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Will house prices go down in 2022?

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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.

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

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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.

Manchester buy to let market to thrive as Brexit deadline draws closer

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Manchester buy to let market to thrive as Brexit deadline draws closer

2018 was an outstanding year for Manchester’s commercial property market which retained the number one position of office take up across the Big Six Regional Cities (Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester).

With the new office space take up predominantly from large companies relocating to the Manchester area, a trend which has continued to grow since 2018. Resultantly the city has seen a massive surge in job creation.
In 2018, 1.75 million sqft of office space was transacted in Manchester across 314 deals, up by 54% on the 10-year average. 2018 top deals included:
This trend continues throughout the 2019 with recent a recent deal (June) by The Hut Group, which took up 280,000sqft and British Telecommunication lined up for over 200,000sqft office space in Manchester centre in Q3 2019.
Since 2015, the city’s population has grown by nearly 6%, according to Manchester City Council. An impressive 65% of graduates of universities in Manchester stay in the city after graduating. Additionally, 36% of people from Manchester who studied elsewhere returned home after graduating. Also many young professionals choose Manchester to seek employment as the city offers rich and diverse opportunities across all sectors.
This has resulted in high demand for residential accommodation in Manchester. The city is undergoing rapid change and growing at a rate of around 2,000 homes per year. This is to house Manchester’s rapidly growing population, which is expected to increase from 530,300 in 2016 to 625,000 by 2025. As the demand for homes continues to rise house prices are expected to go up by 57% by the end of 2028.
This is creating an excellent opportunity for buy-to-let investors looking to address the city’s housing under-supply backlog, with some estimates showing the need for as many as 40,000 additional homes. Manchester’s growth and emerging status as a global city provides all the ingredients to ensure the city remains brexit-proof and continues to grow even through political and economic uncertainty. Brexit negotiations seem to make very little impact, on the property market as overseas investment, mainly from Asia and the Far East reaching the highest level this year.

“With a growing population of young professionals and students, we have identified the ever increasing need for accommodation in areas of Manchester with good transport links, relatively affordable rents and amenities on the doorstep. These areas offer potential for long term demand and continued growth in values. The city has so much to offer. Ideally located, continuously outperforming the wider UK property market, delivering healthy returns for investors and attracting more and more professionals, it is clear to see that Manchester is perfect for prime city centre living to live, work and invest.”

Jonathan Stephens, MD, Surrenden Invest
Located just 10 minutes away from the city centre, the contemporary Middlewood Plaza development with pricing starting from £159,980 has been designed to suit the needs of urban professionals working in both Manchester and nearby Salford. Consisting of stylish apartments, townhouses and duplexes, and located in the popular Salford area, Middlewood Plaza is the ideal investment property for those looking to be a part of North West England’s bright future.

For regular updates on investing in Manchester buy to let hotspots such as Middlewood Plaza, follow Surrenden Invest on social media.

Growth location focus: Manchester

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Growth location focus: Manchester

Manchester is the UK’s media hub, with MediaCityUK in the Salford area of the city acting as a magnet for creative talent, as well as the ideal incubator environment for new creative and digital start-ups.

As an eminently desirable urban location, Manchester is experiencing rapid population growth. The city’s 2018 population of 553,500 people is expected to grow to 631,500 by 2041 based on current trends – an increase of 14.1% according to the ONS.

“One reason that Manchester is such a key growth location is the city’s unique combination of economic opportunity and superb urban lifestyle. This blended offering led The Economist to crown Manchester as the UK’s most liveable city in its 2018 Global Liveability Index.”

Jonathan Stephens, MD, Surrenden Invest
The Greater Manchester urban area accounts for 40% of total GVA in the North West, making the city the focal point for the entire region. According to Savills, that region will lead the UK in terms of house price growth over the next five years, achieving compound growth of 21.6% by 2023. 2020 in particular looks to be an exciting year based on the Savills projections, with the North West tipped to enjoy house price growth of 6.0% over the course of the year.
Capitalising on this population growth is the Middlewood Corridor located in between Manchester and Salford, The Middlewood Corridor is the largest of three regeneration corridors (with over £1 bn of regeneration planned) that make up an ambitious renewal programme for Manchester and Salford. It is being built around existing retail parks, with regeneration work running from 2015 to 2030.
Middlewood Plaza is located in the heart of the Middlewood Corridor, marking the start of a new era for Manchester’s residential sector and those who invest in it. The development is set to capitalise on the enormous economic potential of the Middlewood Corridor Regeneration Zone, as well as benefit from the host of amenities that the completed district will provide. With prices starting from £157,281 and only 10% payable on exchange, this could be the development that gets you on the Manchester property market.

For regular updates on investing in Manchester buy to let hotspots such as Middlewood Plaza, follow Surrenden Invest on social media.

Buy-to-let Borrowing for an Ageing UK Population

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Buy-to-let Borrowing for an Ageing UK Population

Traditionally borrowing gets harder as you get older, but it is now getting easier to secure a buy-to-let mortgage when you’re over 60. This doesn’t mean over 60s can’t get a mortgage. But lenders might impose an age limit for taking out the mortgage, plus a maximum age for when the mortgage term will need to end.

When it comes to buy-to-let, retired borrowers may have previously found it difficult to secure a mortgage to purchase a buy-to-let property. Lenders were reluctant to offer them finance, particularly if they were still in debt in their retirement.
With around 1,000 mortgage deals available for terms of up to 40 years, which means a buy to let borrower aged 45 years old can easily expect to have a mortgage on a private rented home for 45 years. This seems to be working as the latest buy to let mortgage data from lender trade body UK Finance reveals landlord remortgages are outnumbering loans to buy new homes to let by nearly three to one. Borrowing to buy a new property to rent dropped by 7.7 per cent to 4,800 for the 12 months to the end of February 2019. Remortgages were up 2.1 per cent with 14,400 loans agreed over the same term.

“While theoretically age should not be as big a concern for Buy to Let lenders as for a residential property, the reality is that it is still a factor and many borrowers do face upper age limits. When it comes to BTL mortgages, repayments aren’t usually covered by pension savings or work salary as with residentials. Instead, affordability will usually be determined by the expected rental income from tenants (alongside the usual factors such as loan to value and other individual circumstances).”

Online Mortgage Advisor
Buy-to-let lenders are encouraging borrowers to stay in the market well into retirement as they lift age limits on mortgages. Figures from consumer group Which? suggest two out of three of the 2,057 deals available to landlords have a maximum age limit of at least 85 years old. Some go farther – with 9 per cent offering mortgages to borrowers up to 90 years old and a fifth without any age limit at all.
Age limits might still be a factor, but when it comes to determining whether a buy-to-let investment is affordable or not, many lenders will focus more on the rental cover than the age of the borrower. As long as borrowers can demonstrate that the monthly rent payable on the property is enough to cover mortgage repayments by between 125% and 145%, the investment will be determined as affordable.
With the population living longer, people are still wanting or needing to borrow money for a multitude of reasons. Now lenders aren’t standing in the way as the number of buy-to-let products available on the market is at its highest level since the beginning of the financial crisis in 2007, with many of these products will be available to landlords requiring finance, regardless of their age.

For regular updates on buy-to-let investment opportunities, be sure to follow the Surrenden Invest team on social media.

London House Prices increase as Boris Johnson moves forward with stamp duty tax reform

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London House Prices increase as Boris Johnson moves forward with stamp duty tax reform

As we look towards the October Brexit dead line, what is the current state of the UK property market and what effect has Boris Johnson had in the small time he has been prime minster.

Before Boris Johnson became the new PM, he outlined his plans for an emergency budget which would significantly cut stamp duty and potentially reignite a stumbling property market. As Brexit, economic uncertainty and fulfilling policy pledges play heavily on his mind, overhauling SDLT will undoubtedly be the easiest part of Johnson’s role as PM. In his quest to revive the property market, Boris pledged to overhaul the current SDLT thresholds by scrapping SDLT on properties worth less than £500,000. Currently, only properties priced under £125,000 on all current property owners or a £300,000 threshold for first-time buyers (FTBs) are immune from SDLT. The aim to stimulate the more expensive sections of the property market by reversing duty increases on homes valued over £1.5 million by reducing the 12% duty to 7%.

The Current Market Conditions

  • Average house prices saw an annual rise of 1.2% (to April 2019 Gov.UK House Price Index)
  • Highest level of year-on-year growth in followed by Liverpool (4.9%), Manchester (4.1%) and Birmingham (4.0%).
  • According to the same dataset, London saw a 0% change in house prices. (Hometrack UK Cities House Price Index)
  • Despite the ongoing Brexit-induced pessimism, the latest Royal Institute of Chartered Surveyors (RICS) report stated that there has been an increase in buyer enquiries after declines over the first half of 2019. 12-month expectations are indicating continued growth in sales volumes and prices.
Nevertheless, affluent home buyers pushed the number of deals in central London over £5 million up 12% compared to a year ago, while the number of deals under £2 million rose 16%, according to LonRes. With Boris Johnson beating rival, Jeremy Hunt by 92,153 votes to 46,656 last month, the question on everyone’s lips is whether he will deliver on his promise of cutting stamp duty land tax (SDLT) after October 31st 2019.

For regular updates on property investment in London and other UK regional cities, be sure to follow the Surrenden Invest team on social media.

How long will the London housing market pause for thought?

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How long will the London housing market pause for thought?

There are a number of indicators that the pre-Brexit, pent up buyer demand for London property is shortly to be unleashed. Chestertons’ Winter 2018/19 London Residential Property Market Report asserts that the “bottom of the market may be in sight,” while the rate of decline in the capital’s sales prices have slowed. Indeed, demand at the prime end of the market bounced back during the latter half of 2018.

“We’ve seen many buyers – both owner-occupiers and investors – taking a ‘wait and see’ approach in London as the Brexit deadline of 29 March approached. However, the delaying of that date to 12 April – and the 31 October – is testing purchasers’ patience. Add in the prospect of prices in London bottoming out and we could see a swift and decisive rise in transactions over the coming weeks and months.”

Jonathan Stephens, MD, Surrenden Invest
Prices in London fell during 2017 and again during 2018. Given the ongoing political impact of Brexit on sterling, this has made for some interesting opportunities for overseas investors. With indications that the market is bottoming out, many investors will now be looking to snap up properties at bargain (for London) prices while they have the chance.
At the same time, it’s likely that many of those waiting to buy property for their own use will also act in the coming weeks and months. As Brexit looks increasingly likely to drag on, many would-be purchasers may be prompted to act before London’s prices begin to rise too steeply again. As such, 2019 – or at least the latter half of it – could turn out to be a good year for property in and around the capital.

“Many property investment companies are looking closely at London again right now, as the market correction that has taken place over the past couple of years makes property ownership in the capital more attractive, particularly given the recent upward movement in rents and therefore yields. As such, London and the commuter belt certainly bear watching over the rest of this year.”

Jonathan Stephens, MD, Surrenden Invest
London’s property market is, of course, vast, as is the commuter belt that surrounds the city. Two areas likely to be of particular interest in the near future are Gerrards Cross and Reading, both of which offer a fast, direct commute into central London, as well as a good quality of life for the whole family. If the predictions of the market bottoming out and pent-up demand being unleased play out, it is likely that interest in both of these areas will spike significantly.

For regular updates on investing in London and other key UK cities, be sure to follow the Surrenden Invest team on social media.

New data reveals opportunity for first time buyers to outperform housing market

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New data reveals opportunity for first time buyers to outperform housing market

Recent data has revealed that First-time buyers in the UK need an average income of £54,000 in order to buy a property, marking a 9% rise from 2016 when Britain decided it would leave the European Union.

Looking at the data released from property website Zoopla this month, it’s fair to say that Millennials have had something of a raw deal when it comes to their finances. From soaring house prices, inflation exceeding earnings, through to political and economic uncertainty with Brexit – getting onto the property ladder has never been more difficult.
Those wanting a start on the housing ladder will often face a never-ending stream of negativity, with many believing it’s near impossible to buy their first home as they cannot raise enough money. This has created a new opportunity for first time buyers to act more savvy and  to selectively invest in Buy to Let property in national growth locations.
Data released by Zoopla found that the average household income required to buy in London was £84,000. In Liverpool, which had the lowest required household income before tax of the 30 cities surveyed, it was just £26,000.
Current house prices are encouraging huge rental demand in the UK’s busiest cities with young professionals flocking to areas like Manchester, Birmingham, Newcastle and Liverpool. Purchasing a one or two bedroom apartments as a Buy to Let in these locations is a shrewd investment for those priced out of their home town or city.

“The world as we knew it has changed when it comes to property ownership. We’re seeing more people renting and for longer periods, but that doesn’t mean that they need be denied the opportunity to profit from property. It’s just that doing so may look different in the future. Property investment companies need to work with Millennials to encourage that to happen.”

Jonathan Stephens, MD, Surrenden Invest
While Liverpool was named the most affordable market for first-time buyers, it was also the city with the highest house price growth, with values rising 5% over the 12 months April to April.
The Tannery is one of Liverpool’s most iconic residences. The elegant exterior sets the tone for the graceful, stylish homes inside, bringing capital-quality residences to Liverpool’s renters. The low entry price of just £85,000, coupled with 6% NET yields and long term capital growth projections make The Tannery highly appealing to investors looking to either bolster or begin their portfolios with one of the most exciting new opportunities of 2019.

For regular updates on investing in Liverpool and other key UK regional cities, follow the Surrenden Invest team on social media.

The investment case for Luton

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The investment case for Luton

Luton is a growing town that is known for being one of London’s most sought-after commuter locations. Indeed, Jackson-Stops has just flagged it up as the top commuter hotspot for 2019 and the town is fast becoming a favourite with property investment companies. Here’s why.

Luton is located 30 miles north west of central London. Direct trains run into London St Pancras International in as little as 22 minutes. 167 trains per day provide an almost round-the-clock service. Rents, meanwhile are around 1/3 of the cost that they are in London. For renters, it is the ideal combination.
Not only that, but London Luton Airport (the fifth largest in the UK and the fastest-growing major London airport) provides the town with easy, fast access to a wide range of European destinations, as well as select locations in Africa and the Middle East.

“Life in Luton means easy access to the best that London has to offer but without the capital’s extortionate housing costs. The town has excellent amenities with a lively local culture that appeals to those looking to balance access to London with a realistic lifestyle. This is one of the reasons that Luton exhibits such excellent growth potential.”

Jonathan Stephens, MD, Surrenden Invest
Luton’s population is increasingly rapidly. Between 2018 and 2041, the Office for National Statistics projects that the town’s population will grow by 12.9%, to 248,500. At the same time, it is in the grips of a serious housing shortage, as is the case with many towns and cities in the UK. However, Luton’s housing shortage is worse than most, with Project Etopia projecting that it will be 22.1 years behind where it needs to be in terms of housebuilding by 2026, if the current rate of development continues. At present, Luton is building 430 new homes per year – it needs to be building 1,417 to meet demand.
This housing shortage spells good news for buy to let investors, as it points to a long-term, sustained level of demand for private rented accommodation in Luton, as tenants seek to snap up those homes that are available. It also has the potential to drive up house prices (as well as rents and yields). Luton is already bucking the trend in terms of house price rises. While many southern locations are seeing a market correction at present, with falling prices or nil growth, Luton’s prices rose by 1.6% in the year to April 2019. Savills, meanwhile, projects growth of 9.3% in the five years to 2023 for the South East region.
In terms of its rental market, Luton enjoys an average rent of £632 pcm for a one-bedroom apartment and £828 pcm for a two-bedroom one, according to Zoopla – significantly less than equivalent homes in London.

“It is Luton’s combination of capital growth potential and pent-up demand for private rented sector homes that has caused the town to top LendInvest’s UK buy to let index for so much of the past three- or four-year period. This is a town with outstanding growth potential. Watch this town and watch this space to take full advantage of what Luton has to offer in the very near future!”

Jonathan Stephens, MD, Surrenden Invest
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For regular updates on investing in UK buy to let hotspots such as Luton, follow Surrenden Invest on social media.

Is property investment the key to retirement for Millennials?

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Is property investment the key to retirement for Millennials?

It’s fair to say that Millennials have had something of a raw deal when it comes to their finances. According to Brookings, median household wealth for Millennials in 2016 was 25% below that of those who were a similar age back in 2007. The global financial crisis has held them back in terms of salary growth, but it’s far from the only factor. Growing levels of student debt have played a large role, as has an inability to climb onto the housing ladder.

The result is that Millennials are facing a number of issues, both in terms of current wealth creation and future prospects. Not owning property means no capital growth. The increasing prevalence of self-employment more often than not means a lack of savings for retirement. Interestingly, though, this doesn’t mean that Millennials are unable to use the property market to their advantage.

“Millennials face a number of economic hurdles, but property investment doesn’t have to be one of them. The average UK property costs eight times the average salary, according to the ONS, but the right buy to let home in the right area can cost considerably less. It can also generate a healthy income, as well as the potential for capital growth.”

Jonathan Stephens, MD, Surrenden Invest
The Tannery, in Liverpool, is a key example of the potential that property investment holds for Millennials. The apartments are available from just £85,000 – far below the UK average property price of £226,798 (Land Registry figures, March 2019). With a turnkey management solution in place, there is no burden placed on investors in terms of time, meaning that Millennials looking for an alternative to traditional pension arrangements would do well to consider such a property’s potential.
Buy to let mortgages are subject to affordability checks, just as mortgages for first time buyers are. They also consider the potential rental income of the property in question. Surrenden Invest’s mortgage calculator is a great place to start for those just looking into this (whether Millennials or not).

“The world as we knew it has changed when it comes to property ownership. We’re seeing more people renting and for longer periods, but that doesn’t mean that they need be denied the opportunity to profit from property. It’s just that doing so may look different in the future. Property investment companies need to work with Millennials to encourage that to happen.”

Jonathan Stephens, MD, Surrenden Invest

For regular updates on investing in property UK regional cities, be sure to follow the Surrenden Invest team on social media.