Buy To Let Obstacles Fail to Deter Investors

There have been a lot of buy to let obstacles this year. Hikes in stamp duty, reductions in tax relief, tightening of mortgage lending criteria, and, of course, Brexit. And yet, landlords have pushed back, undeterred.

Investors Undeterred By Buy To Let Obstacles

Industry figures released last week show that, rather than being put off by these buy to let obstacles, landlords swept back into the market with gusto in September. Connells Survey & Valuation have released figures also showing a strong and successful September, with buy-to-let valuations rising 24% on August’s figures. Rightmove, too, have revealed a 30% jump in buy-to-let enquiries since May.

Another surprising statistic: in the nine months of 2016, to end of September, more has been lent to landlords than over the same period in 2015. Buy-to-let valuations over 2016 are 0.4% up on 2015.

New rental listings, according to analysis by Rightmove, in the third quarter, were 6% higher than in 2015. Anticipated drop-offs in investor activity affecting tenant choices proved to be unfounded.

From London to the North West

Even in the heady London property market, there was a year-on-year increase in rental listings of 15% over Q1-3 of 2016. As such, these high stock levels on the market led to a drop in asking rents in Q3, down 0.7% on Q2, staying below £2,000 a month. Of course, up in the North West where things are weathering the Brexit storm best, during the same period, rents went up 2%.

In the run up to the changes in stamp duty in April, there was an inevitable rush to close on property purchases in the first quarter of the year. As such, there was a significant drop-off come April, though this may well be down to many property purchases being hastened through before April’s changes hit.

Since then, things have really bounced back. One feature of the recovery seems to be a trend for investors knocking sellers down on asking prices to take into account those stamp duty charges.

Planning Pays Off

For those investors who have factored in those tax and policy changes to their financial planning, there are still strong returns on the cards in the property market. Especially when compared to the dismal performance of savings, bonds and equities, the long term ongoing shortage of social housing and a dearth of house building, is making property an increasingly attractive investment option.

Alistair Hargreaves, from John Charcol mortgage brokers, says:

“I can’t see Government rescinding the tax changes they’ve announced and I don’t see the Bank of England making it any easier for lenders. But that said, the flipside is that lenders are having to innovate to get business and there are still lots of competitive options available for landlords.”

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In addition, Mr. Charcol mentioned that despite tighter lending criteria, there are some innovative buy-to-let mortgage options available. Moreover, he recommended that in most cases landlords should consider longer term fixed rates or lifetime variables which remove some of the uncertainty for their finances.

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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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The Alternative Finance Marketplace: How is Real Estate Shaping Up?

We’ve been eagerly poring through NESTA’s 2015 UK Alternative Finance Industry Report, ‘Pushing Boundaries’, since it was published in February this year. The report offers a fascinating, in-depth look at all areas of the alternative finance industry, including – crucially – the Real Estate Alternative Finance (crowdfunding and Real Estate P2P lending) market.

If you like data, you’ll love it. But if you’d prefer something a bit more readable, you’ll be pleased to hear that we’ve put together our own guide to the state of the alternative finance industry, keeping the emphasis squarely on Real Estate Alternative Finance, of course.

Things have changed since NESTA published its report, ‘The Rise of Future Finance’ in 2013. At that time, the alternative finance industry was worth £939m.  In 2015, NESTA reported its value at £3.2bn. The market is on course to surpass the £5bn mark in 2016.

Real Estate Alternative Finance - QUOTE 1

It’s not just financially that the alternative finance sector has grown. It has evolved taxonomically, too.

In the 2013 report, NESTA identified a range of distinct funding models operating in the sector. Two years later, 28% of alternative finance platforms surveyed reported that they were operating a ‘mixed’ or ‘other’ business model, which does not fit into the existing taxonomy.

Real Estate Alternative Finance: Crowdfunding and P2P Lending Tops the Tables

The 2013 report has no mention whatsoever of the terms ‘real estate’ or ‘housing’. And yet, by 2015, NESTA’s report segments data on Real Estate Alternative Finance into its own category, such is the proportion of the industry it covers.

In 2015, Real Estate and Housing was the most popular sector for the alternative finance market.

  1. Real Estate and Housing
  2. Technology
  3. Manufacturing and Engineering
  4. Food and Drink
  5. Retail and Wholesale
  6. Leisure and Hospitality
  7. Community and Social Enterprise
  8. Finance
  9. Construction
  10. Education and Research

Combined debt and equity-based funding for Real Estate Alternative Finance amounted to nearly £700m in 2015, with P2P business lending in Real Estate (for mortgages and property development) taking the lion’s share: £609m – 41% of the total volume of P2P business loans in 2015.

The market volume of equity-based crowdfunding is much more modest, coming in at £87m for 2015, still a very significant sum.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 2

P2P Business Lending in Real Estate

In 2015, P2P real estate lending financed over 600 commercial and residential developments, mostly by small to medium sized property developers.

Of that hearty £609m funding sum for 2015, Real Estate P2P lending saw increased growth throughout the year:

Q1 → £120.78m

Q2 → £146.81m

Q3 → £152.96m

Q4 → £188.12m

Perhaps some of this extraordinary success has something to do with institutional funding in the P2P Real Estate lending sector? Institutional funding was around 25% in 2015, and up to 75% on some platforms.

P2P business lending for Real Estate comprises a range of financing models and products. There are the short term bridging finance loans, which run for a 12 to 18 month period. Them, there are the longer term (3-5 years) commercial and residential mortgages, and construction/development debt finance.

In 2015, the average size of P2P loans for Real Estate came in at £522,333, slightly under 2014’s £662,425 average. The figure for 2015 was more in line with the average UK house price than the previous year. This may be due to the growing use of P2P lending in funding residential and commercial mortgages, rather than the larger developments focused on in 2014.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 3

Just a quick clarification point here: regulatory constraints mean you cannot use P2P Real Estate lending for your own residential mortgage.

It’s also not a done deal to apply for a loan for a Real Estate development: in 2015, 27.5% of loan applications in P2P Real Estate lending were accepted.

The average number of lenders required to fund a typical P2P Real Estate loan? 490.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 4

Equity-Based Crowdfunding for Real Estate

This model enables investors to acquire ownership of a property asset, via the purchase of shares, either of a single property, or a number of properties as part of a portfolio.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 5

In 2015, equity-based crowdfunding for Real Estate raised a total of £87m, for 174 development projects. This is how the annual quarters looked:

Q1 → £13.09m

Q2 → £23.16m

Q3 → £35.70m

Q4 → £14.63m

Equity-based crowdfunding for Real Estate had a great year in 2015. The record for fastest funding for a development project was set: £843,100 was raised in just 10 minutes and 43 seconds, from a total of 319 investors!

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 6

Unlike P2P Real Estate lending, with equity-based crowdfunding, there is scarcely any institutional involvement. Of the 10,626 funders participating in Real Estate crowdfunding, NESTA found that only 3% were categorised as institutional investors by the platform. This contrasts with the 77% of sophisticated or high net worth investors in the model.

Yes, equity based crowdfunded property investment is much more grass roots in many ways than the P2P Real Estate sector. The recent inclination to lower minimum investment thresholds in this area, with the aim of enticing more retail investors attests to this in a very clear way.

Whilst 27.5% of loan applications in P2P Real Estate lending were accepted in 2015, in equity-based crowdfunding for Real Estate, platform acceptance rate was much lower. Only 2.9% of deals made it onto the platform, on average.

However, deal success rate for those who did make it onto the platform was pretty high: 87%. There are also far fewer investors required for an equity deal – NESTA reports an average of 150 per deal. The average deal size for 2015 in the crowdfunding sector for property was fairly high, too: £820,042.

Real Estate Alternative Finance and Manchester

Of the 58 alternative finance platforms surveyed by NESTA for their report, 62% were – unsurprisingly – London-based. However, a significant 5.2% hailed from our home city of Manchester.

Manchester is also one of a number of regional and local authorities that have either partnered with online alternative finance platforms to fund local SMEs, or have used alternative finance methods to fund community projects.

NESTA’s data shows that the most active regions receiving funds from Real Estate crowdfunding were London (of course), the North East, and the North West. The North West was also found to be one of the top 3 regions actually providing funds.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 7

This isn’t terribly surprising given the growing trend for emphasising Real Estate crowdfunding within areas in need of regeneration. Manchester has, as we know, come a very long way. The economy of the North West has been transformed over the last few years, in no small part due to the heavy investment in regeneration projects, in the form of development funding from both the public and private sectors.

It is these regeneration areas that are being identified as some of the potentially best investment opportunities. Not only do they cost investors less than prime locations, but these areas are also the ones that will experience the highest growth over coming years.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 8

Real Estate Alternative Finance and The Government

Direct investment from the government has helped support the growth of both peer-to-peer and crowdfunding markets. In 2015, £60m was lent by the British Business Bank via P2P lending platforms, specifically for SMEs.

Tax incentives have also been applied, including the EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme). These schemes have been widely used, by a large proportion of investors using alternative funding platforms, and have been especially popular within the equity-based crowdfunding market.

The launch of the IFISA (Innovative Finance ISA) in April 2016 is also an exciting development in the alternative finance sector.

In particular, P2P business lending platforms for Real Estate expect the IFISA to generate a whopping 51.9% growth in transactional volume this year, whilst equity-based crowdfunding platforms for Real Estate predict 30.31% growth as a result of the IFISA.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 9

The figures for Real Estate Alternative Finance outmatch those elsewhere in the alternative finance market. P2P consumer lenders, for example, expect a 26% increase in total volume as a result of the IFISA. It’s clear that Real Estate lending stands to benefit the most.

In anticipation of the influx of retail investors expected by the onset of the IFISA, some P2P Real Estate lending platforms are even lowering their investment thresholds.

What is the IFISA?

At its most basic, the Innovative Finance ISA allows UK investors to lend money using P2P lending platforms to invest up to 100% of their £15,240 annual ISA allowance, and to receive any interest and capital gains tax-free. You can find out more here.

Institutional Investment in Real Estate Alternative Finance

Catching the scent of a good thing, institutional investors are also muscling in on the peer-to-peer real estate lending market, as they are across the alternative finance industry.

It is estimated, based on platform reporting, that in the UK in 2015, 1,031 institutional funders were at the bottom of financing loans and equity deals in alternative finance.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 10

45% of all alternative finance platforms reported institutional involvement in 2015. In 2014, this was 28%, and in 2013, just 11%.

For P2P business lending, in 2015 26% of total funding was attributable to institutional funding. In peer-to-peer Real Estate lending specifically, a total of 25% institutional funding was reported, with significant increase between the 3rd and 4th quarters of the year, in particular:

Q1 → 22%

Q2 → 22%

Q3 → 23%

Q4 → 31%

By contrast, however, in equity-based crowdfunding, 2015 saw just 8% of funding coming from institutions.

With institutional funding growing in the alternative finance market, as well as the influx of more high net worth investors, there is some discussion about whether the disruptive force of the alternative finance market is at risk of being stemmed.

Banking institutions have found themselves burdened with heavy regulatory compliance, cumbersome legacy systems and bureaucratic complexity. Since the debacle at the end of the last decade, the general populous has been hungry for new alternatives to the traditional financial system. Confidence has been lost, and – at the retail end of the investment spectrum at least – making one’s savings grow within the received systems has less potential for gains than what’s promised by alternative finance.

Alternative finance has become a key player in the development of a whole new generation of financial products. Along with a range of other FinTech solutions to saving, banking and investment, this revolutionary rumble has got the banks concerned.

It’s no wonder that, as such a disruptive movement grows, it finds itself on the precipice of being co-opted into the corporate world. But all the time that interest rates on savings accounts remain shockingly low, and first-time buyers view getting on the property ladder as likely as a winning Euromillions ticket, the prospect of a less suffocating alternative for growing money will continue to be thoroughly desirable.

And, focusing on Real Estate specifically, research conducted by Crowdstacker found that 44% of retail investors would like to increase their exposure to the UK property market, not only owning their own home, but also by investing through P2P lenders, like The House Crowd. Investor reluctance was found to centre around the time consuming nature and costs of property management, as well as affordability. The alternative finance model of crowdfunded property investment and P2P lending in Real Estate removes those factors from the equation.

2015 also saw the emergence of self-managed, platform-owned listed investment trusts, funds and vehicles: a sure sign that platforms are preparing to challenge the fund management space.

And as the alternative finance world continues to evolve, we are also seeing the emergence of a number of independent online aggregators, such as Informed Funding, FinPoint and ABF. These are rising up to provide additional channels and services for connecting business fundraisers to alternative finance platforms.

That being said, corporate interjection into the alternative finance space should not be considered a negative. It is this involvement that is allowing the industry to grow and evolve.

A number of P2P consumer lending platforms have struck high profile partnership deals with some big-name corporates.

REAL ESTATE ALTERNATIVE FINANCE - QUOTE 11 - THE HOUSE CROWD

Corporate partnerships have been witnessed between alternative finance platforms and large brands such as Virgin, Amazon, Uber and Sage. As NESTA puts it, these partnerships are “fusing the traditional corporate world with the disruptive models of alternative finance”.

It is these partnerships that will aid in increasing public awareness of the alternative finance sector, but not only this. Corporate partnerships will also attract high quality borrowers, reducing default rates on P2P loans, and also offers the potential for data gathering, which will enhance the industry’s credit scoring capabilities, and inform risk management.

The increasing involvement of high net worth investors, along with institutional funding and corporate partnerships is what is allowing alternative finance to push boundaries, blur definitions, and limit the dangers of orthodoxy: it is a catalyst for rapid evolution.

Conclusion

The extraordinary growth of the industry that we have witnessed over the last few years has begun to level out.

In 2015, the UK’s alternative finance industry facilitated investments, loans and donations totalling £3.2bn. In 2014, this figure was £1.74bn – a YoY growth rate of 83.91%, which is not to be sniffed at. But when you compare this to the 161% growth between 2013 and 2014, it looks positively small.

REAL ESTATE ALTERNATIVE FINANCE REPORT - QUOTE 12 - THE HOUSE CROWD

In 2014, 24 new alternative finance platforms began trading. This was down to 14 in 2015. Fewer new entrants are joining the market, whilst existing platforms continue to increase their total volumes at a steady rate.

Up until now, the industry appears to have been actively pushing its boundaries, both in its evolution, and in its rate of growth. Whilst the figures continue to be staggeringly impressive – with the market on course for a £5bn year in 2016 – plateauing figures are a good sign that the industry is maturing.

Alternative finance is coming of age with intelligence and dignity. It is listening to influential voices from big corporates, accepting helping hands where they are offered, and maintaining its grass roots persona. Most of all, however, it’s making money, not just for a few, but for a large body of investors all along the wealth spectrum. In Real Estate, it’s helping to regenerate run-down neighbourhoods, keeping a stagnant housing market moving, improving living standards across the board.

REAL ESTATE ALTERNATIVE FINANCE REPORT - QUOTE 13 - THE HOUSE CROWD

In short, alternative finance may have been a disruptive teenager, but it’s growing up to be a real force for good in the middle of a blighted financial landscape. The future of finance is looking promising.

 

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The EU Referendum & The Property Market: What We (Don’t) Know

It seems that everywhere you turn at the moment, someone is talking about the EU referendum. Feelings are running high on both sides, and yet it feels like there’s very little in the way of straight-up, unspun facts.

We’ve set out on a quest to try and pin down some objective answers. After all, there’s an awful lot of discussion of how a potential exit from Europe will affect the property market. So, we thought it only right that we should try and clear things up for you guys.

However, with our crystal ball sadly out of order, we’re sorry to say that we’re none the wiser. Turns out, no one really knows for sure what will happen if we leave Europe, nor even how things are likely to go if we stay. That’s not to say a little guesswork couldn’t be beneficial… Frazer has offered a ‘Referendum Martini’ to the person with the most accurate prediction when we review the impact of the referendum in twelve months’ time.

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So, how do you like yours? Shaken, not stirred? On the rocks? We’re afraid straight-up seems to be off the menu right now.

A poll back in November by Greenberg Quinlan Rosner identified Founder of MoneySavingExpert, Martin Lewis, as the most trusted voice in the EU debate. So, let’s see what he has to say.

The-EU-Referendum

Gee, thanks for that, Martin.

Martin also added that “anybody who tells you that they know what will happen if we leave is a liar”. Of course, he’s right. No one really knows what’ll happen if we leave. Either that, or it’s being kept very, very quiet because there are dragons involved.

The EU Referendum

 

Dragons or no dragons, one thing’s for certain: on 23rd June, we’re expected to queue up at the polling station to cast our vote in the national equivalent of a “Guess how much this pig weighs” competition at the village fair.

Whatever your own, personal views may be, we’re sitting firmly on the fence with this one. Frazer himself sighed heavily when we announced our intention to write this article. Nonetheless, we still want to give you, our investors, a bit of a rundown on how the referendum may or may not affect the property market here in the UK. We’re basing this purely on the information that’s out there already (trust us when we say that, whilst writing this, we have three browser windows open, with a total of eighteen tabs between them, plus a notebook full of confusing stats and quotes), so just to drill the point home: we have no interest in swaying your vote either way.

With that in mind, probably the best way of doing this is to tackle each side of the debate in turn. Are you sitting comfortably?

Bremain: The ‘Stay’ Camp

The Prime Minister and Chancellor are, as we all know, rooting for Remain, marking an elaborate about-turn on what Cameron had to say about the EU back in 2009, before he was elected Prime Minister. This may, or may not, have something to do with TTIP, another thing that may, or may not, be good for Britain. But, of course, there’s plenty of talk of deception from both camps, with even Bremainers suspicious about Cameron’s motives for switching sides.

quote-brexit-1

Whatever the motives, George Osborne has come out with a damning indictment of what he reckons will happen to the property market in the event of a Brexit. The Chancellor predicts a house price crash, which would leave homeowners in negative equity and being forced to sell at a loss, and property investors seeing a slump in the value of their asset. He has also stated that the cost of mortgage products would rise, so even those seeing the opportunity in a crash to get on the property ladder would not benefit. Even with lower housing prices, if mortgage prices go up, people wouldn’t necessarily be able to afford to buy anyway. He predicts that, within the fifteen years following a Brexit, households would be £4,300 worse off.

Whilst the general consensus is that Brexit could cause a drop in property prices, Robert Gardner, chief economist at Nationwide, believes that other factors could keep those prices buoyant:

“It is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth.”

This view, of course, supposes that those factors will remain constant in the event of a Brexit, which – again – is not entirely certain. Perhaps we should ask Martin Lewis again…

The-EU-Referendum

Brexit Clauses and The Fate of Sterling

It’s interesting to note that the most recent reports that support for Remain has dropped appears to have caused an immediate plunge in the value of sterling against the dollar. Could it be that the very idea of us leaving the EU is having a negative effect on our economy?

A survey by accountancy firm KPMG has found that 66% of real estate experts believe that “Britain leaving the EU would have a negative impact on inbound cross-border investment”, with fewer overseas investors being prepared to invest whilst the fate of sterling is so shaky.

Reuters conducted a survey of 24 law firms, and found that a solid half of these had used special ‘Brexit’ clauses, had at least one request for such a clause, or brokered a deal with one. The rest said they’d seen one, though not dealt with one directly.

brexit-quote-2

So, what is a so-called ‘Brexit’ clause? Well, they’re currently all the rage, it seems, particularly in high value investments and with overseas investments, who are concerned that an ‘Out’ vote could weaken the sterling. Such a clause is being added to contracts, giving buyers the right to walk away from real estate deals in the event of a ‘Brexit’ vote.

Paul Firth, of law firm Irwin Mitchell LLP, has stated that “Investors fear that the value and return on investment properties may decline, and may not be as good an investment if Britain withdraws from the EU”.

Buyers investing in the swanky new Two Fifty One luxury apartment tower in up-and-coming Elephant and Castle are doing so on the understanding that they do not have to exchange until July 6th, and could withdraw their offer with a full refund of their deposit if they are unhappy with the outcome of the referendum.

However, whilst such a clause does sound particularly damning in terms of general opinion of Brexit, admittedly it’s mostly just good marketing, a way to try and unfreeze a sector that’s currently being stalled by uncertainty ahead of the vote. Both buyers and sellers are waiting to see the outcome, which can be seen in the commercial property sector in particular, where transactions have fallen a steep 40% in the first quarter of 2016.

Brexit: The ‘Leave’ Camp

Let’s start with George Osborne. This ‘households worse off by £4,300’ figure of Osborne’s has attracted some scrutiny. Sceptics point out that with this statement Osborne is conflating GDP with household income, a phrase that has never been used in any budget to date. In fact, Osborne said himself, when entering office, that “GDP per capita is a much better indicator”. He even went as far as to say that GDP is a misleading indicator that can be artificially inflated by immigration. Interestingly, he’s made no mention of GDP per capita at all upon the launch of the latest ‘Brexit’ documents published by the Treasury.

Going back to Osborne’s statement about Brexit’s effect on lowering house prices, there is a similar potential disadvantage to remaining in the EU with regard to the same. It could be that staying in the EU makes it even harder to get on the property ladder than those proposed hikes in mortgage prices. If there is a surge in immigration to the UK following a Bremain vote, domestic demand may keep house prices rising.

And speaking of immigration, yes, with a ‘Brexit’ vote, there is the chance of EU nationals losing their right to live and work in the UK. However, this assumes that a post-Brexit UK government would immediately seek to cleanse the country of EU citizens. It’s something a lot of Bremainers are very worried about happening, and understandably so. Are you worried about this, Martin Lewis?

The-EU-Referendum

But it’s worth asking why the government would do such a thing? It’s most likely that EU nationals earning over a certain amount, and contributing to the UK’s economy, will find it no harder to live here than they do at present. Those who would have to worry are likely to be EU citizens in the UK in low-paid jobs, or who are unemployed. And, speaking purely on the subject of the property industry, it’s not these guys who are going to be buying here anyway.

Let’s look at the prime housing market in London, where, according to a study by Knight Frank, in 2013, for example, 49% of all prime central London buyers were non-British citizens, while 28% didn’t even live in the UK. It’s hard to say if the EU played any role whatsoever in attracting the super-wealthy to London, perhaps not a big one, seeing as only 16.5% of these buyers were from other EU countries.

Some owners in this category would, indeed, sell up and leave the country in the event of a Brexit vote, most likely as a result of institutions like the European Bank for Reconstruction and Development upping sticks and taking staff with them. But the main body won’t be forced to leave, nor, indeed, even want to if we leave the EU. And, what’s more, the bulk of serious money in this area comes from the 9% made up of Russians, and 7.5% of wealthy Middle Easterns, to whom the EU matters not a jot.

brexit-quote-3

That being said, it’s not just the super-wealthy from overseas who favour the UK. Whilst these overseas investors may be attracted to our rising property prices, they also love the UK’s greatest cities for their vibrant culture, relative political and economic stability, relatively honest legal system, and its favourable rules for non-doms. In short, in London at least, the effect of Brexit is unlikely to be too catastrophic. Winkworth’s Dominic Agace concurs:

“The UK and London in particular has always had a draw for foreign investment, not only from Europe, but much further afield, and I would expect this to continue whatever the outcome, especially as people come for many reasons, including schools and the lifestyle.”

Further to all this hoo-hah about property prices plummeting, the Brexit camp would point out that, despite the slowdown in the wider economy, house prices in the UK are still climbing fast. In the year to March 2016, a 9% rise was reported by the Office for National Statistics. Projections also show that prices will continue to rise, roughly by a further 10% by the end of 2018 (according to the Office for Budget Responsibility itself!). So, if we use the Treasury’s own figures, that prices will be 10% lower than they would otherwise be by 2018, surely that implies prices would just be flat on today’s cash terms?

Finally, despite Osborne’s fears that not only house prices would plummet, but that mortgage rates would rise, the Brexit camp is optimistic. Due to immigration from the continent in the event of a Bremain vote, the young people who are currently finding it hard to get on the property ladder would find it even harder, they argue.

Conclusion

To conclude, despite what sounds like good arguments on both sides of the debate, there remain no tangible facts to go on with. Pick your side, and hope for the best. And stay tuned for any news as to who’s going to get their hands on that ‘Referendum Martini’ from Frazer…

Who do you think will win that Martini, Martin Lewis?

The-EU-Referendum

 

 

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Sources:

 

Property News Round-up 6/4/16

Property News All The Latest Updates

 

Hi guys and welcome to another fortnightly property news round-up, today we once again take a look at the latest goings-on in UK property from the north-south house price divide to looking at Ringo Starr’s childhood home in Liverpool – one for you Beatles fans out there!

 

North-South House Price Divide Continues

uk property map

 

House prices in northern England are now less than half those in the south of the country, according to the Nationwide – a new record. (BBC, April 2016)

In the north, on average a property is worth nearly £163,000 less than one in the South.

Stats from Nationwide show that in the first quarter of 2016 prices in Southern England rose by 9.9% year-on-year, compared to just 1.8% in the North.

In addition Nationwide mentioned from their research that property prices were picking up, from the start of the year to March, house price inflation across the country hit 5.7% – up from 4.8% in February and the fastest rate for more than a year.

The building society mentioned that main reason centred around the increase was predominately linked to landlords rushing to buy property ahead of Stamp Duty increases.

Their stats show that property prices are rising the fastest in the London suburbs (an annual change of 12.2%), in contrast, Scotland and the north had an annual change of 0.2% and 1.1% respectively. Click here to view the full list of regional house prices here.

Are you looking for an alternative when it comes to property investing? Why not check out latest regional investments here.

 

Property prices Soar By 47,000 % In The 90 Years Since The Queen Was Born

Queen Property

National Statistics (ONS) and data from Jackson-Stops & Staff found out that between 1926 and the outbreak of the Second World War in 1939, average UK house prices rose by only £40, to £659, a rise of 6.5 per cent. (City A.M., April 2016)

However, by the early 50’s property prices in the country had jumped more than threefold to £2,006. By 1966 (what a glorious year that was! ?) house prices were over £3,000. In the 70’s, prices rose by 331 per cent to £12,704, rising to £36,276 in 1986, by the mid 90’s prices had doubled to £69,889.

According to Jackson-Stops & Staff’s calculations, if prices continue to rise at the same rate as they have in the last two decades, the average property will cost £1.3m when Prince Charles celebrates his 90th birthday in 2038, and £11.3m when Prince William reaches the same age in 2072.

For further reading you can view City A.M.’s article here.

 

Two In Five Of Us Look Up The Prices Of Homes Owned By Friends & Family

nosey neighbour

 

It seems that snooping up on our neighbours is nothing new and has evolved with the digital age.

More than 38 per cent of Britons have checked the price of someone else’s home online in the past year – including the properties of neighbours, family and friends – according to the findings by insurer Direct Line. (This Is Money, April 2016)

The research showed that out of the 19 million Brits who have looked up someone’s home, 52 per cent looked at their neighbours’ homes online, 38 per cent look at their family’s homes and 31 per cent at friends’ houses, now that’s a lot of snooping if you ask me!

In addition, Direct Line’s research showed that 10 per cent of people look online at the homes of their colleagues.

Head of Direct Line Home Insurance, Katie Lomas told This Is Money : “We are a nation of property obsessives with very good reason. Our homes are our castles and becoming a homeowner or even climbing the ladder in the UK is a huge challenge and aspiration for many.”

 

 

To Millennials Caught In The Rent Trap, The Panama Papers Matter

Iceland Panama Papers

As The Guardian’s Kate Lyons mentioned in her article yesterday, the Panama papers is the largest leak in journalistic history and the papers have led to the ramifications of the Icelandic PM Sigmundur Davíð Gunnlaugsson to resign after being accused of hiding millions in an offshore account.

So how does this link to millennials? For Generation Y, they are particularly frustrated with the political and economic status quo as well as the unjust activities of the rich that have been revealed from the Panama papers.

In a country where a lot of the millennial generation cannot afford to get onto the property ladder, the fact that thousands of properties are bought through tax haven-based companies, by people who are already wealthy enough to restructure their finances to take advantage of tax havens in tropical islands really matters to young people.

Home ownership is sadly out of reach for most young people in the UK, something that has been known and reported for a long time, we even conducted research on the matter back in October (which you can view here) – a sobering stat that we uncovered was that a quarter of under 30’s say they need someone to die before they can afford to buy a property.

This is where there is a link with the Panama papers. We know from recent reports just how much property is owned by companies linked with Mossack Fonseca and we can see the direct affect it is having with young people.

When turning on Sky News yesterday evening and heard about the news, being a millennial myself, I wasn’t surprised about what had happened. Hearing about the rich putting offshore money in tropical paradises such as the Cayman Islands and the British Virgin Islands to keep themselves even more wealthy and powerful isn’t new to us at all – however, this way of them finding tax loopholes comes at the expense of others.

Image Source : The Wall Street Journal

 

Childhood Home Of Ringo Starr Sells For £70K

Ringo Starr Liverpool Property

One for all you Beatles fans out there! The childhood home of The Beatles drummer Ringo Starr has been auctioned at the Cavern Club in Liverpool.

The terrace house with two bedrooms at 10 Admiral Grove in Toxteth and was where the former Beatle lived as a small child and until he was 21.

The Liverpool property had a guide price of just £55,000 ($78,000) and reveals the humble beginnings of the Beatles drummer.

Ringo’s childhood home was bought at auction for £70,000 by Jackie Holmes from London. She has previously bought the house of John Lennon’s mother in Allerton last April and George Harrison’s home in Speke the year before.

Unfortunately at The House Crowd we can’t help you invest in your favourite band’s former home BUT we can offer you some handy guides! If interested, we have guides on Manchester (North and Central) and also our South Yorkshire guide.

 

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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Property News Round-up 9/3/16

Property News Round-up 9/3/16

 

Hi guys and welcome to another fortnightly edition of our property news round-up. As usual we will be looking at the latest goings-on in the domestic property market from looking at various house prices around the country to the sobering prospect of Brits having to face on average a three year wait before they can afford a property. If you missed our last property round-up, feel free to catch up here.

Average London Home Is Worth Nearly Triple Those Across England & Wales

 

London Property

New figures reveal the change in house prices over the past year and highlight the regions with the fastest growth in Britain. (Homes and Property, February 2016).

It was revealed that house prices in the capital have risen by nearly 14% with the average house worth three times that of houses in the rest of the country.

In other parts of England and wales, an average property price is around £192,000, in contrast, in London, the average cost will set you back over £530,000.

According to the Land registry, London and the South East have performed strongly with capital figures at 13.9 per cent and 10.7 per cent for the South East respectively.

In addition, the South West prices rose 6.2 per cent this year, cities such as Bristol saw house prices rise to over £220,000.

Moving onto the north, the North East showed the smallest price increase of just 0.2 per cent, cities such as Sunderland fell by 3.2 per cent.

However, on Tyneside, Newcastle had the highest monthly price rise in the north east, with an increase in January of 2.1 per cent to just over £123,000.

In the North West prices grew by 2.1 per cent, Manchester once again showing signs of buoyant growth at 5.6 per cent.

 

Study Shows Third Of £1m-Plus Homes Paid For In Cash Since 2011

Expensive Homes UK

According to research, about a third of homes sold for £1m or more in the UK have been paid for in just cash in the last five years.

Cash buyers have spent more than £63bn in total on £1m-plus homes in England and Wales since 2011, spending on average £1.75m for a property. (Guardian, March 2016).

The research comes after a report from a high street lender predicted that the number of properties in the UK worth £1m or more would more than triple by 2030. Currently, less than 500,000 homes across the country are valued at £1m plus.

The house price analysis which was conducted by Bower Private Clients (BPC) also found out that almost two-thirds of cash buyers bought in London where the average spend per property hit £1.89m, but southern and eastern England also saw high numbers of cash buyers for £1m-plus homes.

Moreover, the Essex based company revealed that their research showed that in London, 22,852 properties costing £1m-plus have been bought for cash since 2011, and 7,864 elsewhere in the South-East. Heading north, there were 641 properties that were priced at £1m-plus and 239 in Yorkshire and Humberside respectively.

Property Investment Is Growing At A Greater Rate In The North East Than Anywhere Else In The UK

North East Investment

Investment in property is growing at a greater rate in the North East than anywhere else in the UK, with investors snapping up more than £1bn worth of commercial property in the last year. (Chronicle Live, February, 2016).

Commercial property experts CoStar revealed that investment volumes within the North East grew by 32% – the largest percentage increase of any UK region.

Gavin Black, chairman of the G9 Group of chartered surveyors told Chronicle Live the North East 2015 total of £1.06bn was almost double the £524m annual average over the last eight years.

He went onto to say that by any judgement this is impressive and that investors are increasingly searching beyond the capital for value and within the North East there is good value as well as asset management opportunities. Investors are always keeping a close eye out on lucrative deals in the region.

 

Property Sales In Scotland Up 4% In 2015

East Renfrewshire Property

We now leave the North East and travel to the north of the border to look at the Scottish property market.

A new analysis report points out that residential sales in Scotland increased by 4% in 2015, which were well below the 11% recorded in the previous year.

The report which was conducted by Savills indicates that tougher mortgage lending conditions during the first half of 2015 impacted the recovery of Scotland’s housing market, but the property market adjusted during the second half of the year due to a recovery in mortgage lending for house purchases across Scotland, which increased by 9% from 59,500 in 2014 to 64,800 in 2015. (Property Wire, March 2015)

East Renfrewshire (pictured) witnessed the strongest annual growth in the number of transactions during 2015 at 13% due to the good schools effect. Glasgow, West Dunbartonshire and West Lothian also performed well and experienced high transactional growth during 2015.

The number of transactions at £1 million and above reached its highest level since 2008. Savills report showed that Prime markets in suburban and commuter areas across the country’s Central Belt performed strongly last year, with growth spreading out from core urban hotspots.

Faisal Choudhry, director of Savills Scottish Research mentioned in Property Wire that the upturn in demand is driving an improving development land market. Sentiment for development land in Scotland’s cities remains a positive one.

Are you interested in Scottish property investment? If so why not visit our property investment in Scotland page.

 

Brits Face Waiting An Average Of THREE YEARS Before Buying First Home

House Buyers UK

A sobering thought… BRITS have to wait an average of three years before they can afford their first home, according to new research. (Express, March, 2016)

The biggest barriers involved include high prices, saving for a deposit and other costs associated with buying or moving house.

Recent research shows that one in two people want to buy their first home or move up the property ladder.

Moreover, six in 10 say they will have to wait 12 months, while 21 per cent worry they may never afford to buy or move home.

Price comparison site GoCompare found out that those who were thinking of buying or moving home have been doing so for an average of 3.2 years.

The sheer lack of availability in the area they want to live, job insecurity and the costs such as mortgage payments, as well as bills have been the main barriers for people. Also, saving for a deposit has been a huge hurdle for many.

GoCompare’s product development manager Matt Sanders told The Express : “Affordability is a big concern for both first-time buyers and those wishing to move-up the property ladder. House prices are increasing due to rising demand and lack of supply. (Express, March 2016)

He also mentioned that with house price inflation exceeding wage growth it’s even tougher to save enough money for a deposit – as a result has potentially put homeownership out of reach for many people.

Are you looking for an alternative and an accessible way into the property market and are thinking about getting involved in property crowdfunding? If so, why not take a look at our Property crowd funding- how it works page for more info.

 

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

 

Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning

Property News Round-up 13/1/16

Property News  All The Latest Updates

Hi guys and welcome to our first property news blog post of the year! The new year hasn’t started well with stock markets coming under severe pressure with the FTSE 100 being down by 5% (its worst start since the new millennium!). In addition, many analysts have predicted more doom and gloom this year (which we will cover in our first story). In China, this year is the year of the Monkey, and we certainly need people who have a huge amount of intelligence and wit (to help us feel a bit more cheery ahead of hard times), both intelligence and wit are associated with people who are born in that Chinese Zodiac year!

 

A Brief Insight Into The Property Market in 2016

property 2016

In this country we always talk about property prices, however, this year there will be more to talk about the likes of stamp duty and landlords.

One thing that will happen in both England and Wales will be an increase in stamp duty – from April 2016, those who are seeking to buy a second home will have to pay a 3% surcharge on each stamp duty band.

The ramifications will therefore make things more expensive for second home buyers and also put off other potential buyers.

In addition, it will not only be second home buyers who will be having a tough time in 2016, buy-to-let landlords will also see their stamp duty rise and will also lose some of their tax privileges (which is already in the pipeline for next year).

As the BBC put it (in my opinion I think they are spot on) mention that who would have guessed that a Conservative government would take a dim view of buy-to-let landlords, just the sort of people supposed to be staunch Tory voters?

The irony is that what exactly has happened as we discovered in George Osbourne’s Autumn Statement.

Regulations such as the illegal immigrant regulation will give landlords even more nightmares (this regulation come into play on the 1st February), they will have to check that their tenants have the right to rent in the UK, if not, they face a £3,000 fine.

One analyst predicts that the first few months will be bumpy as some people will rush to purchase buy-to-let properties before higher stamp duty rates take effect. He also mentions that we will see some quite strong growth in prices, and expects to see prices fall for the next few months as that element of demand is taken out of the market. (BBC, January, 2016)

 

Salford Tops Property Sales In 2015

Salford property

Salford topped the property sales leader board in 2015, a report which was compiled by Halifax, found that the number of property sales taking place in Salford has jumped by 23% this year compared with 2014, also Pontefract in West Yorkshire was ranked second with 20% of property sales.

The report indicated that many towns across Northern England, the Midlands and Wales saw house sale numbers increase, in contrast, the South saw many of the biggest falls in sales.

Below shows the proportions of property hotspots in regions across England and Wales according to Halifax’s research (stats taken from BT) :

  • North 38%
  • Yorkshire and the Humber 26%
  • North West 29%
  • East Midlands 2%
  • West Midlands 20%
  • East Anglia 4%
  • Wales 39%
  • South West 16%
  • South East 15%
  • Greater London 6%

 

Downsizing For One In Three Over-55s Are Dashed Because Of Lack Of Suitable Housing

downsizing property

One in three homeowners over-55 want to downsize but are being prevented by a lack of suitable housing, a report has warned. (Daily Mail, January, 2016)

Researchers found that over-55s hoped to move because smaller homes were easier to manage or because they wanted to release equity to boost savings or pension pots.

International Longevity Centre and retirement housing specialists McCarthy & Stone‘s ‘Generation Stuck’ report revealed that a third of over-55s were actively considering downsizing or expecting to do so in future.

Last year, the Financial Conduct Authority’s mortgage sector manager Lynda Blackwell said Britain had ‘a real problem with the last time buyer’ the Daily Mail mention.

What was particularly interesting to find out was that older people from the UK are among the least likely to move in the Western world. Figures from five years ago show that just 1 per cent of people aged 60 and over moved into retirement housing, compared with 17 per cent in The States and 13 per cent in Australia and New Zealand.

If you fit this age bracket and are looking for an alternative way to invest in property we recommend reading our case study section.

Image Source : Daily Mail

England’s 5,000 Biggest Landowners Are Being Asked To Free Up Land For Affordable Housing

housing crisis

The owners of 5,000 of the country’s largest rural estates hold the key to creating employment, economic growth and housing in areas of the country that are experiencing population decline, according to a recommendation from The Royal Institution of Chartered Surveyors (Rics). (Telegraph, December, 2015)

The call came as figures show that house prices increased at a rapid rate last month, and many have had concerns  that a shortfall of new homes could push the growth in prices higher.

According to Sir Peter Erskine, who has built 22 affordable homes on his family’s Cambo estate in the East of Fife, Scotland, “the big estates are the solution to the depopulation of rural communities”. (Telegraph, December, 2015)

The area near to where his estate is situated has already lost a green grocer and post office, plus the local school has seen a decline in pupils. It clearly shows as Rics‘ head of policy, Jeremy Blackburn mentions that by adding Small amounts of affordable housing can make a huge difference to the viability of rural communities, building just ten units in 1,600 small and market towns in rural areas of the country would solve this rural housing crisis.

Sir Peter Erskine revealed that from experience landowners have dealt with an increasingly hostile political atmosphere and also been held back by high taxes but are willing to create opportunities to effect positive social change in their areas.

Image Source : Telegraph

Northern Property Hotspots For 2016

liverpool property

Last year Rightmove reported that the price tag for a house in London could rocket to an average of £1 million and this is largely down to high demand, cheap mortgages and a lack of accessible homes in the capital.

Investors are therefore heading north as many have discovered that reduce the amount they pay under the new stamp duty rates by purchasing lower entry level properties in northern areas.

Due to the rise of the Northern Powerhouse and having a very good entry level for investors, the north has rapidly become a very attractive place for those wishing to extend their property portfolios.

In addition, investing in student property have also been on the rise in the north, however, as Economic Voice mention, a recent study that sampled 2,000 UK adults by the specialist property company Experience Invest found that only 17 per cent of respondents said they’re aware that investing in student property can result in a high yield.

So what cities are leading the way in the north? Starting with Liverpool, the Merseyside city offers some of the highest returns in the UK due to being a place that has a high yield when it comes to rental income. With a big student population, Liverpool is an ideal place for property investors.

Manchester has always been another popular choice with investors and is arguably the best place in the North to invest due to being centred around the Northern Powerhouse concept. East and North Manchester have good rental yields and good low price properties. With this being such a vibrant and large city – properties can vary from back to back semis to modern city centre apartments. (Economic Voice, January 2016)

Moving our attention to Tyneside, Newcastle is another favourable place for returns. In some areas, there has even been a 50 per cent rise in rental values due to the massive cultural and business rejuvenation throughout the city. Just like Liverpool and Manchester, it also has a thriving student population which makes it another option for investors who are looking to head north.

Yorkshire cities such as Sheffield and Leeds both have an expanding population and the stamp duty is staggeringly low compared with London. Since both have an industrial past, the likes of warehouses and converted modern apartments are being snapped up.

Do you have an interest in the North? If you would like more information, feel free to take a look at our Manchester guides (North and Central), our Liverpool guide and also our South Yorkshire guide.

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

 

Property values can fall. Your capital may be at risk & returns may vary. Read our Risk Warning