Official figures prove the UK property market is looking up
Property investors will take further encouragement from recent positive investment news. House price rises continue to outpace inflation. The number of landlords raising rents has reached its highest for more than a year. Anyone who thinks the buy-to-let investment is dead in the water risks missing the boat on life-changing investment opportunities.
House prices rise by 5.6%, and London prices turn the corner
Figures released by the Land Registry show that the average house price in the UK rose by 5.6% in the 12 months to April, with a 1.1% rise on the previous month. London's average house price rose by 4.7% over the 12 months. Crucially, after a sluggish period since the Brexit vote, London prices rose by 1.5% during April.
Based on the UK's average house price, property investors made an average capital gain of £12,000 per property owned between April 2016 and April 2017.
Property investors expect house prices to continue rising
In a survey conducted by Direct Line, landlords have expressed their concerns and their short-term expectations. The concerns list is headed by taxation. Fear over property prices doesn't make the list. In fact, around a third of landlords expect property prices to rise in the short term. They also expect interest rates to remain low, and demand for rentals to remain high.
Rents are rising, and look set to continue going up
More landlords are increasing rents, and fewer tenants are negotiating rental decreases. That's the news from the Association of Residential Letting Agents (ARLA) over the past few weeks. 31% of agents saw their landlords raise rents in June. It is the highest number since April 2016. Meanwhile, only 2.8% of tenants have negotiated a rent reduction.
Also, ARLA Propertymark CEO, David Cox, said, “With the new government confirming a Tenants' Fees Bill in [the] Queen's Speech, we can expect them to rise by up to £103 a year, hitting loyal tenants looking for long-term agreements hardest. It is on top of any natural organic rent growth as well.
What you can learn from this week's property news
Industry sources vs official figures
Land Registry house price data is the most important release in the UK. They are not based on a small sample. They are not based on asking prices. These statistics cover every single property transaction completed in the UK. It makes them the most relevant for property investors.
While most industry sources have painted pictures of a slowing housing market, the Land Registry shows this is simply not the case. Property investment returns continue to outpace inflation, and the rate of price growth is once more picking up.
Forget the doom-and-gloom merchants, those who have been predicting the collapse of the UK property market since the Brexit vote. Reality speaks louder than the forecasts and the written ramblings of Fleet Street hacks. Demand for homes is way above supply in the UK. Infrastructure investment is on course. The economy is growing. The UK is a fantastic place for property investment today, just as it has been for decades, if not centuries.
Savvy property investors are positive about the future
Savvy property investors are positive about the future of property investment in the UK. They're resilient, mirroring the UK property market. They're not worried about Brexit. They're not concerned about the government's slim majority. Low-interest rates are benefiting both investors and tenants.
Sure, property investors face challenges. When haven't they? Savvy property investors face these challenges head on. They always have. They adapt strategies to market conditions, take advice, and partner with property experts. Then they invest and win over the short, medium and long term.
Rents will probably continue to rise
In December 2016, 80% of ARLA agents forecast rents would rise over 2017. This forecast looks set to be correct.
Landlords are taking steps to combat the impact of tougher buy-to-let lending regulations, the phasing out of higher rate tax relief on mortgage interest, and the possible adverse effects of a ban on letting agent fees to tenants. They are also increasing rents to battle higher inflation.
Not only are property investors profiting from increasing capital gains on their investment, but as landlords, they are widening margins on rental income. And the property market dynamics are supporting them in this process.
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Live with passion
Brett Alegre-Wood
