TSI
London residential property investors looking north for better rental yields
Almost two thirds of buyers of investment property in the North of England are from the South East, with over a third from the Greater London area, new research has found. The study from buy to let specialist Sequre Property Investment, suggests that prices are too high in the south for landlords who may be looking north for bargains. According to the firm they are being enticed out of their own back yard to cities such as Manchester, Liverpool, Preston and Salford by stronger returns and lower entry level prices. Average gross yields of 8% in Manchester compare to 4.5% in London, while a typical two bed investment property costs in the region of £90,000 versus £300,000 in the capital. It also says that speculation of a cooling property market in London and the South East is impacting on investor confidence and driving them to seek alternative locations such as northern cities, where prices have risen at a more sustainable rate and demand from tenants, particularly young professionals, remains strong. The relocation of the BBC and developments such as MediaCityUK have also helped boost the profile of the North and attracted investors from outside the region. Of those London based investors buying in the North, a significant proportion, 42%, are cash buyers. The firm says this is largely due to the lower entry point which means that many investors don't require borrowing. They are keen to de-risk the investment and avoid overleveraging, particularly as many are approaching retirement age and are looking to boost their retirement income One, two and three bedroom buy to let properties in new build developments of up to five years old are most popular, offering a low maintenance and hassle free investment. ‘The buy to let market in the North of England, particularly in hubs such as Manchester and Liverpool, is now being driven largely by money from London and the South East,’ said Graham Davidson, director of Sequre Property Investment. ‘Investors have benefited from huge house price growth in the south over the last few years which has sent the equity in their homes and buy to let portfolios soaring. Now they are seeking new investments which will deliver strong rental returns as well as steady capital growth, at a time when doubt is being cast over the future of the London market,’ he explained. ‘These are mainly professional investors who are comfortable with a 'hands off' approach and are unconcerned about owning property in different locations. It's all about the rental returns and delivering a secure monthly income,’ he added. An example is IT consultant Matthew Earle, 35, who lives in south west London and is currently in the process of adding a number of new investment properties in the north of England to his portfolio. These are spread across northern cities including Manchester, Hull and Sheffield. ‘My main focus is on generating a strong rental income and there's no doubt that yields are much higher in the… Continue reading
Home sales fall in Miami after two months of significant growth
After two months of significant growth, home sales in Miami fell by 9.2% in November but prices are still rising, but at a slower pace than before. Miami has been one area in the United States that has been leading the real estate recovery but some properties are now seeing demand fall, according to data from the Miami Association of Realtors. While sales of single family homes decreased a negligible 1% compared to a year ago, condo sales were down 15.5% while combined sales were down 9.2%. ‘We are experiencing more moderate growth, which reflects a healthier market and more balance between buyers and sellers, in Miami sales remain strong compared to the record sales activity of the previous three years,’ said Liza Mendez, chairman of the board of the Miami Association of Realtors. Single family home prices, which again increased in November year on year, remain at affordable 2004 levels despite three years of consistent year on year increases. Condo prices also increased in November, marking 41 months of growth in the last 42 months. The median sale price for single family homes increased 5.4% to $245,000 from $232,000 in November 2013. The average sale price for single family homes increased 8% from $366,309 in November 2013 to $395,786 last month. Compared to November 2013, the median sale price for condominiums also increased 5.4% to $189,777 from $180,000 a year prior. The average sale price for condominiums increased 11.9% to $311,323 from $348,290 in November 2013. The data also shows that Miami properties continue to sell rapidly and at nearly asking price, reflecting strong demand. The median number of days on the market for single family homes sold in November was just 47 days, an increase of 20.5% from November 2013. The average percent of original list price received was 93.9%, down a negligible 2.3% from a year earlier. The median number of days on the market for condominiums sold in November was 57 days, an increase of 29.5% compared to the same period in 2013. The average sales price was 93.9% of the asking price, a decrease of 2.6%. Cash sales in Miami continue to decline and the association said this is because more financing becomes available. Still, access to mortgage loans for condominium buyers remains limited, impeding further market strengthening. In Miami-Dade County, 53.3% of total closed sales in November were all cash transactions, compared to 61.7% in November 2013. Cash sales in Miami are still double the national figure of 25%. All cash sales accounted for 41.7% of single family home and 63.8% of condominium closings, compared to a year earlier when cash sales were 46.7% of single family home sales and 73.2% of condominium sales. Since nearly 90% of foreign buyers in Florida purchase properties all cash, this continues to reflect the much stronger presence of international buyers in the Miami real estate market. While traditional sales continue to increase, distressed property transactions in November again declined in Miami-Dade due to fewer short… Continue reading
Owners of empty homes should be hit with extra tax, new research note suggests
Britain's housing crisis is being made worse by hundreds of thousands of homes left empty, according to a new report from the Institute of Public Policy Research. The report argues that giving local authorities power to increase tax on empty homes would ensure more become occupied and bring England into line with Scotland. The report shows that there are 635,000 empty homes across England, including 216,000 that have been empty for over six months. In London, where house prices and rents are especially high, over 60,000 homes are empty, including over 20,000 that have been empty for over six months. The report argues that local authorities should be offered an enhanced set of powers, including removing the 50% premium cap from council tax on empty homes. In effect, this would allow local authorities to determine their own banded council tax premiums on long term empty homes, the report explains. It also says that local authorities should have the discretion to define what a long term empty property is, including the ability to shorten the timeframe that defines eligibility for the discretionary tax to one year rather than two, and the freedom to determine what constitutes the inhabitation period that restarts the clock. The report argues that discretion over these two features would allow local government to account for differences in housing market dynamics, such as the common length for property voids and the scale of housing need in the local area. In Scotland long term empty homes are defined with a one year threshold rather than two years in England and the length of time a property would need to be inhabited to reset the starting gate is three months instead of the English standard of six weeks. The report argues that England should be brought into line with Scotland and that this would get more homes occupied, rather than act as a revenue raiser, but if there was no response from empty home owners, a premium of 70% of a Band D Council Tax payment would result in a charge of around £1,000 and draw in an additional £110 million nationally. This would be around £11 million across London, it claims. The report says that local authorities could then channel these extra funds into their local housing markets. The report also models a tougher approach that could raise as much as £215 million a year. ‘Long term empty homes are a luxury England cannot afford. With rising house prices, substantial levels of homelessness and lengthy housing waiting lists, empty homes are making the housing crisis worse,’ said Bill Davies, IPPR researcher. ‘Short term vacant properties are a natural part of the housing market. Properties will be without residents as estates are disposed of, as sellers await buyers, or as landlords await new tenants. But when properties are left empty over the long term it increases pressure on rents and house prices,’ he pointed out. ‘Local authorities should be allowed more discretion to tax long term… Continue reading
