Category Archives: Economics for the Property Investor

Having a broader understanding of the UK economy is ever important in understanding the future of the industry as well as to how changes in policy can effect your business growth. Click here for various regularly updated sources of economic information relevant to the UK property investor. Please also feel free to follow our daily Twitter feed to read the latest news articles of interest.

Acuitus Auctions on Transitioning from Residential to Commercial Property (Part 1)

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In a “post-Section 24” operational environment, the changing face of residential buy-to-let has spurred investors to explore alternative strategies as means of not only overcoming the impending punitive tax burden but also diversify into other asset classes. For capitalised buyers, the case for commercial property as a potential direction of travel is a compelling one: finance costs that are fully tax-deductible, lower stamp duty at purchase, Full Repairing and Insuring (FRI) leases and simplified enforcement of contractual breaches are just some of the commonly-cited advantages. However, evidence does suggest that the risks may be greater as investors can end up more susceptible to market swings, legislation and sector-specific behavioural shifts.  From the outset therefore, successfully investing in commercial property ultimately requires meticulous due diligence alongside an inherent ability to forecast changing trends well into the future. We were very grateful to have a conversation on this subject with Richard... [Read More]

Commentary on the May 2017 Property Investor´s Factfile

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May 2017 Property Investor´s Factfile The Property Investor Blog´s monthly factfile presents relevant data including national / London house prices, the latest buy to let Limited Company (SPV) loan rates, LIBOR / SWAP rates, rentals, mortgage debt figures and information on the first-time buyer sector.  Some noteworthy observations from the last month are outlined below: According to Rightmove, asking prices were up 1.14% over the previous month (the equivalent to £3,547, raising the average price of new properties to the market to £313,655). The property portal also reported that the first-time buyer sector, typically of two bedrooms or fewer, gained strength (a 6.5% annual rate of increase). At the same time however, the same data showed that higher priced property saw an overall annual rise of 2.2% – the lowest recorded since April 2013. Also, whilst the market observed the highest number of sales agreed at this time of the year since prior to 2007 credit... [Read More]

RICS Economic & Residential Property Outlook (End of April 2017)

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Below is a summary of a spring 2017 talk given by Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (RICS) – largely based on his insights using the high profile market surveys regularly conducted by the organisation as well as other reputable data sources. Rubinsohn is closely involved with policy development and regularly works with the Bank of England, International Monetary Fund (IMF) and the World Economic Forum on issues related to property sector as well as being on the board of housing provider L&Q. Simon split his talk into two parts: the macro-economic picture and a more specific exploration of the housing sector. The Macro-Economic Picture Commenting that many economists have had to admit a gross overestimation of the impact of Brexit, Rubinsohn started by referring to the Citi UK Economic Surprise Index demonstrating that the preponderance of data flow has shown that the economy... [Read More]

How Landlords Can Be More Tax Efficient Post Section 24 (Part 2)

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Following on from part 1 of the Property Investor Blog´s extended interview with Simon Misiewicz of Optimise Accountants, in this post we explore the pros and cons of some of the prominent strategies touted as a means of reducing Capital Gains Tax (CGT) and Stamp Duty (SDLT) when transferring properties into a Limited Company.  Simon also discusses how investor landlords can engage in a cost-benefit analysis to examine if incorporation is genuinely worthwhile, seek approval from the HMRC and ensure that any future Limited company buy to let purchases are undertaken in an efficient manner. (5) What are Optimise advising clients who are considering transferring personally owned properties into a Limited Company, particularly with regards to ensuring that General Anti-Abuse Rule (GAAR) are observed?  For example, there is a lot of talk of transferring properties into a Limited company and it would be great to hear... [Read More]

Commentary on February / March Property Investor´s Factfile

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February / March 2017 Property Investor´s Factfile The Property Investor Blog´s monthly factfile presents broad range of data including national / London house prices, the latest buy to let Limited Company (SPV) loan rates, LIBOR / SWAP rates, rental data, mortgage debt figures and information on the first-time buyer sector.  Using data from a range of sources (referenced on the last page of the factfile), we have outlined some relevant observations below: Between December and January, Halifax and Nationwide reported dips in estimated national house prices at 1.0% and 0.32% respectively. However, during the same period, LSL / Acadata stated an average price increase of 0.84%.  Land Registry data indicated that between November and December 2016*, prices rose by 0.74%. Rightmove asking price index pointed to a 1.99% increase between January and February 2017 (although investors should be aware of the often noticeable differences between marketed and actual sold prices);... [Read More]

Build to Rent – “Unlocking the Potential of an Emerging Property Sector”

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Build to Rent (BTR) dominated much of the afternoon´s discussions at the annual British Property Federation (BPR) Residential Conference, starting with a look at a recent report published by Savills in conjunction with the BPR, Barclays and the London School of Economics (LSE) entitled “Build to Rent – Unlocking the Potential of an Emerging Property Sector”.  A presentation by Jacqui Daly, director or residential investment research and consultancy at Savills as well as some the core findings of the report are summarised below: Whilst 98% of the £1 trillion PRS sector is tied up in the hands of small landlords, the pipeline of bespoke build to rent (BTR) stock is increasing; The perceived beneficial impacts of purpose-built PRS developments on overall housing supply include: accelerated delivery (more noticeably on larger urban sites); faster market absorption rates that benefits regeneration and placemaking; viability... [Read More]

The Housing Challenge + The Mayor of London´s Development Plan

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The second of three blog posts (see parts 1 and 3) covering the 2017 British Property Federation (BPF) annual residential conference, briefly outlines some of the takeaways from a panel discussion amongst senior civil servants and a chief executive of Britain´s largest housebuilder followed by a keynote presentation by Jules Pipe, Deputy Mayor for Planning, Regeneration and Skills. “The Housing Challenge” The panel consisted of Tom Copley, London Assembly Member; Mark Prisk MP, former Housing Minister; Sir Edward Lister, Chairman, Homes and Communities Agency (HCA) and David Thomas, Group Chief Executive at Barratt Developments. Some of the key points are summarised below: Addressing an issue that prompted cause for concern in the aftermath of the Housing White Paper, Top Copley of the London Assembly advocated a move away from an “obsession” with homeownership using the example of the London Living... [Read More]

Key Planning Issues + The Question of “When (London) Brownfield Isn´t Enough”

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Coinciding with the release of the delayed “broken market” White Paper, the annual British Property Federation (BPF) Residential Conference sought to address a number of pertinent housing-related topics of the day. Principally chaired by Bill Hughes, Head of Real Assets at Legal & General Investment Management, the various presentations and panel discussions delved into a number of key issues ranging from planning to London´s affordable housing crisis and the supporting role of government at local and national levels. The latter part of the day focused heavily on build to rent (outlined in a separate blog post), a tenure that benefitted from further traction by means of consultation on changing the National Planning Policy Framework (NPPF) (recommending that local authorities plan proactively for these schemes and allow discounted market rent to complement other forms of affordable housing provision). On this latter subject, readers... [Read More]

Commentary on the January / February Property Investor´s Factfile

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The Property Investor Blog´s monthly factfile is principally aimed at UK property investors and traders and includes broad data on national / London house prices, the latest Limited Company (SPV) loan rates, LIBOR / SWAP rates, rental data, mortgage debt figures and information on the first time buyer sector.  This month´s issue (accessible here) presented a range of noteworthy market observations, using data from latter part of 2016*: Rightmove data pointed to an overall 1.1% asking price drop for English and Welsh properties coming on to the market in November and, in the same month, only 14% of RICS surveyors expected prices to increase over the subsequent 3 months (compared to 18% in October 2016); After 4 consecutive month-on-month post-Brexit drops, as at November 2016, Land Registry sold prices in the City of Westminster had broadly recovered to May 2016 levels. However, prices in the City of London fell by... [Read More]

Rightmove´s Sam Mitchell on the 2017 Lettings Market

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On the back of the most recent Rental Price Tracker (Q4 2016), the following summary is based on a short conversation with Sam Mitchell, Head of Lettings at Rightmove during the second week of January 2017.  We explored the validity of the portal´s data sources as a means of assessing local market dynamics; the reasoning behind the reported drop in London´s overall rental figures; the future impact of Section 24 (of the Finance Act 2015) and other top-down policy changes as well as some useful tips on achieving healthy yields moving forward. Rightmove base their yield calculation using rental and sales asking prices. With no equivalent of the Land Registry for the rental market, it can be difficult to establish real prices (i.e. what properties have actually been let for). However, the portal typically has around 300,000 rental properties on the site at any... [Read More]