Blog

Finance Options, property, invest, finance, Aspen Woolf

The Northern Powerhouse And Commercial Property Investment

admin Leave a comment

A simple concept with far-reaching effects, the Northern Powerhouse is changing the way investors think about this part of the UK. Increasing government investment in infrastructure to improve the skills of its workforce, expand the North’s economic assets to connect with the rest of the world is breathing new life into major cities away from London.

Rebalancing The UK’s Economy

All of the investment in cities such as Liverpool, Sheffield, Manchester and outlying regions is making the north of England a major commercial investment hotspot. With a resurgence in industry, housing and improvement of the economy in the north, the pressure can be alleviated from the South East and London and the UK’s economy rebalanced.

Devolution across major cities can help to locally determine infrastructure and transport spend, as well as the skills base and what can be improved. The most effective policy to work on for the region is improving the skills base of the existing and future workforce, to further improve productivity and support the growth of the commercial sector.

Collaboration Between Cities

City leaders from Manchester, Liverpool, Sheffield, Newcastle and Leeds work together to promote key economic assets within the Northern Powerhouse to international audiences. The brand has helped to shine the global spotlight on the key cities in the region, their unique strengths and the changes taking place.

All of this drives the success of the Northern Powerhouse and leads to the need for more commercial development. The core idea is to make the North of England an attractive place to live, study and work. Successful businesses need superior quality commercial property, and the corresponding workforce need places to live.

Lower Cost Of Business

Across Manchester, Liverpool and Leeds the cost of doing business is significantly lower than in the South East and London. Research by Savills showed that annual costs per employee are as much as £8,000 lower than in London. This is hugely attractive to commercial investors as there is a guaranteed need for high quality commercial property.

All of these positive factors combine to create a globally appealing economy in the region that is attracting investment in commercial and residential property from all over the world. High profile examples of global investment include Chinese company BCG’s investment in Manchester’s Airport City. Pall Mall Court in Manchester and the Port of Liverpool building have been acquired by investors from the Middle East and the United States.

Strong Job Creation

The creation of jobs in the region is particularly strong in the professional services industries, which is now outpacing growth in the South East. This is likely to intensify further as there is more investment in the North. This will continue to increase pressure on all property sectors allowing for stronger rental growth projections than in many other regions of the UK.

Research shows that another 3 million sq ft of new office space will need to be created over the next ten years to meet the ever-growing demand.

Strong Investment In Northern Region

The last couple of years have seen extremely strong investment in the Northern Powerhouse, with more than £2 billion of transactions in Liverpool, Leeds and Manchester in 2015, with an increase since then.

London and the South East is looking increasingly expensive for investors across all asset classes. Added to this are extremely high property costs, and higher than average staffing costs, making the region less attractive to investors in an uncertain economy affected by Brexit.

Now is the time for the cities that make up the Northern Powerhouse to shine as a place to do business and as a lucrative investment prospect.

Buy-to-let mortgages

Ten Things Buy-To-Let Landlords Need To Know – Part One

admin Leave a comment

So much has changed in the buy-to-let market over the last year, that whether you’re a seasoned investor or a first-time landlord, it can be tricky to keep up.

Here’s part one of our handy guide to the 10 key things you’ll need to know in 2018, as the government continues to disrupt the property investment market.

  1. A New Centralised Ombudsman Redress Scheme Is Coming

Soon, landlords will have to register with a scheme designed to resolve tenancy disputes. In October 2017, the communities’ secretary announced the government’s plans for all landlords to join a scheme that will offer legally mandated resolutions to landlord/tenant disputes.

We don’t know yet whether the government plans to extend an existing body to become this ombudsman, or whether they will launch a new one. Their aim is to improve standards for both tenants and landlords in the private rental sector. The government wants renters to have greater powers to challenge what they consider unreasonable landlord behaviour. Existing and potential investors should keep an eye on this.

  1. Changes To Energy Efficiency Performance Standards

At the moment, all landlords are obliged to provide an Energy Performance Certificate (EPC) showing exactly how energy efficient the property is. The EPC grades range from A (most efficient) to G (least efficient). From April 2018, all rental properties must achieve a minimum of an E rating.

To start with this will only apply to new tenancies and renewals, before expanding to encompass all existing tenancies by 2020. Any breaches by landlords, such as giving incorrect information or not complying to the new regulations will mean cumulative fines of up to £5,000. Fines are as follows:

  • Providing false information to the register – £1,000.
  • Failing to stick to a local authority compliance notice – £2,000.
  • Renting out a property that doesn’t meet the E grade for less than three months (£2,000) or more than three months £4,000.

This effectively means that more than 300,000 existing landlords could be fined if they don’t improve their energy efficiency scores now. Stats show 330,000 rented homes have EPCs of F or G that don’t match these requirements and time is running out for landlords to rectify it.

  1. Implementation Of Proposed Ban On Letting Fees

In November 2017 the government laid out a draft bill to ban letting agents from charging fees in England. It seems this will be implemented sometime this year. It proposes stopping letting agents from charging fees to tenants to rent out a property, capping security deposits at no more than six week’s rent and capping holding deposits at no more than one week’s rent.

  1. Launch Of ‘Rogue Landlord Database’

Rogue landlords will find it more difficult to hide from April 2018, with the introduction of a new database. It will include details of landlords and letting agents who fail to protect tenants. The database will list landlords that are banned from renting out a property, or who have been convicted of an offence that prevents them from managing one. The kinds of breaches named by the Department for Local Communities and Government (DLCG) include:

  • Harassing or illegally evicting a tenant.
  • Using violence to get in to a property.
  • Failing to adhere to an overcrowding notice.
  • Providing false information.
  • Failing to comply with an improvement notice.

  1. Complying With The Right To Rent

Legislation surrounding Right to Rent has been around since February 2016, and it’s absolutely vital that new landlords or potential investors comply with it. If you are using a managing agent, then they should carry out the checks for you. The legislation means that landlords must check whether their tenants have the right to live and work in the UK.

In 2016, 106 landlords were fined for breaching this legislation and collectively fined £30,000. It applies to all tenants, including British citizens and there’s a step by step guide on the government’s website.

Check out part two of our guide next week.

Aspen Woolf ,earn money, finance

Why 2018 Is The Year Of Regional Property Investment

admin Leave a comment

When it comes to buy-to-let investment, the UK’s property hotspots have historically been centred around London. In the years since the start of the recession, Liverpool and Birmingham have crept into the upper echelons of popular property investment areas, but as we get further into 2018 things may change further.

Looking For Regional Areas

Buy-to-let investors are homing in on the Northern Powerhouse, including cities like Manchester and Liverpool. But they are also increasingly looking at smaller regional areas, thanks to the lower prices and excellent prospects stimulated by regeneration.

There is the growing issue of oversupply in some cities of the UK, as developers react to the demands from investor/buyers rather than the people who drive the market by renting units.

Demand Still Strong In The North

Despite the problem of oversupply, demand will stay high in the northern cities, despite the political uncertainty and shaky growth forecasts.

Dominant hotspots in the UK, including Manchester and Liverpool will continue to attract investors, but they will also be looking in the surrounding regional areas too. Choosing an area near Liverpool, for example, that benefits from low entry points, a wide range of development sites, weak competition and the likelihood of catch-up growth, is an attractive investment proposition.

These smaller areas are benefitting from the investment in the Northern Powerhouse, and for them to attract property investors, must exhibit the same growth in jobs, population and infrastructure projects.

The Northern Powerhouse

Chancellor Philip Hammond has been quoted as saying: “If the Northern Powerhouse were a country, it would be among the biggest economies in Europe.” And it’s the government’s investment in the Northern Powerhouse that is amping up the continued focus on northern cities and towns.

This year will also see the Great exhibition of the North, due to take place over the summer in Newcastle Upon Tyne and Gateshead. This has benefitted from the Northern Cultural Regeneration Fund providing £15 million for the creative, cultural and technology sectors.

Earlier in 2018, culture secretary Karen Bradley said: “This £15m fund is a fantastic chance for towns and cities to develop inspirational projects that could have a transformative local effect – particularly in communities that have seen less cultural or creative investment in the past.

“We want as many people as possible to benefit from the Great Exhibition of the North and this fund will boost the Northern Powerhouse and help build a lasting legacy across the whole region.”

Northern Towns On The Rise

As well as the big cities that are now well on the way to completing major regeneration projects, there are four areas in Yorkshire that will bloom in 2018. These are Bradford, Doncaster, Halifax and Wakefield.

Bradford has one of the fastest improving universities in the UK, which has contributed to the town having the youngest population in the UK. It also received almost £1 billion investment in its public spaces, historic sites and shops and has been named the first UNESCO City of Film.

Over in Doncaster, employment has been boosted thanks to the town becoming the UK’s logistical hub. All of this regeneration has increased demand for rental accommodation, with starting prices relatively lower than current property hotspots.

Interesting Year For Property Investors

While in some ways the landscape has shifted for buy-to-let property investors, with the number of low risk returns diminishing, its new incarnation is a potentially more rewarding.

For investors willing to do their research before making deals, 2018 could be an extremely positive year in terms of ROI.

INTRODUCTION TO PROPERTY INVESTMENT: WHY INVEST? 

admin Leave a comment

Housing is in high demand. In fact, the demand for housing has never been higher. Between 2014 and 2015, the population increased to around 65.1 million -an increase of 500,000 in just 12 months1. If the population continues growing in this way, then it will go over 70 million people by 20262 – and they’ll all need somewhere to live.

It’s also likely that homes with just one person will increase by 159,000 per year, leading to a UK that will be the most densely populated country in the EU3.

Rising housing demand in the UK

To keep up with demand, the government has predicted that at least 232,000 new homes need to be built in England every year4. However, as it stands, in 2017 we’re building fewer homes than any other period since the 1920s.

Due to the constant demand for housing, property investment is often seen as a safer investment than other asset classes (such as stocks and shares). While the economy can and does affect housing prices, for medium and long-term investment, it’s the safest asset class.

Different ways to invest

There are many different ways you can invest, ranging from converting your current residential mortgage to a buy-to-let mortgage to investing in a property fund.

We cover all the common ways to invest in this guide to help you decide which would work best for your investment goals.

How do you make money from property investment? 

There are two main ways to get a return on your investment:

  • Making money from rent by letting out your property to tenants
  • Selling the property in the future at a higher price

If you don’t want to go all in and buy a property by yourself, you can invest into a fund that then invests into a property. There are also property maintenance services and management services that you can invest in.

 

Ten reasons why it’s a good idea to invest in property

  1. 20 per cent of the UK population will rent by 20235

People are increasingly being pushed out of the housing market, leading to a rising demand for rental property. Since 2002, this demand has just about doubled, with rental properties now forming 11% of housing stock. With record levels of population increase, buy to let is the perfect way to invest.

  1. Bricks and mortar always will be ‘safe as houses’

Like all clichés, ‘safe as houses’ has a ring of truth. Investing in property will always be a robust investment class, particularly for investors looking long term. Despite an unstable political situation in the UK, the world’s economy frequently reeling from world politics, and an uncertain foreign policy, investing in property remains the safest bet.

  1. It’s simple to get started

Unlike with other investment asset classes, you don’t necessarily need specific knowledge to begin your property investment career. Often, it takes an increase on your own property to give you the boost you need to look further into this way of making money. There is an entire industry of help, advice, brokers and consultants to help private investors make the most out of their money.

  1. It’s easier to understand than stocks and shares

Sure, if you have the time and inclination it’s possible to learn enough about investing in stocks, shares and bonds. But there’s no doubt at all that it’s not easy to understand the complexity of the trading world, and it takes a lot of time, energy and dedication. Investing in property, by contrast, can be more easily understood with some simple online research and judicious advice.

  1. It’s relatively simple to get financed

Generally, lenders like to lend for property investment, whether that’s a mortgage or another form of investment. All banks offer mortgages as a main part of their business model, and they are always more likely to lend on residential property than other assets. They will generally lend a much higher proportion of the value of the property and at much lower interest rates than other asset classes, including commercial property.

  1. Leverage can help you

Using property, instead of a share portfolio as security, means you can borrow more money. Lenders will typically allow you to borrow up to 95% of the property value, but will only go up to around 60% on the value of shares. If you can borrow more money, then you can benefit from the capital growth of the asset. The greater leverage is one of the most compelling reasons to invest in property, rather than stocks and shares.

  1. Property investment is your flexible friend

There are many different investment strategies, so you should be able to find one to fit your goals. Depending on whether you’re looking for a cash injection in the near future, or want to build a reserve for retirement, you might consider anything from long-term capital growth or positive cash flow to adding value.

  1. Control is yours

While you may well use a broker to start with, or get advice from professional financiers, when the property is finally owned by you, you have complete control over it. Assuming you stick within the bounds of your mortgage, lending stream and planning restrictions you can then choose where you go. Raise the rent to improve cash flow, or add value by improving the property. This just isn’t possible when you have invested in shares in a company.

  1. Overseas investors can take advantage of the 30 year low in value of the pound6

For overseas investors, pre-Brexit the average UK residential property was worth $297,250. After Brexit, the pound has plunged and the value is now $30,259 lower. That’s a 10% drop and a really important opportunity for investment.

  1. Commercial property in the UK is less expensive in 2017

Again, due to the ongoing political uncertainty and Brexit, recent figures show that commercial real estate values in the UK have fallen by 3% (offices in London have fallen 3.8%), which shows the largest fall since March 2009. Some offices are worth from 5-19% less than pre-Brexit prices. It’s a good time to get in on the action.