these anticipated gains is the UK’s chronic undersupply of housing. New building schemes can’t keep up with demand, especially with an ageing population and large net migration figures. An additional 200,000 people are expected each year.

In turn, the UK’s current stock will grow in value as the necessity to find somewhere to live intensifies – by 2021, the average value of a home in the UK will be nearly £300,000.

However, because of this inflated cost, most traditional first-timer buyers are being forced onto the rental market. Around one-fifth of the population are now currently renting, a figure that was just 8% back in 2001.

There are no signs of this trend slowing down, especially as house prices look set to rise again according to the Barclays survey. This means now is the time to invest, not only to make long-term gains but to also take advantage of the rental mindset of modern Britons.

 

For more information on the rental market, you might find Rents Increased Year-on-Year Official Statistics Show interesting.

If you’re ready to become a property investor, get in touch for a chat today.

Now is the Time to Invest in the North as Yields and Equity Continue to Grow

Property investors traditionally drawn to London and the South are increasingly exploring the Northern Powerhouse and its variety of housing stock. With less expensive property and reliance on the rental sector, yields and equity continue to grow.

It appears as if the northern regions of the UK are proving a safer bet – mainly because there’s a chronic undersupply of housing and thus a heavy reliance on the rental sector. This is why now is the time to invest in the North.

Price Changes

The annual average growth rate across the UK is falling but prices in the North are increasing.

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The Hometrack index report monitors house prices across 20 UK cities, as well as regional and national trends. The most recent report shows that the annual rate of price growth has slowed from 8.7% down to 5.3% (April 2016 – April 2017).

However, eleven cities are still rising at a rate faster than a year ago. This surge is led by areas north of the capital, notably Manchester at 8.4%, Birmingham at 7.7%, and Leicester at 7.7%.

Likewise, property in Edinburgh (5.8%), Leeds (4.6%) and Liverpool (4.4%) also showed positive increases from where they were 12 months ago. Because of this ongoing growth, Aspen Woolf have sourced a range of investment opportunities in these areas so our clients are assured of long-term capital appreciation.

Expensive South

The London property market has become overinflated and too expensive for many people.

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One of the main reasons for this fluctuation is the poor performance of southern regions, and in particular the overinflated London market. Although property prices in the capital still saw an annual growth of 3.5%, this is considerably lower than the 13% recorded in April 2016. This is the lowest level London has been at for five years.

The Hometrack report cites affordability constraints, tax changes and weaker market sentiment for lack of movement in the southern regions. It goes on to say:

“Looking ahead we expect current trends to continue with house price growth losing momentum in cities across southern England where housing unaffordability is at a record high and has priced large numbers of households out of the market.

Weaker investor demand supports this trend, taking demand out of the market and adding to supply as investors look to rationalise and de-leverage portfolios in the wake of tax changes.”

Why invest in the North?

The steady increase in prices and demand for rental properties makes the North a great place to invest.

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The steady increase in house prices is just one reason to invest in the north. There’s also the robust demand for rental properties, an important contributing factor to its performance. Yields in these northern regions have thus outperformed the UK average, notably in Salford (7.08%), Manchester (5.79%) and Leeds (5.96%), in the year up to March 2017.

This is because properties are generally less expensive in these areas. Combined with large student numbers and a strong demand for rental accommodation, there are no signs of this trend slowing down in the foreseeable future.

The Hometrack report also points out that households will look to take advantage of the current low mortgage rates and improving economic outlook, although some caution should still remain due to the Election fallout and continuing Brexit negotiations.

You can find out more about the properties with assured long-term capital appreciation that Aspen Woolf has secured for investors here.
If you’d like to know more about the current and future property market, you might be interested in why there is an Optimistic Outlook for the Property Market in the Next Five Years.

Demand for Rented Homes on the Up as Renting is Now Cheaper Than Buying

The latest housing data shows that renting is now cheaper than buying in over half of the UK’s 50 largest cities.

Property experts Zoopla found that in 54% of cases, the monthly cost of renting a two-bedroom home is less costly than obtaining a mortgage.

This is promising news for buy-to-let landlords, especially as this trend has risen in a relatively short space of time. In October last year, the number of these locations was just 40%.

House Price Rises

Due to house prices increasing, mortgage payments are increasing far higher than rents.

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In the survey of Britain’s 50 biggest cities, Zoopla found the average monthly rent on a two-bedroom home is £690. Compared with mortgage repayments of £737 for the same size property, you’re making a saving of £564 each year.

Some property speculators have concluded that house prices have reached a high point, particularly in the capital and Home Counties. This is mainly due to a chronic undersupply of homes and numerous enquiries for the same property. Historically low-interest rates and help-to-buy schemes have also helped raise prices.

Regional Statistics

While London is a popular place to invest, you can great better yields in other parts of the UK, including Liverpool, Bristol and the commuter towns and cities.

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Analysing the Zoopla data further, a correlation emerges between the most expensive areas and the biggest rent/mortgage difference. This is no more evident than in London, where monthly rents of £1,861 lie well below mortgage repayments of £3,000. However, due to the high property prices in London, the rental yield is actually much lower than in other areas of the country, which means that investing in property outside of London can prove better value for money.

Liverpool and Bristol are other areas of interest for buy-to-let investors, with differences between rent and mortgage repayments of 23% and 16% respectively. Because of this, Aspen Woolf have sourced properties from these locations due to the potential for high tenancy demand.

The table below displays the top ten:

Location Median Monthly Rent Avg. Mortgage Repayment Difference
London £1,861 £3,000 47%
Cambridge £1,099 £1,488 30%
Brighton £1,199 £1,576 27%
Reading £1,000 £1,301 26%
Bedford £764 £975 24%
Liverpool £623 £784 23%
Southampton £779 £949 20%
Bristol £900 £1,056 16%
Oldham £476 £550 14%
Bournemouth £848 £975 14%

Large Demand for Rented Homes

As mortgages are so difficult to get these days, the demand for rental properties has been increasing.

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The scramble for rented properties has been high in the UK for many years now, especially as obtaining a mortgage has become increasingly difficult for first-time buyers. According to accountancy firm PwC, there will be 7.2 million households in rented accommodation by 2025.

Further research from the ARLA property group showed that in January this year, their letting agents witnessed a 34% increase in registered tenants per branch. This is good news for landlords as monthly rents will maintain a positive growth whilst remaining cheaper than mortgages, as noted above.

The rise in rents can be attributed to a lack of supply, with additional government pressure on landlords playing its part too. And as there’s no real sign of this pattern slowing down, it appears as if the buy-to-let sector is the place to invest at the present time.

 

If you’d like to know more about the current demand for rental properties in the UK, feel free to get in touch with us today. Our range of properties are carefully selected where the need for accommodation is at a premium, at a time when renting is cheaper than buying.

If you’d like to invest in London property but can’t, you may be interested in how Commuter Towns are the Hottest Places for Property Investment.

Buying A New-Build Property Could Pay in the Long Run

A study by the Home Builders Federation (HBF) has found the cost of upgrading an older property to the same standard of a new-build could be as much as £50,000! Therefore, on top of the initial property purchase, the overall cost may exceed what you’d pay for a new-build in itself.

With this in mind, investors should consider purchasing a new-build outright, especially if the location is desirable and there’s potential for long term capital gains.

Renovation Costs

Renovating an old property for investment can cost thousands of pounds.

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The Home Builders Federation survey looked at refurbishment work that is often required when people move into a new home. Estimates of these potential costs are listed below, although some prices may of course differ depending on the size of the property:

  • Fitted kitchen – £7,900
  • House re-wiring – £8,850
  • New bathroom – £3,800
  • New central heating system – £6,185
  • Roofing – £4,000
  • Doors and windows – £4,900
  • Guttering and insulation – £1,000
  • Utility appliances and electrical equipment – £1,000

If looking to refurbish, one should really take these potential costs into consideration. If they begin to add up significantly, then it’ll make more financial sense to invest in a new-build. Add to this the energy savings you’re also likely to make. Plus the added bonus of having a new-build warranty, which is usually set at 10 years.

Energy Savings

A new-build property will have the latest in energy efficiency and standards.

Image credit: Matthew Hamilton via Unsplash

Buyers are often drawn to new-build homes because of their increased energy efficiency. Compared with Victorian-style properties, they could be up to 65% more effective in preserving heat due to fitted airtight doors, insulated roofs and double-glazing.

The HBF study shows that 94% of homes built in 2016/2017 can boast an A-C energy efficiency rating –  this is just a quarter in second-hand properties. New-build homeowners will therefore save hundreds, and sometimes thousands, of pounds in utility bills alone each year.

New-Build Advantages

New-build properties offer investors a low cost, modern opportunity.

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Some older buildings in the UK may simply not meet the standards required for 21st century living. Remodelling them completely may take up too much time and money for it to be considered financially viable. Usually something done out of a labour of love rather than investment purposes.

On the other hand, new-builds are always constructed to modern standards and have to pass multiple council planning, build, and health and safety requirements. They’ll be equipped with energy-efficient boilers and vacuum insulation panels, not just saving you money on bills, but also meaning replacements won’t be needed any time soon.

You’re also likely to experience long-term capital appreciation as new-builds are often hand picked in areas with high social and economic growth potential.Some buyers may not be aware that new-builds are zero rated from VAT. As the buyer, these savings will be passed onto you, helping reduce your overall costs. As briefly mentioned before, fittings in a new property are covered by a 10-year NHBC warranty protection on structural defects. So if anything does go wrong, you won’t have to worry about footing the bill.

Deciding between a large-scale renovation or a new-build property depends on the property itself, as well as your personal circumstances and goals. However, as refurbishment can cost as much as £50,000 as noted in the Home Builders Federation study, it would make more financial sense to plump for a new-build instead.

 

If you’re looking for ideas on where you should buy your investment property, take a look at The UK’s Top Buy-To-Let Hotspots in 2017 Revealed!

For more advice and information on where you can invest in property, get in touch for a chat.

Rents in England Increased Year-on-Year Official Statistics Show

The latest figures from the Office of National Statistics (ONS) show that rents in England grew by 2% in the year to April 2017.

This correlates with an overall rise from January 2011 where rental prices across the whole of the UK have increased by an impressive 14.6%!

Despite additional pressures on the buy-to-let sector in recent years, investors should be buoyed by these rental statistics. This is especially the case if you can obtain properties in buy-to-let hotspots around the country – something we have been quick to recognise here at Aspen Woolf.

Why are Rents Increasing?

The latest figures from the Office of National Statistics (ONS) show that rents in England grew by 2% in the year to April 2017.

Image credit: Christine und Hagen Graf via Flickr

Rents have consistently risen because traditional first-time buyers cannot afford to purchase their own home. Combine this with a chronic lack of housing and you have millions of people increasingly reliant on the private rental sector, and not just for the short-term either.

These findings are backed up by the latest English Housing Survey. It shows the private rental sector has doubled in size since 2004, with almost half of those aged between 25 and 34 paying a landlord for their accommodation. Around a decade ago, this figure was below a quarter.

What this ultimately means is that monthly rates will increase. Landlords are assured of enquiries as potential tenants have no real alternative, even as rents continue to rise each year.

Landlord’s Perspective

A gradual increase in rents over a few years is more beneficial than doing a sudden increase.

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Looking at things from the landlord’s point of view also helps explain this pattern of growth. Of course, no investor wants to disappoint their tenant by raising prices, but the choice is sometimes taken out of your hands.

If the level of inflation or cost of living rises – as it has done in the UK since 2015 – it makes sense to increase your rental income to cope, especially as other landlords are likely to be doing the same.

As noted, it’s not good practice to burden your tenants with an expensive hike in their rent in one go. A gradual increase over a few years is more beneficial, hence the long-term positive trend across the UK as a whole.

Further Analysis

Aspen Woolf have sourced properties from Plymouth due to these rental increases and positive forecasts.

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Looking further at the ONS report, it illustrates that even by removing excessive London rents from the equation there’s still a 10.5% rise after 2011. The rest of England outpaced both Wales and Scotland comfortably.

The South West performed impressively, with rents up 2.5% from March this year, whilst the North West also saw a rise of 1.4% over the same period. Aspen Woolf have sourced properties from Plymouth and Liverpool due to these rental increases and positive forecasts.

There’s no sign of these trends slowing down either, especially as more and more people are being pushed into the rental sector. According to property agent Savills, rents (+19%) across England are set to rise considerably faster than house prices (+13%) between now and 2021.

 

You can find out more about our investment opportunities in Plymouth and Liverpool over on our UK investment page.

If you would like to know more about these areas, you may be interested in 5 Reasons Why Now is the Time to Invest in Plymouth and Three Reasons Why North Liverpool is a Great Place to Invest.

UK Buy-To-Let Sees Surge in Foreign Investment

Foreign investment in the buy-to-let sector has increased significantly in the past year, mainly due to a more favourable exchange rate post-Brexit. This has also been the case with British expats who’re looking to acquire rental properties back in the UK.

Traditionally, international backers have centred their investments on London. However, what we’ve seen recently is increased interest in regional areas outside the capital, namely the North West, Midlands and South West.

This signifies that, despite premature warnings over the Referendum and tax relief changes on the buy-to-let sector, confidence in the rental market has endured. Domestic investors should therefore recognise these buying trends and look to snap up properties in the UK whilst they can.

Traditionally, international backers have centred their investments on London.

Image credit: Rick Ligthelm via Flickr

Expat Investment

Although it’s not been uncommon for British expats to purchase property back home, there’s been a significant rise in these numbers since Brexit. A recent survey of financial intermediaries revealed that 68% had seen a rise in enquiries about buy-to-let mortgages from expats alone.

The predominant reason for this has been the devaluation of the pound since the UK’s decision to leave the EU. Sterling has weakened against the US dollar, falling from 1.49 on 23 June 2016, to around 1.30 at the time of writing. Currencies pegged to the dollar – such as Hong Kong, Qatar and Saudi Arabia – will be getting more for their money.

These findings are even more impressive considering the new stringent lending conditions introduced by the Prudential Regulation Authority this year. Although guidelines and borrowing limits were tightened, investors still haven’t been put off the UK market.

This is likely due to the strong performance of the rental sector. Rents are increasing year-on-year, with interest rates at historic lows. Combined with the favourable currency exchange, low-entry properties have become even more affordable and therefore produce higher yields.

The favourable exchange rate post Brexit has led to a surge in foreign investment in UK buy-to-let.

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Foreign Investment in UK Buy-to-Let

Higher expat activity is echoing the strong foreign investment in the UK as a whole. A study by property agent Savills shows that international buyers accounted for one-third of all investment in the UK’s regional property market last year. There’s no sign of this trend slowing down either.

Naturally, the devalued pound has played its part. Investec have calculated that a purchase of a property worth £1 million before the Referendum will cost around £200,000 less on the current market!

Likewise, various buy-to-let hotspots across the country provide consistently high rental yields on a long-term basis. This is especially the case with purpose-built student accommodation which is beginning to dominate the sector.

If you’re a foreign investor or British expat, it’s within your best interest to use an established estate agent who knows the UK market inside out. At Aspen Woolf, we provide specialised and impartial advice to clients from both home and abroad.

Foreign investors are now looking at other places outside of London to invest in property, including Liverpool.

Image credit: Radarsmum67 via Flickr

If you’d like some advice about investing in UK property, get in touch for a chat.
If you’re interested in student accommodation in particular, you might be interested in how the student accommodation sector is also benefitting from foreign investment.

What Effect Could the General Election Have on the Property Market?

After the surprise snap election called by Theresa May, voters will yet again head to the polling booths on 8 June. However, as much of the discussion has centred on each party’s manifesto and their post-Brexit outlook, some domestic matters have been overlooked.

One such issue comes with the property market and especially how the new or existing government will deal with a chronic undersupply of UK housing. In the build-up to election day, we’ll take a look at how property in the UK could be affected.

Previous Elections

By studying previous election patterns, a correlation emerges in relation to property market transactions. According to Alison Platt, chief executive at estate agent Countrywide, the past nine elections has seen a dip in sales in the weeks before polling day.

However, one difference this year is the timespan between Theresa May’s announcement on 18 April and the election date itself. We don’t have the same long run up as usual, meaning the normal ebb and flow of property activity is less likely to be affected.

The effect of the 2017 general election can be predicted by looking at past elections.

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Soft Impact

A survey conducted by eMoov helped confirm this. They canvassed 1,000 potential buyers/sellers in regard to their intentions now the election has been declared, asking the question:

“If you are buying/selling a house, will you still go ahead regardless?”

The results were pretty conclusive with nearly 60% saying they wouldn’t be discouraged. Only 18% stated they would wait until the result is announced, with the remainder being undecided.

60% of people polled said they wouldn't be discouraged in buying or selling property during the general election.

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Stability

The main factor behind the snap election is to help strengthen Theresa May’s position as Prime Minister. Should the Conservatives win (the most likely outcome according to the polls), investors will react positively to her ‘strong and stable’ mandate.

This is also the case with Brexit, with the Tories committed to finalising Article 50 as efficiently as possible. Again, property speculators prefer this attitude as long and short-term market conditions are likely to become clearer.

The general election will be held on 8 June 2017. How will it affect the property market?

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Post-Election

Looking back over previous elections also shows activity begins to pick up in the three months after the result is announced. According to Countrywide, transaction levels can increase by as much as 13%. Likewise, the former residential chairman of the Royal Institution of Chartered Surveyors Jeremy Leaf has noted:

If the result is decisive either way, that will give the Government a greater mandate for its existing policies and is likely to result in a surge in activity in the housing market at least for the honeymoon period afterwards.”

In their manifesto, the Conservatives promise hundreds of millions of pounds invested over the next five years, although precise figures weren’t given. Labour addressed the lack of housing in theirs, promising to build one million new homes during their time in government.

Whatever the result, the snap General Election is unlikely to affect the UK’s housing market severely one way or the other. The stability seen after Brexit is therefore likely to remain, especially in the short run up to the vote on 8 June.

If you’re not sure about investing your hard earned money in property now, take a look at Why Property is Still the Most Lucrative Investment in 2017.

Student Accommodation Sector Benefits from Soaring Foreign Investment

Research by estate agent Savills shows that investment in purpose-built student accommodation (PBSA) has increased by 17% to over £5 billion this year. Confidence in the market remains high and any perceived fear over last year’s Referendum haven’t come to fruition.

Much of this recent investment is because of international backers who’ve increased their market share to 64% from just a third in 2015.

This in turn has helped the market grow significantly over the past two decades, with yields remaining stable throughout. In addition, rent increases of 3% per annum since 2014 surpassed all other real estate asset sectors, with potential for even more growth in the future.

Overall, the amount of private student accommodation remains well below student numbers in key UK university cities – something we’ve recognised at Aspen Woolf with a range of carefully selected student property at our disposal.

International Appeal

Interest from abroad has been the primary cause of large-scale investment in the PBSA market, with Asian financiers particularly active. For example, a massive £1.2bn came from two of Singapore’s leading real estate developers last year, fending off stiff competition from the US, Middle East and Russia.

This echoes what is happening throughout the sector as rival bidders often vouch for the same investment portfolio. Unsuccessful bidders retain a strong appetite to invest here however, and are expected to make more acquisitions throughout the 2017/18 academic year.

The student sector in the UK has remained a reliable asset class for many years now. Being ‘countercyclical’ in nature, it’s less likely to suffer from volatile markets or currency fluctuations. Shrewd international buyers therefore recognise it as a dependable hedge against other investments.

Brexit has no far not put off foreign investment despite worries.

Image credit: Duncan Hull via Flickr

Brexit

The EU referendum result didn’t do much to put off foreign investment, mainly because the supply and demand of student property will always hold up. UK universities are some of the most highly regarded learning institutions in the world after all, and keep attracting students from home and abroad every year.

The value of trade also backs this up. Since the Brexit result, more student real estate was purchased in the six months after June  23rd (£2.1bn) than in the six months before (£1.9bn).

There's still a high demand for spots in UK universities for foreign students.

Image credit: Char via Flickr

Why the UK?

The student sector is ripe for investment for two main reasons – a constant volume of demand and a severe shortfall of suitable accommodation.

This is specifically related to purpose-built flats which students now tend to prefer, primarily as they offer a much more modern standard of living. Private student en-suite studios within communal buildings come with all-inclusive bills, high-speed internet and on-site facilities such as free parking, laundry rooms and even gyms or cinema rooms in some cases.

Conversely, traditional house sharing arrangements can leave students stuck in run-down, unsecured properties with untrustworthy landlords. By investing with Aspen Woolf, everything is managed so the tenant has far less to worry about in this respect.

For prospective investors, remember that undersupply in the sector will virtually guarantee enquiries, especially in prime areas near to a campus or transport links. University halls aren’t often upgraded to the modern standards of PBSA, meaning any new developments are snapped up quickly, especially by foreign students and postgraduates.

 

If you’re interested in investing in purpose-built student accommodation, get in touch today to see how we can help.

If you would like more information on investing in student accommodation, you might be interested in discovering why Student Properties Are a Safe Bet for 2017.