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House price growth has picked up pace and continues to outstrip wider inflation.

Figures from the Office for National Statistics say the average UK house price was £219,000 in August, £3,000 - 1.4 per cent - higher than the previous month.

It had been predicted that the economic uncertainty unleashed by the Brexit vote would cause the housing market to stall and house prices to crash. 

A report for September produced by the Halifax and Nationwide showed house price growth was still positive even though it had slowed. While surveys done by the Royal Institute of Chartered Surveyors, found buyer demand is returning to the housing market after a brief post-Brexit vote dip.

This could mean house prices are set to rise faster in the months ahead.

Below, Stevenson Whyte have taken a look at data from the Land Registry for the whole of the Manchester postcode area. This includes all the areas we cover such as; Manchester City Centre, Salford Quays, Castlefield, Stretford, Chorlton and Sale. The table shows the average price for each property category, and the number of sales from June, July and August.

As you can see from the above, the overall average house price in the Manchester area saw an increase of over £10,000 from June to July. August's increase was not as high, but the average house price was still on the rise.

It is worth bearing in mind that the prices shown above are averages, and the value of any home is dependent on a wide range of factors. These can include the property’s size, type, location, condition, whether it's freehold or leasehold and even the time of year the property is put up for sale.

If you are considering selling your property and would like to get a better idea of your homes current market value, then contact Stevenson Whyte today. We will arrange a convenient date and time to visit you at your property, provide you with an up to date valuation, and discuss with you how we can help you sell your property.

Alternatively you can also use our free online valuation tool, which will provide you with a quick guide to your homes market value.

The buy-to-let market has experienced something of a testing time in the last 12 months. From the government bringing in an additional three per cent levy on top of Stamp Duty Land Tax, to the uncertainty brought about by the Brexit vote, landlords have had to stand up and be counted in recent times. 

However, according to the latest market reports, it would seem that the sector has stood up well to these tests, as it has continued its bounce back in the second half of the year so far. 

One surveying company looked at the way the market has changed in the last month, and discovered that there had been a 12.7 per cent increase in activity, showing that landlords still believe in the sector, and are still putting their money heavily behind it. 
 

The demand for rental homes in the private sector in recent years has continued throughout the Brexit uncertainty, which means the PRS has that sort of underlying health that investors can believe in, even when they need to start targeting long-term income as opposed to shorter gains. 

They also said that the buy-to-let improvement, which has been taking place since the start of July, is an indicator of how the economy as a whole is acting, as it starts to climb out of the temporary hole that Brexit helped to bring about. 

Now the effects of the Government’s legislation have been digested by lenders and investors alike, buy-to-let activity has increased sharply. The market’s fears over the impact of Brexit are calming, too and the Bank of England’s decision to cut the base rate last month for the first time in seven years may also have a psychological impact on property investors.

"Encouraging economic data, high levels of employment and fading fears of a recession have also injected life into the sector. While we can still see the impact of last Government’s damaging set of changes to legislation in the year-on-year numbers, August’s surge in activity highlights the resilience of the buy-to-let sector," they added.

Introduction of landlord licensing scheme in Greater Manchester

 

The former Labour shadow home secretary and mayoral candidate for Greater Manchester Andy Burnham, has recently written a blog for Inside Housing magazine in which he outlines a number of lettings sector policies he wishes to see implemented should he be elected. One of which is the introduction of a landlord licensing scheme for the area

Manchester has previously tried such a proposal across the north of the city between 2007 and 2011, but abandoned the move after finding it expensive and ineffective.

In the article Mr Burnham - himself a private landlord - appears to take a swipe at the private rental sector and landlords in the Greater Manchester area by saying that there is a "scourge of absent, private landlords that bedevils much of Greater Manchester" and that "Many never visit our area and don’t care about the state of the properties they rent out. They only care about the rent cheques they keep raking in".

Andy Burnham is hoping to help tackle the housing crisis, and the problem of landlords that provide substandard homes at extortionate rents by saying “I will establish a licensing scheme for private landlords across Greater Manchester and, in the long term, seek powers to regulate rent increases and property standards.”

Currently, private landlords do not legally need a licence to rent out their property unless it is classed as a House in Multiple Occupation (HMO). HMOs are generally for larger properties with several residents.

However, Manchester council have, in recent months, had discussions about testing the idea again in areas such as Crumpsall, Moston and Rusholme.

 

So what could this potentially mean for private landlords in Greater Manchester?

If a consultation in the areas suggests the idea is supported, landlords will be ordered to pay for the right to rent out their properties. Looking at other similar schemes that have been run, they could be expected to pay between £150 and £750 for the right to rent. It is believed the landlord would be expect to obtain a licence for each individual property and not just a single licence that covers them all.

Landlords will have to make an application for a licence via the council. This means that in theory a landlord could be refused a licence if they, or the property, do not pass the application process. If this is the case it is possible that the council could be award interim management of the property.

It is expected that a licence will last for around 5 years based on similar schemes that have been run.

If landlords are found to be letting a house or flat without a licence - or to be breaching the terms of the one they have got - the council could then administer an on-the-spot fine or take them through the courts, where they would face a much larger penalty.

 

Over the last several months we have seen headlines such as 'Buy-to-let investing just became a very, very bad idea - The Spectator', and 'Bye bye buy-to-let - The Guardian' referring to the buy-to-let mortgage interest relief being axed, and from landlords now having to pay an extra 3% stamp duty on property purchases.

Stamp Duty changes at a glance
Price Original band New band
£0-£125,000 0% 3%
£125,001-£250,000 2% 5%
£250,001-£925,000 5% 8%
£925,001-£1.5m 10% 13%
£1.5m+ 12% 15%

Despite the tax changes, property is still an attractive option for those with money to invest. And there are still good rental returns to be had if you know where to look and what to look for. After all there have been much bigger events in recent times that failed to have the long lasting negative effects that were reported. These included; 

The credit crunch/recession of 2008: The amount of doom and gloom; people saying it was the end of property investment (even experienced people). Properties dropped 20-30% for 3-5 years (some places more) depending where you are located. In the vast majority of areas prices have recovered and are now higher than just before the crunch started. Tenant demand increased and rents rose through this time.
Actual RESULT: Landlords who held on and ignored the noise did best. Landlords who used it as a buying opportunity did amazingly well. Much of the stock we bought in this period is now worth (conservatively) 30% more.
 
Planning permission would be required for all new HMOs (even below 6 tenants): People shouted, moaned and many said it was the end. The new government realised how crazy this was and in 2010 this rule was reversed and planning was no longer required.
Actual RESULT: Landlords who adapted their strategy and ignored the noise did best. Many learned what properties planning could be acquired on and bought HMOs in these areas. In 2010, they reverted to their old strategy as the authorities came to their senses.
 
 
Where to look and what to look for
 
Good rental yields are still obtainable from buying properties to let to students, according to one market analysis, with some of the highest rental returns being around university towns based mainly in the north. The table below shows the top ten areas with the best yields based on average prices paid for property and what the average rental income is. Nearly all of these are northern towns with three of them being in the Greater Manchester area.
 
University town Average house price Rental income Yield

Sunderland

£65,200

£575

10.6%

Teesside/Middlesbrough

£56,300

£425

9.1%

Aston/Birmingham

£116,700

£676

6.9%

Salford

£131,900

£750

6.8%

Edinburgh

£197,000

£1,100

6.7%

Manchester Metropolitan

£160,300

£895

6.7%

Manchester

£137,174

£750

6.7%

Newcastle/Northumbria

£150,600

£823

6.6%

Nottingham/Nottingham Trent

£151,500

£794

6.3%

Coventry

£179,400

£901

6%

If buying a property to let to students isn't high on your list then there are plenty of other ways you can still get a good return on a Buy-To-Let property.

 

Good rental returns can be found by finding those properties that are a good deal, or by just getting a good deal on a property. And one of the easiest ways to do this is via an Estate Agent. 

Despite the increase in direct marketing methods, the huge majority of houses are still sold through Estate Agents. 

There is a far lower financial acquisition cost through agents. Where else can you employ someone to source you cash flowing assets without huge time input yourself?

When sourcing through Estate Agents you don’t have to pay for entry into the agency, you don’t have to pay the ‘consultant’ for his/her time, and you don’t even have to pay the home owner to buy their property, or the agency. They are the most leverage-able assets in your property business, as most traditional high street agents will have a load of useful knowledge about the property market and local area, which you can use to your advantage. 

Estate Agents could be vital to your negotiation and deal making success.

 

Another way of finding a property that can provide good rental returns would be to go through an auction. Auction houses are booming. And you need to be aware that you can get the very best property deals from under the nose of the elite professionals.

But a word of caution. Auctions can be VERY risky. So here are a few of our tips of what You should consider before buying from a property auction:

Having your Finance in order
Never bid on a property unless You are certain you can get a mortgage & can complete the deal within 15-28 days... As soon as the hammer falls, you have bought the building & will be expected to pay 10% immediately.

Setting a maximum price
You should have a firm idea before you enter the auction room of exactly how much you can afford to spend. Just because other bidders are pushing the price higher, it doesn’t mean the property is necessarily worth that amount. Do your homework.

Factor in other costs
As well as mortgage and survey costs, don’t forget to factor in legal costs, renovation and refurbishments costs, interest payments for your JV partner/bridging funds, and any buyers fee which might be payable at the auction house. (Some auction houses have a 5% buyers fee which could put a dent in your profits!) Remember stamp duty.

 

So it is possible to see why Buy-To-Let is still potentially a good investment for those who have money to invest, even after the changes to tax were made by the government.

We have also included below a list of our tips, from one of our previous blog posts, in order to help those of you looking to invest in Buy-To-Let property for the first time, or even those who have been doing it for a while but want to make the most of/ increase your potential rental returns.

 

1) Do your research

It may seem a bit of an obvious thing to say but it is a fundamental starting point and therefore a top tip worth mentioning.

What do you actually know about the market? Do you know the risks involved? Is buy-to-let right for you? These are the kinds of questions you need to ask and then look in to before making the decision to go ahead and buy a property for investment.

Property investing has paid off handsomely for many people, both in terms of income and capital gains but it is essential that you go into it with your eyes wide open, acknowledging the potential advantages and disadvantages.

 

2) Work out the figures

Once you have decided that buy-to-let is the right option for you your next top tip is to look at the figures involved.

This includes everything from what deposit you can put down, what you can lend, what the interest rates will be, what potential rental yields will be, possible renovation/ maintenance costs, fees involved in purchasing and fees for letting the property.

Obviously not all of these cost are something you can calculate before you buy a property but the ones that can be should be something you start to work out straight away. 

Before you think about looking around properties sit down with a pen and paper and write down the cost of houses you are looking at and the rent you are likely to get. For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield. 

When looking for a buy-to-let mortgage and the best rates, it pays to speak to an independent broker. They should not only be able to advise you on the best deals available but which one is right for you i.e. whether to go for a fixed rate or a tracker.

Once you have the mortgage rate and likely rent established then you can be clear in deciding whether your investment will work for you.

 

3) Buy what will rent

This may seem a bit obvious again but what we mean is don't necessarily buy something you would want, put yourself in your potential tenants shoes.

If they are young professionals then it will probably need to be modern and stylish.

If it's a family then they will possibly need good storage and outside space. You may need to consider taking pets.

What you really need to do is work out who you think your target tenants will be and look at any potential properties as if you were them. You will of course still need to look at it from your own investment point of view as you may need or want to sell the property on in the future.

Things to always look for are; good transport links in the area you are looking in, schools, good local amenities, shops and leisure facilities. Areas such as Sale, Sale Moor and the close surrounding areas all have access to these, as do places like Salford Quays and Castfield. These are also areas where you can find you get more for your money than some of the areas nearby. To see what properties we have available click here

 

4) Make your money work harder

When looking for properties make sure you research what types are selling for what kind of price. Below is a good example of why this is an important top tip.

Just because a property may look nice and may be in a nice area does not always mean it is going to be a good investment as you will possibly find you pay more for not that much more rental income. For example, in one area you might get a 2 bed apartment for £250,000 and has rental income of £850. If you look a bit further out you could get a 2 bed house for £125,000 that has a rental of £650. This means you halve your purchase price but your yield only drops 24% and you could even potentially buy two properties that give you a return of £1,300 instead of £850.

Similarly the cheapest property is not always the best option either as you may find you have to pay for it later in renovation and maintenance costs.

 

5) Decide how involved you want to be

Once you have 1-4 of our top tips sorted you then need to decide on the level of service you would want from an agent. The most common services are either let only or managed.

With let only the agent will do all the marketing and advertising of the property including showing potential tenants round. The will then reference a tenant for you and process an application for the property, which will include identity checks and credit referencing. They will then produce a tenancy agreement for the tenant to sign and the agent will sign on your behalf. Once this has been signed the agent will collect the deposit and first months rent from the tenant and make any necessary payments to you.

A managed service covers everything a let only one does but then once the tenant moves in to the property the agent is the point of contact for them, so should there be any problems or issues they contact them instead of ringing you. This then means that you don't have to worry about having to give up evenings and weekends in order to run round sorting out repairs etc. The agent will of course make you aware of any issues and keep you up dated as you may have to authorise certain repair work.

Included within the managed service are routine inspections/ visits to make sure the tenant is complying with the tenancy agreement and is looking after the property. This also helps to identify any possible issues early on so that they can be dealt with effectively before they become worse or potentially costly. Most will also include an inventory, which will document the condition of each room, any items in those rooms and will be accompanied by photographs.

Not all agents offer the same under each service though and look out for hidden costs in small print or add-on charges. At Stevenson Whyte there are no hidden or add-on fees, everything is set out clearly and transparently. To have a look at our services click here

Post Brexit opportunity for investors

 

Since the vote to leave the EU was announced last week, and the pound took a fall, overseas property investors are taking the opportunity to dive into the UK property market.

Estate agents in the UK have been swamped with calls from Chinese, Middle Eastern, American, and even European buyers looking for a bargain after the pound tumbled to more than 30-year lows, making the exchange rate very favourable for foreign buyers. Britain’s decision to opt for Brexit will create bargain opportunities in the property market for foreign investors over the next three months.

The impact of the UK decision to leave the EU raises many questions for those investing in other areas, but despite recessions and global financial crisis, residential property has proved to be the best performing and lowest risk of all the major asset classes. The UK residential property market has seen no five-year period, between 1973 and now, with negative total returns, after accounting for both rental income and capital gains. This is why it is a good time for investors to look at the deals to be had in the UK property market.

Outside of the obvious London market, there are plenty of opportunities for investors in the North. Emerging cities such as Manchester and Liverpool are also attracting interest from the Middle East and Asia, and it is expected that savvy investors will carry on this trend.

Why not have a look at some of the developments we currently have available that are ideally suited to those looking at property investment.

Ealing Mews, London development

The Richmond, West London development

St James Court, Liverpool development

 

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