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History of the UK’s Buy to Let Property Market

September 2021 marked 25 years since the arrival of buy to let mortgages. In that time, the UK’s property market has proved its resilience, weathering the storm through two recessions, a global financial crisis, the withdrawal from the European Union, and a pandemic. Throughout this feature, Surrenden Invest looks back at what has shaped the UK’s private rental sector to make it into the thriving entity it is today, and investigates what valuable lessons investors can learn from its growth.

History of UK buy to let

The UK’s buy to let (BTL) sector has come a long way in the past 25 years, growing from a relatively small, niche market into a multi-faceted, lucrative area of the property sector. The first buy to let mortgage products officially launched on September 24, 1996, when the Association of Residential Landlords (ARLA) developed a mortgage product tailored to landlords with a small group of lenders.
This groundwork facilitated much-needed investment into the rental property market in response to rising demand from tenants and an overall shortage of homes across the nation. Since then, buy to let has become a mainstream consideration for buyers and is generally accepted as one of the best performing asset classes. The tangible nature of property and its track record of delivering returns that consistently outpaced stocks and shares have seen its popularity grow considerably.
Today, the widespread availability of BTL mortgage products has seen the number of landlords surge to 2.65 million in the private sector, owning a staggering total of over £1 trillion worth of homes across the UK. But how did buy to let manage to position itself so firmly in the marketplace? And is there still room for property investors to capitalise on the sector?

The 1990s: UK homeownership peak

Despite the availability of BTL mortgage products emerging in the late 90s, the story of the UK’s buy to let sector seemly begins around 20 years earlier.
Following the election of Margaret Thatcher in 1979, major changes took place. At the time, only 55% of Brits owned the home they lived in, yet this figure was about to witness a stark increase, with the introduction of the Right to Buy (RTB) policy introduced under the Housing Act 1980.
By 1995, the Right to Buy policy saw the public sector to private ownership side of the market rapidly shift, with almost 2.1 million homes transferred through the scheme. This, coupled with 100% mortgages, which granted more people than ever before the possibility to access the market, saw the nation witnesses a massive boost in ownership compared to 15 years before.
On top of this, the overall level of new-build housing has dropped since the 1980s. Data from the Office for National Statistics (ONS) showed that house building declined by 44% between 1980 and 2014. This trend continues to be a problem despite the government’s continued promise to deliver 300,000 new homes per year to ease supply issues.
Despite the early 90s recession slowing down the rate of homes sold under the RTB scheme, the 1990s became one of the UK’s strongest decades for homeownership levels. By the turn of the millennium, homeownership levels had hit 70%. At the same time, however, the private rented sector started to gain traction. The introduction of dedicated buy-to-let mortgages in 1996 naturally saw investment levels rise.

Commenting on the introduction of BTL mortgages to the market, John Heron, the former director of mortgages at Paragon Bank, said:

“Borrowers could get finance at up to 75% of the value of the property and affordability would be assessed on the income the property generated and well as the landlords wider financial circumstances. In addition, landlords would be able to make the most efficient use of capital available and maximise their return due to the option to take out interest-only mortgages.”

£181,000

By 2007, rising prices year on year led to the average property price reaching a record high

£25.8bn

Lending fell from £45.7 billion in 2007 to £28.5 billion in 2008

£37.9bn

Market rebounded quickly, rising from £9.6 billion in 2010 to £37.9 billion in 2015

22.0%

The nation’s private rental sector now accounting for 22% of all homes

The global financial crisis

The turn of the millennium is often overlooked for the part it played in shaping today’s property market. Overshadowed by the global financial crisis, homeownership levels started to decline across the UK around 2002.
Data released by the Resolution Foundation helps paint a clearer picture of the market back then. With high house prices, low wage growth and an ongoing lack of available homes, the number of people who owned their own homes started to dwindle, and, somewhat surprisingly, it has not reversed since.
Similar to today’s market, the early 00s saw most people priced out of the market, and by 2007, rising prices year on year led to the average property price reaching a record high of £181,000 at the time. Naturally, with most people unable to get their foot on the proverbial housing ladder, estimates at the time suggest it was around 25% to 40% cheaper to rent than buy, which meant that many people decided to go with this option.
Following the global financial crisis in 2007, the financial downturn and recession of 2008 proved disastrous for the property market, with the value of property and access to lending dropping overnight. For the buy to let mortgage market, approved loans almost halved between 2008 and 2010, with lending falling from £45.7 billion in 2007 to £28.5 billion in 2008, and just £8.6 billion in 2009.
However, the market rebounded quickly, rising from £9.6 billion in 2010 to £37.9 billion in 2015. BTL investment rocketed in the space of just five years, with these peak years forever changing the landscape of the private rented sector. The number of privately rented homes peaked, rising from three million to more than just five million over a short period of time.
Investment levels into the UK’s buy to let property market continues to grow, with the nation’s private rental sector now accounting for 22% of all homes. For the first time in recorded history, the number of private sector tenants is higher than public housing, with just two-thirds of people now owning their own property – the lowest level witnessed since the 1980s.

Today’s UK buy to let market

For property investors and landlords, tenant demand is key to the success of BTL investments. In today’s market, affordability issues and a rise in remote working among Millennials and Gen Z has created a large pool of tenants who do not aspire to own their own home.
Good news for investors, the so-called ‘generation rent’ refers to younger people who opt to rent over buying for a variety of reasons that include location freedom and the desire to work remotely from anywhere in the world. What’s more, rental market allows young professionals to rent city centre properties at a fraction of the cost of buying one, offering them a better work/life balance.
Property investors are presented with an opportunity to invest in new-build housing specifically designed to meet the needs of this large demographic of renters.
Fully managed buy to let property investments like the apartments available through Surrenden Invest have proved popular for investors and renters alike, offering buyers reliable rental returns from properties located in areas with high demand from tenants. To view our latest range of buy to let opportunities, click here.
Aside from Brexit and the pandemic, just like in the 1980s, changes introduced by the government to increase homeownership levels have been one of the biggest challenges that the UK’s property market has faced. A tide of changes has been phased in over the last five years in a bid to improve homeownership levels, with landlords and investors bearing the brunt of policy changes.
The introduction of a 3% levy on Stamp Duty on BTL property, changes to mortgage interest tax relief, more stringent rent background checks, and abolishing estate agency fees have all seen the market shift in recent years. However, despite the introduction of changes, the demand for buy to let remains evidently clear.
With over five million people living in private sector homes owned by more than two million investors across the globe, the UK’s buy to let sector certainly still has room to grow. And for those looking for further evidence of the longevity of the BTL market potential gains it has to offer, it is estimated that property investments purchased back in 1996 have risen by 1,400%.
Get the latest UK property news delivered straight to your inbox by signing up for Surrenden Invest’s monthly newsletter. You will gain valuable insights into trends, plus you will be able to preview new launches before they enter the market.

For more information about buy to let property investment, contact Surrenden Invest today.

Will house prices go down in 2022?

Will house prices go down in 2022?

In the property industry, a New Year brings the age-old question of whether house prices will go down over the next 12 months and whether now is a good time to buy a house. To understand what might happen in the housing market in 2022, it is important to reflect on where things stand today. With the average property price reaching record highs, Surrenden Invest looks at what factors will shape the market over the next year.

£268,349

The average cost of buying a property in the UK stands at £268,349

6.90%

On average, house prices increased by 6.9% in the year to October

+10.6%

Northern Powerhouse cities continued to record the strongest growth rates

+4.80%

Property hotspot Newcastle recorded a +4.8% rise in the year to October 2021

What happened in 2021?

Across the board, data analysed by the industry’s biggest names have shown that UK property prices increased at a double-digit pace throughout 2021.
The latest UK House Price Index – released in December – has reported that the average cost of buying a property in the UK stands at £268,349. This figure is 10.3% higher than the average values a year earlier. Data released by the mainstream lender, Nationwide, support this growth rate, recording the average cost of buying a property at £252,687 – up 10% since November 2020.
The vast nature of the UK’s property market means that indexes will differ based on the composition of the data available to the body at the time of release. Therefore, buyers keeping a close eye on the nation’s property market should delve deeper into headline stats by looking at the regional performance of the property market they are considering for investment in 2022.
Those looking for an in-depth analysis of property prices on a city and regional level are likely to be reassured by the most recent Zoopla UK House Price index, which compares the performance of 20 UK cities. The most recent index reported that, on average, house prices increased by 6.9% in the year to October, with the rate of growth starting to ease following the end of the government’s Stamp Duty Holiday incentive in September.
Despite the slowdown, the report emphasised that the average rate of growth recorded over the last three months is significantly higher than at any time since 2014, helping to highlight the current strength of the market.
Overall, the UK’s largest regional cities significantly outpaced the 2.4% rate of house price growth in London. Northern Powerhouse cities continued to record the strongest growth rates with a +10.6% climb recorded in Liverpool, +8.7% in Manchester, and +7.9% in Sheffield. Even at the lower end of the index, regional property hotspot Newcastle recorded a +4.8% rise in the year to October 2021.
Elsewhere, the UK’s Second City Birmingham recorded an impressive +6.3% growth rate.

Commenting on the overall performance of the marketing during 2021, Jonathan Stephens, Managing Director of Surrenden Invest, said:

“Over the last 12 months, property prices across the nation have continued to rise steadily, and while London’s market has slowed to a certain extent, regional markets have gone from strength-to-strength. This is a trend that we expect will continue throughout 2022.”

What’s happened since the pandemic?

The UK’s property market experienced significant changes throughout the pandemic. From the complete closure of the market during the first national lockdown in March 2020, where the number of properties sold reached the lowest levels since records began, to the introduction of a Stamp Duty Holiday and record-low interest rates, the industry has undoubtedly displayed its resilience during the pandemic.
It is safe to say that Covid-19 dramatically altered everyday life, with many people experiencing a shift in the amount of time spent in the office and commuting to work.
Naturally, this pattern has been reflected across the property market, with homebuyer and renter habits changing over the last 18 months. According to a survey about what people want from property conducted by MFS, a garden or outdoor space is the number one feature for homebuyers in 2021. Square footage is ranked second and access to fast broadband and mobile connectivity third.
The survey, undertaken by 2,000 UK adults searching for a residential property, also highlighted the need for space. The number of Londoners who moved out of the capital and into surrounding areas boosted countryside property sales by £5 million.
However, it is not just the sales market that has undergone changes caused by Covid-19. The easing of lockdown restrictions in the summer and a return to city centre living pushed rental growth to the highest level in 13 years in Q3 2021.
The latest Hometrack Rental Market Report has revealed that average UK rents increased by 4.6% in the year to September. The resumption of a more ‘normal’ life and the commencement of a new academic year have been attributed to a sharp rise in the cost of renting.
Despite the upheaval caused by the pandemic, the demand for property across the country has remained strong. Those considering investing in the sector should pay close attention to trends on the market to secure the best potential gains.

Housing market predictions 2022

It seems obvious, but, at this point, it is worth highlighting the importance of differentiating between the easing of house price growth and values decreasing. For those looking to buy property in 2022, it is doubtful that property prices will dramatically decrease over the next 12 months. Instead, buyers will find that the rate at which values will climb will ease.
Throughout 2020 and 2021, buyers rushed to the market to maximise the government’s Stamp Duty Land Tax (SDLT) savings. As a result, in 2021, it is thought that 1.5 million property transactions will take place. However, the time-sensitive incentive has ended, and transactions are expected to fall to 1.2 million in 2022, which is more in line with the 5-year average.
The window to complete property purchasing during the SDLT naturally created a competitive market. Propertymark’s Housing Market Report reported an average of 19 buyers for every available property.
However, with the urgency to complete now over, property prices are set to continue to rise throughout 2022, with the rate of growth expected to ease. According to Savills, the UK’s mainstream housing market can expect a +3.5% growth rate throughout 2022, citing a shortage of available homes to push prices upward.
Across the property sector, forecasts generally align with this growth rate, with Zoopla expecting a +3% increase, whereas JLL (+4.5%) and Rightmove (+5%) are slightly more optimistic.
In terms of demand, market experts at Zoopla expect that buyer demand will remain strong moving into the new year, with the sector beginning to ‘normalise in 2022’. The property portal cites low supply levels to underpin prices across the next 12 months.
Based on market predictions, it is unlikely that house prices will go down in 2022. Instead, those searching for a property will be comforted by an easing of price rises; however, with a high demand for housing, buyers will likely need to act fast to secure their investment.

£1,058

The average cost of renting is £1,058 per calendar month

0.25%

Bank of England’s decision to raise interest rates from 0.01% to 0.25%

300,000

Construction of new homes well under the government’s target of 300,000 new builds per year

18.80%

Savills predicts a total 5-year price growth of 18.8% in the North West and Yorkshire and Humber

Rental market predictions 2022

For those entering the buy to let property market in 2022, UK property hotspots will continue to benefit from a bounce-back driven by a desire for life to return to ‘normal’. Currently, the average cost of renting is £1,058 per calendar month, and according to JLL, the average rent will increase by 2.5% throughout 2022.
The most recent report from HomeLet has praised the UK’s Private Rented Sector (PRS) as ‘exceptionally resilient’ throughout 2021 and, when it comes to demand, a lack of available new rental properties compared to pre-pandemic levels will continue to push rents upwards in 2022.
For buy-to-let investors, the UK’s property market is a robust choice for rising rental returns and capital gains, making it an excellent choice for investment.

Is now a good time to buy a property?

When it comes to buying a property for personal use or as an investment, it is important to understand your motivations and what’s driving your decision to buy.
Without establishing goals, property investors will not be able to track the performance of their portfolios. Likewise, those buying their primary residence should also consider the reasons behind their purchase. For example, how long are you likely to stay in the property? Upcoming changes to your circumstances and whether you want to buy a new-build or something that requires a bit of work and will therefore require additional funds.
Once you have a clear set of goals, buyers must establish their financial obligations. Securing the best mortgage rate is one practical option to ensure that purchasers get the best deal for their purchase. Despite the Bank of England’s decision to raise interest rates from 0.01% to 0.25% in December 2021, the borrowing cost remains exceptionally low compared to the last five or even ten years.
To determine how much you can borrow, here is a handy mortgage calculator to help investors get an idea of their initial outgoings. Investing in off-plan property through a reputable developer or property consultancy like Surrenden Invest is another way for buyers to reduce the initial outgoings. In addition, buyers purchasing during the off-plan stage are often rewarded with an early investor discount, benefiting from any uplifts in value across the local property market during construction.
For homeowners and investors who are willing to wait for a property to complete, off-plan property investment can offer some of the strongest capital growth potential. Buyers wondering whether now is a good time to buy a property should also consider the cost of waiting for the ‘perfect’ time to invest. With house prices showing no signs of slowing down and the potential for interest rates to climb over the next few years, buyers who act now will benefit from rising prices expected throughout 2022 and beyond.

Positive 5-year forecast

With the construction of new homes well under the government’s target of 300,000 new builds per year, JLL predicts that there will be a shortfall of 500,000 properties from the 1.5 million needed over the next five years. An overall lack of housing across the country will undoubtedly lead to rising prices. JLL expects house prices to climb by 20% between now and 2026, meaning that property investors who enter the market at today’s price could see the value of their assets rise in a relatively short period.
Property investors considering where to invest for the best capital growth potential will continue to benefit from the north-south divide in mainstream house prices. Savills predicts a total 5-year price growth of 18.8% in the North West and Yorkshire and Humber, with these two regions outperforming the 5.6% and 10.4% expected in London and the South East, respectively.

Investing in property in 2022

It is difficult for property investors and homebuyers to ignore the fundamental demographic and economic changes supporting house price growth over the next five years. Buyers looking to invest in property in 2022 are likely to benefit from a real estate consultancy like Surrenden Invest. With over 2,000 properties sold in seven years, our team of professionals is on hand to discuss your investment needs and match our available properties with your financial goals.

For more information about buy to let property investment, contact Surrenden Invest today.

Introducing The Silversmiths, Birmingham: A Jewel in Jewellery Quarter’s Crown

Introducing The Silversmiths, Birmingham: A Jewel in Jewellery Quarter’s Crown

Surrenden Invest is pleased to present a unique opportunity for investors to own a remarkable Grade ΙΙ listed apartment in Birmingham city centre. Located in the most sought-after corner of central Birmingham, The Silversmiths presents buyers with the chance to own a slice of history and benefit from the rising demand for a rental property in the city’s affluent Jewellery Quarter.
With construction already underway, this beautifully executed period conversion will be delivered by NVSM – a Developer with an extensive track record in delivering high-quality restorations of listed buildings in Birmingham and London. With an exclusive allocation of 10 apartments within The Silversmiths development, Surrenden Invest has a range of units available within this historical buy-to-let investment.
Due to demand, four apartments have been reserved and taken off the market by clients searching for a property of this calibre in Birmingham city centre.  Investors looking for a top-performing property investment with a historical-wow factor and an exceptional kerbside appeal should act now to ensure they don’t miss out on this rare opportunity to invest.

Presenting The Silversmiths Apartments

The Silversmiths is a boutique development of 34 luxury, two, and three-bedroom apartments spanning three floors. Tenants will be offered a peaceful slice of city-centre living, overlooking a residence-only courtyard or a quiet residential street.
Unlike other new-builds available in Birmingham city centre, the Developer will focus on amplifying the property’s existing period features by delivering open-plan interiors that include beautiful original wood beams and exposed brick walls.
Sold on a long leasehold agreement, buyers searching for a truly unique property in one of the UK’s best-performing locations for buy-to-let returns need to look no further than The Silversmiths.
OWN A SLICE OF HISTORY
Over the last 10 years, the UK’s Private Rented Sector (PRS) has played a critical role for investors and tenants alike, delivering new-build properties in locations with rising demand for rental property. Yet despite increasing levels of construction, it is safe to stay that the ability for investors to own a period property in the heart of a UK property hotspot is incredibly rare.
Dating back to 1865, The Silversmiths building was created during the reign of Queen Victoria and has seen six monarchs, the start and end of the industrial revolution, plus it remained standing throughout WW1 and WW2. Today, the thoughtful renovation will bring the building back to its former glory, making The Silversmiths development a unique opportunity for investors.

1.10m

Birmingham is the largest city outside of London, boasting a city centre population of 1.1 million people.

163%

Between 2002 and 2015, the Birmingham City Centre population grew by 163%.

16.5%

property values are set to climb at a markedly fast pace in Birmingham by 16.5% by 2024.

15.9%

Over the next few years the cost of renting in Birmingham forecast to rise by 15.9% by 2024.

INVESTING IN A UK PROPERTY HOTSPOT
Widely considered the UK’s Second City, Birmingham is the largest city outside of London, boasting a city centre population of 1.1 million people and 2.6 million across the wider metropolitan area.
Between 2002 and 2015, the Birmingham City Centre population grew by 163%, making it one of the fastest-growing populations across the country. Moreover, with the introduction of various multibillion-pound regeneration projects and the introduction of HS2 rail, the city’s central population is set to rise rapidly, creating an ideal environment for buy-to-let investors.
Potential rental income is one of the key factors buy-to-let property investors consider when evaluating an investment, so it will be encouraging news to many that average rents across Birmingham are rising.
The latest data from JLL has offered an insight into the rate of growth in rental values over the next few years, with the cost of renting in Birmingham forecast to rise by 15.9% by 2024. The regional picture also shows that property values are set to climb at a markedly fast pace in Birmingham, with property prices tipped to rise by 16.5% by 2024.
Buyers considering The Silversmiths investment are likely to witness the value of their off-plan apartment rising throughout the construction period. With completion due in 2024, early investors can benefit from the potential to secure strong capital gains and higher rental returns.
INVESTING IN BIRMINGHAM’S JEWELLERY QUARTER
Located in the North-West of the City, the Jewellery Quarter is the ‘most walkable’ residential district and is more than just a hub for jewellery makers. This already prestigious corner of the city is undergoing a rapid transformation and has welcomed multimillion-pound commercial and residential projects, and it is on track to benefit from the planned Metro Tram extension.
With a high standard of living on offer plus a steady demand for rental accommodation, when it comes to property investment in Birmingham, The Silversmiths really is the jewel in the Jewellery Quarter’s crown.
WHY INVEST IN THE SILVERSMITHS?
Alongside securing a reliable rental return and the potential to sell the property at a later date for a profit, there are plenty of reasons for buy-to let-investors to consider The Silversmiths. Seasoned property investors will be fully aware of the time it takes to manage a successful buy-to-let asset, which is why an experienced Management Company will fully manage apartments within The Silversmiths upon completion.
What’s more, apartments within The Silversmiths will also include a 10-year building warranty upon completion, which places an obligation on the Developer to repair any defects that aren’t caused by general wear and tear or maintenance issues. This reassurance offers valuable peace of mind for investors who want to feel confident their asset has been completed to the highest standard and will retain its value should they wish to sell at a later date.
Finally, when it comes to offloading the property, investors are likely to find the demand for a newly renovated Grade ΙΙ listed apartment in Birmingham city centre a highly attractive asset on the local market. The rarity of a period conversion that has been completed to such a high standard will naturally be a highly-desirable choice on the local property market.
Commenting on the development, Jonathan Stephens, Managing Director of Surrenden Invest, said:

“We have admired the Developer’s previous projects and the remarkable attention to detail that has gone into the thoughtful renovations which has persevered some of the UK’s oldest buildings whilst delivering functional spaces that are perfect for modern living. The quality of the end-product has not gone unnoticed on the property market, with their latest project achieving 100% occupancy rate and delivering investors exceptional rental yields.

“The whole team at Surrenden Invest is delighted to have the opportunity to market ten truly unique apartments within The Silversmiths development. There is already a buzz around the project, and we have no doubt that these remarkable buy-to-let properties will be snapped up by our clients quickly.”

This selection of images was taken at the Developer’s latest project, the award-winning Bishton Fletcher Building. Located a stone’s throw away from The Silversmiths, this newly completed development illustrates the high specification of the Developer’s renovations of a historical building in Birmingham. The images will help paint a picture of what investors can expect from purchasing an apartment within The Silversmiths. What’s more, despite the pandemic, the development is fully sold out, with 100% occupancy level achieved.
ONLY SIX APARTMENTS REMAIN
With 40% of our available allocation already reserved by clients who have been searching for a period renovation property in Birmingham’s city centre, we highly expect the remaining six apartments to sell quickly.

For more information about The Silversmiths property, contact Surrenden Invest and a member of our knowledgeable team will be happy to send you the development brochure and the latest availability.

Best Places to Invest in UK Property 2022 | Buy to Let Market Overview

Best Places to Invest in UK Property 2022 | Buy to Let Market Overview

Over the past five years, the UK government has introduced several measures that have impacted the buy to let market, including reduced tax relief available to property investors and second-home buyers. On the surface, conditions like these might have made buy to let property more complicated for some, however the fundamentals of the market – such as demand for rental property – remained strong.
According to the Office for National Statistics, the number of households in the Private Rented Sector (PRS) increased from 2.8 million in 2007 to 4.5 million today. And with projections suggesting that 1.2 million new households will be created over the next five years, demand for PRS property is set to continue to grow.
To help investors capitalise on the rising demand for rental property, Surrenden Invest will outline the best places to invest in UK property in 2022 in this feature, by highlighting where is expected to provide investors with the best rental yields and the strongest capital growth potential.

Building on a positive 2021

Despite the pandemic, overall, 2021 proved an extremely positive year for property investors, with figures published throughout the year showing rising rental yields and steady house price growth.
As far as values are concerned, the latest UK House Price Index for August 2021(released in October) showed that average asking prices of sales agreed in England were 3.2% higher in August than in July 2021. Over the course of the year, prices increased by 9.8% and the average property value reached £280,921.
Savills also published separate data predicting UK house price growth climb by an average of 3.5% in 2022, with mainstream UK house prices expected to rise 13.1% by 2026.
Since the country reopened, the rebound in housing market activity is an encouraging trend, particularly for investors looking for signs that UK property will continue to provide opportunities for capital gains in the coming years. 2021 was also an excellent year for rental properties, with demand rising across the UK – especially since the country started to open up following the various lockdown measures introduced by the government.
Currently, rental prices in the UK average £1,061 per calendar month (pcm), excluding London from the equation, and the average rent is £891pcm. However, despite the pandemic, rental prices have climbed by 7.5% across the UK as a whole over the last 12-months.
Those considering investing in UK property should certainly see the last year as a triumph for the property market. Even in the face of challenging economic conditions, the property sector continues to show its resilience and offers investors an excellent chance of achieving good returns in the coming years.
But where should investors buy to achieve the best rental returns in 2022?

3.20%

Average asking prices of sales agreed in England were 3.2% higher in August than in July 2021

£280,921

Over the course of the year, prices increased by 9.8% and the average property value reached £280,921

£1,061

Rental prices in the UK average £1,061 per calendar month (pcm) excluding London

7.5%+

Despite the pandemic, rental prices have climbed by 7.5% across the UK as a whole over the last 12-months

Best UK buy to let areas for 2022

To help property investors make an informed decision, Surrenden Invest has outlined the best buy to let areas for 2022. As mentioned earlier in this feature, when it comes to capital growth potential, the UK average in 2022 stands at 3.5%, with the growth rate in London lagging behind at just 2%.
According to Savills, the north-south divide will continue to close over the next five years, seeing house price growth excel across the North of England and the Midlands, whereas values in the South and South East will rise – albeit at a slower pace.
The potential for price growth looks particularly positive for Northern Powerhouse cities like Manchester and Liverpool.  The wider North West region is expected to see values climb by 4.5% in 2022 and by 18.8% in the five years 2026. Interestingly, Savills expects the same rate of growth across Yorkshire and the Humber.
Location
2022
2022-2026
(5-year cumulative)
North West
4.5%
18.8%
Yorkshire & the Humber
4.5%
18.8%
North East
4%
17.6%
East Midlands
4%
15.9%
West Midlands
4%
15.9%
South West
3.5%
13.1%
South East
3%
10.4%
East of England
3%
10.4%
London
2%
5.6%
UK
3.5%
13.1%
Source: Savills Research.
Investors looking towards regional property hotspots including Birmingham, Leeds, and Newcastle can also expect to secure higher than average returns across 2022 and over the next five years, with values in the North East expected to increase 17.6% by 2026 and 15.9% in the West Midlands. When compared to the UK average of 13.1%, it is clear that regional property hotspots are most likely to deliver property investors with the best capital gains potential.

Best rental yields

Throughout 2021, the UK’s best buy to let areas were regional cities. Rightmove cited the effects of ”boomerang” tenants – those going back to cities following the easing of lockdown restrictions – attributing the rising rental costs.
A report from Rightmove revealed that demand for rental accommodation helped push rental growth in some regions to double-digit increases year-on-year, with rents climbing by 10.3% in the East Midlands and by 10% North West.
For buy to let investors, positive rental growth can be seen across regional rental hotspots, with average rents climbing by 8.4% in the East of England, 8% in Yorkshire and the Humber, and 6.9% in the West Midlands. When compared to London, where rents increased by 2.7% year on year, regional property investments are most likely to deliver the most robust return on investment over the coming years.
When it comes to demand, Birmingham and the West Midlands saw the highest tenant interest, with the amount of new prospective renters reaching a record high in September, according to Propertymark.
Buyers looking towards future demand should consider tenants affordability. With regional cities already attracting higher levels of students and young professionals than London, prime locations with younger populations, including Manchester, Liverpool, Leeds and Birmingham, offer strong rental yield growth over the next five years.

10.3%

Rents climbing by 10.3% in the East Midlands and by 10% North West.

16.5%

Reports expect rental costs to rise 16.5% by 2024 in Manchester, 15.9% in Birmingham, 14.8% in Liverpool, and 14.2% in Leeds.

8.4%

Positive rental growth can be seen across regional rental hotspots, with average rents climbing by 8.4% in the East of England

As JLL outlines in its 2020 UK City Centre Forecasts, “Manchester is forecast to see both the highest sales price and rental growth of any UK city over the next five years.” The report expects rental costs to rise 16.5% by 2024 (5-year cumulative) in Manchester, 15.9% in Birmingham, 14.8% in Liverpool, and 14.2% in Leeds.
Investors considering Northern Powerhouse cities may achieve some of the highest rental growth available on the market.
Encouragingly, the demand for new, high-quality rental properties continues to remain strong across the country for property investors and tenants alike. As a result, there is a steady flow of tenants who require properties in locations that offer a good quality of life, excellent transport links, and access to local amenities.
If you are looking to maximise returns from your buy to let property in 2022, keeping an eye on market trends, including tenant demand and regional growth, will likely steer you in the right direction.

Skip London, but consider London commuter belt property

Over the last 12 months, the regions have outpaced London in new sales agreed, house price and rental growth, and it seems likely that this will continue over the next few years.
The slight ”cooling” of London’s property market will be of no surprise, with affordability in the capital a sticking point for most residents and investors. However, with attractive employment prospects in London and the pull of the ”big city lifestyle”, the traditional ”commuter belt” located just outside London is once again set to provide a strong attraction for investors next year, with areas with fast and reliable rail connections offering some of the best opportunities.
Those considering the London commuter belt property market should consider areas that offer travel times under 40 minutes by train like High Wycombe. Recently named the location with the ”most reliable” commute to London, High Wycombe offers a fast 35-minute train and is ranked in the top 10 family-friendly commuter towns for London workers.
Property values in the picturesque market town have increased by 8% over the last 12 months, with the average prices of property standing at £374,442 – significantly lower than the London average of £649,941.
As city workers start to return to offices, many companies have moved to a hybrid model regarding location flexibility. Buy to let investors who take note of this trend will be able to capitalise on the demand for rental properties within an easy commute from London.

How to invest in buy to let property in 2022?

Building a diverse portfolio can offer some highly attractive benefits for property investors. Location diversification is a popular strategy for investors who can broaden their options to ensure maximum benefit from various trends and fluctuations in the market.
Cities including Birmingham, Liverpool, Leeds, Manchester and Newcastle will prove attractive options for buy to let property investment in 2022 and beyond, offering investors the opportunity to secure reliable rental returns and capital growth potential. Plus, with the government’s commitment to level up the country’s economy, investors stand to benefit from long-term infrastructure projects that include HS2.
For those considering entering the property market, there are several reasons for investors to feel confident about the fundamentals driving buy to let sector.

To discover the best place to invest in UK property in 2022 for your portfolio, contact Surrenden Invest to discuss your requirements and to view our latest range of investments.

Autumn Budget 2021: What does it mean for the property market?

Autumn Budget 2021: What does it mean for the property market?

October 27th 2021 was an important day for the UK economy, with Rishi Sunak delivering his third Budget since becoming Chancellor.
During his speech, Mr Sunak announced spending increases of £150 billion over three years. The spending includes £7bn for transport projects, plus £6bn to tackle NHS backlogs and almost £2bn to help schools in England catch up following the Covid-19 pandemic.
While much of the Chancellor’s speech in the House of Commons focused on the country’s road to recovery from the coronavirus situation and unfolding challenges following Brexit, Mr Sunak also unveiled broader measures that will impact the workforce, businesses, and the property market.

Summary of Budget headlines

Overall, the 2021 Autumn Budget ran for around an hour. So to save you time, here are some of the headline announcements from the Budget:

£150bn^

£150bn rise in overall spending across three years

£24bn

£24bn set aside for housing, including £11.5bn for 180,000 affordable homes

£24m+

The cladding crisis is set to be addressed with a new 4% levy on property developers with profits over £25m

£1.7bn

£1.7bn Levelling Up Fund – an influx of investment in local areas that include projects in Aberdeen, Bury, Burnley, Lewes, Clwyd South, Stoke-on-Trent, Ashton under Lyne, Doncaster, South Leicester, Sunderland, and West Leeds

-8%

Universal Credit taper rate will be cut by 8% (no later than December 1st 2021)

£%>/?

Business rates retained and reformed

£9.50 ph

Public sector pay freeze lifted plus National Living Wage to rise to £9.50 an hour

50% OFF

Retail, hospitality, and leisure sectors set to benefit from 50% business rates discount (up to £110,000)

-%

Fuel duty increases cancelled due to rising pump prices

£4.6bn^

Scottish Government £4.6bn rise in funding

£2.5bn^

Welsh Government £2.5bn rise in funding

£1.6bn^

Northern Ireland Executive £1.6bn rise in funding

+£2.2bn

£2.2bn of additional support for courts, prisons, and probation services

+2 years

2-year extension of tax relief for museums and galleries

£5.9bn^

£5.9bn rise in core science funding

Accelerated recovery of the UK’s economy

During his speech, the Chancellor told the House of Commons today that the government’s fiscal watchdog, the Office for Budget Responsibility (OBR), expects the UK economy to recover to pre-pandemic levels by the end of the year.
Earlier in the year, the OBR estimated that the economy would grow by 4% throughout 2021; however, this figure has been revised upwards with the expectation that it will expand by 6.5%.
What’s more, longer-term damage to the economy due to the pandemic has also been revised down from 3% to 2%.
For those keeping an eye on inflation, the Office for Budget Responsibility (OBR) predicts it will hit 4% by the end of the year – double the Bank of England’s target.

How will the 2021 Autumn budget affect the housing market?

It is very rare for a Budget not to include new home targets, and yesterday’s briefing was no exception to this rule.
Key announcements from the Autumn Budget included the removal of dangerous cladding from high-rise buildings, additional funding for new homes, plus the redevelopment of brownfield land. Speaking about his ambitious plans, the Chancellor announced that housebuilding is set to witness the “largest cash investment in a decade.”

£2.4 bn new homes promise

The Chancellor unveiled an investment of almost £24bn to build new homes, with £1.8bn earmarked for the development of 1,500 hectares of brownfield land that has the potential to deliver 160,000 new homes.
The property industry has drawn similarities between the £1.8bn new homes pledge and its 2015 Starter Homes Initiative, which was scrapped before any properties were built.
Mr Sunak also confirmed £11.5bn investment into the Affordable Homes Programme.
With the proposed new homes set to be built on brownfield land, commentators want the scheme to focus on delivering greener properties that offer longer-term environmental benefits.
The unlocking of brownfield land presents developers and future residents with the prospect of delivering property located within urban areas that boast convenient transport links.
On the surface, the Chancellor’s promise to inject the ‘largest cash investment’ could help alleviate supply in some areas, yet the amount of pipeline new homes is way off the government’s own target of 300,000 new homes per year.

Capital Gains Tax extension

There was much speculation in the runup to the Budget about Capital Gains Tax (CGT) increases; however, Mr Sunak did not include the change during his announcement.
Instead, property owners and investors selling a residential UK property will benefit from a 30-day extension to pay their CGT bill. Before the announcement, sellers had 30 days from the completion date to pay. The window has now been extended to 60 days from the completion of the sale.
The property industry has welcomed the simplification of CGT. As the change comes into immediate effect and is available to UK and international sellers, those who wish to release property from their portfolio will benefit from the extension straight away.

£5bn confirmed for cladding updates

The cladding crisis has regularly made headlines since the disastrous fire at Grenfell Towers highlighted safety issues in existing high-rise buildings across the UK.
With many leaseholders with affected properties unable to repair or sell their apartments, the government pledged £5bn in February this year to tackle the crisis amid pressure from those affected by the problem.
The new Building Safety Levy is a part of the government’s solution to tackling dangerous cladding is to raise £2bn by introducing a 4% levy on property developers with profits over £25m.
The new tax will be applied over a 10-year period starting next year. However, the expected £2bn it will raise is a far cry from the Housing, Communities and Local Government Committee’s £15bn estimated cost to remove all of the cladding deemed dangerous from high-rise buildings.

Will mortgage rates increase following the Budget?

In response to the Coronavirus outbreak, the Bank of England (BoE) introduced an emergency interest rate cut from 0.75% to 0.25% on March 11th 2020 and then again to 0.1% on March 19th 2020.
Lower borrowing rates have helped to protect and stimulate the economy throughout the pandemic. However, with rates still at a record low, many people have been left wondering when the BoE will start making moves to increase the cost of borrowing.
For the UK’s property market, low mortgage costs have fuelled borrowing activity, helped support house prices, and boosted capital gains for investors. In fact, the average cost of a property in the UK has increased by 10.6% year-on-year in August to reach £264,244 according to Land Registry.
With inflation set to hit the 4% mark by the end of the year, it is possible that interest rates may increase, albeit at a slow pace next year.

Planning reform

During the Budget, the Chancellor also included £65 million to ramp up England’s planning system and £9 million to help local authorities create 100 new urban “pocket parks” across the UK.
The plan includes digitisation to make local plans easier to access; however, those working in the sector have made calls for further and more meaningful overhauls to the planning system, focusing on delivering sustainable properties.

What was missing from the Budget?

Despite speculation and calls from the property industry, there was no extension of reduced Stamp Duty rates which was introduced as an emergency measure at the start of the pandemic.
During the reduced rate period, home buyers were not required to pay Stamp Duty on the first £500,000 of a purchase price until June 30th 2021, and a 0% rate was payable on property priced up to £250,000 until September 1st 2021.
As of October 1st, rates returned to pre-Covid levels. If you are currently looking to buy a property, you can use our Stamp Duty Calculator to determine your obligation.
Although property investors no longer have access to lower Stamp Duty rates, time-sensitive incentives remain to invest in a property, including record-low interest rates.
Commenting on the Budget, Jonathan Stephens, Director of Surrenden Invest said:

“Looking at the property sector as a whole, it will be interesting to see if the government’s additional £24 billion investment in new-build properties and other reforms will have a direct impact on the supply chain. A well-established property market like the UK’s has lived up to its ‘safe haven’ status throughout the uncertainty of the pandemic, and we expect further investment from private and institutional property investors who see the growth potential and the value for money currently available on the market.”

For more information about investing in UK property, you can contact Surrenden Invest team, who will be happy to assist with your search.

Spring/Summer 2021 Portfolio Brochure

Spring/Summer 2021 Portfolio Brochure

As the UK’s leading property investment consultancy, Surrenden work extremely hard to ensure at any given time we provide buy-to-rent investors with an unrivalled portfolio of developments.
With many developers choosing to retain key developments in their land bank, rather than bringing them to market over the last 24 months, and when coupled with land transaction and planning application falling by over 50%, there is an acute shortage of new developments coming to market, this is particularly evident when reviewing our competitors portfolios of developments.
Despite this, Surrenden have continued to lead the way with our unrivalled portfolio of developments emphasised by our exclusive launches in Q1 2021 including Arc Avenue in Newcastle, FiftySixty in Birmingham, Hollybush House in Hinkley and Town Square in Manchester.
With a market primarily offering investors with undesirable developments, and many of our competitors offering the same developments as each other Surrenden Invest offer buy-to-rent investors access to new to market and exclusive developments.
Please download your complimentary Spring/Summer 2021 Portfolio Brochure and get in touch if you would like to speak with one of our experienced property consultants.

For regular updates and advice on investing in UK Buy-to-Rent hotspots, follow Surrenden Invest on social media or get in touch today.

Manchester Market Insight – Q1 2021

Manchester Market Insight – Q1 2021

By John Parker, Business Development Director

Manchester has long been regarded as the UK’s go-to market for buy-to-rent investors who have enjoyed sustained year on year rental and capital growth. Values in the centre of Manchester have nearly doubled since 2008 and rental values have increased year on year by 5 – 6%. With prices in super-prime Manchester starting from £245,000 for a 1-bedroom apartment, the challenge now for investors is to find pockets of Manchester that are still undervalued and primed for long term rental and capital growth.
This significant growth wouldn’t be possible without the influx of professionals seeking convenient rental accommodation in Manchester city centre. In fact, Generation Y (those born in the 80’s and 90’s) makes up 89% of the city ’s population growth, which fuels the growing demand year after year.
As a result of Manchester continued property market growth, London is seeing less and less prominence. Average property prices in the capital decreased by 4.1% in 2019, whilst rental growth dipped to its lowest since October 2010. In contrast, Manchester ’s average property prices increased by 5.5% and rental values increased by 6.5%.

Manchester Market Snapshot

SALES MARKET

M=Capital Growth

6 postcodes in Manchester enjoyed the highest national property price increases in 2020

1/3

The average apartment in Manchester is just over a third of the price of a London apartment

149%

Manchester’s population has grown by 149% since 2002

30.0%

Manchester property values up 34.36% over past 4 years

RENTAL MARKET

6.0%

Manchester postcodes boast some of the highest Average buy-to-rent yields in the UK, at 6.0%

4.20%

Manchester rents predicted to rise by 4.2% per year for the next 5 years

2 weeks

The average property is let within 2 weeks of going to market

43.0%

At 43%, Manchester has one of the highest proportion of private renters in the UK

Our newest launch, Town Square is located in the urban village of Eccles which has just been confirmed by Rightmove in January of this year as the UK’s top performing market hotspot in 2020 with a staggering 16% increase in property values.
Eccles, on the west side of Manchester, has been named as the property hot spot of 2020, with prices rising faster than anywhere else in Britain according to the property website Rightmove. Just 12 months ago the average asking price in this undervalued pocket of Manchester was £184,299 compared with £213,703 at the start of the year.
Eccles is one of three Manchester suburbs in the top-five fastest rising areas of 2020, with the other two also in the north of England. In a dramatic reversal to rankings in previous years, a wealthy London commuter town, Sevenoaks, was named by Rightmove as the location where the average price fell the steepest during 2020, falling from £693,569 to £681,069.
Eccles benefits from nearly every acknowledged contributory to a top performing residential property market benefiting from excellent transport links and academic credentials. Located just five miles west from Central Manchester, Town Square is under 12 minutes by Train or Metrolink to anywhere in the city centre and there are 24 schools within a 2-mile radius rated good or outstanding by Ofsted.

ECCLES is THE UK’s BEST PERFORMING pOSTCODE & named as the property hot spot of 2020

Eccles, home of the iconic cakes and located west of Manchester, has seen a bigger annual increase in average asking prices than anywhere else in Britain, up 16%. The national average increase is 6.6%. Average asking prices in the town have risen from £184,299 in 2019 to £213,706 this year.
SI_Rightmove_Logo

Source: Rightmove.com

Town Square is a collection of just 41 beautifully presented apartments with a resident roof top garden set within the UK’s top preforming postcode. The development has a superior specification and finish throughout, with branded appliances in the kitchen and bathrooms and will raise a new standard of living in a market that’s expectations are changing fast.
Because of Eccles excellent investment potential as the UK’s leading investment consultancy Surrenden Invest have exclusive access to the best buy-to-rent opportunity in this undervalued pocket of Greater Manchester.
Please do not hesitate to contact one of our experienced property consultants if you would like to discuss the investment case for Manchester in greater detail.
John Parker
Business Development Manager
john@surrendeninvest.com

For regular updates and advice on investing in Manchester Buy-to-Rent property, follow Surrenden Invest on social media or get in touch today.

Newcastle Market Insight – Q1 2021

Newcastle Market Insight – Q1 2021

By Conor Kilcoyne, Senior Property Consultant

With a range of topflight sports teams, historical & cultural experiences, shopping & leisure facilities, and an attractive nightlife one could say the Newcastle community is a proud one. As well as an established community, Newcastle is fast becoming the most sought-after buy-to-rent market in the UK for investors seeking greater capital growth and a more attractive yield than the go-to regional cities can now offer.
SI_NewcastleInsight_icon1

Property values in Newcastle are 14% lower than that of Birmingham and Manchester.

SI_NewcastleInsight_icon2

Newcastle is one of the fastest regional growing economies in the UK.

SI_NewcastleInsight_icon3

Over 33% of graduates from Newcastle Universities go on to live and work in the city .

SI_NewcastleInsight_icon4

Arc Avenue is set within the heart of the £60m Gateshead Quay re-generation project.

SI_NewcastleInsight_icon5

Newcastle property prices have experienced 78% growth since 2000.

SI_NewcastleInsight_icon6

20,000+ students study in city highlighting the need for high quality accommodation.

Commercially, Newcastle has never been so strong with large global corporations such as Siemens, Sage PLC, Nestle and Proctor & Gamble occupying office space and setting up UK headquarters throughout the city.
Newcastle plays host to two of the UK’s leading universities: Newcastle University and Northumbria University. Newcastle University is often regarded as the leading university for Computer Science in the country, producing the next generation of tech entrepreneurs who will flourish in the city. Factoring in the North of Tyne Devolution deal which will see annual growth in economic output of £1.1bn and 10,000 new jobs, Newcastle’s already growing base of young professionals (33% of all graduates settle and work in the city) looking for quality, affordable accommodation is only going one way.
According to the PP index, it was not until 2019 that property prices in Newcastle recovered to pre-2008 levels. Comparing this to other post-industrial cities such as Birmingham and Manchester who recovered as quickly as 2014, real estate in Newcastle is now well-positioned to out-perform the rest of the UK. Development is set to surge from 2022 onwards with developers applying for planning with local councils in increasing numbers.
Newcastle remains one of the more affordable buy-to-rent locations in the UK, with property prices currently 15% below rival cities, such as Manchester. However, with continued investment into the city we are seeing property prices begin to soar. This means that Newcastle is primed for sustainable capital and rental growth for many years to come.
SALES MARKET

23.46%

Property values up 3.9% over the past 12 months and 23.76 over the past five years.

14.0%

Newcastle property prices are 14% lower than Birmingham & Manchester.

863,000

Newcastle’s population is expected to grow by 863,000 by 2030.

RENTAL MARKET

6.52%

Newcastle postcodes boast one of the highest average buy-to-rent yields in the UK, at 6.52%.

2.5weeks

The average property is let within 2.5 weeks of going to market.

33.33%

Over 33% of university students stay to work in Newcastle.

Due to Newcastle’s growth, Surrenden Invest have acquired exclusive access to the best investment opportunities in the city. These opportunities strengthen our already healthy nationwide development portfolio.
Please do not hesitate to contact me if you would like to discuss the investment case for Newcastle in greater detail or find out more about our latest opportunities in the city, such as the recently launched Arc Avenue, a waterfront Grade II Listed period conversion.
Conor Kilcoyne
Senior Property Consultant
conor@surrendeninvest.com

For regular updates and advice on investing in Newcastle Buy-to-Rent property, follow Surrenden Invest on social media or get in touch today.