By John Ennis, Director of Foxtons New Homes & Investments.
Many people spend hours, weeks and months looking for trends, changes and new opportunities in property, however, sentiment and appetite in one key sector continues to grow.
With a recent explosion in the number of new buy-to-let mortgage products and with first time buyers struggling to pull together deposits to get onto the housing ladder, investors are turning to bricks and mortar as a safe investment and inflation-beating home for their money.
We have seen seasoned buy-to-let investor landlords continue to advance - often buying with cash at the outset, and then taking advantage of excellent re-mortgage rates at sub-5% interest rates. They are picking off some of the cream of the crop, buying early, buying in advance or buying the deals that need a speedy and quick sale. They are working with specialised brokers, such as Alexander Hall on their financing - as many of these deals are not available on the high street and are often on a case-by-case basis.
However, with uncertainty in the wider economic market, particularly the Eurozone, the pension market, volatility in the stock markets, and almost worthless interest rates for their savings, the biggest trend over the past year has been the emergence of the first-time investor landlord, looking to break into the strong lettings market. Right now the underlying trend still remains the same - demand for property is unrelenting. Notwithstanding the traditional increase in valuations for this time of year, the numerous new properties we have taken on recently seem unable to satisfy the amount of applicants we have registered and with many tenants renewing contracts, the number of properties available to rent are in short supply.
We have also seen a huge increase of 'Bank of Mum and Dad' deals over the past 12 months. Parents are nervous that their children will struggle to get on the housing ladder in the future, are concerned that they will find it difficult to fund university fees, and are aware that their pension pots are being eroded. According to recent reports, the UK housing market is worth over £3 trillion, and the debt against it is around £1 trillion...that's a lot of equity out there! We are seeing a lot of savvy parents therefore trying to use the cash held in their properties to take advantage of a strong lettings market, buying up property for their children that they will rent out for the next 5-10 years.
London remains to be a popular, transient, magnate for tenants. With job uncertainty, many temporary contracts, a hard-to-access mortgage market, and ever-increasing house prices, the average age of the first time buyer is in the late 30's. With low interest rates and strong rents - it is common to see buy-to-let returns outscore other forms of investment with yields ranging from 3-5% for central London, rising to 5-6% as you push towards the suburbs.
We have a range of properties and opportunities for every budget and every pocket of London, although many investors start their search in Zone 1, we are finding that if potential landlords are looking to invest £50,000-£80,000 equity in property for a buy-to-let, then most of our deals are often in Zones 3-6.
The buy to let market continues to grow. Economic, population, and property price forecasts all point to positive times ahead - the key question is when. Nevertheless, fortune favours the bold and the brave - and many are taking full advantage of the current rental market to secure themselves a rosy future!
To get the best deals in London, it's all about timing. For example, the hottest property right now is a new development bordering Canary Wharf in E3 which launches at the end of June. With huge improvements and regeneration going on around you and great transport links into Canary Wharf and the City, these flats are perfect for investment - and early-bird investors and home buyers are pre-registering their interest on these exclusive flats already! Check out axiolondon.com for more details and to get ahead of the queues!
