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Why student housing is a first-class honours investment

High yields, low risk, and fast returns are just a few of the reasons reasons luxury student housing has become the new essential in any high-net-worth individuals’ investment portfolio.

While many of the UK’s older generation will reminisce of sub-standard housing, and an unlikely chance of functioning heating or hot water in their university halls, increased private sector involvement in the last decade has now dramatically changed this once Dickensian landscape.

Pools and cinemas are being introduced as standard to the already not uncommon features, such as gyms and concierges.

How university is funded appears to be a driving factor in this growth. The rise in tuition fees has created a dominant consumer culture that is affecting how other parts of the student experience are run.

It might have assumed that the increase in tuition fees would mean a tightening up of budgets in other areas, but it’s producing the opposite effect.

Instead, the fee rise has led to a rapid increase in student spending.

Research by Knight Frank suggests that this could be a result of housing becoming a smaller share of overall living costs, meaning students are more willing to increase their expenditure on higher quality dwellings.

Others are raising concerns that students are becoming more comfortable with debt and simply compiling it with their original loans to worry about later.

Either way, the demand and money for quality student housing is there, and investors are competing to provide it.

According to Knight Frank research, as many as a fifth of students were prepared to pay upwards of £160 per week for housing.

Additionally, 19 per cent of the UK’s students arrive from abroad each year, and these overseas students represent a key target of this investment, as they search for a home away from home.

Demand for UK university degrees hasn’t slowed down either, with half a million applications last year, more than have ever been in university education before.

The purpose-built student housing market is believed to be worth around £46bn, with roughly £5bn of new developments being completed each year.

For 2017, figures from JLL predicted that in every £10 invested in the UK commercial property market, the student housing sector would account for an astonishing £1 of it.

Savills now forecasts a 17 per cent increase in investment in student housing for 2018 alone.

The market operates with something of an immunity to economic downturn due to the inelastic nature of the demand and the reliability of student finance.

Its countercyclical nature means that it’s the larger scale developments offering more units that are attracting the most interest, and proving to be the more reliable investment.

With live projects across areas like Birmingham, Bath, Leicester and Glasgow, the UK University towns are increasingly attractive locations for investors to consider.

Unite Students, in partnership with the Government of Singapore’s sovereign wealth fund, bought all 3,000 of Aston University’s on-campus bedrooms for £227m, in the biggest one-off purchase of student housing so far.

In fact, since 2016, sovereign-wealth funds have invested over 15 per cent of their worldwide spending in student accommodation – a number that is continuing to rise.

The supply-demand defect and the changing attitudes of students has resulted in the emergence of investment hotspots in the UK, with institutional and private investors stepping into meet demand.

The trick is having skilled financiers on board to find the right projects, while heading them with reliable developers.

A joint venture approach to development will promise investors quick turnaround builds that are pain-free, and will see some serious returns on investment.

By James King

Source: City AM

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Top Cities For Buy To Let Investments To Catch Millennials

The best cities for property investment to attract millennials have been uncovered in new research by credit experts TotallyMoney.

Millennials have been shown to be more likely to rent in the private sector, as the UK home ownership rate drops, an obvious target for by to let investors.

The research looked at 16 elements that are widely considered to be important to millennials and used them to rank 63 cities across the UK to reveal the best cities for millennials to live in.

The elements considered included property factors, such as the cost of a one-bedroom property to rent as well as to buy; cost-of-living factors, such as the cost of a cappuccino, gym membership, and meal for two; lifestyle factors, such as number of things to do, the population aged 0–17 and 18–29, and the percentage of Brexit remain voters; and most importantly, work factors, such as overtime hours, paid overtime, average weekly earnings, number of business start-ups, graduate hires, employment rates, and the number of young people on benefits.

Despite high living and property costs, London still makes second place in the list, due to high potential earning and the highest number of graduate hires.

However, first and third place go to Scottish cities Glasgow and Aberdeen respectively, where decent wages can be combined with lower than average property prices.

Bottom place went to Basildon in Essex, where just two per cent of graduates find work and the level of extra-curricular activities lagging way behind.

Spokesperson for credit experts TotallyMoney, James McCaffrey, said: ‘There are some things millennials have had to adjust to that haven’t been experienced by past generations, and with this comes an entirely different set of priorities. Rising house prices, stagnant wages, and Brexit are just some of the hurdles this generation have to get over.’

Rank City Average Weekly Earnings Business Start-Ups Per 10k Population Graduate Hires Employment Rate Average One-Bed Asking Prices Average One-Bed Asking Rents
1 Glasgow £526 48 5% 70% £90,466 £584
2 London £727 112 39% 74% £451,582 £1,633
3 Aberdeen £597 50 5% 74% £84,584 £478
4 Liverpool £512 51 6% 67% £102,029 £483
5 Bristol £547 60 6% 78% £184,736 £686
6 Gloucester £526 44 6% 80% £101,739 £443
7 Southampton £579 70 9% 76% £139,110 £584
8 Cambridge £609 55 2% 73% £225,239 £689
9 Cardiff £505 49 1% 69% £129,368 £493
10 Middlesbrough £477 41 2% 69% £62,183 £353

Source: Residential Landlord

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London property market predictions over the next 12 months

It’s no secret that the London property market has been subdued recently, but the fact that, in spite of everything, it has refrained from crashing does highlight the fact that the market is underpinned by solid foundations. That said, the London property market in 2019 is likely to be characterised by overall caution and stability rather than growth. The team at property investment firm Hopwood House look ahead to what the next 12 months might have in store for the London property market with three specific predictions.

Sales volumes will slow as buyers wait to see what Brexit will bring

Even though Brexit itself need not turn out to be a complete catastrophe, the uncertainty around the form it will eventually take can, understandably, make buyers very nervous. In principle, this issue should be resolved, one way or the other, by the end of March. If that is the case, then growth may start to return to the market towards the latter end of 2019, once buyers have had a chance to adjust to the new reality. In practice, however, there is also a feasible possibility that the negotiating period will be extended beyond the given deadline, which could lead to a longer period of uncertainty and hence subdued activity in the London property market. On the plus side, this could ultimately be of long-term benefit to everyone if it results in a better deal for the UK.

House-price growth will remain subdued

Brexit is the most obvious reason why it is unlikely that there will be major house-price growth in London for the immediate future, however there are others. For example, the London authorities have made it a priority to address the chronic shortage of housing, particularly affordable housing, through a programme of home-building, which has had the (presumably intended) effect of helping to put a brake on house-price growth. It’s also worth noting that the last 10 years have seen certain parts of London benefit greatly from the regeneration brought about by the 2012 London Olympics and other, separate, infrastructure improvements, such as Crossrail, with the result that there was unusually high house-price growth in these areas. At the current time, no such major developments appear to be in the pipeline, hence it is only to be expected that house-price growth will proceed at a slower pace, although, as always, it is to be anticipated that some parts of London will perform better than others, for example, the Notting Hill market continues to be very robust.

The rental market will be highly competitive for tenants

On the one hand, you have people who need a place to live in London, but who do not wish to buy right now. On the other hand, you have a vastly reduced number of rental listings as compared to 2018. This obviously creates a challenging situation for tenants even before factoring in the likelihood that the opening of new tech hubs will draw even more people to the capital. It will be interesting to see if this imbalance in the rental sector will lead to the government looking to encourage buy-to-let investors to focus on the capital and, if so, what form this encouragement will take.

Source: London Loves Business

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UK property: Why history proves this could be the best time for you to buy

  • New research proves how UK property investors who bought immediately following the global financial recession have made the most money on their investment in recent years
  • These “brave” investors made £93,378 in profit when selling their property in 2018, more than buyers in any other year over the last 14 years
  • Amid the wider economic uncertainty of Brexit, will those investors that buy now in 2019 make some of the highest returns over the next decade?

Does this prove that buying UK property now could help you to achieve the highest long-term returns?

Brexit, and the immediate uncertainty of the UK’s withdrawal from the European Union, means that some investors may be waiting until a conclusion is reached before entering the property market. However, the subsequent fall in the pound has also led many other investors to take advantage of this currency opportunity by buying property now.

And new data suggests that it’s the latter group of investors that could be about to achieve the biggest levels of profit over the next few years.

Published by Savills, new research shows that, between 2004 and 2018, it was investors that bought UK property in 2009, amid the fallout of the global financial recession, that achieved the biggest returns when selling their property in 2018.

On average, those buying UK real estate in 2009 made £93,378 when selling their asset last year. It underlines the importance of purchasing with the right market conditions – and taking advantage of wider economic uncertainty.

“Over the last 15 years it really has made a difference as to when and where you bought in terms of the profits you’ve made. It reinforces that it’s not a one-size-fits-all market,” said Lucian Cook, Residential Research Director at Savills.

“The mortgage markets (in 2009) were locked up, but I also suspect some of this is about whether people were brave enough to do it and whether some people in 2009 had enough accumulated equity at that point to be able to make the move.”

The UK is currently suffering a housing shortage. Housebuilding is significantly below the 300,000 new homes the government outlines is required each year. Regardless of wider economic concerns, this does not alter this supply and demand imbalance in the UK’s property market.

At the time of publication, the pound is 11% cheaper against the US dollar than it was on June 22nd 2016 (the day before the EU referendum), and many investors are taking advantage to ensure they can secure an asset with the best value and long-term growth prospects.

Source: Select Property

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UK Investment Property Rental Growth Slowing

Investment property rental growth in the UK is slowing according to the latest Landbay Rental Index.

Annual rental growth in the UK without London is at its lowest point in nearly six years at 1.16 per cent, the lowest since the 1.13 per cent seen in February 2013.

Rental growth in London has seen relative stagnation over the last couple of years since the Brexit vote, but across the other English regions total rental growth has been seven times that of London (3.69 per cent to London’s 0.52 per cent).

However, the latest indications show that the rest of the UK is also seeing a slowdown in rental growth. Wales is currently at the lowest it’s been since April 2014 (1.39 per cent) and in Northern Ireland growth of 0.54 per cent is the slowest since the Rental Index began collecting data in January 2012.

Scotland, however, has seen annual rents grow at 1.66 per cent, having steadily grown over the last six months. The average rent in Scotland is now £746, higher than Northern Ireland (£573), Wales (£656), and creeping up to the English average excluding London (£776).

This Scottish growth is led by high annual growth in Edinburgh City (5.88 per cent), Inverclyde (3.56 per cent), and Glasgow City (2.49 per cent). Only Aberdeen City (-6.62 per cent) and Aberdeenshire (-5.42 per cent) are dampening the Scottish rental growth rate.

CEO and founder of Landbay, John Goodall, said: ‘Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown. This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.’

He continued: ‘Rental growth may be slowing, but the pace of change varies wildly between regions. Landlords and brokers alike need to be tuned into these variations in order to maximise their profits, using variations in rental growth and yields over the past year to pick out some of the most promising regions for buy to let. Consistent rental demand will obviously drive returns in the long-term, but by selecting the right location yields will be even greater.’

Source: Residential Landlord

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What can we expect from the UK housing market in 2019?

Brexit and its impact is on every person’s mind, and rightfully so. The local’s aren’t sure which way the market is going to go – will the prices of the UK housing market rise or will they see a sharp fall? National investors, as well as foreign investors, are waiting with bated breath to know what their next move should be. Should they invest in property, sell their current properties or just let things be as they are. Well, below is what the experts are predicting and expecting from the UK housing marketing in 2019.

The number of houses for sale is expected to fall

According to RICS (Royal Institution of Chartered Surveyors), there will be a 5% drop in the sale of houses which is probably around a £1.5 million drop in sales in comparison to 2018. Since many people who have invested in property in the UK will not be forced to sell, they will not have to list their houses on the market. However, to maintain some sort of equilibrium there will be properties up for sale. As per RICS findings in 2018, the number of houses for sale i.e. the stock in the real estate market has been at its all-time low. That is because people are not willing to put their properties up for sale.

The monthly rent is expected to increase

Most people will be unsure about whether or not they should buy a house in 2019, or maybe because of a lack of options, so they will prefer to stay on rent. Owing to this fact, the prices of the rent for most houses will increase. You should expect to see a 2% increase in the cost of rent all throughout London and even certain parts of the UK. Some experts are predicting a 4% drop in the prices of London homes while some are expecting a 2% drop. None the less, even though the prices may be dropping, the number of houses for sale will also drop hence more people will prefer to take a place on rent. Keeping that trend in mind, most homeowners will spike up the rents.

The demand for houses in the outskirts will rise

Keeping in mind that the pound is falling and that a visit to the countryside is as good as a vacation, investors will start buying homes in the outskirts and near the countryside. These houses will be bought with the purpose of enlisting on Airbnb for the locals to book and stay. As per estate agents in Surrey, there has been a 0% change in the average property prices in Surrey from 2017 to 2018, and this is expected to remain stagnant in 2019.

The UK real estate market will see a rush of foreign investments

With the pound falling, more and more foreign investors will start to invest in properties in the UK. While the locals might sit with their hands tied waiting to figure out what is going to happen, the ultra-rich British nationals, as well as foreign nationals, will swoop in and buy the properties because of their discounted prices. For many wealthy investors, Brexit was basically an investment opportunity to invest in prime properties.

All in all, despite the changing prices and trends in 2109, experts are predicting that the UK real estate market will stabilise and return to normal within the coming 5 years. So, if you are planning on buying a house in 2019 then you should expect to see a return on investment in the next 4 to 5 years, so plan long-term investments as of now.

Source: News Anyway

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London Brexit fears see Asian property investors choose Dublin

Brexit has turned Asian property investors off London. Now, they’re reappearing in Dublin.

For the first time ever, Asian investors accounted for three of the top five investments in office buildings in the Irish capital in 2018, according to estate agents Knight Frank.

This included the biggest deal, the €176m (£158m) sale of one of the city’s largest office developments to Hong Kong-based CK Properties Ltd.

Across the board, analysts have been suggesting that London would see a Brexit-related dent to its property market. Earlier this year, a report from Savills indicated that Asian-based investors’ interest in the capital had tailed off, falling behind the level of demand among UK-based buyers.

It is of course no secret that many of the UK’s large financial services firms have decided to move some of their operations from London to elsewhere in Europe because of concerns over Brexit.

Dublin has been a big winner in this respect, and now it seems to be benefitting from top-line investment, too.

According to Knight Frank, when all of the year’s transactions are completed, the overall value of commercial property deals will have jumped from €2.5bn (£2.25bn) in 2017 to €3.5bn (£3.15) in 2018.

The office market accounted for the biggest share of transactions, something the firm said was due to strong occupier demand and competitive pricing compared to other European capitals.

Around 25% of Brexit-related relocation announcements between June 2016 and September 2018 involved moves to Dublin, according to Knight Frank — putting the city ahead of Luxembourg, Paris and Frankfurt.

Bank of America and Barclays, which has rented prime city-centre real estate a stone’s throw from Ireland’s parliament, are two high-profile banks that chose Dublin for their post-Brexit European Union hubs.

But Dublin’s real estate market has also long benefitted from its thriving technology district, known as Silicon Docks.

In May, Google announced it would spend €300m on the purchase and redevelopment of a series of warehouses in the district, dramatically expanding its existing European headquarters.

And Facebook, which also has its European headquarters in Dublin, announced it was set to quadruple its office space in the city, with room for 5,000 extra staff, by signing a long-term lease for a new 14-acre campus.

Knight Frank’s report also points to a big increase in Dublin’s private rental market, with several global institutional investors spending upwards of €1bn (£899m) in the sector.

Favourable long-term demographics, rising rents, and new investment-grade properties coming on stream are three of the main factors that encouraged the growth, the report says.

Source: Yahoo Finance UK

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Looking to the future

2018 was certainly a year of uncertainty in the UK so it comes as no surprise to see a knock-on effect on the property market that’s experiencing sluggish house purchase activity and slowing house price growth.

Property investors could therefore be forgiven for operating with understandable caution given the current political and economic climate.

So putting Brexit aside for one moment, property investors face an anxious January waiting for this year’s heavier tax bill to land on the doormat as Osborne’s tax changes really begin to bite.

Many professional landlords have already taken steps to limit their tax exposure by moving their portfolios into a limited company structure; however, it is still a huge burden on landlords looking to expand their portfolios.

These tax changes heighten the importance of yield of for professional landlords with many of them already looking further afield to access higher yields and some diversifying into HMOs, commercial and semi-commercial property.

These are also potential pockets of the property sector still growing substantially and may even benefit from a slowdown in other areas. For example, the bridging market has expanded over recent years with new lenders entering and new products being introduced to the market.

This substantial growth in the bridging market is reflected in the Association of Short Term Lenders (ASTL)’s quarterly results, showing that the number of loans written by its members had grown 21.2% in the 12-month period to 30 September 2018.

Brokers have also identified it as an area of growth. In the latter part of 2018, our research found that 70% of brokers believed that demand for bridging had risen. By comparison, only 8% thought it had fallen.

Many put this rise in demand for bridging down to property sales taking longer to complete leading to more developers requiring exit finance, more buy-to-let investors undertaking refurbishment and increased demand for purchasing properties at auction.

Like investors, brokers are increasingly turning to bridging, advising on cases and looking to diversify their revenue streams. Indeed, 65% of brokers stated that as bridging cases involve higher fees they present an opportunity to generate extra income.

When looking ahead in 2019, 12 times as many brokers expect demand for bridging to grow rather than shrink (62% vs 5%), making it a key growth area this year.

Brokers who predicted increased demand put some of the reasons down to rising house prices, slower sales of property developments, increased investors at property auctions and growing demand from buy-to-let investors.

With the demand for bridging increasing within a sluggish property market, we will continue to see more lenders stepping into the bridging market, increasing competition and improving rates. However, with lots of lenders offering similar products, brokers will really need to be aware of all the alternative financing options in the market.

For some brokers it can seem like a daunting and complicated market but through developing good relationships with specialist business development managers (BDMs), flexible solutions can be found.

BDMs are best placed to inform on product availability and appropriate criteria as well as offering flexible tailored advice.

As the bridging market continues to expand in an uncertain wider property market, BDMs will be able to familiarise brokers with all the products currently on offer and help navigate the more complex cases, ultimately providing the best solution for the client.

Source: Mortgage Introducer

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Some Of The Best And Worst Places To Buy Property In The UK

Every investor wants to be sure they’re making the right decision with their next investment, and location plays a big part in the success of any property venture. Certain areas of the UK are more prosperous than others when it comes to the housing market, with more opportunities and potential found up North compared to in the South. This guide takes a look at some of the UK cities with the most worthwhile prospects for investors, along with details on where to avoid.

The best: Liverpool

Liverpool has come a long way since decades ago, when the city was faced with economic struggles and little hope for the future. Today, Liverpool is one of the best cities in the UK, with a reported population of around 489,541 in 2017 and the fastest growing city centre population. The appeal of Liverpool for buy-to-let investments lies heavily on the affordability of property in the city, along with attractive rental yields reaching as high as 11.79 per cent in some postcodes. Those investing in Liverpool property can expect the best value for money compared to a lot of other UK cities like London, along with a rich culture and attractions, and lots of potential for capital growth.

The worst: London

For those seeking investment opportunities in the UK that are worthwhile, profitable, and affordable, London should generally be avoided. Though London has plenty to offer in terms of tourism, attractions, business ventures and education, the property market in London is one of the least lucrative in the UK as of late. High property prices and decreasing rental costs have resulted in some low rental yields of 3.7 per cent on average when it comes to buy-to-let. Not only this, but the type of property that normally provides investors with the best returns is less in demand than in the past. London property demand has diminished in recent years, with demand for more high-end properties having decreased since the time of the Brexit vote. The most in-demand type of properties in London are now reported to be based in the more affordable neighbourhoods and boroughs of the city.

The best: Manchester

Another thriving North West city, Manchester is proving itself to be a great area for property investors to get on board with. With plenty going on when it comes to nightlife and attractions, paired with a growing business scene, it’s no surprise that more students and young professionals are heading to the city to live, work and learn.

Manchester has a population of around 99,000 students, boasting the largest single-site university in the country. Records show that more people are choosing to leave London and move to Manchester as of late, which is certainly good news for investors who want to buy property in a city with demand coming from students and young professional tenants keen to stay in a high-quality city centre apartment. Property investment companies like RW Invest offer Manchester property investments with rental yields as high as 9 per cent, in prime city centre locations perfect for professional tenants.

Source: ShoutOutUK

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How is the UK commercial property sector performing?

The UK commercial property market is rapidly changing and facing highly uncertain times in the face of Brexit. We have a look at how the industry is evolving and what commercial property stocks to watch.