The Property Investor’s Factfile presents a range of relevant data for buy-to-let investors, traders and developers.
Below are some noteworthy observations over the last month:
Property Market Trends
- Bearing in mind the 2-month time lag, the latest Gov.UK House Price Index reported annual price rises of 3.1% – making average property values stand at £231,422. North-west England saw the greatest monthly price rise (by 3.4%); the East Midlands saw a 0.2% drop in prices and house prices in London decreased by 0.7% in the year up to July 2018;
- The Royal Insitute of Chartered Surveyors (RICS) reported ‘robust’ price growth across Scotland and Northern Ireland; new instructions ‘edging further into negative territory’ and ‘sales expectations suggest activity is likely to remain stronger away from the south of England’ (see the links to historical reports here). Chief economist, Simon Rubinsohn commented that: ‘While a combination of a lack of stock and some level of uncertainty, both relating to the interest rate outlook and Brexit, has had an impact on activity, the overall picture in these areas is still encouraging. The story in London and the South-East is, as has been widely recognised, rather more challenging but it is important that this is not seen as being indicative of the wider market’;.
- Other regional-specific data by Hometrack’s Cities House Price Index reported year-on-year growth (up to August 2018) in Liverpool (7.5%), Glasgow (7.2%), Nottingham (6.9%), Manchester (6.8%), Leicester (6.7%), Birmingham (6.6%), Edinburgh (5.7%), Cardiff (5.2%), Belfast (4.8%). Negative price growth was seen in Cambridge (-0.1%), London (-0.3%) and Aberdeen (-3.7%);
- Halifax house price data reported that in the three months to August, prices grew by 3.7%. Yet the monthly change was just 0.1%. Russell Galley, managing director of the building society commented that low-interest rates and a ‘constrained’ supply of properties were propping up the prices. He also commented that household finances were healthy, assisted by a low unemployment rate and a gradual pick-up in wage growth’;
- This interactive map produced by Bloomberg tracks London’s property prices, median sale values, sales volumes and price changes (using Land Registry data);
- If you have not the chance to check it out, this excellent house price tool by the BBC (covering England and Wales) shows how real values (factoring in inflation) have performed since the Credit Crunch (thanks to @HenryPryor for sharing this resource on Twitter);
- A free new portal PropCast provides users with a ‘weather report’ that shows levels of buyer demand in UK housing markets. Check out our recent interview with creator Gavin Brazg here.
Rental Market Observations
- The most recent HomeLet Rental Index report indicated that average rents across the UK rose by 0.9% in August 2018 relative to August 2017 (average monthly rents are now £947). According to the data, average London rents stand at £1,632 per month – increasing by 1.4% in August 2018 compared to the same month in 2017. Excluding London, the average UK rental value was £786 in August 2018, up 1.3% relative to 2018. Homelet’s interactive infographic is useful to observe broader rental market trends;
- For the 12 months up to April 2018, Landbay’s Rent Check reported increased rental values in Monmouthshire (3.2%), Nottingham (2.9%), Conwy (2.7%), Stirling (2.7%), Blaenau Gwent (2.6%), Carmarthenshire (2.6%), Inverclyde (2.6%), Edinburgh City (2.6%), Northamptonshire (2.5%), Bristol (2.4%). Drops in rental values were seen in Aberdeen City (-4.4%), Aberdeenshire (-4.3%), Windsor & Maidenhead (-1.2%), Luton (-1.1%), Halton (-1.1%), Kensington & Chelsea (-0.9%), Hartlepool (-0.9%), Brent (-0.8%), Kingston-upon-Thames (-0.5%), Angus (-0.4%);
- Your Move’s latest England & Wales Rental Tracker reported that London, the North East and Wales have seen average rents drop whilst rising in the South West. Across all regions, average rents are up year-on-year;
- Check out Totally Money’s Buy-to-Let Yield Map which looks at 580,000 properties across England, Scotland, and Wales to and provide a rental return estimate;
- According to July’s Pearl Rental Index, rents increased by 1.0% in the 12 months to June 2018. London rental price growth continues to decline, with the latest index showing rents dropping by 0.2% in the 12 months to June 2018 (the first drop since September 2010);
- Please also check out other relevant rental data and statistics in the RENTING section (page 2) of this month’s factfile.
Macro-Economic Conditions for Buy-to-Let Property Investors / Traders
- Office for National Statistics (ONS) data reported that gross domestic product growth over the second quarter of the year had been unchanged at 0.4%. However, it also reported that the construction sector activity has been negatively affected as a result of the so-called ‘Beast from the East’ earlier in the year;
- Chancellor Philip Hammond commented that the UK has the ‘fiscal capacity’ to withstand a such a ‘no deal’ Brexit – qualifying his statement by confirming that this ‘would not be a good outcome’ should it come to fruition.
Buy-to-Let Investing / Financing Conditions
- The 3-Month London Interbank Offered Rate (LIBOR) marginally decreased from 0.80575 on 23rd August 2017 to 0.79844 on 27th September;
- The 1-year SWAP rate grew from 0.897 on 22nd August to 0.925 on 27th September;
- The 5-year SWAP rate grew from 1.316 on 22nd August to 1.431 on 27th September;
- Special Purpose Vehicle (Limited Company mortgage rates featured in this month’s property investor’s factfile include a Barclays fixed 2.57% pay rate until the end of October 2023 with a £1,795 loan arrangement fee. The Buy-to-Let Club is also offering a 5-year fixed rate at 3.43% with a £1,500 loan arrangement fee. For more information and to discuss your specific borrowing circumstances please get in touch with Paul Lowcock at firstname.lastname@example.org or direct on 01133 203240. Also, check out Paul’s commentary on the impacts of Section 24 and Prudential Regulation Authority (PRA) criteria on the mortgage lending landscape;
- Our extended “Section 24 “Landlord Tax” – Expert Insights on Phase 2” post collates a wide range of indispensable commentary from professional accountants and tax advisors actively working in the buy-to-let industry;
- The BM Solutions’ full rental income calculator checks the eligibility for buy-to-let loans prior to submitting a case. To see the results, enter the number of applicants, type, income, product rate, term length, maximum loan to value, property value, loan required and anticipated monthly rental income. Note the disclaimer that the calculations are for illustrative purposes only and do not represent a full mortgage offer;
- Please see our post on mortgage underwriting (within the buy-to-let sector) for some insights into the key influences of buy-to-let mortgage pay rates.
First Time Buyers
- According to the National Association of Estate Agents, property sales to first-time buyers have hit their lowest level since August 2015. Whilst sales to this segment of the market reached 29.5% in June and July, the figure slowed to 20% in August. Mark Hayward, chief executive of NAEA Propertymark commented that: “in September, buyers typically storm the market in a bid to complete sales in time for Christmas. However, it looks like this year’s heatwave encouraged more house-hunters to stay at home in August and continue their searches, which has in turn increased competition and pushed FTBs out of negotiations”;
- With the 5-year anniversary of the Help to Buy equity loan scheme now passing, reports are emerging that remortgaging options are limited. According to Ray Boulger of mortgage brokers John Charcol, “about 24 lenders offer Help to Buy for purchase, but only half offer a remortgage option where you retain the equity loan”;
- Hometrack recently commented that the income required to get on the first rung of the housing ladder has risen by almost a fifth in Britain’s largest cities over the past 3 years. This is attributed to house price growth continuing to outstrip earnings.