However, despite the positive intentions behind the consultation, there are several critical considerations and unanswered questions which require both government and industry’s attention.

1. The local versus central question

Recent statements from government ministers Baroness Penn and Lee Rowley seem to support central control over net zero requirements through the revised standards.  However, this top-down approach is at odds with the government’s broader commitment to devolve power to local authorities and the instruction of the National Planning Policy Framework (NPPF).  This also comes in the wake of a High Court ruling this month (February) in favour of campaigners challenging the Planning Inspectorate’s decision on net-zero homes in the Salt Cross Garden Village in Oxfordshire, where the rejected the arguments made by the government’s legal team in support of the local planning inspectorate.

While national regulations set a ‘‘minimum requirement’’ the importance of defending local autonomy in shaping policies that align with both national objectives and the unique needs of individual communities becomes extremely important.  

2. Cost of materials

The impact of how materials are made and used over time is not considered. This is extremely important as the impact of construction of materials needs to be recognised, too.

3. Existing buildings

Both homes and non-domestic buildings need special attention, especially given that most of the country’s building stock is not recent, making reliance solely on cleaner energy insufficient for these existing structures. Although the consultation acknowledges existing buildings, it lacks the necessary detail.

The recent King’s Speech saw the government row back on net zero commitments and further muddied the waters.  More clarity on the direction of travel is urgently required, so investors, owners and occupiers can plan forward. We also need to encourage adaptive re-use and establish robust monitoring and maintenance requirements.

4. Capital cost uplifts and long-term implications

While the focus is on how much it costs to build something new, what is missing is the long-term cost for people who will live in these homes. This should include system replacement cost, maintenance cost, exposure to energy prices and health and wellbeing. Post-occupancy insurances would be welcome along with checks. Addressing fuel poverty and ensuring the positive impacts of these standards reach every corner of society and should be a central focus of our mission.   

5. Fabric upgrades and approach to energy efficiency

The Future Homes Standard proposes to eliminate fossil fuel heating systems, promoting the adoption of highly efficient air source heat pumps, or equivalent electric solutions, encouraging widespread use of solar PV panels.  Most of those solutions don’t have a long life expectancy.  For buildings with a heating requirement, improvements to how much heat is lost due to fabric elements should be the focus.

6. User impact of technological emphasis

While technology advancements are all well and good, adding more complex systems might create user experience challenges. Passive elements are easier to use.  Achieving inclusivity requires considering varying levels of familiarity among different population groups. Providing comprehensive home user guides and handover is crucial for maximising the benefits of interconnected systems like PV, smart hot water tanks, heat pumps, ventilation systems, battery technologies, and EV charging. Accessibility to supply chains impacts maintenance, emphasising the need for simplified operations and user-friendly interfaces to ensure widespread adoption and long-term success. More focus on the user/occupier would be welcome.

7. Grid infrastructure resilience

It’s not just about using cleaner energy; it’s about making sure national and decentralised systems can handle it without any problems and that it is put to best use. Energy efficiency remains a central consideration, as is possibly more decentralised energy management solutions. The recent association of decarbonisation with an all-electric approach, awaiting the UK Electricity grid to decarbonise, poses challenges if implemented incorrectly. This may escalate user running costs, raise concerns about the timing and impact of energy consumption, and prompt questions about addressing these new buildings in the future when they transition to existing structures.

Tassos Kougionis is Director of Sustainability and ESG at McBains

The post Opinion: The Future Homes and Buildings Standards: Seven areas where the guidance needs more clarity first appeared on Property Insider.

What exactly is the housing crisis?

There are two main elements to the housing crisis. One is that there aren’t enough houses available, whether to buy or rent and in different ways, for everybody who needs one. The second is that the housing that is available is too expensive to buy or rent.

Other issues around the housing crisis include housing quality and homelessness.

It’s important to remember that when talking about the housing crisis that the problem isn’t universal across the country. It’s more acute in London and the south east. Some parts of the country don’t have a housing crisis.

So what might be some possible solutions to the housing crisis and, more to the point, would they work?

Simply build more houses. On the face of it, this is the obvious solution. It’s not quite that simple however. Houses need to be where people need them, and it’s harder to build in the places where there’s more demand. And they need to be of different types of tenure to suit different needs, whether to buy or rent and in different ways.

Build more privately developed houses. This has been the main way to provide more housing in recent decades. The snag here is that private developers are in business to make money, not solve the housing crisis. They can only build where they can make money from doing it.

Build more council houses. Some councils do build homes but the numbers they can build are very small. It’s difficult to see how this could be upscaled. There are funding problems and it’s also difficult for councils to find the land. Planning problems hamper social developments in the same way as privately developed ones.

Build more build to rent homes. Build to rent (or BTR) is a type of development where private developers build homes purely to rent out themselves and not to sell. Build to rent has been slow to get moving in the UK. Build to rent is mostly only found in large cities and for apartments or flats.

Encourage the private rental market. Today millions of people rent in the private rented sector or PRS. It may be seen as radical, but an argument could be made that by encouraging more investors to buy to let it would provide more homes to rent. Better still if there were more homes to rent then, potentially, rents would fall.

In recent years however the government has done a lot to discourage buy to let, so this is almost certainly never going to happen anytime soon.

Make it easier to build new homes. Building houses is expensive, time consuming and difficult in terms of the materials and labour needed. Modern methods of construction like modular construction can make building and so houses themselves cheaper. It can speed up the build process too. But modular construction hasn’t been very successful in the UK – two modular companies have run into problems this year.

Reform the planning system. This is probably one of the biggest factors in the housing crisis. The planning system in the UK is cumbersome and slow and it is very difficult to get new large scale housing schemes passed. Also people who live in areas where more housing is needed often don’t want more houses to be built there – so called nimbyism.

The government has been promising to reform the planning system for years. It seems unlikely to happen any time soon.

Prohibit land banking. Land banking, where developers buy up land and then don’t develop it for many years, is sometimes held up as being a contributor to the housing crisis. There have been proposals that it should be made unlawful to bank land, because it blocks new houses from being built on land that is inherently suitable for it.

One snag is that although it might help with the supply of land such a measure won’t help with actually building on it. Developers will only build homes that people want and can afford to buy.

More government help with housing. Some people suggest that giving people incentives to buy a home could effectively make it cheaper, and allow more people to buy. But there have been some measures that do this in recent years, such as Stamp Duty reductions and the Help to Buy scheme. Arguably these have made things worse by pushing up demand and hence property prices without doing anything to increase supply.

A new approach to government and political party policy. This is perhaps the biggest problem behind solving the housing crisis. Solving many of these problems is well within the remit of politicians.

Politicians of all colours generally propose policies that will boost their popularity for the next election, over a period of five years at most. But today’s housing crisis is a long term problem which has been building up over the last 40 years or so. Solving it will need a long term solution, not one that is only designed to last as long as the next election.

When looking more closely at the housing crisis it is obvious that it involves not just one but many, many problems. Unless positive action is taken to solve not just some but most of them it’s unlikely to see an end to the housing crisis anytime soon.

A blog post originally written by Mark Hempshell for Apex27.

The post The Housing Crisis: Can It Ever Be Solved? first appeared on Property Insider.

“Crucially, the already delayed National Infrastructure and Construction Pipeline is still nowhere to be seen, with the government saying it will publish a National Infrastructure Strategy next year.

“Investment in infrastructure, and removing barriers to private sector investment, is hugely important to driving economic growth. With the Autumn Statement, construction firms operating in an uncertain market have simply had that uncertainty prolonged yet again.

“We welcome full expensing of plant and machinery becoming permanent, for those firms who qualify. Having the ability to plan capital investment more effectively will be a huge benefit for firms looking to invest now and in the future, and maybe even a lifeline for some.

“For house builders, the promise of more streamlined planning processes and investment in new schemes may be welcomed, but we can’t forget that the significant slowdown in the housing market has been primarily caused by high interest rates creating a lack of demand. The housing sector would benefit more from tangible growth in the economy, which could in part have been boosted now by transparency around and commitment to infrastructure plans.

“Other measures, which will be welcomed by the industry, include a slice of a £50 million investment pot for engineering apprenticeships, but this doesn’t address a much wider skills gap we have across construction. The abolition of class 2 NI contributions for the self-employed, a growing demographic in our industry, is a saving of just £3.45 a week, and so a drop in the ocean considering the considerable costs construction trades have faced and continue to face.

“As BCIS recently launched the Built Environment Carbon Database, to unite the industry in making the measurement and reporting of whole life carbon assessments consistent, and as we approach COP28 next week, it’s hugely disappointing that the government hasn’t addressed the built environment and other sectors’ significant contribution to carbon emissions. Ambitions to reach net zero continue to be hampered by a lack of mandate for reporting from government level.”

The post Autumn Statement – Underwhelming for the Construction Industry says BCIS first appeared on Property Insider.

Edward Aldersley, Managing Director of prime central London property specialist, Aldersley London, explains the pros and cons of these charming city homes and why their appeal continues to grow:

The Mews homes of today couldn’t be further from the realities of their original intended use, and today they are an increasingly popular choice of home for many HNW buyers looking for a quiet home in a prime location – ie the best of both worlds.

In fact, Mews homes have been a favourite amongst A-List celebrities in the capital for many years, with the likes of Michael Caine, Guy Ritchie and Madonna having previously owned and inhabited one.

Whilst they won’t necessarily reach the asking price of the neighbouring grand Victorian property, they can still command a serious purchase price – which was certainly evident in 2016 when the alleged ‘world’s most expensive mews’ sold for £24 million.

One of the many attractions of the Mews house is that most are offered for sale as freehold, as most are now independent residences in their own right, whereas a traditional apartment in a similar price bracket is likely to be offered as leasehold only or with share of freehold.

The other key attraction is their location – being typically found in the wealthiest areas, such as Kensington, Chelsea, Belgravia, Mayfair, Knightsbridge and Notting Hill. The benefit they offer, perhaps above their grander, former owning residence, is that because they were tucked away at the back of the main street, accessed via a small, cobbled road and out of the way of the main houses, they tend to sit within a quiet cul-de-sac, which today provides a peaceful haven in amongst the hustle and bustle of the city surrounding them.

There can however be some drawbacks to a Mews house, depending on how it’s been developed over the years and depending on personal preference. Being intended for staff, the homes in their original form would have housed the horses or carriages on the ground floor and the living quarters on the upper floors, with the back of the property sometimes having very few or no windows at all to maintain the privacy of the owners occupying the corresponding grand home. This means the property could often be a little dark inside, with lack of natural light.

The ceiling heights were also less likely to be high in comparison to the main house, making the property overall feel smaller, they would often have little to no traditional period features, leaving very little charm in comparison to the main residence and, in most cases, there would be no garden or outdoor space.

However, these cons are easily outweighed, and often even removed, in some of todays modernised Mews houses. Whilst green space doesn’t traditionally come with the property, the homes are often close to green spaces such as Hyde Park or Holland Park, and despite many of them being in conservation areas, some have obtained planning permissions to build roof terraces or balconies, the use of large skylights at roof level and the addition of windows at the rear.

Furthermore, whilst their exteriors are subject to local authority and conservation area regulations there can be little preventing interior refurbishment – as such the modernised Mews home of today can be completely unrecognisable to its original format, with some being completely reconfigured. So, whilst they may not hold all the traditional charm and high ceilings of a grand Georgian of Victorian home, they can offer a spacious, well laid out and highly modern alternative, full of high spec features and fittings to attract the most discerning of buyer.

Princes Gate Mews in South Kensington is a prime example of this. Double fronted and retaining its original façade, the interior has been fully refurbished to make the best use of the space and allow light to flood through the entire property, with the benefit of a balcony and private terrace off the principal bedroom. Such is the use of space, a workout studio has also been seamlessly incorporated, and to further promote wellbeing, a living wall has also been installed within the private terrace.

Overall, if you’re a buyer in the market in prime central London and are looking for a quiet haven in the heart of the city, you can get an abundance of charm and space for your money with a Mews house, with more potential freedom to mould its interior completely around your own personal preference and lifestyle than any other house type in prime central London.

For more information on Aldersley London visit www.aldersleylondon.com  

The post The Enduring Allure of a Mews first appeared on Property Insider.

The team at PromptCleaners analysed rental data from the Greater Manchester area and found that in the year preceding May 2023, the mean monthly rental price in the metropolitan county saw an increase of 9.89%, up from £758 to £833. In some boroughs, prices have jumped even further, with Salford having the greatest increase of 11.18% (from £787 in 2022 to £875 in 2023).

How are locals coping with the situation, and which Greater Manchester boroughs are the best and worst for renting a home? This study analyses rent and salary data provided by the ONS.

Methodology

We consulted the Office of National Statistics and used its most current statistical data, namely Employee Earnings in the UK and Index of Private Housing Rental Prices, UK, to analyse the data pertaining to the Greater Manchester area.

As the ONS provides average rental prices per month, and salaries per week, our team multiplied the weekly average pay by 4 to make the data more consistent. Efforts have been made to ensure monthly pay figures are as precise as possible, however, they should be considered estimates.

Our team at PromptCleaners took into account all publicly available data on mean pay for employees, including those working both full-time and part-time. This report includes information about the metropolitan boroughs of Manchester, Salford, Stockport, Oldham, Bury, Bolton, Rochdale, and Wigan.

Greater Manchester Metropolitan Boroughs with the Worst Rent Affordability Ratio

According to the ONS, the Northwest of the UK, where Greater Manchester is located, is the 4th most advantageous English region in which to rent a home. The rent affordability ratio of 31.4% in the Greater Manchester area means that renters spend an average of 31.4% of their monthly salaries on rent. In some of Manchester’s boroughs, however, the percentage of salaries local employees spend on rent is considerably higher. This is particularly the case in the city of Manchester where 45.64% of the average monthly salary is spent on rent.

Manchester – £986 Mean Monthly Rent vs £2,160.40 Mean Monthly Pay

A major cause of the worsening rent affordability ratio in Manchester, and the other metropolitan boroughs, is that salaries are increasing at a rate considerably slower rate than rent. According to the ONS, between October 2021 and October 2022, the city of Manchester’s mean monthly salary only rose by 3.33%, from £2,088.4 to £2,160.40. This makes this borough the worst for renting a property, with the highest mean monthly rent of £986, and the second lowest mean monthly pay of £2,160.40, creating a rent-salary ratio of 45.64%.

Salford – £875 Mean Monthly Rent vs £2,364.80 Mean Monthly Pay

Salford has had the highest rental price increase in the last 12 months, rising by 11.18%. However, Salford has the second highest average percentage of salary being spent on rent, coming in at 37%, as mean rental prices are lower than in Manchester city, at £875, while average pay is slightly higher at £2,364.80. Interest in living in Salford is expected to grow, as the English Cities Fund and the University of Salford have recently announced the first phase of a project bringing forward a £2.5bn scheme featuring the development of 933 new homes, among other initiatives.

Stockport – £883 Mean Monthly Rent vs £2,618.40 Mean Monthly Pay

The top 3 of the worst Manchester metropolitan boroughs to rent a home is rounded up by Stockport, where the £883 mean monthly rent accounts for 33.72% of the last officially published average monthly salary of £2,618.40. The annual rental price increase is estimated at 10.93%, the second highest in the Greater Manchester metropolitan county.

The Most Affordable areas to Rent a Home

Renters deciding to head to Wigan, Rochdale, or Bolton looking for a rental property could not put a foot wrong, as these are the top three areas offering the best rent affordability ratios, of 26.18%, 29.25%, and 29.74%, respectively. Although to a lesser extent, Bury and Oldham also show reasonable figures.

Wigan – £586 Mean Monthly Rent vs £2,238.40 Mean Monthly Pay

Wigan is the best location to rent a home for those wishing to have more money left after making their monthly rent payments. As the second most populous district in Greater Manchester, with 329,800 residents, Wigan boasts the best rent affordability ratio with as little as 26.18% of mean monthly pay being enough to cover the average rental cost of £586, the lowest in the metropolitan county.

Rochdale – £628 Mean Monthly Rent vs £2,147.20 Mean Monthly Pay

Rochdale is another Greater Manchester borough currently in high demand. Although rental prices are soaring here too, but with an increase of 8.46% within the past year, the area is still considered an affordable alternative to Manchester city, Salford, and Stockport. According to ONS, the mean monthly pay in the metropolitan borough is £2,147.20, of which, the £628 mean monthly rent is 29.25%.

Bolton – £695 Mean Monthly Rent vs £2,336.80 Mean Monthly Pay

Having a mean monthly pay of £2,336.80 and rental prices averaging £695, Bolton is the third most affordable Greater Manchester borough for renting a home. Along with Bury, Bolton has shown the greatest consistency in the metropolitan county when it comes to the rent-salary ratio. In comparison to the same time last year, the percentage of pay needed to cover the mean monthly rent has remained almost unchanged at 29.74%, vs 29.95% in 2022.

Bury – £751 Mean Monthly Rent vs £2,456 Mean Monthly Pay

In the 12 months to May 2023, Bury saw the second lowest annual rental price increase in Greater Manchester of 8.06%, up from £695 to £751, only coming in behind Wigan with its increase of 6.55%. The current mean rental price accounts for 30.58% of the average pay in the borough of £2,456. While not insignificant, this figure is far behind Manchester’s 45.64%.

Oldham – £692 Mean Monthly Rent vs £2,226.80 Mean Monthly Pay

Oldham is the last metropolitan borough on the lower end of the rental market in Greater Manchester with its rent affordability ratio estimated at 31.08%. According to ONS, mean monthly rent prices averaged £692 in May 2023, with only the residents of Rochdale and Wigan enjoying lower rates.

The post The Best and Worst Areas to Rent a Home in Greater Manchester first appeared on Property Insider.

Traditionally seen as a popular property market for homebuyers, London proved to be relatively safe and extremely robust in terms of property prices in 2022 despite the rising cost of living and interest rates.

This was particularly true for the prime London property market which, largely unaffected by the rising cost of living, saw a 16.2% increase in the number of exchanges in November 2022 compared to the same month in 2021, and a 15% increase from the five year average, according to figures from Knight Frank.

This shows no signs of slowing down, with the number of prospective buyers registering in London being 28% above the five year average in the first few months of 2023. Meanwhile, the number of new sales instructions was 36% higher.

London’s prime property market has experienced lower price growth than the wider UK this year to date however, it still far outweighs the rest of the UK in monetary value, has stabilised substantially and looks set to outperform the mainstream market over the coming months.

Savills predicts that prime central London property will continue to showcase its strength, with a 13.5% compound price growth between now and the end of 2027, presenting a fantastic opportunity for homebuyers with a long-term outlook.

Meanwhile, Knight Frank estimates the central London property market will lead property price growth in the UK with an 8.1% increase over the next five years, outperforming greater London and the rest of the UK’s 2.5% predicted growth.

Simon Howard, group sales director at SevenCapital, said: “Consistently recognised as a top global centre for finance, higher education and cultural appeal, the London property market continues to show its resilience in 2023 in the face of economic and political challenges by drawing in property buyers from across the UK and globally.

“With forecasts for the next five years indicating that the London property market shows no signs of slowing down, it continues to present an exciting opportunity for buyers to purchase property in the UK’s capital city.”

SevenCapital has been making significant moves into London over recent years, with a number of high profile residential-led sites in the pipeline, including, notably, its joint venture partnership with MARK on the £500m development at 100 West Cromwell Road in Kensington. Find out more and register for updates on this fantastic development.

For more information on SevenCapital visit www.sevencapital.com

The post London Property Market Continues To Demonstrate Its Resilience first appeared on Property Insider.

The UK’s Purpose-Built Student Accommodation (PBSA) sector is continuing to go from strength to strength, according to global real estate adviser Savills. A shortage of supply combined with rising student numbers has resulted in strong rental performance, with over 7% growth forecast for 2023/24.  

1 million applicants expected by 2030

The latest UCAS application data reveals that the number of students starting their undergraduate degree has topped 600,000 for the second year in a row – with  618,000 starting in 2022/23 and 622,000 in 2023/24. This equates to a first year cohort larger than the population of Sheffield looking for accommodation each year.

Even more growth in demand is expected, with UCAS projecting that the UK could reach 1 million university applicants in 2030, which will place existing PBSA stock under even greater pressure.

Graph 1: Total undergraduate population is forecast to surpass 1.75 million

Source: Savills using HESA, UCAS (the projections allow for a dropout rate of 6.5%pa, the average over the past 5 years)

“The UK remains one of the key global destinations for students looking to study abroad. There are currently more than 600,000 full-time international students, up from just over 400,000 five years ago, according to figures from HESA. While there has been a fall in EU students in the wake of Brexit, this has been more than offset by significant growth in the number of students from India, as well as continued strong numbers from China and elsewhere,” says James Hanmer, Head of UK PBSA Investment and Co-living, in the Operational Capital Markets division at Savills.

“We know that strong application figures from these countries are a huge positive for PBSA demand: international students are 60% more likely to live in PBSA than domestic students, with those from India more than twice as likely.”

Significant shortage of stock in some markets

Regulatory and tax changes have seen the number of buy-to-let mortgage redemptions reach over 300,000 since 2017, and as a result there are currently 31% fewer 5+ bed properties listed for rent in Q1 2023 compared with the pre-pandemic average.

This creates an even greater need for PBSA, and yet the total pipeline of new stock is only 144,000 beds nationally (on schemes with at least 20 beds), according to Savills analysis of data from Glenigan, with only a quarter of these under construction. As a result, occupancy levels are at record highs, supporting rental growth of around 7%, according to Unite and Empiric, which is expected to drive continued strong investment returns over the coming years.

Savills PBSA Development League Table indicates particularly strong development opportunities in Canterbury, Durham and Glasgow (around the University of Glasgow), all of which have seen strong growth in their student populations, with the former two also seeing rising applications, which will put pressure on existing stock. They have been promoted to First Class in the Savills league table, joining Bath, Birmingham, Brighton, Edinburgh, London, Manchester, Oxford and St Andrews, all cities with very high student demand.

Southampton, Bournemouth and Cambridge have moved up to the Upper Second tier of the Savills league table, as rising student numbers put pressure on existing stock and with a relatively limited pipeline of new schemes to meet those increases.

Investment activity remains strong despite the challenging backdrop

In spite of the weaker macro-economic backdrop, which saw overall real estate investment in the UK down by -14.2% in 2022, PBSA bucked the trend with a record-breaking £7.8 billion of stock traded – an increase of +89% on 2021 figures.

Over the past three years, 82% of investment in UK PBSA has come from overseas, with investors from USA and Singapore accounting for 47% and 24% respectively over this period.

While investment has been limited to date in 2023, activity is expected to pick up in the second half of the year, supported by rising rents, which are offsetting the challenges faced, including operational cost increases. Savills recent European Living Investor Survey found that around two-thirds of investors are looking to deploy more capital into PBSA over the next three years. Of investors looking to expand in the sector, close to a fifth expect to deploy more than €500 million by 2025.

“The current supply and demand dynamics create a compelling opportunity for investors to deliver much-needed new PBSA, in particular to target the growing domestic student population. The underlying student growth demonstrates the long-term demand for PBSA and underpins the attractiveness of investment in the sector,” comments Richard Valentine-Selsey, Head of European Living Research & Consultancy at Savills.

“While build costs increased significantly over the past two years, reaching just under 10% in 2022, putting pressure on the deliverability of some schemes, the latest forecasts suggest that the worst of the price rises are behind us. Tender price inflation is forecast to fall back to just 2-3% per annum for 2023 and 2024, which should bring some confidence and increased viability back to the development of new PBSA stock.”

Savills latest research also highlights that despite economic environment and implications of higher interest rates, early indicators from the debt market in 2023 reveal that demand from lenders to finance both development and investment opportunities in the PBSA sector remains strong, particularly for quality projects and strong sponsors.

Charlie Bottomley, Director in Savills Debt Advisory team, said, “All lenders, including banks, insurance companies and debt funds, are showing considerable appetite for the sector, as they recognise its resilience and strong rental growth performance. Interestingly, the increase in base rates has created a convergence of pricing between bank and nonbank lenders, particularly for development finance. For a marginal increase in all-in debt costs, non-bank lenders are offering a meaningful increase in leverage, which typically results in a positive impact on equity IRR”.

The post Investor appetite for student accommodation remains strong, as the UK expects to hit 1 million university applicants a year by 2030 first appeared on Property Insider.

Why buy to let is here to stay

Buy to let has come under a lot of pressure in recent years, with changes to tax allowances, the stamp duty premium, interest rate rises and more regulation of the sector.

However, at the end of the day buy to let investment continues to be underpinned by strong fundamentals. So there are lots of good reasons to suggest that renting will be more popular than buying for a long time yet – and that there’ll always be a good demand for rented property – and for buy to let investors to provide it.

Consider some of the buy to let facts:

* Renting is now the only option for millions of people who simply can’t afford a deposit – let alone a mortgage.

With household budgets set to be tight for the foreseeable future and much economic uncertainty it’s difficult to see things changing anytime soon.

* Prices in some areas are now so high that renting is the only realistic way to find accommodation.

For decades, big cities like Paris, Tokyo and New York have been largely rental-only locations. Many areas of London are now unaffordable to the majority of owner-occupiers with the likelihood that many more, plus other popular parts of the UK, will also become completely off limits to those wishing to buy.

* It can actually be cheaper than buying. Some reports suggest buying is slightly cheaper, others suggest renting is slightly cheaper. Whatever the truth, there’s not much of a financial advantage in buying a home right now.

* The days of free-and-easy, write-your-own-cheque mortgages have gone for good. Stress testing means that lenders are being much more choosy about whom they lend to and how much they’ll lend.

* Renting a home can be much less hassle than buying. Often overlooked, this can be a significant attraction for many tenants. Those like busy working people, families and singles. There’s no dealing with breakdowns and no regular maintenance like painting and decorating to bother about.

* Renting offers flexibility that buying can never match. Those who need to move for work, to study or for personal reasons, who want to upsize or downsize, can move quickly and easily when they rent a home.

As a tenant, you never get stuck in a protracted chain waiting for your house to sell, your buyer’s house to sell and so on. You can move into a new home with just a few week’s or even day’s notice. Almost total freedom!

Even if everybody who wants to buy a house then this market alone would still be an absolutely huge market to serve for buy to let landlords.

In my opinion it’s no exaggeration to say that renting is much more than just a passing trend. Renting is and will continue to be a good choice for tenants for years to come – and continue to be a wise investment for well informed, well organised buy to let investors.

Property Insider have opportunities for property businesses to sponsor posts just like this one, helping to raise your profile and generate traffic for your own website. If your business is interested in sponsored posting, find more details here.

The post Fundamentals Suggest There Will ALWAYS Be A Demand For Buy To Let first appeared on Property Insider.

Investing in property without having an exit strategy can be a very risky business indeed – it poses the risk of investing your money and getting no return, or even getting less back than your original investment.

Here are some types of exit strategy you might like to consider:

Time based exit strategy. With this type of exit strategy you sell your property after a given number of years. This type of strategy is ideal if you are buying property as a pension. In this case, you might deploy your exit strategy either when you retire, or at a pre-determined period after retirement. If you have several properties you might decide to sell one or more at different intervals.

Another issue when using this type of exit strategy is to consider your capital gains tax and other tax allowances and liabilities and aim to make tax efficient disposals – take advice from experts on this well in advance.

Bear in mind that property is best regarded as a long term investment – typically for ten years minimum. So, if you want to invest for less than this it might not be the right kind of exit strategy for you.

Capital value based exit strategy. With this type of strategy you move on your investment once it has achieved a particular capital value. (Or even once it has dropped below a stop-loss.) For example, once your property is worth £150,000, £250,000, £500,000 – or whatever level is appropriate to you. (And of course relevant to your original investment.)

Some investors use this kind of exit strategy in order to exit one property investment and re-enter the market with another. For example, selling a £500,000 investment to re-invest in two or more others in a cheaper area.

With this strategy you don’t have to be so concerned with time. Instead you need to become pre-occupied with price rises (and falls) and monitor expert forecasts regularly to try and judge when your an appropriate time to exit the market might be.

Yield based exit strategy. With this exit strategy you decide the minimum level of yield you’re happy with. You sell if and when your yield falls below this level (in other words, also a kind of stop loss.)

This kind of approach involves no time-based element. The time frame you’re working in could be 20 years …. or it could be two years. To use this technique effectively it’s important to monitor your yield performance regularly.

Bear in mind that, right now – even given recent tax changes – it’s still pretty much a given that property will produce a better yield than any kind of savings account. However this won’t necessarily always be the case …. historically it hasn’t always been either.

At the end of the day there’s nothing to say you have to use these exit strategies. If you prefer, create one of your own. But whatever you do you must have a well-thought-through exit strategy whenever you invest in buy to let property.

The post Buy To Let Investment: What’s Your Exit Strategy? first appeared on Property Insider.

After years when everything in the property investor’s garden seemed rosy, issues like tax changes, and more rules and regulations – and now Covid-19 – are prompting some investors to consider selling their buy to let property.

But if that’s you …. Wait …. Stop! Here are 8 very important things you must check before putting your buy to let up for sale:

* What’s your motivation for selling?

Is your buy to let actually causing you practical difficulties? Is it actually losing you money? Or is it just a general feeling of despondency at being a landlord that is prompting you to sell?

Whatever it is, know your reason for considering selling up.

* What yield are you getting on your buy to let?

Knowing what your yield is can help put things in context …. you may well find it makes your buy to let more attractive than you thought. Yield percentage can be calculated by dividing the annual rent by the property cost x 100.

The fact is, even pretty low yields are multiple times better than the return even on the best paying savings accounts right now.

* What can you do to improve the situation, or turn things around?

Selling may not be the best answer, and in fact could be the worst. Could you raise the rent to help make things pay better? Could a new tenant be the answer? Could you rent out the property in a different way, eg. as a house share. Are there any ways you could cut costs? Could some professional advice on tax or ownership improve the outlook for your investment?

* Are you guilty of thinking too short term?

Remember, property is a medium-long term investment. By selling now you can miss out on a future, potentially attractive, capital gain.

Governments never last as long as the ideal lifetime of a property investment (15-25 years) so there’s every chance landlord/investor policy could become more favourable again in future.

* Will you be able to sell your buy to let easily, quickly, and an attractive/viable price?

Prices and buyer interest are holding up right now, but there’s no telling how long that might last.

It’s never a good idea to guess or saleability – take advice from a surveyor or estate agent.

* What will you do with the money?

Assuming there’ll be money left over from the sale of course. Is there any other way it could earn you a better return?

You might find this Property Insider report useful: Property over and out? So how else can you make a good return on your money?

* What other plan do you have for securing your financial future?

That’s assuming, of course, that you invested in buy to let – as many investors have – as a pension pot.

Again, explore all the options.

* What will your tax situation be? Is there a risk that an increased tax liability could make you worse off by selling your buy to let, not better? Always find out before you sell … not after!

Whatever you do it’s important not to make a knee jerk decision. Think everything through, do the numbers, and take professional advice if you need it. Think how your decision will play out in both the long and the short term.

Mark Hempshell is Editor-in-Chief of Property Insider.

The post 8 Questions To Ask Before Selling Your Buy To Let first appeared on Property Insider.