UK Government Boosts Build to Rent

UK Government Boosts Build to Rent

A £45m cash injection has been announced by the UK Government to kick-start the construction of 2,000 build to rent homes.

As the Government clamps down on the buy to let sector, it has announced that it will be driving £45m of its £3bn Home Building Fund, in a move to create a “bigger, better private rental market”.

The deal is one of the largest for the private rental sector in the UK, and is focusing on creating thousands of homes in Leeds, Birmingham and Manchester.

Housing Minister, Gavin Barwell, is also confident that it will “create jobs and opportunities for many hundreds of people”.

Along with the £45m from the Government, funds from HSBC will also be used to back the £400m project. 995 of the purpose-built housing units will be in Manchester, which has the highest rental yields in the UK outside of London: 774 more will be built in Leeds, and 323 in Birmingham.

In the Autumn Statement, issued in November, it was also announced that letting agent fees for tenants will be scrapped. This is just part of the Government’s plan towards tighter regulations, and improved quality in rental accommodation for the £5.4m households who rent across the UK.

Built To Rent To Replace Buy To Let

These plans follow on from George Osborne’s clampdown earlier in the year, ending mortgage tax relief and raising stamp duty. Both moves were intended to curb investment into the buy to let sector, and these latest moves demonstrate a new focus on build to rent, which Knight Frank estimates will be worth £50bn by 2020.

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The private rental sector in the UK is at an all-time high, and showing no signs of slowing down. As prices on residential property continue to skyrocket, it has never been more important to invest in new housing across the country.

The building and development of properties for the rental market, is one of the key aspects of our work at The House Crowd. Along with offering a more democratised property investment market for those seeking to raise capital through property, we are also confident that our investment opportunities are doing a great job in providing high quality accommodation across the rental sector in the North West of England.

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UK Property Market Growth Slows

… but prices continue to rise!

The latest Hometrack UK Cities Index has shown that the annual rate of house price growth in twenty of the UK’s largest cities slowed to 8.2% in August 2016. In July, growth had been at 9.5%. The average house price in the UK, as a result, was £239,400. Prices are still rising, but just not as fast at the moment.

Why Is the UK Housing Market Slowing?

People are finding it increasingly difficult to buy a home whilst the UK housing market continues to inflate quicker than earnings, particularly in the south, where many potential buyers are finding themselves completely priced out of the market. This fact is what is probably most of the reason for the slowdown in house price growth over the last couple of months.

There’s also the factor of the shock outcome of the EU Referendum, which gave lots of potential buyers reason to pause for thought. And, of course, is also in part due to the recent interest rate cut by the Bank of England.

So What’s the Good News?

Nonetheless, these disruptions to the UK housing market don’t seem to have had a lasting effect, and we’re seeing the market begin to settle down again now. This is good news that suggests an underlying strength within the residential UK housing market, which will hopefully see us optimistically into the long term.

What Does this Mean for Investors in the UK Property Market?

There is still a massive imbalance between supply and demand of properties on the market. This goes some way to explaining the continuing growth of the rental sector, and why property investors are increasingly leaning towards buy-to-let investment, including HMOs, as their investment of choice.

If residential property as an investment is still on your radar, however, then it’s still a good time to buy. There are signs that house prices are going to continue to rise, and getting in whilst there’s a chance you can afford to could pay in the longer term.

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For investors in the property market wishing to take the sensible route of diversifying their portfolio, record low interest rates make the potentially higher returns of equity crowdfunding and P2P lending for Real Estate an appetising option.

So choose your weapon… all signs point to a continually promising future for the UK property market.

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