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Buy-to-let Borrowing for an Ageing UK Population

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.

How long will the London housing market pause for thought?

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.

Growth location focus: Birmingham

Growth location focus: Birmingham

The UK’s population is booming and one result of this is a severe shortage of housing in many areas. Coupled with a shift away from home ownership and towards private renting, particularly in urban areas, this has created a number of key rental market growth locations. Birmingham is a prime example.

“Birmingham has the ideal combination of factors to make it a buy to let property UK investment hotspot. The city’s population is growing rapidly and the rate of house building has lagged behind the level of demand for new homes for many years. At the same time, urban regeneration work in the city centre is creating a number of sought-after locations, with renters wanting to be close to the heart of the action.”

Jonathan Stephens, MD, Surrenden Invest
According to Surrenden Invest’s report on National Growth Locations, Birmingham’s ambitious, large-scale regeneration projects, such as the £1.5 billion Birmingham Smithfield redevelopment, are drawing renters to the city centre in their droves. Meanwhile, the city’s established economic credentials (centred around manufacturing, retail, tourism and financial services and, more recently, creative and digital/tech businesses) are creating plenty of employment opportunities.
The West Midlands as a whole has a bright outlook. Savills has projected compound growth of 19.3% over the five years to 2023 for the area’s house prices. Birmingham is the region’s shining star. In fact, it the city has outshone many other urban areas in the UK over the past few years, with prices there rising faster than in any other UK city since the UK’s EU referendum in 2016.
Birmingham’s population is growing hand in hand with its house prices. The city is known for its youthful population, with the Birmingham Economic Review 2017 naming it the youngest major city in Europe. Nearly 40% of the population are under the age of 25. There were some 1,147,300 residents in 2018, according to the Office for National Statistics. That figure is set to rise to 1,313,300 by 2041 – growth of 14.5%.

“Birmingham’s economic credentials are backed by a strong cultural offering. This is a city with a vast amount to offer its young population, which is why it is enjoying such sustained popularity, particularly in terms of city centre living. Successful housing developments are those which meet not just the needs but also the aspirations of those young people.”

Jonathan Stephens, MD, Surrenden Invest
No.76 Holloway Head is one such site. The development enjoys an outstanding city centre location, just a couple of hundred metres from Birmingham’s upscale Mailbox and within two minutes of Birmingham New Street Station, Grand Central and the Bullring – the ideal spot from which to enjoy a luxurious urban lifestyle. The one- and two-bedroom homes, with their spacious, elegant interiors, provide the perfect upscale residence for ambitious young professionals looking to make the most of life in prime central Birmingham.

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

Manchester voted world’s 15th best city

Manchester voted world’s 15th best city

Picture the world’s greatest cities and what springs to mind first? London? Paris? Hong Kong? New York? Tokyo? Well, according to the 34,000 city dwellers interviewed by Time Out, Manchester now ranks up there with the best. The city came in 15th in Time Out’s list of the 48 best cities on the planet.

While New York, Melbourne, Chicago and London topped the list (in that order), Manchester proudly took the 15th spot, beating the likes of Buenos Aires and Barcelona thanks to its outstanding cultural attractions and “legendary (and growing) bar and club scene.”

“Manchester is an incredible city that is going from strength to strength. In recent years we’ve seen it competing on the global stage with some of the largest cities in the world. In 2018, IBM flagged it up as being in the top 10 cities on the planet for attracting foreign direct investment. Now, Time Out has recognised just how much Manchester has to offer those who live here.”

Jonathan Stephens, MD, Surrenden Invest
While Manchester’s nightlife was one of the aspects highlighted, the city’s art galleries, museums, sporting prowess, gastronomic scene and retail offering all came into play in the ranking.
For those with a focus on property investment UK opportunities, Manchester has even more to offer. The city is an established haven for property investors looking for solid yields and plenty of potential for capital growth. According to Hometrack, it is one of only two cities to have achieved price growth of 17% since the Brexit referendum in June 2016 (the other being Leicester).
Developments such as Middlewood Plaza are making it easy for investors to tap into this lucrative buy to let market. Just 10 minutes from the city centre, in the Middlewood Locks regeneration corridor, the stylish apartments, duplexes and townhouses are ideally positioned for access to both Manchester city centre and the best that Salford has to offer (Salford Central is, in fact, just 750m from Middlewood Plaza).
Boasting a private roof terrace, secure underground parking, smart technology and luxury furniture packs, with investment from £153,000, Middlewood Plaza is attracting interest from the wider global investment community, as well as from investors within the UK.

“Manchester is a city that welcomes investors with open arms. Its housing market has performed consistently well in recent years, upstaging other regional cities around the UK. The future also looks bright for Manchester’s property market, with Savills projecting compound growth of 21.6% for the North West over the coming five years – higher than that of any other UK region.”

Jonathan Stephens, MD, Surrenden Invest

To keep up to date with the latest news on investing in Manchester and other UK regional cities, connect with the Surrenden Invest team on social media.

Liverpool to London in just 85 minutes

Liverpool to London in just 85 minutes

The omission of Liverpool from the original plans for the HS2 high speed rail network was a major blow to the city. However, Liverpudlians didn’t give up on the potential for their home to benefit from the new network. Instead, they focused on ways to turn it to their advantage.

The Linking Liverpool campaign called for a high speed rail link between Liverpool and Manchester, effectively allowing Liverpudlians to tap into the HS2 network via the link. Transport for the North, whose remit includes the improvement of transport across the North of England, has backed the plan as part of its £70 billion, 30-year northern transport plan.

“It makes absolute sense that as many northern cities as possible should benefit from HS2, so the proposed Northern Powerhouse Rail link between Liverpool, Manchester and Leeds is a key project for the area. It’s also one that has the potential to impact on property prices and yields, for those looking for buy to let property UK opportunities in the right locations.”

Jonathan Stephens, MD, Surrenden Invest
The L3 postcode district is one such location. A sought after area of central Liverpool, it provides easy access to the best that the city has to offer, both in employment terms and for entertainment purposes. The area is home to The Tannery – a collection of elegant new homes in a striking building that reflects the city’s industrial past, paying homage to the leather works that formerly occupied the site and from which the new building takes its name. The buy to let apartments already hold strong appeal to local professionals, boasting a communal courtyard, roof garden and concierge service.
Adding a reduced Liverpool to London journey time of around 85 minutes into the mix will certainly give the development a boost – along with the wider economic prospects of Liverpool city centre. The Liverpool to Manchester leg of the journey will take approximately 22 minutes if the Northern Powerhouse Rail link goes ahead as planned. The onward journey from Manchester to London would then take around one hour and 25 minutes on the HS2 network.

“Keeping abreast of local transport and regeneration initiatives is an important part of identifying current and future buy to let opportunities that have the potential to positively impact investors. Coupled with the fact that northern cities are outstripping the UK average when it comes to property price growth, Liverpool has an incredibly strong investment case right now.”

Jonathan Stephens, MD, Surrenden Invest

To keep track of the latest developments impacting the buy to let sector in Liverpool and other UK regional cities, follow Surrenden Invest on social media.

Northern cities stand out from the crowd

Northern cities stand out from the crowd

Property investment companies with a nose for good opportunities have been focusing on the potential of the North England for some time. Cities such as Manchester, Liverpool and Newcastle have much to offer those looking to profit from property. Now, JLL’s latest Northern England Residential Forecasts report has confirmed the wisdom of looking to the North.

“In recent years Northern England’s major cities have established themselves as stand out performers in terms of residential investment and development.”

JLL Northern England Residential Forecasts, February 2019
The key to the success of property investments in these northern cities is the imbalance between the increased demand for centrally located homes and the supply thereof. The JLL report urges investors to ‘find the gap’ when it comes to these markets, which is precisely where property investment companies come in.

“The vast size of cities such as Liverpool, Newcastle and Manchester means that no two investment opportunities are equal. A few hundred metres can make all the difference when it comes to the yield that a property can deliver. That’s why it’s so important for investors to work with a property company with local knowledge when they’re seeking buy to let property UK opportunities.”

Jonathan Stephens, MD, Surrenden Invest
The North is outstripping the national average considerably when it comes to house prices. UK house prices rose by an average of 2.7% in the year to Q3 2018, according to JLL, while in the North West that figure stood at 4.9%. Yorkshire and The Humber saw growth of 4.4%.
Both the North West and Yorkshire and The Humber offer an excellent entry point for investors, thanks to their average home values being below the national average. In the North West, the average home costs £165,000, while in Yorkshire it costs £164,000. The average UK home price is £231,000 (all figures as at Q3 2018).
The Tannery in Liverpool is as shining example of why investment in the right northern hotspots is so attractive. The stylish homes enjoy a superb central location, while investment starts from just £85,000, with net yields of 6%. Premium specifications and a concierge service mean that the homes hold strong appeal to professional tenants, while the provision of luxury furniture packs makes life easier for tenants and investors alike.
JLL’s forecasts for Liverpool project a continuation of the city’s success over the year ahead. The firm believes the city will achieve 2.4% growth in new development prices, against a UK average of 2.2%, and an increase of 3.0% in city centre rents (UK average: 2.4%). All at a time when buy to let landlords are enjoying greater returns.

“By delivering specialist, localised knowledge about the cities in which it offers investments, Surrenden Invest will remain at the forefront of the UK buy to let sector over the years ahead, finding the gaps that deliver the best results for all those interested in investing in UK buy to let opportunities.”

Jonathan Stephens, MD, Surrenden Invest

For regular updates on investing in northern cities such as Liverpool, Manchester and Newcastle, be sure to follow the Surrenden Invest team on social media.

Housing market latest – wage growth enhances buyer affordability

Housing market latest – wage growth enhances buyer affordability

Wage growth in the UK is outstripping house price growth at its fastest rate since 2011, enhancing buyer affordability. This is contributing to both mortgage approvals and housing transactions holding up well, despite the ongoing political uncertainty related to Brexit. Indeed, the February 2019 Zoopla/Hometrack UK Cities House Price Index states that, “Data on transactions remains resilient with no obvious Brexit impact at a national level.”

According to the report, there was no material drop in mortgage approval activity or transaction volumes during the latter half of 2018, when compared with the five-year average. Furthermore, HMRC figures show that transaction volumes actually increased slightly during the first two months of 2019.

“The latest figures are further evidence of the UK housing market’s resilience in the face of the Brexit debacle. Improving buyer affordability enhances that resilience even more, with strong transaction levels supporting a buoyant market for both owner occupiers and investors.”

Jonathan Stephens, MD, Surrenden Invest
Annual wage growth stands at 3.4% according to Rightmove’s latest House Price Index. That compares to an average annual rate of house price growth of 2.0%.
Annual wage growth stands at 3.4% according to Rightmove’s latest House Price Index. That compares to an average annual rate of house price growth of 2.0%. Not only that, but the National Living Wage in the UK has just risen by 4.9%. As of 1 April 2019, the national minimum wage rose from £7.83 per hour to £8.21 for those aged 25+. Workers aged 21-24 also saw an increase, from £7.38 per hour to £7.70, while those aged 18-20 saw a rise from £5.90 to £6.15.
The impact of this can best be seen at a local level. In three out of four southern regions, for example, Rightmove reports that new sellers’ asking prices are cheaper than they were a year ago, giving buyers a distinct advantage when considered in light of their increased purchasing power.
Further north, many regional cities have been outstripping the price growth of their southern counterparts over the past three years, thanks to rising employment levels, as well as enhanced affordability. Two cities – Leicester and Manchester – have even achieved price growth of 17% since the Brexit vote, creating fantastic capital growth for those who timed their purchases right around the time of the referendum.
Manchester remains high on many investors’ priority list – and for good reason. The city is home to an impressive array of redevelopment projects, the largest of which is the NOMA development. The 20-acre, mixed use site is being regenerated at a cost of £800 million, making it the largest development project in North West England, eclipsing even MediaCityUK (also in Manchester). Such vast developments bring a wealth of opportunities, both for those who live in the city and for those looking to invest there.
Just 300 metres from NOMA, Ancoats Gardens provides an exciting residential property investment UK opportunity, offering net yields of 6.0%. Available from £229,714 and already under construction, the one, two and three-bedroom apartments offer bright, spacious homes backed by cutting edge facilities in a top location. Residents will benefit from an on-site coffee lounge for relaxing or working from home, a large, private gym that’s spread across two levels and a truly stunning rooftop garden providing views across the city.

To find out more about investing in one of England’s best-performing regional cities, follow the Surrenden Invest team on social media.

London property market snapshot – buyers hold their breath

London property market snapshot – buyers hold their breath

It seems that prime central London property buyers are collectively pausing as they wait to see what the future holds in store. Figures from the LonRes research firm show a 14% drop in the number of prime housing transactions in the capital in 2018 compared to 2017. The steep fall means that transactions in prime London are now at their lowest level since 2008.

“Property buyers are holding their breath to see how Brexit unfolds, at least so far as central London is concerned. However, London is a vast city and not all areas are experiencing the same dip in transaction levels. With choice outlying areas offering good value for money, there are still benefits to buying property in London at the moment, despite the UK’s political upheaval.”

Jonathan Stephens, MD, Surrenden Invest
Indeed, Foxtons reports that one result of the drop in transactions (and therefore new rental instructions) is that demand for private rented homes is outstripping supply at record levels, with nearly nine registered tenants for every new rental property.
The pace at which London house prices have outstripped salaries also comes into play, with the average deposit now 1.3 times higher than the average salary. Savills calculates that the average Zone 1 property costs £1.4 million. To secure a 75% mortgage, the buyer would need a household income of £247,484 per annum, along with a cash deposit in the region of £371,227. All of which explains why many of those who live in central London rent their homes instead of buying them.
Further out, however, London becomes much more affordable. The average property price in Zone 5 is £452,186, meaning that an annual salary of £75,364 and a deposit of £113,046 would be sufficient to fund the purchase of a home.
A number of commuter towns around the capital offer even better value for money, while direct rail connections make travelling into London perfectly achievable on a daily basis. It is areas such as these that are still generating a high level of interest from investors, according to the Surrenden Invest team.

“The commuter belt is big business right now. Buy to let property UK opportunities are alive and well in many parts of the capital and investors are continuing to seek out below market valuation properties that carry strong potential for capital growth. The high level of demand from renters means that the market still has much to offer to buyers who are careful about the locations in which they invest.”

Jonathan Stephens, MD, Surrenden Invest

To find out more about investing in and around London, as well as in other UK regional cities, follow the Surrenden Invest team on social media.

Free resources for property investors

Free resources for property investors

According to the Office for National Statistics (ONS), the number of households who rent privately has risen by 61% in a single decade. The ONS data shows 2.8 million households renting privately in 2008, compared to 4.5 million in 2017.

Figures from Foxtons, meanwhile, show that intense demand from private tenants has carried on into 2018. The firm reported an average of just under nine registered tenants for every new rental listing – its highest ever level. 2018 renter registrations increased by 8% over the course of the year, when compared to 2017 levels.
With demand outstripping supply, there’s a strong case for investing in buy to let property in sought after areas – provided the sums stack up.

“It’s important to understand the full financial commitment of investing in a buy to let property. In addition to the cost of the home itself, investors need to factor in outgoings such as stamp duty and mortgage interest, as these will have a bearing on the overall yield.”

Jonathan Stephens, MD, Surrenden Invest
As a property investment company that is keen to support investors to profit from their property decisions, the Surrenden Invest team has created two new calculators as part of the company’s revamped website.
The mortgage calculator uses monthly mortgage payments based on currently available buy to let mortgage products to indicate how much an investor’s mortgage repayments are likely to be. Surrenden Invest provides it as a free-to-use resource for anyone considering investing in a buy to let property.
Surrenden Invest’s other free resource is its stamp duty calculator. Stamp duty is payable to HMRC within 14 days of the purchase of a residential property, including an investment property. The amount due depends on whether it is your first or second (or subsequent) property and on the value of the property. With different rates of stamp duty applied based on different price bands, working out what you will owe can involve several sums. The Surrenden Invest calculator performs all of these in under a second, providing an instant indication of how much stamp duty a particular buy to let investment will require an investor to pay.

“We would encourage all those who are considering investing in residential property, whether for the first time or the tenth, to use our mortgage and stamp duty calculators. It takes less than a minute to use both calculators, thus providing investors with a fast, accurate indication of what the buy to let property they are considering is really going to cost them.”

Jonathan Stephens, MD, Surrenden Invest

For regular updates on investing and additional free resources, keep in touch with the Surrenden Invest team on social media.

Will Brexit break the 18-year house price boom cycle?

Will Brexit break the 18-year house price boom cycle?

According to Fred Harrison, the property market operates in an 18-year cycle. Prices grow steadily for six to seven years, correct a little, then increase for another five to six years. A crash then brings prices down, with a four to five year recovery period preceding the next steady growth phase.

Harrison’s theory has proven to be correct over the past 70 years or so. Prices crashed, or at least slumped significantly, in 1953-54, 1971-72, 1989-90 and 2007-08. Based on this cycle, we’re currently due a correction, then another period of strong growth. Prices in London and the South East certainly seem to be correcting at present, which indicates the period to around 2025-26 should bring growth, but could the UK’s departure from the EU finally break the cycle, triggering an earlier crash? Surrenden Invest’s MD, Jonathan Stephens, thinks not.

“The 18-year property cycle theory is one that has played out repeatedly over the last several decades. This has been despite changing political and economic circumstances both within the UK and more widely around the world. Brexit, while a significant upheaval for the UK, is more likely to impact on the value of stocks and shares and on sterling than it is on the housing market. Property prices aren’t so fast to react to politics and so provide greater stability.”

Jonathan Stephens, MD, Surrenden Invest
Savills, too, believes that Brexit won’t be enough to break the cycle. That company’s Autumn 2018 Residential Property Forecasts report paints a positive picture of house price growth over the five years to 2023, with compound growth of 14.8% nationally. The report also supports the correction part of the 18-year cycle theory, showing a 2.0% drop in London prices for 2019 followed by a year of nil growth in 2020, before prices rise again in 2021. The South East and East of England, meanwhile, show as prices flatlining over the course of this year, before rising again in 2020.

“The correction in London and the South looks to be localised to just those regions, with central and northern parts of England enjoying impressive growth over the coming years. From a buy to let property UK perspective, regional cities such as Birmingham, Manchester, Liverpool and Newcastle therefore present some of the most exciting investment opportunities in the country.”

Jonathan Stephens, MD, Surrenden Invest
Developments such as No. 76 in Birmingham deliver just the right sort of attractive opportunity for investors with a regional focus. The ultra-prime location of the apartments means that they are ideally placed to benefit from the huge inner city regeneration projects taking place in and around Birmingham’s B1 postcode area. From a price perspective, the potential for growth is therefore huge.
Brexit aside, if the 18-year house price cycle proves correct once again, property owners can look forward to at least another six or seven years of booming prices before they have to worry about an impending crash!

For the latest news on investing in regional UK cities, follow the Surrenden Invest team on social media.