Investment Property UK
A Glimpse Into The Future Of Investment Property UK
This looks like being a better year for investment property UK. According to recent research from the Association of Residential Letting Agents (ARLA) in September 2008, the preceding three months have seen a rise of almost 20% in new tenancies. This is in line with other market indicators showing that the private rented sector is taking up the slack as the owner-occupier market cools.
There will be major investment in investment property UK body ARLA has revealed, with six out of ten investor landlords planning to acquire more property this year. And they plan to keep it too, even if property prices fall. In this case, more than 97 per cent of investment property landlords will hang on to the property they own, with only 2.1 per cent planning to sell.
The ARLA survey shows that the values of houses to rent in prime central London rose by 8.3%, although in the rest of the South East they fell by 4.3% and by 2.2% elsewhere.
The values of flats to rent rose by an astonishing 13.7% in prime central London and, away from London and the South East, still rose marginally by 0.4%. This is good news for the investment property UK outlook. In the South East, away from London, values fell by 4.6%.
Another positive feature for the investment property UK outlook is that ARLA's research shows that tenants are now staying more than a month longer than they were a year ago. The average tenancy is now more than 17 months, despite an initial six month tenancy agreement.
EU Impact on BTL
The ARLA research also commented on the impact landlords will feel from new entrants to the EU who are migrating to the UK. Figures from government departments suggest that there will me more than 100,000 people in each of the next two years and these are expected to enter the rental sectors, giving it a further boost. However, with these new tenants, landlords are experiencing some difficulties as it has not been easy to obtain tenants' references from the new EU member states. That said the new influx is expected to keep the investment property UK outlook very healthy indeed in the short term.
It is hard to assess the full impact of new legislation on investment property. Many landlords have got rid of any houses of multiple occupancy (HMOs), because of onerous licensing restrictions, and lack of clarity about the licensing requirements and process. Complying with the new law is also seen as costly. And there is doubtless some impact from lenders' attitudes to HMOs, with many lenders refusing to lend for this type of property or insisting on property being licensed before issuing an investment property loan.
For those who have invested in investment property, returns have been good. ARLA's figures show an average return on investment of 11.17 per cent over the past five years for cash investors. Geared investors have done even better over the five year period with a return on investment of 21.97 per cent. These figures alone account for the increased popularity of buy to let. And forecasts for the future continue to be promising. With investment property UK landlords can make a good return in a buoyant market.
