With our ever elusive departure from the European Union lingering on and the impact of Brexit fear being felt across multiple markets, many new and experienced investors may be tentative about exchanging their hard earned cash for a new addition to their property portfolio.
Property has always been a great investment, providing a level of financial stability and certainty that you just don’t get with other assets. Brexit or not, buying property remains one of the best and smartest ways to invest in your future. Purchasing property and then leasing it out gives a consistent monthly income while the value of your property asset, and subsequent profit, grows.
Here at Goodwin Property Holdings, we provide access to the sound investments you need to confidently capitalise on the UK property market. Despite the UK economy entering a transitionary period, with the right development and the right management expertise, you can see your investment appreciate in value. Still not convinced? In this article, we reveal the reasons why now is the best time to invest in the UK property market, and your future.
1. Rental Demand Remains Higher Than Ever
The demand for rental property in the UK continues to rise, unlocking boundless opportunities for private landlords and property investors. An ever increasing number of people in the UK are unable to purchase a property of their own – a recent think tank report from the Resolution Foundation found that one third of all millennials are likely to be renting all their lives, long into retirement – which leaves many turning to rentals. In recent years, investors with rental properties have found an abundance of potential tenants, with demand in many UK towns and cities outstripping supply.
The high demand for rental options isn’t a phenomenon either. The private rental sector has grown dramatically in recent decades, with the revelation of these ‘retiree renters’ and the UK’s ageing population both major contributors to the country’s housing crisis.
While rental demand is high throughout the country, there are some areas that are more sought-after than others. Outside the capital, Manchester was deemed the best place to invest in buy-to-let property for 2019. With its rich heritage, thriving industry, world-class arts and eclectic scene, the city is fast becoming one of the most desirable places to live and work. A fact that made it a natural choice for our latest project, The Lyceum.
With an aim to breathe new life into one of Greater Manchester’s most iconic buildings, The Lyceum is on its way to becoming a premier place to live in the city. The residential demand for high end property is what cements the success of The Lyceum development. The Grade II listed former theatre and historic landmark will be home to 82 high specification apartments. The much-anticipated development has already attracted attention and investment from investors and potential tenants.
2. More Buying Incentives for Investors
With a rising number of people unable to afford a mortgage or buy a property of their own, residential developments and the mortgage products that make investing possible are increasingly attracting the attention of investors, not prospective homeowners. Many developers and mortgage lenders are providing incentives for investors to ensure properties can be sold and rental demand met. The Lyceum for instance offers the lowest price on the market for this type of development, with the larger than average 1, 2 and 3 bedroom apartments available from just £213 per square foot. In addition to providing a great investment opportunity in an enviable location, an investment in The Lyceum is fully managed with 7% net rental return. Incentives like these make investing in the UK property market accessible to a greater number of new and experienced investors.
The same can be said for mortgage lenders, who are providing more suitable products for buy-to-let investment. Traditional mortgage lenders are now softening their stance by revoking the harsher criteria that prevented so many taking that first step onto the property investment ladder. Specialist mortgage lenders are also improving accessibility, allowing more people to obtain finance for investment and end-use.
According to Mortgage Brain, the number of mortgage deals available to buy-to-let investors has risen by 11% in total. Buy-to-let investors looking to purchase the next addition to their portfolio and able to stump up a higher deposit benefit from further savings. On average, a buy-to-let mortgage product for a £150,000 purchase could save landlords and investors up to £144 per year with a 40% deposit. Investors wishing to refinance their property portfolio can benefit from the lower rates and greater accessibility. There are now a range of affordable remortgaging deals available.
UK interest rates remain extremely low, meaning there are a variety of competitive mortgage products currently available for investors looking to finance their next property purchase or refinance their portfolio.
3. Stability Ensured Whatever Brexit Brings
Whilst we can’t be 100% sure about the impact our departure from the EU will have on the UK economy, and more specifically the property market, the UK still remains a safe bet for those considering property investment. As a recognised and world-leading economy, a founding member of the United Nations (UN), and a member of NATO and the G8, the prospect of investing in UK property is certain to deliver more positives than negatives, especially if you intend to hold onto your property assets for the long term.
The UK’s ‘safe haven’ status is only consolidated by the country’s low risk wealth and robustness. Whilst its wholly transparent property laws mean the property market is governed fairly, simply and securely to ensure a high level of protection for both UK based and overseas investors. Secure legal ownership is guaranteed in the UK, with the process of buying and letting property relatively straightforward.
Government intervention in the past few years has however resulted in a loss of confidence for UK and overseas investors. Regulations and tax changes that have been implemented over the last two to three years have affected investors and end-users negatively. The 3% stamp duty surcharge for instance, which came into effect on 1st April 2016, has seen investors buying additional residential properties with a value of £40,000 or more liable for thousands of pounds extra. The letting fees ban, which was implemented this year, also resulted in added expense for landlords and investors in the UK property market. As of June 2019, all letting fees are banned in England and Wales. The cost of referencing and inventories can no longer be passed onto the tenants, with landlords now having to foot the bill for these administration costs.
Despite the introduction of such legislation, the UK property market has remained resilient, and with the government thought to be holding off on other buy-to-let interventions, the market is receiving a welcome break and boost.
4. Rental Yields are Rising Rapidly
With housing supply in the UK at a 100-year low and record levels of population growth, it’s obvious to say that as well as rental demand rising, so too is rental yield. It was recently reported that rental yields are now at a two-year high; these rises have even overtaken house price increases, despite regional variations and a post-referendum market slowdown. The underlying market conditions however appear to be changing for the better, with those looking to expand their property portfolios now benefitting from the best yields.
Outside of London, the North West of England saw the biggest annual increases in average rentals. According to Homelet, the average rent in the North West increased by 3.3%, rising from £717 in August 2018 to £741 in August 2019. The North East, South East and Northern Ireland saw the smallest annual increases, making buy-to-let investments hot property in Manchester and the surrounding areas.
Rental yields are set to rise further with news that UK tenants are set to exceed the number of homeowners by 2039.
5. Investment Opportunities are Everywhere
In addition to affordable finance and rapidly rising rental yields, the opportunities to invest throughout the UK are increasing. Finding the right investment opportunity for your requirements is the key to success, with the property you select making all the difference to your short and long term profit prospects.
Choosing a buy-to-let investment is much different than buying a property that you intend to live in. Tenants may have similar wants and needs to homeowners but putting your own tastes aside and finding a property that makes business sense should be a priority. It’s important to look at the requirements of your target tenant. If you want to target families with young children, sourcing an investment that is in the vicinity of good schools and a great community is vital. The needs of a young professional or couple will differ further, with excellent transport links and great entertainment options treasured by these particular demographics. Students will favour rentals that are close to campus and not too far away from local nightlife.
There are several factors to consider when choosing the right investment opportunity. Finding the right location is a great place to begin. The location itself and the distance to local amenities will enhance the appeal of your buy-to-let property. The type of building you choose will influence the type of tenant. When compared with houses, apartments or flats often unlock higher rental yields. The initial outlay will also be lower when purchasing an apartment with lesser purchase prices often guaranteed. Opportunities to buy in bulk are possible when investing in apartment buildings, meaning you could unlock discounts and build a consistently strong property portfolio. As a buy-to-let investor, investing in an apartment rather than a house could mean less maintenance too.
The great debate between new and old builds is reignited when selecting the right investment opportunity. New builds tend to make easier investments as they have wider appeal and are less costly to maintain. The character of an old build however is something that appeals to investors and a more select number of tenants. It’s not just the type and location of the investment property that count. The layout, outdoor space, fixtures and fittings, parking facilities and availability of natural light should all be vital considerations when choosing the investment opportunity for you. Thinking further into the future, the property’s potential resale value should be deliberated. Whilst you cannot predict what the future holds for the UK property market, purchasing a property in an up and coming area will ensure a good investment that will net you plenty of profit when you come to sell.
The Lyceum – Your Next Property Investment
Savvy investors looking to purchase an investment property that ticks all the right boxes will want to view The Lyceum. The development is situated in a highly desirable location, just a stone’s throw away from the centre of Manchester. Its incredible transport links courtesy of eight international airports (including Manchester Airport, one of the globe’s busiest), the soon-to-be developed High Speed 2 (HS2) and a further £13 billion investment in transport will make an apartment at The Lyceum the first choice for tenants looking to live, work and flourish within the Northern Powerhouse and beyond. The apartment’s high specification fixtures and fittings, larger than average spaces, secure parking and excellent facilities will attract more reliable, professional tenants as well as higher rental yields.
By investing in The Lyceum, you don’t have to choose between new build and old build. The development is a poignant mixture of both. Behind the historic façade of the Grade II listed ‘Crown Theatre’, you’ll find all the perks of plush, new build living. Pure heritage and luxury will both be enjoyed by your tenants, who’ll be proud to call this landmark development their home.
Ready to invest in the next addition to your property portfolio? View the brochure to discover more about The Lyceum or contact us direct to reserve your apartment off-plan. Apartments start from just £120,000 with a 20% expected completion appreciation and 7% guaranteed net returns.