Investment news – Full steam ahead for investors in UK property

House prices rise, rents rise, and buy-to-let mortgage rates fall

If there were further proof needed that the UK is still the place to invest in property, last week’s investment news provided it:

  • Investors who ignored the ‘expert’ predictions of a housing price crash post the Brexit vote will have made an average of £10,000 in the 12 months since.
  • In London, there are signs that the environment for investment is now positive once again – rents rose for the first time in eight months.
  • The rate of rental increase across the country doubled between June and July.
  • Buy-to-let mortgage interest rates have fallen again.

UK property investors have rarely had it so good.

Average house prices in the UK rise by 4.9% in a year

Data from the Office for National Statistics (ONS) shows that the average price of a house in the UK rose by 4.9% between June 2016 and June 2017. Property investors have seen the average value of a house in the UK rise by £10,000 in a year to £223,000 – and by £2,000 in June 2017 alone.

England was the best performer, where house prices increased by 5.2% in the last year, with the average house price now £240,000. House prices have been supported by some factors, including weaker supply with fewer new homes being built than is required.

Rate of rental price growth doubles in July

Rental price growth doubled in July, to an average of 2.2%. For the first time in eight months, rents in London rose as the supply of homes for rent fell by a whopping 18% year-on-year. While the supply of rental properties rose by 4% across the UK as a whole, the number of properties for rent fell in the East of England and the South East as well as London. In London, tenant numbers continue to rise and are 1% higher than a year earlier.

Buy-to-let mortgage interest rates fall again

Data from Mortgage Brain, the mortgage software provider, has identified that buy-to-let mortgages are getting cheaper. Over the last three months, both interest rates and mortgage costs have fallen for buy-to-let investors.

The cost of a buy-to-let two-year fixed rate mortgage, with a 70% loan-to-value(LTV), is now £306 less annually than it was this time last year. A 60% LTV five-year fixed rate buy-to-let mortgage is now a huge £630 cheaper than a year ago.

What you can learn from this week’s property news

As we’ve pointed out previously, ONS house price data is the most accurate in the UK because it pulls in the prices of every single residential property sold in the UK from the Land Registry.

The latest ONS data release flies in the face of most price indices produced by other sources and paints the real picture of the property investment landscape in the UK. And this is that property price inflation, at 4.9%, remains above the mid-point of the 3% to 6% range in which it has been for most of the last two years. It is also comfortably above the rate of general inflation, proving that property investment remains a great hedge against inflation.

Buy-to-let investors will be jumping for joy with the news that rents are rising faster. The rise is only a little below the rate of inflation and could increase in the coming months – especially in London. As with all goods and services, the cost is affected by competition. When demand for rental properties continues to rise while the supply of them is falling, it follows there should be upward pressure on rental prices.

Buy-to-let landlords entering the market today will benefit from higher rents and lower mortgage payments – in other words, increased profit margins. After a wobble caused mostly by ‘expert’ pessimism after the Brexit vote, the UK has proved it is one of the safest places to invest in property.

To stay abreast of all the property investment news that matters, contact one of our team today on +44 (0)207 923 6100 on . Ask about our newsletter. We give it to you straight. No BS. No hype.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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