20 March 2018
Described by the Sunday Times as the ‘perfect mix of heritage and hi-tech’, York’s historic beauty, friendly people, ultra low crime rate, cosmopolitan cafe culture and fast-emerging business sector are to name-but-a-few of the reasons that the Sunday Times has named the city as the ‘Best Place to Live In The UK 2018’.
Proud to be part of the city and to be working with investors who are migrating to York in search of their next opportunity, this accolade only confirms what we have been saying to our clients for many months and years.
Whilst the history of the city and its architecture play a major role in attracting people to study, live and work here – named as the UK’s first Gigabit-city, York is certainly keeping ahead of many other locations when it comes to infrastructure. York can boldly claim to provide high-speed internet connections throughout the city, making it one of the fastest emerging cities in terms of technology in the UK.
The transport network and links continue to be advanced which always helps. After all making it easy for people to get to us as well as travel to other locations, whether it be for work or pleasure, is one of the most essential factors that anyone has to consider when deciding where they are going to live or work. An equally important factor when identifying a suitable location for your next investment property.
Often willing to pay for the privilege to live in this beautiful city, whether tenants are looking to work for a well-renowned business offering good career prospects, have children and are coming to the city to ensure they receive the best possible education, or simply want to spend their time enjoying the lifestyle and beauty that the city so uniquely offers, it appears that York has been officially placed on the map as a hotspot to live in the UK.
To find out more about York’s nomination as the UK’s Best Place To Live 2018, click here: SUNDAY TIMES FULL ARTICLE >>
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Or to speak directly with one of our property experts, contact us on 01904 652729, firstname.lastname@example.org
15 March 2018
With a host of policy changes affecting the rental sector and a marked slowing in the number of properties being purchased by landlords, we’re all wondering what this means for the outlook of the private rental sector. Since the introduction of the 3% stamp duty land tax (SDLT) charge in April 2016, landlords have sold 50,000 more homes than they’ve bought. Investors only made up 12.3% of purchases in 2017, compared to 16.4% in 2015. Landlords seem to be thinking twice before adding to their portfolio or replacing homes they’ve sold.
Despite landlords selling more homes than they bought, the private rented sector in England continued to grow in the 12 months after the introduction of the higher stamp duty charge. Between April 2016 and 2017 the number of households renting increased by 164,000, 3% more than 2016. And it is forecast that the sector will continue growing in 2018, and over the next five years. By 2022, 20.5% of households will be renting in Great Britain, up from 19.4% today. By 2025 the sector will reach six million households (see table 1 below).
TABLE 1: FORECAST GROWTH OF NO. HOUSEHOLDS RENTING
Greater forces at play
Continued growth of the private rented sector may come as a surprise in an environment where landlord purchase activity has fallen, but there are greater forces at play. The growth in demand for rented homes is being driven by long-term structural shifts in demographics and the housing market, many of which aren’t unique to the UK. House prices consistently growing above incomes has raised the barrier to entry for many people, driving a steady decline in home ownership and growth in demand for renting. The performance of property as an investment has also discouraged owners from selling surplus property. And, a decline in social housing has seen more tenants on housing benefit, seeking accommodation in the private rented sector.
There are many routes homes can take to the rental market
There are more ways for a home to make it into the rental market than being bought for that purpose. A common source of property for landlords are homes that were previously a main residence or second home. Couples who are both homeowners moving in together, relocation for work or simply keeping a starter home as an investment. We tend to see a larger number of these moving into the rental market when price growth and activity slows in the sales market, with an estimated 80,000 homeowners trying to sell their homes in 2017 deciding to put those sales on hold and rent out their properties.
Many landlords also inherit property. Statistics on Inheritance Tax from the Office for National Statistics (ONS) show 200,000 estates were inherited in the 2014/15 financial year that included a residential building. Most years at least 200,000 homes change ownership through inheritance. Many of these homes will be sold or used by the heirs as a family home, but recent research from UK Finance shows that 16% of landlords acquired their property without a purchase, which would include inheritance. While we can’t apply these numbers to total rental households, they do show that a meaningful amount of rental stock comes from inheritance, with a larger number supported by funds gained from inheritance.
In recent years we’ve seen the growth of a new part of the rental market too, the professional build-to-rent market. Generally, blocks of flats purpose-built to rent,owned and operated by professional organisations. The sector only accounts for a small part of the industry today, but we estimate there are more than 100,000 units in the planning pipeline and that is set to continue growing.
These three sources of rental property, which are not dependent on individual landlords purchasing new homes, explain how the sector can expand while landlord purchase numbers are sluggish. This means that, despite recent policy challenges, ongoing changes to demand from long-term structural shifts in the market are helping landlords’ wealth and purchasing power.
The sector is anchored by large amounts of housing wealth
There is an incredible amount of wealth tied up in housing. The latest ONS Wealth and Assets Survey estimates there to be £4.6 trillion of housing wealth, a third of total household wealth. Alongside that, the English Housing Survey shows 1.3 million more households own their homes outright than own with the help of a mortgage. Cash owners are the biggest of any tenure group, and their numbers have increased for 23 out of the last 25 years, (see table 2 below).
TABLE 2: TENURE GROUP OF HOUSEHOLDS OWNED
The same is true for landlords, most individual landlords have no debt on their rental property. 65% of investor purchases were made with cash in 2017, £21 billion worth of property. A similar proportion of landlords have no mortgage on their existing portfolio too.
This volume of cash has been able to build up largely through high house price growth over the past 25 years, driving growth in landlord total returns. On average 40% of a landlord’s return comes from capital growth. This helps us understand investor behaviour today, house price growth is a key part of their return. It is no coincidence that the biggest falls in investor activity have been in London, where the outlook for house price growth is currently weakest.
The mass of cash in the market alongside increasing institutional interest in the private rented sector is acting as an insulation to changes in policy and credit availability. This is creating a firm foundation on which the sector can continue to grow, particularly as the drivers of demand for rented homes will continue.
13 March 2018
Average landlord who sold in 2017 gained £86,651
- The average landlord who sold their rental property in 2017 did so for £86,651 more than they paid for it, owning it for an average of 8.7 years
- The average owner occupier selling in 2017 made a bigger gain (£92,886) than a landlord (£86,651) as they owned their property for longer
- Rental growth slowed to 2.1% in February down from 2.4% in January, but was supported by increasing rents in London
The average landlord who sold their rental property in 2017 made a gain of £86,651 (table 1), having owned their home for an average of 8.7 years. The average gain from a landlord is up slightly from £86,302 in 2016. Sellers in London gained £253,981 (table 1) on average in 2017, over four times more than those selling outside the capital. In fact, one in four landlords (28%) who sold their home in London did so for at least twice what they paid for it an average of 8.1 years ago (see table 1 below).
Table 1: Profit made by a landlord on re-selling their rental property, by location
Landlord gains are slightly behind owner occupiers, who on average made £92,886 when selling their home in 2017. The average owner occupier made 7% more than a landlord when selling their home last year. This is because the average landlord selling their property in 2017 owned it for 8.7 years, rather than nine years for an owner occupier.
With the highest house prices and strongest capital growth over the last nine years, landlords who sold in London and the South East generally made the biggest gains. Eight of the ten places where landlords made the highest percentage gains were in London, with Maldon in Essex (118%) and Pendle in Lancashire (109%) being the only exceptions (see table 2 below).
Table 2 – Top 10 locations with highest % gains & profit on the resale of their property
Landlords in the North East made the smallest gains, £23,874, over 10 times less than a landlord in the capital (table 1). Landlords selling in Selby in North Yorkshire made the lowest percentage profit of 14%, but still made £9,703 on average.
The average cost of a new let rose to £954 pcm in Great Britain in February 2018. But the rate of annual rental growth slowed to 2.1%, down from 2.4% the previous month. Rents in London grew-faster than any other region for the third month in a row to stand at £1,686, 3.1% above last year’s level. Scotland was the only region to see rents fall in February (see table 3 below).
Table 3: Average rental growth year on year, by region
Commenting Johnny Morris, Research Director at Countrywide, said:
“House price growth has driven investor gains. Landlords selling in 2017 owned their homes for nearly nine years. In 8 of those last 9 years house prices have risen. Even in areas where price growth has lagged behind, most landlords have made a profit from rising prices.
“Rents continued to grow in January. London continues to see the greatest falls in the stock of available homes to rent, on the back of reduced investor activity, this scarcity of supply is driving rental growth.”
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