First Time Buyers, Brexit and Boris Johnson
An influx of deals agreed over the last several months will cause a substantial rise in House prices over the summer – according to new data from property experts Reallymoving and Rightmove.
Fuelled by past frustrations of political indecision, home buyers see the nearing deadline of Brexit as an essential milestone for establishing stability and future prosperity in the market. Investors encouraged by the light at the end of the tunnel now also see an opportunity to capitalise on exceptional value through buying in the last remaining months ahead of Brexit.
House pricing indexes forecast growth of upwards of 1.2% in August, followed by growth of 3.8% in September – marking a crucial turning point in the recovery of what has otherwise been a tough couple of years in the property market. (Reallymoving)
This Summer is also set to see renewed interest and appetite from overseas buyers with the promise of lower stamp duty and purchasing costs for home buyers and investors alike. The introduction of increased Stamp Duty in 2014 was arguably the leading driver in the 20% decline in property prices in areas of Central London in the following year; questions now linger as to whether the introduction of lower Stamp Duty will spark an immediate correction in house values and send prices soaring.
With the prospect of Boris Johnson in No.10 looking more likely than ever, Johnson’s condemnation of high taxation appears to be well received with investors drawn to the Country who have in the past been unmotivated by unattractive costs associated with investment.
“The spring market was more robust than expected and this has prompted positive growth through the summer, particularly for deals agreed in May which are translating to sales in July.”
A plan to cut stamp duty on home purchases in Britain may just be the boost needed by the slumping London property market and give first time buyers the opportunity to get on the property ladder across the UK.
“We have seen a spike in interest in commuter belt locations around the UK’s largest cities, London, Birmingham, Manchester and Newcastle. With high sales in growth location sites such as Gerrards Cross, Luton and Digbeth. There is huge pent-up demand in the UK property market amidst the political unrest if the UK is able to agree a deal with the EU we could see a rush of properties hitting the market in the late autumn along with a surge in buyer demand..”
For regular updates on Brexit and Property Investment in key UK regional cities, follow the Surrenden Invest team on social media.
Business snapshot – let’s take a look at Dudley
The Metropolitan Borough of Dudley, to the North West of Birmingham, is a popular home for families looking to enjoy the perfect blend of suburban life and access to green space, while still enjoying all the economic opportunities that a thriving business environment can provide. The borough is home to over 100 business parks, making it a key player in the Black Country economy.
The power of a business park to support regeneration in an area is significant. Brierly Hill’s Waterfront Business Park is an excellent example. Home to over 20 companies, it offers a wide range of commercial properties to companies looking for well-designed and well-connected premises. Not only that, but those connections are shortly due to get a whole lot better, with Brierly Hill directly benefitting from the £449 million extension to the West Midlands Metro tram line.
Further regeneration work is also taking shape in the local area. Just two minutes from the site of the new Brierly Hill tram stop (due for completion by 2023) is Oak Court. The stylish apartments are largely one-bedroom homes, in line with current demand for rental homes in the local area. Designed to serve both the Dudley Borough and Birmingham rental markets, the apartments will offer spacious homes designed to meet the needs of professional tenants looking to enjoy a contemporary suburban lifestyle.
“Oak Court is a particularly interesting development as investors have a chance to be involved in Brierly Hill at a very significant phase in the town’s history. The tramline extension, which will provide a rapid connection to central Birmingham, is opening up regeneration opportunities like never before. Coupled with the Borough of Dudley’s focus on business and economic opportunities, this is a location that will be of important regional significance over the coming decade and beyond, particularly for those with an interest in buy to let property UK prospects.”
Home to just shy of 320,000 people, the Metropolitan Borough of Dudley certainly punches above its weight when it comes to business opportunities. And with renters increasingly finding themselves priced out of central Birmingham, the borough is ideally placed to capitalise on the potential of its housing prospects as well.
Oak Court is ideally placed to benefit from all of these factors. It is situated within the heart of a £1 billion Enterprise Zone and is adjacent to the new £100 million Merry Hill Shopping Centre. Available from £82,000, homes at Oak Court offer rental yields of 7% with a full management programme in place. A short build time means that they will be ready for occupation from winter 2019.
New Rental Market Snapshot keeps investors up to speed
Here at Surrenden Invest we do all we can to make our property investment company stand out from the crowd. Part of that includes sharing the knowledge and market insights that we have with our community of investors. We believe that knowledge is a powerful thing and is essential in choosing the right investment opportunities at the right time. That’s why we’ve launched our Rental Market Snapshot Guide
“Whether you want an overview of the UK rental market as a whole or a concise, detailed look at some of the country’s leading cities, the Rental Market Snapshot is the ideal investment companion. Making money from buy to let property UK opportunities is all about achieving strong yields as well as the potential for healthy capital growth. Surrenden Invest delivers a range of resources to support this.”
The data-driven Rental Market Snapshot considers not just current rental prices in each of the major cities it covers (Birmingham, Manchester, London, Liverpool and Newcastle) but also a range of other market performance metrics. These include average tenancy lengths and void periods, as well as factors such as what proportion of renters end their tenancies early. All of these can impact on the rate of yield that buy to let investors can expect.
Wider market drivers such as the kind of properties that renters are seeking are also considered, as well as the growing relevance of the private rented sector as a whole.
“The UK rental market is a huge topic. What we’ve done with the Rental Market Snapshot is to capture the essence of the market as it stands today, while also exploring the historical factors that have led us to that point. We’ve looked forward was well as back, which is particularly important for investors who are currently looking at a range of cities for their next investment.”
Birmingham is one of the most exciting cities in the UK right now when it comes to buy to let investment. Surrenden Invest has been highly active there in recent years. Its latest – and most impressive – Birmingham development is No. 76 Holloway Head. The 34 luxurious apartments enjoy an outstanding B1 location, just two minutes from the Bullring, Grand Central and New Street Station. The swanky Mailbox retail destination, meanwhile, is almost on the doorstep. This ultra-prime location has been chosen in order to capitalise on the demand for true inner city living that’s at the heart of the action – one of the trends noted in the Rental Market Snapshot.
Birmingham Is Being Recognised as the ‘New’ London
As a leading property investment company, Surrenden Invest has for years been espousing the virtues of the Birmingham property market. Now, with London house prices falling for the last two years in a row, increasing numbers of investors are looking to Birmingham to be the home of their UK property investment.
According to the latest Nationwide figures, London house prices dropped by 0.8% in the year to December 2018, following a 0.5% fall in 2017. By contrast, the Nationwide figures show a 2.9% increase in house prices for the West Midlands for the year to Q4 2018.
However, it isn’t just because London prices are falling that the Surrenden Invest team are such strong advocates for Birmingham. Indeed, the team was extolling the virtues of all things Brum long before London house prices began to wobble!
“This simple fact is, Birmingham is an amazing city that has an awful lot going for it. Its business community is thriving and there’s a palpable energy when it comes to startups and entrepreneurs in the city. Birmingham’s residents demand the very best, whether that’s cultural attractions, retail outlets or the restaurant scene – and that’s precisely what the city delivers. This is a modern metropolis that is drawing in new residents by the tens of thousands, and for very good reasons.”
Birmingham Property Investment Booming
According to the latest Office for National Statistics population growth projections, Birmingham’s population is expected to increase by around 166,000 people between 2018 and 2041 – a growth rate of 14.5%. This is another factor driving the new wave of property investor interest in England’s ‘second city.’
One of the leading developments that is rising to meet the surge in demand is the centrally located Westminster Works. Home to 220 beautiful, loft-style apartments, Westminster Works is offering investment from £168,000. The building’s specification and facilities are superb, as befits such a prestigious development in this exciting city.
“With Westminster Works, what we see is apartments and amenities that deliver a new style of urban living to Birmingham’s aspirational, dynamic young professionals. The lively Digbeth location is the perfect site for this leading development, while the impressive roof terrace is a feature of which every resident can feel proud.””
Birmingham Regeneration Will Benefit the Midlands Population
The yields on offer in Birmingham are another reason that attention is moving away from London. Westminster Works offers solid yields of 5.0% NET – something which many developments in London are either struggling or failing to do.
Then there is the overall impact that regeneration work is having on the city. Grand Central’s opening in 2015 marked a step change in the way that many people thought about Birmingham. Now, the £500 million Birmingham Smithfield masterplan, located just behind Westminster Works, is taking regeneration to the next level. Head of city centre development and planning, Richard Cowell, has hailed it as, “an example to international cities,” with residents set to benefit not just from a new market area but from a museum, hotel, culture centres, leisure facilities and a 24-hour gourmet foodie hangout.
For regular updates on investing in Birmingham and other exciting UK regional cities, simply follow the Surrenden Invest team on social media.
The regional round-up – where will 2019’s housing hotspots be?
We hear a lot about how the UK is in the midst of a housing crisis, and how the country is falling further and further behind each year in terms of delivering the number of homes that our population needs. Combined with the rapid rise in popularity of city centre living, this is creating pockets of extreme demand in some of the UK’s regional metropolises. With 2019 just around the corner, the Surrenden Invest team has done some number crunching (with a little help from our friends at the Office for National Statistics and Zoopla) to see which hotspots are worth keeping a close eye on over the year ahead.
2018 population: 1,147,300
2041 projected population: 1,313,300
Property price growth over past five years: 29.46%
Housing development to watch: Westminster Works
With a 14.5% population increase on the cards between now and 2041, Birmingham tops the list of 2019 hotspots. The city has a young population compared to the country as a whole, with its five university campuses attracting young people with a thirst for knowledge. The city has the sixth highest graduate retention rate of any UK city, and the third largest inflow of graduates with no prior connection to the city.
This 65,000-strong student talent pool provides Birmingham with a vast pipeline of future workers and entrepreneurs. It also means that stylish homes in city centre locations are, and will continue to be, in hot demand.
2018 population: 553,500
2041 projected population: 631,500
Property price growth over past five years: 30.60%
Housing development to watch: Ancoats Gardens
Manchester is on track to experience a 14.1% population increase between 2018 and 2041, meaning it will be snapping at Birmingham’s heels in terms of growth. The city has already risen up the ranks in recent years, making it onto IBM’s list of top ten global destinations for foreign direct investment in 2017 (as part of the Manchester-Liverpool metropolitan region).
Manchester benefits from a steady influx of bright, enthusiastic young people. The city is second only to London in terms of its graduate returners (at 58%), as well as its inflow of graduates with no prior connection to the city. Businesses are doing much to harness this talent; Amazon, for example, chose Manchester as the site of its first Amazon Academy, running a series of programmes and events designed to help hundreds of small, local businesses. Future residential developments in the city centre will need to serve these entrepreneurial young professionals.
2018 population: 8,965,600
2041 projected population: 10,346,000
Property price growth over past five years: 32.36%
Housing development to watch: Brook House
London leads the UK in many respects, as a world-renowned centre for finance, business, education, tourism and more. Over the next 25 years or so, its population is projected to increase by 15.4%, driving demand for housing across the capital. From sleek, centrally located apartments to sprawling houses in the suburbs, London offers every kind of property imaginable, providing homes for workers from across the UK and the globe.
More than 300 languages are currently spoken in London’s schools, highlighting the diversity of the capital’s future workforce. The city attracts some of the best and brightest as a result of its vast range of employment opportunities and is home to a huge rental population. According to PWC, 60% of Londoners will rent their homes by 2025, as the city’s young (and not so young) professionals rent in ever greater numbers.
2018 population: 495,300
2041 projected population: 554,500
Property price growth over past five years: 24.67%
Housing development to watch: The Tannery
Liverpool is on track to experience a population increase of 12.0% between now and 2041, as the city continues to attract talented young people as a result of its thriving service sector, healthcare sector and knowledge economy. The city’s extensive cultural offering is also a draw, from its plentiful museums and art galleries to its excellent restaurants and lively music scene.
42% of Liverpool’s population is below the age of 30, compared with 37% nationally. This youthful population is driving forward Liverpool’s reputation as an innovative, entrepreneurial city. It is also one of the main forces behind the extensive regeneration that the city is experiencing, while the growing trend for city centre living is creating new hotspots close to key attractions and amenities.
Newcastle upon Tyne
2018 population: 297,400
2041 projected population: 318,100
Property price growth over past five years: 23.70%
Housing development to watch: Hadrian’s Tower
Newcastle’s city centre population has grown rapidly since the turn of the century. According to Centre for Cities, Newcastle city centre enjoyed population growth of 112% between 2002 and 2015. The massive jump in demand for city centre living is creating a hotbed of innovation with-in the housing sector, as developments seek to woo the bright young things who have flocked to the city for work and want prime accommodation in the heart of Newcastle.
With a superb social scene and a thriving urban renaissance well underway, Newcastle’s attractions to ambitious young professionals are plenty. It also has a rapidly growing student body as a result of its superb universities. Student numbers at Newcastle University have shot up by over 70% since 2000, while Northumbria University has enjoyed a student body increase in excess of 114% over the same period. With nearly 50,000 students in total, a full sixth of the city’s population is engaged in study, creating a uniquely youthful atmosphere as Newcastle grows its own talent for the future.
“Each of these cities has its own distinctive culture, which is drawing in young people who will ultimately contribute to the future success of that city. Those working in the housing sector need to respond accordingly, delivering high quality homes in central areas, in order to meet the demand that these young people are driving.”
For the latest news on property industry developments and the investment opportunities that they are creating, follow Surrenden Invest on social media.
Liverpool has just hit the headlines for leading the UK’s cities in terms of its house price growth. The Hometrack UK Cities House Price Index reported 7.5% inflation in Liverpool during the year to August 2018. For those working in the Liverpool property sector, the news comes as no surprise.
According to Hometrack, Liverpool’s average property price stood at £120,100 as at August 2018, against a UK average of £217,300. For those buying a main residence, that means 0% stamp duty. For those buying a second home (including investment properties) it means the lowest stamp duty rate, of 3%.
Factor in a 10-15% discount for off plan properties, and Liverpool really does have some exceptional investment deals available. Apartments at The Tannery, for example, are available for as little as £85,000, with anticipated yields of 6% net.
Despite the low entry price, the homes have been designed to offer outstanding quality, synonymous with the world’s greatest capital cities – those with which Liverpool has been rubbing shoulders on the IBM Global Location Trends report. Bright contemporary interiors are complemented by on-site facilities including a 24/7 concierge, secure underground parking, a spacious communal courtyard and a roof garden, all in the sought-after L3 postcode area.
“Liverpool has exceptionally strong credentials as a property investment destination. It has a booming city centre population, a thriving business community and a superb cultural offering. This combines to produce a high and sustained level of demand for decent, well-located rental homes, which in turn means that property investors can earn healthy yields, as well as enjoying the potential for impressive capital growth.”
As part of the Liverpool-Manchester metropolitan area, Liverpool was recently flagged up by IBM’s annual Global Location Trends report as being among the top ten cities in the world for foreign direct investment (FDI). The area pulled in the tenth highest number of FDI projects in 2017, according to the report, resulting in the creation of some 7,000 jobs.
Earlier this year, TripAdvisor also highlighted Liverpool as one of the best places in the world to visit. The city’s cultural offering was key to that decision. This year, it is offering a year-long programme of events, exhibitions, seasons and performances to mark the ten-year anniversary of Liverpool being crowned European Capital of Culture. One of the most impressive offerings is the Terracotta Warriors exhibition, which is drawing in visitors from around the UK and beyond.
“Liverpool is one of those rare cities that has it all. It’s a delightful blend of economic opportunities, cultural pursuits, a superb gastronomic scene, a lively sporting offering and a thriving property market. The city also enjoys property prices that are well below the average for the UK, which is another reason that it is such an exciting prospect for property investors.”
For regular updates on Liverpool and its property market, as well as other UK regional cities, you can follow the Surrenden Invest team on social media.
Investors from around the world are flocking to pick up property in Birmingham, with developments such as Westminster Works seeing a strong, sustained level of interest. In September, Birmingham was highlighted by PropCast’s England & Wales House Selling Weather Report, with four of the city’s postcode areas making it into the top ten best areas to sell a property. National property expert John Parker, Surrenden Invest’s Business Development Director, explains what it is that makes Birmingham so alluring, and why now is the right time to give full attention to this dynamic city.
Why is now the right time to invest in property in Birmingham?
Birmingham was named as the sixth best city in Europe for investment prospects in 2017 by PwC. 2017 also saw it crowned as the most improved city in the UK in which to live and work. With a youthful population (the youngest of any major city in Europe, with 45% of the population under 30) and an impressive cultural offering, England’s ‘second city’ has much to offer aspiring entrepreneurs and those looking to climb the corporate career ladder.
The city also has a bright future. At present, it is growing faster than 31 of London’s 33 boroughs, while HS2 looks set to cement its future as one of the UK’s leading economic power-houses. The high speed rail network will connect London Euston to Birmingham by 2026. This has driven a wave of investment in areas such as Digbeth and Curzon Street, as station works inspired by HS2 create a ripple effect that benefits the surrounding location. With £1 billion of investment behind the development work, several new neighbourhoods will result.
At the same time, a low supply of properties and extremely high property prices in London are driving buy to let investors out of the capital and straight into the open arms of markets such as Birmingham. Average property values have increased there by 31% over the last five years, while a further 20-30% hike in prices is expected over the next three to four years, off the back of the Big City Plan’s ambitious 20-year vision.
What should buyers look for in a Birmingham investment property?
It sounds simple, but the three questions I ask myself are:
– Would I buy it myself to live in?
– Can you rent it out?
– Can you sell it?
Other than that, it’s a case of choosing the area wisely. Birmingham is home to many affluent and emerging areas, with the Jewellery Quarter, the Convention Quarter and Digbeth all making names for themselves. The type of property also needs careful thought, with consideration given to renter trends. Larger apartments are growing in popularity and there’s a big shortage of them in city centre locations.
Finally, think about unique features. Homes with high ceilings or a premium specification will stand out from the crowd and should attract a queue of would-be tenants, thus minimizing void periods.
Which areas of Birmingham are particularly attractive to investors?
Birmingham has plenty of areas that investors are keen to be a part of right now. New Street Station (England’s busiest railway station outside of London) is where it all began. By creating a massive, impressive gateway to the city, with a smorgasbord of restaurants, shopping and entertainment right on your doorstep, it opened investors’ eyes to the city’s potential, and residents’ eyes to the benefits of a new style of urban living. Birmingham is now attracting plenty of people who want to live in the centre, working, eating, sleeping and playing all in the same ultra-convenient location.
With waves of large-scale regeneration sweeping Birmingham, the city has a number of investment hotspots, with the city centre as the core. The massive residential and retail zone of Smithfield and the new cultural quarter in the east are two great examples. In addition, the central business and shopping district is booming in terms of price, scale and the influx of companies moving in. The presence of Deutsche Bank, HSBC, HM Revenue & Customs and their ilk is drawing workers to seek centrally located homes.
In a nutshell, the most exciting city centre locations at present are the area around Mailbox and Holloway Head, the Jewellery Quarter, Digbeth and the cultural district to the east. Further out, both Edgbaston and Ladywood are proving popular.
The Jewellery Quarter
What should buyers be wary of?
Due to Birmingham having been heralded as the new darling of overseas property, and investors looking to avoid the over-inflated values and dwindling yields of London, the former’s property market is highly competitive, which can at times lead to frustration. Much of the city’s pipeline of residential developments have already been purchased off plan, while its burgeoning ‘Build to Rent’ sector is also introducing a new element of competition.
That aside, and with standard due diligence checks taken into account, price is probably the most important aspect to be wary off. When you buy off plan, it’s important not to pay over inflated prices, especially in the more prime developments in the city.
It’s common to see developments that are selling out some 18 months before completion and being market at prices that would be more appropriate were they completing today. It means that developers are not passing on the speculative discount that one should expect to receive for buying off plan so far in advance. Discounts of 10-15% are reasonable; if an apartment would be worth £200,000 upon completion today, but won’t be complete for another 18 months, then a price of £180,000 would be more appropriate.
What kind of due diligence should investors carry out?
That aside, and with standard due diligence checks taken into account, price is probably the most important aspect to be wary off. When you buy off plan, it’s important not to pay over inflated prices, especially in the more prime developments in the city.
Other than that, put yourself in the rental market mindset. Rental demand is the number one factor that will drive capital growth, as well as being critically important to service any debt that you may have on the property. Look into location, local infrastructure, public transport links, nearby amenities, entertainment options, bars, restaurants and anything else that could contribute to the development being a solid rental investment moving forward.
What sets Birmingham apart from other UK cities?
Birmingham has a number of important selling points as a property investment location. Its extensive regeneration work means that pockets of potential and value are being unlocked across the city. Its youthful population and dynamic business environment are also key.
Then there is the London factor. Take Holloway Head as an example. It might not look like much now, but many are already labelling it the soon-to-be ‘Millionaires Row,’ meaning that they are hedging their bets on a new tide of London-centric commuters being brought in by HS2. When complete, HS2 will mean that people can travel from Birmingham to London in the same time it would take to get from Dulwich (in South East London) to the West End. That’s going to make a big difference and it’s something that other regional cities, which are further from the capital, simply can’t offer.
What is your top piece of advice for those considering investing in property in Birmingham?
Think carefully about the location you choose, particularly if it’s short term capital growth that is driving your investment.
For regular updates from John and his fellow national investment and property experts at Surrenden Invest, follow us on social media.
Prime Birmingham residential values to hit £500 PSF by 2020 (Knight Frank)
West Midlands property prices rising at fastest rate in UK (Halifax)
Birmingham’s innovation and dynamism, along with HS2, capture attention of overseas investors (Surrenden Invest)