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Prime property in UK university towns could be snapped up by buy let pensioners
People in the UK who are able to take money out of their pension pots from next month can be confident that if they choose to invest in buy to let they are likely to see strong returns, it is claimed. Recent research by IPSOS MORI suggests over 15% of the estimated 200,000 expected to cash in their pension will choose an investment in property. Management and investment company Grant Property Investment, said it has already seen a 28% rise in property sales in the last quarter of 2014 compared to the same quarter the previous year and expects a further rise when the pension changes take effect in April. For those who do enter the market, there is the potential to enjoy the potentially higher returns than the 3% to 4% pensioners could receive when buying an annuity, the firm believes and points out that investors would also own an asset that can substantially grow in value in the future. ‘As a business, we only source prime traditional Georgian and Victorian properties in areas that have high occupancy and can produce a high rental yield. Consequently, on behalf of individual and institutional investors we are very active in 12 UK cities, including Edinburgh, Stirling, Dundee, Glasgow and Aberdeen,’ said As Peter Grant, chief executive officer of Grant Property. Grant acknowledges that recent analysis from the Halifax suggests UK house prices are firming, while various experts expect house price growth of 4% in 2015. In addition to this he believes prime property in places such as Edinburgh will continue to offer a solid return, including for those who seek alternative ways to utilise a pension pot. ‘Our own expectation is that the properties in prime city centre locations, outside London, will increase in value by a further 3% to 5% in 2015 and achieve rental yields of 6% to 8%. This is significantly better returns than in London where some view prices as overheated and yields are as low as 2% to 3% in prime areas,’ Grant said. ‘It’s also our experience of the market that high quality traditional residential property consistently outperforms new build developments from a capital growth and yield perspective,’ he added. The firm recognises that those of pensionable age may be wary of tax implications, investing in a single asset class and variations in future interest rates and therefore it always recommend clients take independent advice before making any decision. ‘As an alternative to an annuity, investing in a prime buy to let property gives you and your offspring an asset and potentially rental income higher than returns from an annuity. Many parents of offspring heading for university may also see the benefit of investing in high quality property that can support their child through education and provide monthly rental if let to fellow students,’ Grant pointed out. ‘We expect the buy to let will remain a standout investment for 2015, especially in hotspots like the university cities of… Continue reading
Edinburgh prime property market got boost ahead of new tax regime
Prime property prices in Edinburgh increased by 1.2% in the first three months of 2015 as buyers looked to complete deals ahead of a new property tax. The quarterly rise comes on top of a 0.5% increase in the final quarter of last year and on an annual basis prices are up by 4.1%, according to the latest market report from real estate firm Knight Frank. The new Land and Building Transaction Tax (LBTT) came into force today (Wednesday 01 April), and this led to a rise in buyer’s interest which in turn has boosted prices, says Knight Frank. The report also points out that, as was the case for much of last year, tax policy continued to play a defining role in the city’s prime property market during the first quarter. Under the new LBTT regime which replaces stamp duty, those buying homes worth less than £333,000 will pay less tax, however for homes above this threshold the upfront cost of moving will increase. The number of sales completed by Knight Frank between January and March was 47% higher than the first quarter of 2014 and 66% higher than the first quarter of 2013. Knight Frank expects that following the introduction of LBTT there may be a period of adjustment at the top end of the market as individuals factor in the increased cost of moving. Forecasts from the Office of Budget Responsibility (OBR) appear to confirm this, with the fiscal watchdog recently revising its forecasts for future stamp duty and LBTT tax revenues. The OBR said that the bringing forward of some higher priced transactions in Scotland before April will increase UK stamp duty receipts by £11 million in 2014/2015. The OBR subsequently reduced its forecast for LBTT receipts in 2015/2016 by £20 million. ‘Buyers have been taking advantage of the short window when purchase costs are lower. The buyer of a property valued at £1 million will pay nearly £35,000 more in purchase taxes,’ said Edward Douglas-Home, head of Edinburgh city sales at Knight Frank. ‘However, even with the new higher purchase taxes, the relative cost of property in Scotland compared to London and the South of England means there is still a large effective discount for buyers making the move north,’ he added. Indeed, the number of Londoners looking to buy property in Edinburgh in 2014 nearly doubled compared to the previous year, highlighting the city’s ongoing appeal. Douglas-Home added that despite the challenges facing homes at the top end of the market, there is a more positive outlook for the residential property market as a whole, with favourable market conditions with interest rates remaining at record low levels, economic growth steady and mortgage rates competitive. Continue reading
Prime property market in south west London less volatile, research suggests
The prime south west London property market has change dramatically from a year ago with more domestic buyers and homes taking longer to sell, new research suggests. In prime areas such as Battersea, Clapham, Wandsworth and Chiswick, prices aren't dissimilar, but there are no longer shortages and the market is less volatile, according to a report from Stacks Property Search. ‘Domestic purchasers dominate whereas a year ago the market was dictated by investment buyers, with buy to live purchasers struggling to make an impact. Early in 2014, buyers would have to compete with numerous competitive bidders, and properties were achieving up to as much as 15% above asking price. Successful buyers were using cash and those who needed finance weren't getting a look in,’ said Sara Ransom. ‘The return of domestic buyers means that property is taking longer to sell. Surveyors and solicitors are required to undertake more due diligence, so where property was taking two or three weeks to exchange contracts a year ago, the average is now around three to four weeks,’ she explained. ‘While the market is more grounded, and prices are more stable, there is plenty of momentum, and there's little sign of anything slowing down for Easter or the election. Our expectation is that it will gear up post-election as we don't foresee any political scenario that might adversely affect the market,’ she added. Ransom also pointed out that one of the biggest hurdles for any buyer is now finance. ‘Buyers really need to be on the case well in advance of finding a property as the process is becoming more and more protracted. The difficulty is exacerbated because mortgage companies are reluctant to talk in 'principle' any longer,’ she said. ‘And there are some mortgage companies that are gaining a reputation for approving finance then pulling out further down the line. Another difficulty is that mortgage companies are insisting that borrowers use a solicitor that is on their approved panel, so you will need to check this before appointing a solicitor,’ she added. The firm also believes that buyers should also be aware that it's difficult to get more finance for improvements, so buying a property that needs renovating is tricky unless you have a substantial deposit. ‘My advice would be to seek out potential for future improvement rather than property that has an urgent need of refurbishment. Remarkably, there are good examples of property that offers this kind of promise. For instance, adding a loft conversion to the pretty cottages on the Shaftesbury Estate in Battersea, resulting in three bedrooms instead of two, can add around £100,000 to the value, while the cost of the work is about £50,000,’ said Ransom. ‘Take plenty of time to research and understand the market, and the individual pockets within areas. Prices can vary by as much as 10% to 15% street by street. And don't dismiss areas without doing some pavement explorations. London changes so quickly, and areas that would… Continue reading
