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Salford most profitable UK city for BTLs according to new study

A new study has revealed that Salford is the most profitable buy-to-let city for landlords, following the stamp duty holiday pushing UK house prices to an all-time high.

The research by CIA Landlord reveals that Salford, with an average house price of £173,311 and average rent prices of £1,052 per month, is the best city for landlords looking to buy a new property for buy-to-let purposes.

CIA Landlord calculated the best cities for buy-to-lets under the Government’s latest stamp duty holiday by analysing the average house price, rental price and stamp duty savings in every UK city for the cheapest home prices and highest rental yield in order to calculate profitability.

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Manchester follows closely behind Salford with house prices averaging at £193,681 and rental incomes at £1,141 per month. Leeds, Portsmouth and Belfast also feature in the top five buy-to-let hotspots.

High Wycombe in Buckinghamshire ranked as the worst city for landlords purchasing a buy-to-let property, with average house prices reaching £430,891 and rental prices averaging at £945 per month. Cambridge also saw low profitability margins, with average house prices at £448,432 and rental income averaging £1,080 per month. Reading, Worcester and Watford also feature on the bottom of the table in terms of profitability.

In the capital, Havering was the best borough for profitability according to the study, with house prices averaging £395,832 and monthly rental prices reaching £1,895. Alternatively, with average house prices reaching over £2m and average monthly rent coming to £4,003, properties in Kensington and Chelsea see the lowest profitability margins.

Source: Property Wire

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Mortgage payment holidays have been a vital lifeline

Mortgage payment holidays have proved a vital lifeline for homeowners struggling financially due to the COVID-19 crisis, according to online mortgage broker Trussle.

However, following the Financial Conduct Authority’s (FCA) statement that mortgage payment holidays will not extend past 31 October, and further financial supports after that point will affect borrowers’ credit files, Trussle has urged homeowners to use caution with this support system.

Miles Robinson, head of mortgages at Trussle, said: “It’s clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.

“It’s important to know that unlike before, if you need financial support from your lender after 31 October, it will be marked on your credit file.

“We’d urge homeowners to only utilise the mortgage payment holiday if it’s essential.”

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Robinson also highlighted that once a homeowner’s mortgage payment holiday reaches its end, their monthly payments will increase as a result of additional interest being added to the total mortgage balance.

Meanwhile some lenders offer other viable alternatives; this includes switching some of the loan amount to interest-only payments in the short-term.

Miles Robinson, head of mortgages at Trussle, said: “For existing homeowners, now could also be a good time to think about remortgaging.

“Our customers save £334 on average per month by remortgaging onto a fixed rate, so it is worth using a remortgage calculator to see if switching could save you money.

“Any aspiring or existing homeowners who are considering taking a mortgage payment holiday should seek professional advice as soon as possible to discuss their options.”

By Jake Carter

Source: Mortgage Introducer

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June house prices rose 3.4% as ‘flood of buyers’ returned

UK house prices increased by 3.4% in the 12 months to June, compared to an annual rise of 1.1% in May, the UK House Price Index revealed.

Month on month, house prices rose on average 2.7% between May and June.

Regionally, the East Midlands saw the greatest annual price rise of 4.5% while the North East saw the lowest annual price growth with a rise of 1.7%.

Shaun Church, director of Private Finance, said: “These latest figures reveal the scale of the impact that the sudden burst in pent-up demand had on house prices following the reopening of the property market.

“Price rises were driven by a flood of buyers resuming purchases put on hold during lockdown immediately after restrictions were eased. Initial strong demand has been boosted by the higher stamp duty threshold coming into effect in July.”

Around 150,000 housing transactions were put on hold in March and restarted again in June, according to the Centre for Economics and Business Research (CEBR).

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However, Church expects the strong market activity to be short lived.

“An uptick in infections and mounting concern over the reintroduction of national and local lockdowns is weighing on consumer confidence,” he said. “This could cause buyer activity to dip, resulting in the market readjusting to a new economic environment.

“Lenders are taking a risk-averse position in response to high uncertainty levels in the UK economy. Mortgage providers are increasing rates on higher loan-to-value products to reduce exposure to riskier borrowing propositions. Unfortunately, this will create barriers to entry for first-time buyers, the group of people that have been hardest hit financially by the pandemic.”

It is widely expected that the property market will experience a downturn next year.

CEBR forecast a 14% drop in house prices in 2021. In its latest report, the Intermediary Mortgage Lenders Association said the policy decisions lenders made now about loan-to-value restrictions would affect the severity of a downturn next year.

However, estate agents said they are no signs yet of the market slowing down.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although a little historic, these figures highlight the resilience of the property market and the strength of pent-up demand even as we were recovering from lockdown and before the announcement of the stamp duty holiday.

“This comprehensive survey reflects prices paid for property and so is an indicator of some optimism. We are being told repeatedly that this mini-boom will not continue as the job retention scheme unwinds and unemployment rises but we not seeing many signs of that on the ground. If anything, the market is being more restrained by lender caution and lack of capacity to deal with the number of enquiries rather than demand fizzling out.”

Written by: Samantha Partington

Source: Your Money

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Property Market Activity in the UK Remains High – RICS

August 2020 saw another month of uplifts in buyer inquiries and transactions, as the UK property market continued to rebound following months in lockdown.

Summary:

  • Data from the Royal Institution of Chartered Surveyors (RICS) shows that activity in the UK property market in August continued to remain high
  • 63% of surveyors reported a rise in interest in residential property over the month, with 61% also reporting an increase in sales
  • The research also found a greater demand for properties with gardens and access to outdoor space following life in lockdown

UK property’s post-lockdown bounce back continued in August.

New figures from the Royal Institution of Chartered Surveyors (RICS) shows sustained growth in the number of new residential property inquiries and sales over the month.

This continues a period of increased market activity since it ‘reopened’ at the start of June, following the UK’s national coronavirus lockdown.

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In RICS’ August UK Residential Survey, 63% of members questioned responded by saying they saw an increase in people interested in buying a property. For the third month in succession, there was also growth in the number of sales completed; in August, 61% of respondents noted they’d recorded an uplift in new sales agreed.

And confidence amongst buyers was matched by sellers, too. A net balance of +46% of respondents reported an increase in the number of properties being listed for sale in August.

This activity has had a notable impact on property prices in the UK. According to a net balance of +44% of those that took part in the survey, house prices increased during August, up from a balance of +13% in July. The survey also found that this price growth is happening across all regions of the UK except for London, where average values have flatlined over the last two months.

Analysing the findings, Simon Rubinsohn, Chief Economist at RICS, commented: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market, which should help support the wider economy gain traction over the coming months.”

In addition to highlighting the buoyant nature of the UK property market, the survey also picked up on some of the emerging trends in the UK following life in lockdown. Specifically, the increased demand from buyers and tenants on property with a garden, or with easy access to outdoor green space.

83% of surveyors stated that they believe properties with a garden will be in high demand for the next two years. 79% stated the same for property near to green space, and 68% agreed the next two years will increase demand for property with private outside space.

Source: Select Property Group

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FCA announces extension of mortgage holidays

The Financial Conduct Authority (FCA) has confirmed the extension of mortgage holidays for consumers who still face financial difficulties, as well as those whose financial situation may be newly affected by coronavirus after the current FCA mortgage guidance ends.

The FCA has published additional guidance for firms meaning they must offer further short and longer-term support reflecting the circumstances of their customers. This could include extending the repayment term or restructuring of the mortgage.

Where consumers need further short-term support, firms can continue to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. This additional guidance will come into force on 16 September 2020.

Christopher Woolard, interim chief executive at the FCA, said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time. Consumers in these situations will benefit from firms providing them with tailored support.

“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”

Under the guidance published today, firms will prioritise support for borrowers who are at most risk of harm, or who face the greatest financial difficulties.

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The new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers rather than adopting “one size fits all” solutions. The FCA will be monitoring firms to ensure borrowers are treated fairly having regard to their individual circumstances.

The FCA has said that firms will also signpost borrowers to the support they need in managing their finances, including through self-help and money guidance, or refer borrowers to organisations that can provide free debt advice if this meets their needs and circumstances.

Where borrowers have taken, or are taking, payment deferrals under the existing guidance and require further support from lenders these further arrangements can be reflected on credit files in accordance with normal reporting processes. This also applies to borrowers newly affected by coronavirus who receive support from their lender after 31 October.

This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.

The FCA’s current guidance published in June will continue to provide support for those impacted by coronavirus until 31 October 2020 – with consumers able to take a first or second three-month payment deferral until this date.

The June guidance is due to expire on 31 October and the FCA do not intend to extend this guidance. The guidance published today ensures consumers will still be able to obtain the support they need from their lenders after their payment holiday ends or they are newly affected by coronavirus after 31 October.

However, the watchdog has said it will keep the guidance under review and if circumstances change significantly, consideration will be given to any further measures that may be needed to support consumers during the ongoing pandemic.

Source: Scottish Housing News

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House prices rise as appeal of gardens and space grows

Housing market activity in the region continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

Sixty-three per cent of respondents reported an increase in buyer interest across the West Midlands over the month, according to the August 2020 RICS UK Residential Survey.

However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of plus 26 per cent of survey participants noting an increase in vendors listing property to sell.

Consequently, strong growth in agreed sales was cited for a third successive month, with a net balance of plus 52 per cent of contributors seeing a pick-up.

Looking ahead, near term sales expectations for the West Midlands remain positive, but 12-month sales projections are still in negative territory, with the net balance coming in at minus 12 per cent.

Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

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Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as eight per cent of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years.

Seventy-nine per cent predict rising demand for those properties near green space, while a net balance of plus 68 per cent foresee a rise in the desirability of properties with more private/less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation.

Across the region, a net balance of plus 52 per cent of respondents reported an increase in prices, the strongest reading since September 2018.

This is up from a net balance of plus 49 per cent in July and marks a turnaround compared to the reading of minus 27 per cent registered back in May.

Simon Rubinsohn, RICS chief economist, said: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months.”

By James Pugh

Source: Shropshire Star

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UK economy grows 6.6 per cent in July as recovery continues

The UK economy grew 6.6 per cent in July as it bounced back from the coronavirus lockdown of the spring, setting the stage for rapid GDP growth in the third quarter, official figures showed.

The growth was slower than the 8.7 per cent expansion seen in June, however, and was from a low base after the historic collapse in output in the second quarter.

“While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic,” said Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), which released the figures.

In July, the UK’s all-important services sector grew 6.1 per cent. It makes up around 80 per cent of the economy. The sector was boosted by the reopening of pubs and restaurants at the start of the month.

Production, which includes manufacturing, expanded by 5.2 per cent. But construction shone, growing a huge 17.6 per cent after expanding by 23.6 per cent in June.

Nonetheless, July output in the massive UK services sector remained 12.6 per cent lower than in February despite the quick GDP growth. And rising coronavirus cases could derail the recovery.

Chancellor Rishi Sunak said: “Today’s figures are welcome.” But he added: “I know that many people are rightly worried about the coming months or have already had their job or incomes affected.”

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“That’s why supporting jobs is our first priority.” He flagged the Eat Out to Help Out scheme, VAT cuts and the £1,000 retention bonus for jobs brought back from furlough.

UK economy 11.7 per cent smaller than in February

Some parts of the services sector were running at almost full capacity. Output in wholesale and retail trade rebounded to higher than its February level. Financial and insurance activities and real estate were only slightly off.

But other sub-sectors lagged far behind, highlighting the unequal effect of the coronavirus crisis.

Output in accommodation and food services grew strongly but was nonetheless only running at 40 per cent of its February level in July. Arts, entertainment and recreation was also well off.

Tej Parikh, chief economist at the Institute of Directors business group, said: “The economy continued its rebound in July, but the hard part is still to come.

“The recovery will start to hit speed bumps into the end of the year. Local lockdowns and new restrictions heap uncertainty on businesses, and demand remains limited in many areas.”

The ONS said the UK economy was 18.6 per cent bigger in July than it was at its April low.

Yet in July UK GDP remained 11.7 per cent below its level in February, before the full impact of the coronavirus pandemic.

GDP recovery ‘likely to stall’

Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said growth was likely to be strong in August and September.

He said it would be “assisted by far greater than usual numbers of people staying in the UK during the summer holiday season” and “the full reopening of schools”.

But he said: “Thereafter, the recovery likely will stall if, as looks likely, new Covid-19 infections continue to rise.” Tombs said that would keep “people working from home and avoiding consuming services that require close human contact”.

Coronavirus cases have risen sharply in recent days. The number of daily new cases has consistently been just below 3,000 this week, whereas they were consistently half that the week before.

In response to the spike, the government has limited the number of people who can meet socially to six.

Yael Selfin, chief economist at auditing giant KPMG, said: “The risk of a second wave of infections in the autumn could derail the nascent recovery and put the economy into a lower gear.”

By Harry Robertson

Source: City AM

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Why the North West could be the new buy-to-let hotspot

The North West of England is currently one of the leading UK regions for buy-to-let purchases, second only to the historically strong South East. Richard Rowntree at Paragon looks at the rise of the Northern new kid on the block

Over seven million plus people call the North West home and I imagine a good proportion of them would tell you that it’s a great place to live.

A combination of civic and independent investment has resulted in regeneration and forward-facing cosmopolitan hubs that are home to thriving arts, culture and entertainment scenes. This helps to draw in tourists and students, particularly to Liverpool and Manchester, the region’s two main economic strongholds and home to well-respected universities.

After decades of underachievement – according to a 2010 report by the Regional Economic Forecasting Panel, wealth per head in the North West was 14% below the UK equivalent – the region is finally fulfilling its potential.

The North West’s economy, once weakened by over-reliance on a fading manufacturing industry, is now driven by modern high technology sectors including ICT, pharmaceuticals and telecommunications in addition to financial services.

The result is a regional economy that is outperformed only by London and the South East after growing 31.4% between 2010 and 2018.

As well as the bright lights of the towns and cities, the North West boasts natural beauty. The Peak District and Lake District are stand out spots but are joined by plenty of other places offering impressive views over quaint villages, unspoiled countryside or wild coastline.

So, with a broad overview of the North West and what it can offer tenants, let’s look at some of the factors driving the growth that saw more landlords buy new properties in the region than they did in London last year.

Strong rental yields
When considering how lucrative a buy-to-let investment is, a measure that is almost always taken into account is the potential rental yield and this is an area where the North West performs particularly well.

Of all the landlords taking part in BVA BDRC’s latest survey, those in the North West achieved the highest yields. At 6.5% this was above the England average of 5.8% for Q2 of 2020.

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Although analysis of Paragon data suggests that the North and Wales top the North West in terms of rental yields achieved, it also shows that landlords in the region can potentially see even better figures than those reported by BVA BDRC with average yields of 7.11%. Whichever measure you use, it’s clear that the North West is a place where the ratio of rental income to property purchase price is attractive to investors.

I think that central to the North West’s strong yield return is demand for rented accommodation in the area – something supported by data on the growing number of households as I cover below – and this is driven by some of the groups of tenants who gravitate to the region.

Across the UK, the highest yields are achieved by landlords who let to migrant workers at an average of 6.8%. Mirroring the size of regional economies, the North West has the highest migrant population in the country after London and the South East.

According to the Office of National Statistics’ latest quarterly migration report, in the year ending March 2020 around 313,000 more people moved to the UK than left. Of this number 257,000 arrived for formal study.

When we look at the UK cities with the most universities, Liverpool and Manchester are both in the top ten and are joined by others across the region such as Lancaster. Add to this the fact that student lets offer strong rents and we can see that the region’s offering for those choosing the UK for work or study supports its position as a leading area for yields.

The student market is one we feared would be negatively impacted by the Covid-19 pandemic and while we’re yet to see how this will develop there is potential for the numbers of overseas students studying in UK to dramatically fall in the short term. It’s worth noting that if this scenario does materialise it would also result in a reduction in UK students studying abroad, as well as those enjoying gap year adventures, so there would be a degree of one cancelling out the other.

Attractive property prices
Of course, to achieve good yields it helps if the price you pay for property is comparatively low and this is another key element of the North West’s emergence as an appealing area for buy-to-let landlords.

The average price of a property in the UK is £234,612 according to the latest Land Registry UK House Price Index. Those purchasing in the North West will pay much less as the average property price is just £167,809. Only those in neighbouring regions will pay less for property with averages in the North East at £125,938 and Yorkshire and the Humber at £165,561.

As you would expect, many of the UK’s most expensive postcodes are in London and the South East. Paragon figures show that advances in these regions have decreased over the past few years and increased in the North West amongst other areas. This suggests that there is a trend towards investing in areas where buyers feel they are getting more for their money.

Stability
At first glance, the North West’s low levels of rental inflation over the past five years would appear to be a chink in its armour. Even though it hasn’t exceeded 1.5% over this period, it has been generally stable and that is something that shouldn’t be overlooked.

Stable markets don’t always deliver the best returns when the going is good but, as the events of 2020 should prove, it’s not always possible to see what’s around the corner. It’s sometimes wise to look at the longer term, opting for markets that deliver reliable, if modest, returns due to being less susceptible to external influence.

It’s too early to gauge the long-term impact that coronavirus will have on the region but looking back to midway through the last decade we can see that the North West has a proven track record of being less volatile than other regions.

Changes to tax relief on finance costs and Stamp Duty Land Tax (SDLT) as well as Prudential Regulation Authority (PRA) underwriting standards for buy-to-let mortgages resulted in a decline in lending for buy-to-let purchases in most regions after being introduced by the Government. Lending for house purchases in the North West remained relatively stable, however and early indicators point to a similar resilient response to the market’s latest challenge.

Affordability
With rents only creeping up slowly in comparison to other regions, people in the North West pay a smaller proportion of their average salary – 26%, which equates to £610 per calendar month -compared to the England average where renters typically pay 29% of their salary.

I feel that this balance of offering tenants a great place to live while remaining affordable is crucial to the area’s success. It also means that any rental increases can be absorbed without a significant negative impact.

Strong levels of tenant demand
The North West’s affordability also has an impact on demand and may be one reason why it has the highest levels of any UK region according to landlords surveyed by BVA BDRC.

Another factor may be the growing number of households. The Office of National Statistics’ 2018-based household projections for the region forecast a change from 3,120644 households in 2018 to 3,296981 households in 2028, an increase of 5.6%.

This can be attributed to a range of factors; one being rising numbers of one person households which, after increasing by 300,000 on the year prior, surpassed eight million across the UK in 2018.

With 31% of North West households being listed as lived in by one person, the area sits at the higher end of the scale for single occupancy households in England. Comparing this to London, the lowest in England at 23.9%, suggests that this trend is playing a part in stronger demand in the North West compared to the capital.

Considering again that the North West is home to a large number of well-respected educational institutions, demand in the region may also be boosted by increasing numbers of those in higher education. The latest figures reported 2.4 million people in post-secondary study, a significant number of whom rely on the PRS for their accommodation.

Landlords show desire for continued North West investment
The idea that landlords are responding to this demand is supported by industry data. The North West recorded the third highest number of new buy-to-let purchases over the past five years, with the South East accounting for the highest, followed by Greater London. Last year, the region leapfrogged London in terms of new buy-to-let homes purchased.

Again, judging by landlords responding to BVA BDRC’s Q2 2020 survey the region is set to continue to attract investment. Those in the North West are more likely than any other region to buy property in the next 12 months, with 26% of landlords in these locations indicating that they intend to increase their portfolios.

Source: Mortgage Finance Gazette

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Covid-19 set to change what consumers want from property

The idea that ‘customer is king’ affects all industries, and has grown exponentially in importance for businesses and investors in recent years. The Covid-19 pandemic is having specific and significant impacts on the private rental sector through customer wants and needs.

Some of these are existing trends and changes, exaggerated by circumstance. Others are new. All must be considered by PRS investors. Two key areas of consumer need are relevant:

• What customers want, and are willing to pay for; and

• Consumer confidence.

The PRS market context

Before sharing my thoughts on how customer wants, needs and confidence are changing what works in the PRS in a post-Covid world, it is important to set the context.

National and international investors are attracted to the sector, as UK residential property investment has for many years offered compelling stability, growth, yield and a hedge against inflation.

The UK PRS is unique, partly due to our cultural obsession with home ownership that has come to dominate the wider housing market.

Key points

  • Tenant needs are changing post-Covid
  • People care more about having a garden and space to work in
  • Economic confidence will be a driver of change

The sector has doubled in size in the 20 years from 2001, from 10.2 per cent to 20.3 per cent of households, according to Savills.

Since 1997, and the widespread take-up of Buy-to-Let mortgages, the make up of investors has diversified dramatically.

Savills also found that 94 per cent of the PRS was owned by individuals in 2018, with the vast majority of landlords owning four or fewer properties, and only 1 per cent owning more than 10 different properties in 2010.

The diversity of ownership has fallen since the Montague Review 2012 and a raft of regulatory changes such as mortgage interest relief via section 24.

The make-up of investors in the PRS is important because:

• It profoundly affects what the PRS actually looks like, and how it responds to Covid-19.

• In many ways, investors are considered as consumers too: you only need to watch Homes Under the Hammer, or read any major news publication, to realise how many ordinary people feel they can and should get involved with UK residential property investment.

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My own experience since studying land economy has predominantly been with PRS assets worth less than £5m, which make up more than 90 per cent of the £1.5tn sector.

I typically work with high-net-worth investors who want the benefits of PRS investment, without the hassle. During lockdown, I published a book on what works and what does not in this complex market.

The main message was that what works must be increasingly professional and efficient, while allowing the investor to be hands off.

Consumer appetite

So, how will Covid-19 affect customer appetites in PRS investment and the wider property market?

What consumers (tenants) want and are willing to pay for relates to buildings, service and confidence. Surveys suggest that people are thinking differently about their housing choices.

Perhaps unsurprisingly, people care more about having a garden, more indoor space, the right neighbours and local community, and space to work from home. It seems clear that ‘walk to work’ locations and layouts that facilitate working from home will be increasingly important.

On fabric of buildings, everything hinges on ability to pay. This may change in the aftermath of chancellor Rishi Sunak’s generous furlough scheme.

The truth is that there is a wider trend: what institutional investors often fail to consider, and many smaller landlords know well, is that many ordinary people, and in particular young people, are not willing to pay for what they say they want when you ask them.

This will need to be considered by PRS investors in a post-Covid world. What is more, appetite changes fast. The idea that ‘yesterday’s news is today’s fish and chip wrapper’ seems rather old hat to anyone who understands TikTok.

The PRS is not just about buildings, but also about service. On this, Helen Gordon, chief executive of Grainger, got it right when she described a core focus on innovation, communication and improvement. Kindness, compassion and a flexible, responsive service driven by technology is key. To an extent, the former of these have been necessitated by the ‘moratorium on evictions’ through Covid-19.

Economic confidence will also prove a key driver of change. There are widespread reports of PRS tenants handing back keys and moving back in with their families. Key life decisions are being delayed, whether due to cancelled weddings or employment status nerves.

The desire for more and better inside and outside space, combined with economic necessities and Covid-inspired nerves have resulted, in many parts of the country, in a correction in the ‘shrinking households’ phenomenon that has accompanied later settling down, and fewer/later lasting marriages, in favour of higher voids. This may not prove permanent, but it will certainly be relevant in the short to medium term.

Investors as consumers, and what they want

While tenant needs are key, there is another relevant group of ‘consumers’, who are acting as investors in the PRS. Side-line landlords have been on the decline due to market and regulatory changes, but what these investors want remains a key driver in the PRS.

What investors want in a post-Covid world is confidence, above all else. This is the currency of the era, and it seems to be worth more than data and oil combined.

They want yield and an inflation hedge. Mass government stimuli and long-term low interest rates are creating an unprecedented appetite for yield. Individual investors in a post-Covid world want this without the increased hassle (for example, more effort around health and safety, and increased need for tenant communications such as that around payment of rent and job security) associated with investing directly.

More professional delivery of PRS-focused investments targeted at ordinary investors seems essential to meet this growing demand.

The truth is, real estate is not about inanimate objects. Much like the internet, powerful businesses and governments effectively control access, and its content both shapes and reflects the pulse of the nation.

In a post-Covid world, we will of course need increased focus on public health in PRS products and services. Investors and operators must consider what tenants want, need and are willing to pay for, and do our best to deliver excellent customer service to tenants.

In many ways, I believe there has never been a better time for investors to access the PRS.

What needs to change is the way so many investors access this sector: it must be professional, efficient, and underpinned by superior technology, systems and customer service if it is to work for tenants and investors alike, in a post-Covid world.

By Anna Clare Harper

Source: FT Adviser

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Region’s house price growth at highest level in almost two years

Housing market activity in the West Midlands continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

A net balance of 63% of respondents reported an increase in buyer interest across the region over the month, according to the August 2020 RICS UK Residential Survey.

However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of +26% of survey participants noting an increase in vendors listing property to sell.

Strong growth in agreed sales was cited for a third successive month, with a net balance of +52% of contributors seeing a pick-up.

Looking ahead, near term sales expectations for the West Midlands remain positive, but 12 month sales projections are still in negative territory, with the net balance coming in at -12% (up from -40% last time). Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

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Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years. 79% predict rising demand for those properties near green space, while a net balance of +68% foresee a rise in the desirability of properties with more private / less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation. Across the region, a net balance of +52% of respondents reported an increase in prices, the strongest reading since September 2018. This is up from a net balance of +49% in July and marks a turnaround compared to the reading of -27% registered back in May.

In the lettings market, tenant demand continued to rise sharply in the West Midlands, while landlord instructions returned to negative territory following a rebound in July. Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of +58% of contributors now anticipating an increase.

Simon Rubinsohn, RICS chief economist, said: ‘The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.

“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.’

By Rachel Covill

Source: The Business Desk