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Buy to let surges in UK as first time buyer activity retreats
May has seen an acceleration in property valuations for buy to let landlords, while first time buyer activity has retreated, according to the latest research. There were 33% more buy to let valuations conducted in May than at the same time last year. Conversely, valuations for first time buyers declined by 4% over the same period, the data from Connells Survey and Valuation shows. On a monthly basis, May’s buy to let valuations were up 3% on April, while valuations for first time buyers fell 2% between the two months and the buy to let market is booming, according to John Bagshaw, corporate services director of Connells Survey and Valuation. ‘Would be landlords are eager to enter the sector and current landlords look to expand. However for first time buyers, May was not just less positive than the rest of the housing market, but also disappointing in comparison to the previous month. Previously, valuations for new buyers had proved resilient in April, even with uncertainty about the impact of the election result on home buyers,’ he said. He explained that fewer people are looking to buy their first home means more tenants sticking to the rental sector. ‘As such, new landlords enter the market and those already in the sector grow their business to capitalise on the increased demand. Yet what remains unclear is how long this contrast in fortunes will continue,’ he added. May’s remortgaging figures also outperformed the overall housing market, with these valuations up 9% on April’s figures. This equates to a 31% increase on the number of remortgaging valuations since May 2014. Meanwhile, valuations for those existing home-owners looking not to remortgage but to move to a new property posted a 4% increase since April. This has contributed to an 8% increase in the number of home-owner valuations since May 2014. ‘Remortgaging is going from strength to strength right now. Record low mortgage rates are the main reason for this, and with inflation still near zero and flirting with a negative reading, the Bank of England is likely to play it safe and keep rates at bargain-basement levels for the foreseeable future,’ said Bagshaw. ‘Yet the recent cooling in home mover activity points at another cause for the remortgage rush. Increasingly, home owners are opting to upgrade the property they already have, be it through a loft conversion, conservatory or major face lift, rather than sell up and get a new one. In short, people are improving not moving,’ he pointed out. He believes that people feel financially secure enough to use their home as a guarantee against which to raise big capital, a sentiment that was absent for some time immediately after the economic crash. ‘However, they still don’t feel the property market overall is safe enough to risk trading up what they already have. For a government reliant on movement… Continue reading
Fewer homes coming onto the market in UK, despite positive election result
Hopes for a post-election supply bounce in the UK residential market fail to materialise and selling instructions fell for the fourth month in a row, according to the latest monthly report. Indeed, the average stock of houses per surveyor has fallen by around 12% since the start of 2015, the data from the May report by the Royal Institution of Chartered Surveyors shows. But prices are not suffering with 38% more surveyors expecting higher house prices over three next three months and new buyer enquiries are rising at the fastest rate in over a year. The RICS report shows that house prices rose again in May, and at a quicker pace than in April, as the stock of homes per UK surveyor fell to a record low since the data series began in January 1978. While 34% more surveyors saw prices rise in May, the same month in which the Nationwide Building Society estimated that the average price of a home in the UK has now climbed to £195,000, supply to the market declined with 19% more surveyors reporting a drop in new instructions. Despite the rise in new buyer enquiries, which increased from a net balance of 4% in April to 18% in May, many respondents to the survey expressed some surprise at the lack of post-election bounce in fresh supply following the unexpectedly decisive outcome to the poll. The North West and London saw the sharpest drop in instructions compared with April. More ominously, UK wide listings have now failed to see any meaningful growth since the middle of 2013. Additionally, although respondents' reported a slight improvement in credit conditions with higher perceived loan to value ratios on mortgages to first time buyers and existing home owners, the average number of newly agreed sales per surveyor rose only very marginally to 19, down from 23 in May 2014 and up from 18.9 in April 2015. At a regional level, unbalanced price growth continues to be particularly marked across the market. Surveyors reported the highest price growth over the last three months in the North West, Northern Ireland, East Anglia and the South West. But London is now seeing a slight turnaround, following seven consecutive months in which the net balance for prices was in negative territory, it has now been positive for two months in succession. In the lettings market, tenant demand continued to increase in May on a non-seasonally adjusted basis extending an uninterrupted run of demand growth into a fifth straight month and respondents' anticipate rents will rise across all parts of the UK over the next three months, with expectations most elevated in the East Midlands and the South West. ‘There had been some hope that the removal of political uncertainty would encourage more properties onto the market but the initial indications are that this is not proving to be the case. As a result, it is hardly surprising that prices across much of the… Continue reading
Birmingham named as UK buy to let hospot
Birmingham has come top in the best postcodes for buy to let, with landlords in the Midlands benefiting from the UK’s best rental yields, new research shows. The highest rental yield postcodes from the first quarter of this year can now be found in Birmingham, Ipswich, Liverpool and Glasgow, according to the data from property peer to peer lending platform LendInvest Though Birmingham has beaten London, postcodes around north and central London are still delivering the best overall returns on investment, thanks to capital gains delivered by rising house prices. The rental yield is worked out by taking the annual rental income your get from the property and calculating it as a percentage of the property cost. Using around 1,000,000 sales and 500,000 rental listings from Zoopla, LendInvest has taken the average asking rental price per year and divided it by the average asking property purchase price and then broken it down by the first part of a postcode, known as the outcode. Four of the 10 highest rental yielding areas are in Birmingham, with 13.6% in B44, 11.9% in B42, 10.5% in B98 and 9.1% in B23. In Ipswich and Liverpool landlords can get 10.8% in IP4 and 9 per cent in L28 respectively, while Glasgow areas such as G34, G21 and G22 are yielding 11.9%, 10.1% and 9.2% respectively. ‘Many landlords tend to invest near to where they live, but if they look further afield, they could easily increase their yields and capital growth,’ said Jane Morris, managing director of Property Let By Us. ‘The Midlands provides a great investment opportunity as the property is much more affordable than the South East and the yields are high. For example, in Coventry a three bed semi will cost around £125,000 and will provide rental yields of around 6.57%,’ she explained. ‘Many of the landlords that we work with are netting between 6.57% and 9.1% from their properties in Birmingham, Coventry and Nuneaton. My advice to any landlord looking to invest outside there area is carry out thorough research on property prices; rent prices; and yields to ensure they make the right investment,’ she added. Continue reading
