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The Opulent Blog.

Is the abolition of ground rents good for investors?

Investing in UK property comes with a range of additional costs that investors must take into account like taxes, management fees, service charges and more. Of all these extra costs, the most contentious in recent years has been ground rent. Currently, if you own a long lease on a property in the UK – as is often the case when buying a new property under a leasehold – you will normally have to pay an annual fee to the owner of the freehold. This is known as ground rent, and the amount will vary depending on the terms of the leasehold you have purchased. Ground rent rates can be fixed or they can escalate, and the latter scenario created a situation where buyers were trapped in leaseholds where the cost was doubling every five or 10 years as part of the purchase agreement. This created financial hardship for many new buyers, and in 2017 the Council for Mortgage Lenders Handbook was revised leading to some lenders refusing to lend on properties where the ground rent exceeded 0.1% of the value of the property. This made it harder to buy and sell properties, threatening to push owners into negative equity and signalling that ground rents were getting out of control. Now, the government has acted to combat this problem and provide a solution. Ground rents are a cost that does not provide a service, making them unjustifiable, and so these charges will be banned on most new leases purchased after 30th June 2022. The Leasehold Reform (Ground Rent) Bill 2022 is expected to lead to more transparent home ownership for leaseholders in the future.  It will restrict ground rents on long leases of flats and houses to a token peppercorn rent each year – to all intents and purposes, the value of peppercorn rent is zero. What does the ground rent abolition mean for property investors? For those considering their next investment in UK property, the abolition of ground rents should be at the forefront of your mind. The removal of ground rents on new leases should automatically move new-build properties to the top of your list due to the inherent benefits you will receive. As mentioned previously, the Act will apply only to new leases, meaning that all properties in new-build developments qualify and purchasing one of these will mean that you are exempt from paying ground rents in the future. Crucially, it is important to note that the legislation will not apply retrospectively to existing properties with leases that are already signed and in effect. The government notes that some existing freeholders are changing existing agreements to remove ground rent stipulations in light of the new law, but this cannot be guaranteed as it relies on the goodwill of freeholders – something that has not traditionally been forthcoming. In effect, this creates a two-tier market. On the one hand, you will have new properties with effectively zero ground rent costs, and on the other, you will have existing properties which will continue to have ground rents which could cost you hundreds or even thousands of pounds a year. Furthermore, as all new properties will have ground rent costs removed, selling an existing property which does require these payments will only become more difficult. By purchasing an existing property rather than a new build, not only will you potentially pay more during your ownership period thanks to ground rent, but you are also more likely to lose out when you come to sell it, cutting into your potential capital appreciation. One of the main strengths of UK buy to let investment is its dual income stream – monthly rental income and capital appreciation upon sale. By purchasing an existing home with ground rent costs rather than a new build without it, you are in danger of creating an inverse, negative version of that for yourself. Existing properties which are already operating as investments will continue to have some advantages over buying new-build or off-plan. For example, there is a degree of security in buying a property that is already complete and tenanted. However, the abolition of ground rents on new-build properties is good for investors overall and acts as yet another incentive to buy a new property. The benefits are clear, and the Leasehold Reform (Ground Rent) Bill 2022 offers investors a way to cut their costs and increase their profits by investing in new-build property. Want to invest in UK buy to let property? Get in touch with our team today and find out more by clicking here.
Sanjit Dhanjal
29th June 2022

Should you invest in UK property during a recession?

The UK economy proved to be more resilient than many anticipated during the covid-19 pandemic. It bounced back impressively over the second half of 2021 which left many looking ahead positively to the future. The latest figures from the Bank of England suggest that the picture might not be quite as good as we had initially hoped. The cost of living crisis is well documented, as is the ongoing issue with energy prices which is contributing to that. The combination of both is putting pressure on household spending and having repercussions in the wider economy. Looking at the bigger picture reveals some concerning numbers. The UK manufacturing and servicing sectors have both contracted further than expected thanks to the cost of living crisis, and this has been a major contributor to predictions that the UK has entered a technical recession – a period of two quarters of negative economic growth. Earlier in May, the Bank of England predicted that the economy would contract in the final three months of 2022 as the cost of living sees households cut their expenses. The Bank further forecasts weak quarterly growth in 2023 and a contraction as a whole next year. It predicts a fall in GDP of 0.25% next year and a consequent small rise in unemployment. Thomas Pugh, an economist at RSM UK, says in the Financial Times that the projected slump “is a clear sign that the economy looks set to worsen after contracting by 0.1 per cent in March and increases the chances of a bigger fall in the second quarter and of a recession this year”. This situation is viewed by the market as likely to lead to further rises in inflation over the rest of 2022. Indeed, the Bank of England has indicated that it expects to increase the base rate of interest further in an attempt to combat rising prices from its current level of 1.0%. So, what does this mean for property investors? Put simply, it could be the ideal time to speculate and invest for long-term gains, even if the short-term economic picture may look less promising. We have argued previously that rising inflation rates can offer some advantages to investors. Overall, the benefits of investing, and the income on offer, is potentially a lot higher than any inflation or rise in the base rate of interest. The reality is that UK property has proven itself to be one of the most resilient and reliable assets on the market time and time again. Property prices and rents remain on an upward trajectory, and the underlying situation regarding a lack of new supply is no closer to being solved. That is a point in favour of investing despite any rise in inflation caused by the economy performing less well than predicted. The second question that property investors need to be aware of is: if the UK does enter a recession, will it cause house prices to fall? The theory behind that question makes sense. We are already seeing households spend less due to the cost of living crisis, and a recession would further decrease the amount of money on hand – potentially reducing the number of people looking to move house or rent a new property. Housing is a big purchase after all. This would theoretically reduce competition in the market, causing prices to potentially fall. While this is true to some extent, the reality is that there is such a shortage of available housing in the UK that a fall in the number of buyers may not affect the market all that much. There is an annual shortfall of more than 100,000 new homes when construction rates are compared to demand. This leaves a huge backlog which is the foundation of rising house prices – as Halifax noted in April, prices have risen for 10 consecutive months and by 10.8% overall in a year. While the potential for a temporary recession appears to have cooled some demand, the underlying fundamentals have not changed. This could even end up being an opportunity for investors. There is no prospect of the millions of additional homes the UK needs to be built in the foreseeable future. This ensures that demand is likely to remain for years to come, and that there is potential for investors to get ahead of the game and invest while the market slows in anticipation of a future upturn. “For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating,” said Russell Galley, the managing director of Halifax. “Housing transactions and mortgage approvals remain above pre-pandemic levels, and the continued growth in new buyer inquiries suggests activity will remain heightened in the short-term. The imbalance between supply and demand persists, with an insufficient number of new properties coming on to the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices.” Want to learn more about investing in UK property? Get in touch with our team today for more information about the best UK property investment markets, our available properties and how you can start making your next investment today. Click here for more.
Sanjit Dhanjal
29th June 2022

Why invest in the Birmingham property market?

Birmingham enjoys a strong reputation among property investors. The UK’s second city is a huge national success story, home to more than one million people, as well as thousands of multinational businesses and innovative start-ups. It has emerged strongly from the covid-19 pandemic and is in a prime position to continue growing and lead the way in the future. As the host of the 2022 Commonwealth Games, the city is about to receive an unprecedented level of attention and a huge economic boost. Not only will the Games bring an additional 4,526 jobs to Birmingham in 2022, but it's estimated that an additional 950 jobs will be available annually thereafter according to figures from the University of Birmingham. Overall, the impact of the Games is set to be a £1.2bn annual uplift. Aside from the Games, Birmingham is enjoying the benefits of other large-scale investment and regeneration projects. A number of commercial developments across the city are creating thousands of new jobs bringing substantial economic benefits to the people of Birmingham. To give just a few examples, the 20-year Big City Plan, the Smithfield Masterplan, Paradise Birmingham and more are all underway and changing the face of the city. Together, they are set to add billions of pounds to Birmingham’s economy and create tens of thousands of new jobs. Furthermore, they will make Birmingham an even more attractive place to live by improving infrastructure, quality of life and the city’s sustainability credentials. These, and other major investments like the HS2 high-speed rail line which will slash journey times to London, are putting the focus on Birmingham as one of the UK’s most popular investment destinations. Birmingham is also a global centre for higher education. More than 60,000 students from around the world come to the city each year and contribute significantly to the city’s economy, as well as adding to the demand for city centre housing, both during their education and afterwards as graduate workers. Its nine universities are headlined by the University of Birmingham which is one of the UK’s top institutions. Most recently, it was named the 19th best university in the country by the Complete University Guide league table for 2022, with 18 of its departments ranked in the top 10 for their areas of study. In addition to the large number of students, the aforementioned infrastructure and commercial developments are also driving population growth. The latest published figures from the Birmingham Demographic brief show that the city’s population is scheduled to reach more than 1.2 million by 2038 – representing growth of 7.8%. Development of residential property in Birmingham is not even close to keeping pace with this. The Deloitte Birmingham Crane Survey 2022 shows that just 4,720 units are currently under construction in Birmingham, and are to be delivered over a five-year span. This follows 2021 where the volume of units delivered fell by 26%. In contrast, it is estimated that Birmingham needs at least 4,000 new units every year – creating a supply and demand imbalance that is reflected in house price growth projections. JLL believes that Birmingham is the city which will see the highest level of house price growth in the next five years, with the average property value increasing by 27% by the end of 2026. The agency also projects rental growth of 14.8% in the same time period driven by the same lack of supply. This follows a year period where Birmingham house prices rose by 8.2% in the aftermath of the pandemic, according to Hometrack. Not only does this put Birmingham ahead of other cities in the country, but it is also set to perform more strongly than the West Midlands region that surrounds it. The latest long-term property forecast from Knight Frank shows that the West Midlands as a whole is expected to see average property value growth of 14.2% by the end of 2026 – almost 13% lower than the city of Birmingham itself. Birmingham is one of the UK’s biggest and best cities, and a whole range of factors are combining to put its property market at the top of the list for investors in 2022. If you are looking for the next UK property hotspot, Birmingham is the place to be. Want to learn more about investing in Birmingham property? Get in touch with our team today by clicking here.  
Sanjit Dhanjal
29th June 2022

UK house prices keep on rising

House prices always dominate the news in the UK, but recent events have made the property market even more prominent than usual. The last two years have seen runaway house price growth despite a pandemic, war in Ukraine and now a cost of living crisis and growing inflation which has caused many to ask whether the market can continue to grow. It is against this backdrop that we must see the market and judge its health rather than simply look for new record prices every month. When looked at in the long term, the health and resilience of property is remarkable. Many, including Savills, predicted that house prices would fall “5%-10%” when the market reopened following the first Covid lockdown. This assessment was based on the theory that people would be reluctant to spend and have less disposable income following that life-changing period. Instead, the pent-up demand was much higher than expected and the market flew out of the gates. Today, the average asking price for UK properties is £367,501 according to Rightmove in its latest market analysis. This equates to a 2.1% monthly increase, a rise of more than 10% in the last year, and the fourth consecutive month in which prices have hit a record high. Asking prices are now £55,000 more than they were before the pandemic began. This long-term health is backed up by figures from Halifax. The bank’s data shows further growth in April which took prices to more than 12% higher than they were a year ago. Russell Galley, managing director at Halifax, said: “Housing transactions and mortgage approvals remain above pre-pandemic levels and the continued growth in new buyer inquiries suggests activity will remain heightened in the short term. “For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating.” With the above in mind, it’s fair to wonder whether the cost of living crisis, rising inflation and continuing economic uncertainty are having any negative effect on the market at all. It seems to make perfect sense that a degree of volatility combined with people having less disposable income should have a cooling effect – so what’s going on? As Tim Bannister, director at Rightmove, said: “People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment." “What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices." This gap between supply and demand is the basis of the UK property market’s strength, as we have discussed previously. However, it is also true to say that the pent-up demand in the first phase of lockdown was never going to last forever – so where is the continued demand coming from that is keeping prices, sales figures and enquiries so high despite a predicted “cooldown”? The latest data from Nationwide shows that mortgage approval figures reached 70,700 in March. Although this was a slight fall from the previous month, remained above the immediate pre-pandemic average of 66,700 a month. The answer to the demand question posed above appears to lie in the large group of people who did not move immediately after the lockdowns and pandemic eased, but were instead waiting to become more comfortable with their new working patterns before taking the plunge and looking for a new home. In this way, these people are acting as a second wave of pent-up demand which remains unsatisfied, and therefore keeping pressure on the housing market higher than before the pandemic. This might have several implications. Firstly, it could somewhat blunt the impact of the cost of living crisis on people’s willingness and ability to buy homes. One of the big lessons from the first wave of buyers following the pandemic was that the new work-from-home pattern that has become normal led to many people moving out of London and heading to other, more affordable and more desirable areas. Without the need to commute, areas like the London Commuter Belt towns which offer better value for money and an improved lifestyle suddenly became more popular. Likewise, other cities like Birmingham and Manchester saw an increased number of new arrivals as people left the capital to make their money go further. With the cost of living crisis underway, people who work from home are likely to continue seeking this value for money, and it is possible that demand in those aforementioned areas will keep growing as a result of this. The second major trend we saw in the first wave of post-pandemic moves was that people prioritised private space more than they had previously. Whether that means moving to a studio on their own or upgrading to a larger one-bed apartment, greater weight was put on quality of life and having the space to really live than it was previously. This was reflected in people’s decisions when it came to both buying and renting. Luxury apartments were a big beneficiary and could continue to be so as the second wave of demand hits. The above points may provide the answer to why any ‘cooling’ of the housing market we see is unlikely to be either severe or long-term. The first wave of post-lockdown demand pushed the market to new heights, but it does not appear to have exhausted demand by any stretch of the imagination. Consequently, while factors including the cost of living crisis, inflation and the economy may have an effect on prices, this must be viewed in the wider context. The ‘cooling’ that people are predicting or expecting is based on a market that is at a substantially higher point than at any time previously, and so any minor downturns are relative. The value of the market overall is still a lot higher than it was pre-pandemic. For these reasons, we would advise investors to be cautious, yes, but not disheartened or put off. The underlying supply and demand issue which has defined the UK property investment market for many years remains unchanged and keeps the market buoyant. As always, buying in the right locations like those mentioned above is the paramount factor. Want to learn more about investing in UK buy to let property? Get in touch with our team today by clicking here.
Sanjit Dhanjal
29th June 2022

What effect, if any, will the war in Ukraine have on the UK property market?

The ongoing war in Ukraine is already having economic repercussions around the world, and it is likely that the full extent of these will only become apparent in the future. However, we can already see the consequences unfolding in some areas, including inflation and interest rates. This will inevitably affect the UK property market, and many people are beginning to ask what they can expect from property prices and rents in the future as they look for security and stability. Inflation and cost of living The most obvious and immediate impact of the Ukraine war is that several major European energy sources have been jeopardised. This has led to increased energy and fuel costs which are the basis of the rising cost of living. Growing costs in all areas are squeezing households more than ever before, and it has been predicted that the financial impact could become worse before it gets better. Indeed, inflation hit 6.2% in February 2022 – a 30-year high. Tom Bill, head of UK residential research at Knight Frank, said: “The most immediate impact is likely to be increased inflationary pressures at a time when the cost-of-living squeeze is pushing up fuel and grocery bills. “The financial pain that households are experiencing could get worse, increasing downwards pressure on house prices. While it is a mathematical inevitability that inflation will start to fall later this year, the risk that it will spike higher in the short-term has risen sharply.” But is this negative outlook borne out by the most recent house prices? Record house prices Against this backdrop, the latest reports from Rightmove show that the average house price in Britain has reached a record high of more than £354,000 as of March 2022. This follows a 1.7% rise in February and represents growth of 10.4% annually across the UK. When looking at individual regions, all apart from London saw average annual growth of at least 10%, reflective of the Capital’s overheated housing market and the number of people leaving for more affordable and popular destinations such as Commuter Belt towns like Hayes, and other big cities like Manchester and Birmingham. Likewise, a recent report from Halifax agrees with the above conclusions, stating that house prices are growing at their fastest rate since 2007 in defiance of the prevailing economic conditions. The bank has measured annual house price growth of 10.8%, an even higher rate than Rightmove recorded. What keeps demand so strong? So, we have what seems like a contradiction to consider: a cost of living crisis, made worse by the war in Ukraine, that means people have less money to spend than ever before, versus the reality of a housing market that continues to set new records. Russell Galley, Halifax’s managing director, said: “The war in Ukraine is a human tragedy but is also likely to have effects on confidence, trade and global supply chains.” He said soaring oil and gas prices were one immediate consequence, meaning that UK inflation would remain higher for longer, adding to the squeeze on already stretched household incomes. Meanwhile, further interest rate increases looked likely in the near term. That argument makes sense, and it is an understandable worry for investors looking at the present and future market. However, by returning to the latest data from Rightmove, we can identify the reason that house price growth has remained resistant to larger economic concerns – and could continue to do so in the future despite fears of a downturn or cooling of the market. The foundational fact of the UK property market which drives everything else is the gap between supply and demand. Until enough new homes are built each year to meet that demand, competition will continue to increase and that will naturally lead to house price growth. At present, the UK government estimates that the shortfall of new homes is approximately 100,000 each year. Rightmove data shows that the chance of finding a buyer for a property on the market within the first week is higher than it has ever been at this time of year and twice as likely compared with the same period in 2019. Tim Bannister, Rightmove’s director of property data, said: “Many of those who are selling in this record-breaking market obviously also face the prospect of buying again in the same market, and being in fierce competition against other buyers.” Add in the growing demand for larger and better located homes – such as properties in city centres or close to convenient transport links such as Crossrail – following the Covid-19 pandemic, and it seems unlikely that demand will slow anytime soon. The war in Ukraine is, without doubt, a disruptive global event, and investors should be aware of rising inflation and any interest rates increases that come with it as they have the potential to impact profitability. However, at this stage indications are that the UK property market is weathering the difficulties and has the potential to continue doing so. If you would like to learn more about the current state of the UK property market and find out about where the best places to invest in the UK are, get in touch with our team today by clicking here.
Sanjit Dhanjal
30th March 2022

Manchester and Birmingham growing strongly

The UK property market as a whole has resisted the economic turmoil of Covid-19 well, emerging strongly from the pandemic and continuing to grow. The latest index from the Office for National Statistics shows that the average UK house price grew by 9.6% over the course of 2021. Now, in the first quarter of 2022, we have seen reports from Rightmove, of the biggest monthly house price rises in 17 years, and a new average high of more than £345,000. However, the most important thing for investors is the future – so where are the best locations for investments which balance higher entry prices now with the potential for the most growth down the line? One of the best ways to predict the future prosperity of an investment location is to measure its rate of construction and development. This is a key market driver and an indicator that should be considered when looking at where to make your next investment. We have picked out two of the best places to invest in UK property here by looking at their construction activity in different sectors. Manchester Manchester is an interesting case for property investors because its success is known and understood, yet there is still plenty of room for growth and a huge amount of construction underway to deliver it. The Deloitte Manchester Crane Survey 2022 shows that the last five full years have seen almost 20,000 new residential units delivered to the Manchester market, of which just over 5,500 were completed in 2021. In addition, a further 10,700 units are in construction as of 2022, the majority of which are scheduled to finish in the next five years. This raises the question of whether the Manchester market is overcrowded, and therefore whether investors should be wary. The main consideration here is population growth – or to put it another way, will those additional 10,000+ units be enough to meet demand. By looking at future projections, we can say that the answer is likely to be no. Manchester City Council estimates that Manchester’s population will grow by a further 70,000 people by the end of the decade, and all of those will need homes. In particular, luxury city centre homes are already in high demand and short supply, making them a good market for long-term investment. Why are so many people moving to Manchester? The answer is the sheer number of high-quality jobs on offer combined with a first-class lifestyle. Returning to the Crane Survey shows the level of commercial building underway which is already translating into economic strength and employment opportunities. More than 1.3m sqft of commercial space is under construction in Manchester right now, with almost 750,000 sqft of that due to be delivered in 2022. Crucially, more than half of the commercial space under construction is already pre-let, and it is hard to think of better evidence for a vibrant, attractive city centre economy than that. More major schemes on the horizon will add to the total under construction in the future. These include Central Retail Park, Mayfield and more – significant regeneration schemes which are proving to be of interest to anchor tenants including the UK government, National Rail and several banks. Add in the 1m sqft of science, educational and research space completed over the course of 2021, including the world-class Manchester Engineering Campus, and we have the picture of prosperity in Manchester. A Deloitte spokesperson said: “Our latest results demonstrate that Manchester and Salford have been remarkably resilient during 2021 as the world entered its second year of the pandemic. Whilst there has certainly been some rebalancing of market activity over the last two years, overall construction levels are well above average for the city. “There are also plenty of new opportunities, with restrictions beginning to wane and a healthy pipeline of new developments fuelled by a continued appetite for inward investment in the city.” Want to invest in Manchester property? Learn more by clicking here. Birmingham Much like Manchester, Birmingham enjoys a strong reputation among property investors. The UK’s second city is a huge national success story, and 2022 could be its best year yet. Hosting the 2022 Commonwealth Games will allow Birmingham to shine, demonstrate to the world its progression over the past decade and showcase some of its best developments. The Deloitte Birmingham Crane Survey 2022 shows that the pace of development in the city has been relentless. The number of new residential schemes underway in Birmingham increased by 250% in the last year, with 14 new buildings breaking ground in that time. Deloitte’s data shows that 4,720 units are currently under construction in Birmingham. This is a volume of development that could set new records in the city. This leads to similar concerns as those mentioned above in Manchester – does this mean that the market is about to become saturated and, therefore, should investors stay away from Birmingham for now? By putting the numbers in context, we can see that investors should not be overly concerned with new record delivery statistics. Firstly, it should be noted that these unusually high future figures follow a year in 2021 where the volume of units delivered fell by 26% This was due to supply chain issues, restricted availability of materials and labour shortages that all contributed to delays and hit Birmingham construction especially hard. Secondly, much like Manchester, Birmingham’s population is growing at a rate that far outstrips the pace of construction scheduled for the future. The latest published figures from the Birmingham Demographic brief show that the city’s population is scheduled to reach more than 1.2m by 2038 – representing a growth of 7.8%. This is powered by a commercial sector which the Deloitte Crane Survey shows the pace of delivery almost quadrupled in the space of a year. Along with the aforementioned Commonwealth Games and Birmingham’s student population which grew by approximately 1,500 in the last year according to the Crane Survey, you have a recipe for future growth. A Deloitte spokesperson said: “This year’s Crane Survey shows that development in Birmingham city centre continues with major residential and office developments leading the way.” Want to invest in Birmingham property? Learn more by clicking here.
Sanjit Dhanjal
30th March 2022

Why you should invest in studio apartments in Manchester

City centre living has never been more popular in Manchester. From a situation two decades ago where almost no one lived in the city centre, tens of thousands of people now call it home – and more are arriving every year as the population continues to grow. However, there is already a serious shortage of available apartments in the city centre, especially in the luxury market which is most attractive to young professionals and overseas students. This lack of supply is pushing prices up and making larger apartments less affordable. Recent research from urbanbubble shows that rents in Manchester climbed to an all-time high over the course of 2021, with the average property seeing 9.1% rental growth over that year. Rents for 2-bed apartments rose by 14.8% over that time period, more than any other property type in Manchester and reason enough for many to downsize where they could. The obvious solution – 1-bed apartments – does not offer much respite for people on a smaller budget. The same research shows that the average rent for this type of apartment grew by 4.4% in the final quarter of 2021 alone. This situation leaves many young professionals and students searching for other options which allow them to stay in the city centre while maintaining a more affordable lifestyle. An increasingly popular solution to this problem is the modern studio apartment. Unlike old fashioned studio apartments which are generally of low quality, new build studios are a different prospect entirely. Spacious, carefully considered and of superior build quality, new studio apartments can offer all the benefits of luxury city centre living at a more affordable price, making them the perfect option for many people. They are also an increasingly good cultural fit as living alone is no longer seen as unusual or negative. Indeed, having your own space and a greater sense of privacy is often preferred, particularly after the Covid-19 pandemic and the rise in home working. Likewise, the freedom offered by an open-plan living space is proving to be increasingly popular with tenants. Studio apartments also offer a range of day-to-day advantages on top of the affordability benefits and increased privacy. The smaller floor plan makes it easier for tenants to maintain, and they cost less to heat in the winter, further appealing to those on a smaller budget. Furthermore, they are often located in buildings with a host of amenities which make modern apartment living even more enticing. Features such as gymnasiums and bicycle storage increase the versatility of these apartments and add an extra dimension to modern, city-centre living. Studio apartments are affordable, popular with potential tenants and can add a strong income stream to any portfolio. For investors, purchasing a modern studio can give you access to the lucrative city centre markets and a distinct, growing tenant pool at the same time. Returning to the urbanbubble report demonstrates the benefits of investing in studio apartments in Manchester. While the data shows that the average rent of a studio apartment in Manchester city centre is approximately £100 lower than for a 1-bed, the lower entry price of a studio means that you can potentially earn a higher rental yield than if you were to invest in larger apartments. Rents for studios are also growing strongly – 6.6% over 2021, and 2.9% over the last quarter of that year. This is healthy growth that lowers the risk of pricing out potential tenants. There is a gap in the market for studio apartments in Manchester that is waiting for investors to fill it. Our latest investment opportunity in the city – X1 Cheltenham Place – is the perfect example of all that studio apartments can offer. These luxury studio apartments are perfect for professionals, graduates and students, and come with all the amenities residents need to make life easy, including a gym, laundry facilities, bike storage and a stunning roof garden. Furthermore, it is located approximately five minutes walk from Salford Crescent station – one of the most popular and desirable locations in the city which provides direct access to the whole region and beyond. Similarly, Manchester city centre is only a short distance away by foot or public transport, including the city’s main business zones such as Spinningfields, Victoria Station and Deansgate. Likewise, Manchester’s vibrant social scene is only ever a short distance away – making X1 Cheltenham Place the perfect venue for all aspects of life. X1 Cheltenham Place is eagerly awaited by investors and residents alike, bringing hundreds of luxury studio apartments to this thriving city. Key highlights Luxury studio apartments from £119,950 7% net rental return assured for 5 years 999 years lease Earn an assured £41,982 over 5 years Excellent location prime for rentals Want to find out more about investing in Manchester studio apartments at X1 Cheltenham Place? Get in touch with our team today by clicking here.
Sanjit Dhanjal
30th March 2022

Where should I invest in student accommodation?

Purpose-Built Student Accommodation (PBSA) is one of the most popular alternative investments on the market. Occupancy rates bounced back strongly in 2021, and all indications are that they will keep improving in the future. Demand from UK-based and foreign students is increasing years on year, and the number of students beds available in the UK’s university towns and cities is not adequate to supply the market. These factors account for the 95% average occupancy rate recorded by the latest Student Accommodation Survey from Knight Frank and UCAS. This is in spite of the fact that Brexit and the following economic uncertainty reduced the number of students from the EU significantly. This fall was met by a rise in domestic applications of 5% this year, and should also be offset by the government’s stated goal to increase the number of international students from across the world to 600,000 annually by 2030. It is these underlying factors that have created a resilient sector, and make PBSA such an attractive investment option for investors from around the world – and contributed to the growth of a sector predicted to be worth as much as £72bn by the end of the year. So, the question becomes: where should you invest in student accommodation? The biggest cities such as London and Manchester are seeing more PBSA built than ever before, and even though there will still be a shortfall in those places, it has become increasingly clear that investors might be able to achieve better value by looking at other destinations. One such place that is attracting an increasing amount of attention from investors is Stoke-on-Trent, a West Midlands city that is home to two large, popular and highly-regarded universities - the University of Staffordshire (approx. 13,000 students) and Keele University (approx. 10,000 students). Both universities occupy prime sites within easy reach of the universities and city centre. Likewise, both are undertaking expansions that will increase their capacity and attractiveness – and both have nowhere near enough student accommodation supply to meet demand. The University of Staffordshire prides itself on training graduates who are among the most employable in the UK, and is moving towards the completion of its 2030 Campus Masterplan. This is overhauling the services and facilities on offer to make the university more competitive and attractive in the years to come. Additions to the campus include a £40m physical and virtual business hub called the Catalyst, a £5.8m Centre for Health Innovation, a £4.4m Nursery and Forest School and a £20m Innovation Enterprise Zone. By expanding the range and quality of education it offers, the University of Staffordshire should attract an even greater number of students in the future as it continues to grow. Keele University is among the top 10 in the UK for student experience and satisfaction, and is developing a similar Masterplan which will serve its ambition to reach 20,000 students over a long-term period. This will be done through the establishment of a new engineering faculty and student growth at the existing health, humanities and sciences faculties. Overall, the Masterplan will cover approximately 100 hectares, of which around half will be allocated to science and innovation, and half to academic uses. This will in effect double the size of the university, both physically and in terms of student numbers. It is clear to see that Keele University is on the verge of a huge transformation, and that will bring with it accompanying challenges – including the need to house twice as many students as before. In addition to their growth plans, the universities occupy locations close to the centre of Stoke which make them even more attractive to potential students. Stoke itself is a modern city that includes everything a student could want, from cultural attractions to nightlife, bars and restaurants. It is also on the mainline between Manchester, Birmingham and London, with many trains operating every day providing convenient access to everything that these cities have on offer. Between the two universities, the need for PBSA is already strong and about to become much more urgent. This can only be met through the private sector, with the best apartments located close to the universities and Stoke city centre likely to be in high demand. Invest in Stoke student accommodation If you are looking to invest in PBSA in Stoke, we are pleased to present two opportunities that could both make a strong addition to your investment portfolio. Poulson House Poulson House in Stoke is a completed and fully-operational student accommodation development situated a mere nine-minute walk from the University of Staffordshire and a 25-minute drive away from Keele University. This represents an attractive and immediate income for investors. Poulson House is managed by Greenpad, the university student union’s own management company. This is their sole management property and ensures a high level of focus and maximum occupancy each year Completed student accommodation 100% occupied [Please confirm before publishing] Prices from £62,950 True live yield of 7% The only university-approved PBSA studios in Stoke Managed by Staffordshire University’s student union Rental assurances available [Please confirm before publishing] Find out more about Poulson House by clicking here. One London Road One London Road is located in the picturesque town of Newcastle-Under-Lyme and offers an impressive 10% net return assured for 3 years. The building features great facilities such as a rooftop terrace and BBQ area, a state of the art gymnasium and various common lounges featuring table football and other activities to keep the students busy. The building lies 10 minutes away from the Keele University by bus, and with the University being rural, this is one of its closest and most convenient purpose-built student accommodation developments. Built by a reputable developer with extensive experience in this area, One London Road is managed by the leading student management company Urban Student Living who look after all of the management on behalf of our investors. Prices from £79,999 5% net return for three years 250 year leasehold from completion date £350 per annum ground rent £1350 per annum service charge and management (not applicable during rental assurance) Find out more about One London Road by clicking here.
Sanjit Dhanjal
8th March 2022

The significance of Crossrail on property prices

Crossrail is Europe’s largest railway infrastructure project, and it is having a transformative impact on London. Once fully open, it will serve 41 stations across the Capital, cut journey times into Central London by up to 40 minutes, increase rail capacity by 10% and add an estimated £42bn to the UK’s economy. It has also had a significant two-part impact on the Greater London property market. The first effect is the initial bounce in prices which followed the announcement and raised house prices along the Crossrail line. Research from CBRE shows that a 10% reduction in commuting time can increase house prices by as much as 6%. The same report shows that the impact of Crossrail appears to have been even greater than this. Since its announcement in 2008, an average 31% increase in property prices has been observed on top of existing gains in the wider market. Some reports from agents go even further and identify Crossrail areas where house prices have doubled since the plans for the new line were made public. What does this mean from an investment point of view? The reality is that you will be paying a higher entry price when investing in Crossrail destinations than you would have a decade ago. While unfortunate, this is the price of successful infrastructure investment in the local area. However, on the other hand, it speaks to the positive impact of Crossrail, and it does not necessarily mean that you are investing too late – quite the opposite, in fact. While some of the benefits of Crossrail have already been seen in relation to house prices, the second major impact of the new line on property prices is the ongoing aspect that will extend far into the future. The line is scheduled to be complete and fully operational by June 2022, and its impact on house prices will continue from there as demand for properties along the route continues to grow. Returning to the CBRE report, the agency expects average additional house price growth of 3.3% annually along the Crossrail route in addition to the normal market growth. This is a simple consequence of supply and demand. Improved connectivity and reduced commute times to Central London and other destinations such as Heathrow Airport will naturally make properties within a five- or 10-minute walk of the new Crossrail line more attractive. However, the impact of Crossrail on house prices is not uniform across all the stations, with some areas benefitting more than others. For example, Hayes, a town in West London, has proven to be a big winner from this new infrastructure in recent years. House prices in the town have already risen in line with this new transport infrastructure development, in the manner described above. The latest figures from Rightmove show that house prices in Hayes are 11% above their pre-pandemic peak, compared to prices in the wider local borough of Hillingdon which are just 6% above the pre-pandemic peak on average. This clearly demonstrates the benefit Crossrail has brought to the housing market in Hayes. Indeed, Hayes has been cited by JLL as one of the major beneficiaries of the new rail line, and noted that it is now, “host to the most extensive planning pipeline in West London.” Whereas this means that prices in the town are higher now than they would have been even five years ago, that downside is superseded by what this means for the future. Increased property prices are a consequence of the increased demand that we are seeing in Hayes for high quality rented accommodation close to Crossrail. This increased popularity makes it likely that both rents and property prices in Hayes will continue rising in the future as Crossrail becomes fully operational. Combine that with other benefits of life in Hayes such as its tranquil suburban atmosphere, first-class employment opportunities, bustling cultural scene and its outstanding education options – among many other positives – and you have all the ingredients needed for a growing property hotspot. The impact of Crossrail on property prices is already apparent, and the future growth potential in hubs along the route such as Hayes make this a prime investment opportunity. However, with Crossrail opening fully in June 2022, and some price rises already locked in, time is of the essence to invest, get the best possible price and make the most of the projected gains which could be coming down the track. To find out more about investment projects in Hayes, and to learn more about the benefits on offer for investors, get in touch with our team today by clicking here.
Sanjit Dhanjal
25th February 2022

Property is still a good option despite rising inflation

Rising inflation has been one of the major economic trends so far in 2022, dominating the news cycle and leading many to question whether they should keep investing or exercise a greater degree of caution. While the government had initially set the Bank of England (BoE) a target to keep inflation below 2% over this year, the Bank currently expects it to reach 7% over the course of Spring 2022. The Bank has responded to this by raising the base rate of interest from 0.25% to 0.50% this month in an attempt to reign in and control that inflation. While this may seem alarming to some, in reality, it is a positive move that is designed to have beneficial medium- and long-term effects. The headline 7% inflation figure is attention-grabbing, but the BoE believes its actions will help to bring inflation back down again from Q3 onwards. Additionally, the Bank believes that some of the underlying causes of the Spring inflation will only be in effect for the short term, stating: “Most of the causes of the current high rate of inflation won’t last. It’s unlikely that the prices of energy and imported goods will continue to rise as rapidly as they have done recently.” What does this mean for property investors? The first obvious area that inflation will affect is the mortgage market. A rising base rate has caused a reaction from lenders who are increasing their mortgage interest rates. While it is true that not all products are becoming pricier, borrowers should be aware that the majority of mortgages will now be more expensive and take that into consideration when investing. However, the increased cost of borrowing does not exist in a vacuum. It is also true that rents and house prices in the best markets like Manchester and the London Commuter Belt are rising at rates which are notably above the added mortgage costs. This means that while investors should be aware of the impact inflation is having on the base rate of interest, it should not be something which puts you off on its own. The upsides of property investment are far ahead of the downsides of mortgage costs that are rising slightly, but are still at historic low levels. It is also worth bearing in mind that more expensive mortgage products offer a natural advantage to cash buyers as your relative spending power compared to borrowers will be magnified. If you are in a position to invest with cash, this is an ideal time to do so. The second major effect of inflation that concerns investors is on the tenant side of the equation. As inflation rises, it raises the cost of living for tenants and reduces the amount of disposable income for many. This raises questions about how rents will be impacted. While there will certainly be a minority of people who choose not to move home due to the rising cost of living, that does not reflect the majority. The ongoing imbalance between supply and demand has pushed competition for apartments to new highs. Rightmove’s latest Rental Tracker notes that competition between tenants has increased by 94% in a year, and tenant demand as a whole has grown by 32% over the same time frame. This reality means that rents are not only primed to remain strong for the foreseeable future, but most reliable sources also believe that they will continue growing rapidly. The same Rightmove Tracker estimates average rental growth of 5% across the country over the course of UK in spite of the impact of inflation on the cost of living. Finally, as mentioned previously, the Bank of England believes that the rate of inflation will peak in the Spring and begin to fall towards more manageable levels over the course of 2022. With that in mind, we can have some confidence that the cost of living crisis will be temporary, and any effect it has on renters will also pass in short order. Overall, worry over rising inflation is understandable, but the reality is that UK property has proven itself to be one of the most resilient and reliable assets on the market time and time again. Property prices and rents remain on an upward trajectory, and the underlying situation regarding a lack of new supply is no closer to being solved. The market is buoyant, and the potential positives on offer when investing in UK property outweigh the negatives and concern caused by inflation – making this a good time to invest. Want to learn more about how UK property could be your best investment in 2022? Get in touch with our team today by clicking here.
Sanjit Dhanjal
25th February 2022

Top 5 reasons to invest in Hayes

Hayes in West London has continued to rise in notoriety over the past few years. Whilst the people of Hayes would be the first to say that Hayes is not the most glamorous area, in terms of value for money and investment potential, there are few places that can rival it. We have put together the Opulent top 5 reasons to invest in Hayes and look to explain why property prices in Hayes have a bright future: 1) Existing Transport Links Hayes has always had great transport links both into London and outside of London to Reading and the home counties. Hayes and Harlington station has recently been refurbished ahead of the grand opening of the Crossrail in June 2022. Travel times as they stand today without Crossrail are already very efficient: Heathrow Airport - 12 mins via Heathrow Connect Train Paddington Station - 20 mins via First Great Western Reading - 40 mins via First Great Western As a result of the short commute times, more and more people have opted to live in Hayes, which has had a positive effect on house prices in the area. 2) Crossrail From June 2022 the Crossrail, Europe’s largest infrastructure project is expected to go live from Hayes and Harlington Station. Crossrail is the largest infrastructure project in Europe and is set to overhaul the already short travel times to other parts of London, in some cases by up to 40 minutes. The new service will see up to 10 trains an hour from Hayes and Harlington station with direct access to several of London’s key employment hubs. Typical journey times from Hayes once the service goes live will be as follows: Heathrow Terminals 1,2,3 and 5 - 5 Mins Paddington - 16 mins Bond Street - 20 mins Liverpool Street - 27 mins Canary Wharf - 34 mins 3) Regeneration Since the arrival of Crossrail property prices in the vicinity of Hayes have increased 50% over the last 5 years (Hillingdon Council). Much of this has been attributable to regeneration and the amount of inward investment into Hayes to transform it into a thriving commuter belt town. Through an ongoing plan, the council aim to overhaul the entire Hayes Town Centre, a project that has just gone out to tender and is expected to be in the region of £200m. In addition to this, the very site our Barnett Apartments sits on is part of a wider regeneration project that will see the creation of over 1500 new homes and lots of commercial area for businesses. This scheme itself is worth over £200m. Another significant regeneration project in Hayes has been the Old Vinyl Factory redevelopment, the former home of EMI records. This £250m project is ongoing and will see the creation of 600 plus homes, 550,000 sq. ft. of office space and 70,000 sq. ft. of retail and leisure space including a 3 screened cinema, landscaped streets and cafés and restaurants. All this regeneration has helped transform Hayes into a thriving community where we are seeing a huge upturn in the demand for property which in turn has meant prices in the area have risen considerably and are expected to continue to rise. 4) Heathrow Airport Heathrow Airport is the world’s busiest international passenger airport and employs over 70,000 employees. There aren't many towns that can boast having an international airport just 5 minutes away. Many of the airport workers reside in Hayes due to the short travel times to and from the airport. As the airport continues to expand with a proposed new runway and 6th terminal, demand for property both to live and to buy in Hayes, is only scheduled to increase and Heathrow is destined to plough even more money into the local Hayes economy. 5) Buoyant Local Economy Due to the location of Hayes being conveniently located on the cusp of four major motorways and its excellent transport links, it has always attracted businesses to set up in the area. Some of the largest companies in the world are already based in Hayes, and with the arrival of Crossrail demand for office space in Hayes is set to increase even further. All these companies bring staff to the area, all of whom require property to live in hence increasing the potential target audience size of prospective tenants and driving property prices upwards. Hayes is also very close to a large business park called Stockley Park that is home to companies such as Canon, Apple, Hasbro and Marks and Spencer to name but a few. All of this has helped transform the local economy in Hayes. To learn more about Hayes and investing in the London Commuter Belt, please get in touch with our team today by clicking here.
Sanjit Dhanjal
25th February 2022

Our top tips on where to invest in 2022

For both first-time investors and experienced landlords with an extensive portfolio, the UK property market offers real opportunity in 2022. The national economy is recovering strongly following the Covid-19 pandemic, and the housing market continues to perform well. The gap between supply and demand in the UK continues to widen. Figures from the National Housing Federation show that there is an annual shortfall of almost 100,000 new homes at the moment, and the number of new starts fell even further during Covid. This backlog will have a beneficial effect for investors in the coming years, meaning that we may be at the start of an unusually strong five-year period for UK property. The Purpose-Built Student Accommodation market is also performing strongly and could be of interest for investors looking at an asset outside of the usual residential property market. We’ve previously looked at how to decide where the best places are to invest, and here we have picked out some of our favourites which are particularly attractive for investors in 2022. Manchester, residential property Manchester has long been known as one of the UK’s top property investment hotspots, and its performance during Covid has only improved. Rental demand has reached unprecedented new heights in Manchester’s most desirable city centre markets in the last 12 months. Rightmove recorded a 36% annual increase in demand in a year, and new research from urbanbubble shows that there were only 525 vacant residential properties in the whole city at the end of 2021 – this is compared to more than 2,000 at the end of 2020, and is in spite of just under 6,000 new apartments being completed in Manchester during 2021. What’s more, the latest UK Residential Forecast report from JLL shows that rents in Manchester are set to increase by more than 15% in the next five years. This is far above the national average and a good sign for investors. House prices are rising too, with Zoopla recording house price growth of 8.5% in Manchester over the course of 2021, and Savills predicting a further 25.8% of growth in the next five years. This is based on predictions of a large population increase of at least 70,000 people in the next decade according to Manchester City Council figures. All of the above means that investors should strongly consider investing in Manchester property in 2022 thanks to this growth potential. To learn more about why Manchester is so popular with investors right now, click here. London Commuter Belt, residential property The London Commuter Belt is one of the UK’s most popular property investment markets. Its population is growing thanks to the number of people leaving Central London, and waves of regeneration are transforming Commuter Belt towns, creating desirable neighbourhoods which offer high quality job opportunities and an enviable lifestyle. Jessica Tomlinson, Research Analyst at Savills, said: “Across the commuter belt, we’ve also begun to see a change in priorities with people seeking to be closer to transport links and lifestyle amenities in town and city centres, in contrast to the flight to country properties in village and rural locations seen throughout last year.” Despite property prices growth of 10.4% over 2021, entry prices remain affordable and offer many of the benefits of buying in Central London without the cost. Furthermore, the latest residential forecast from Savills projects further house price growth (up to 17.1%) for the Commuter Belt in the next five years. Rents in the Commuter Belt are also performing strongly, and in 2021 they hit their highest levels since 2007. Savills recorded an average rental increase of 7.3% last year, and has predicted further rental inflation of up to 13% for the Commuter Belt as a whole in the next five years in its most recent residential forecasts. The London Commuter Belt has such a wide variety of properties and locations that there is something for everyone. More renters than ever before are realising this and are leaving London in response. This is a key trend of 2022 and makes the Commuter Belt a property investment area of interest. You can learn more about why the London Commuter Belt is one of the UK’s most attractive property investment markets, including which towns within the Belt you should be targeting, in 2022 by clicking here. Stoke-on-Trent, Purpose-Built Student Accommodation (PBSA) What if you’re looking to invest in Purpose-Built Student Accommodation (PBSA) rather than residential property? That requires a slightly different market, and there are not many better options than Stoke-on-Trent. Stoke enjoys a prime position 1 hour 15 minutes from London, 30 minutes from Birmingham and 40 minutes from Manchester – making it extremely attractive to businesses and, consequently, students and young graduates looking to build their careers. This is one of the UK’s most important university regions and is home to two of the country’s more impressive institutions - the University of Staffordshire (approx. 13,000 students) and Keele University (approx. 10,000 students). Crucially, these two universities have strong links to business, and are a major factor in the area being one of the UK’s strongest areas for job growth according to the UK Powerhouse Report. The arrival of the HS2 high speed rail line will only help to create more jobs and boost the local economy (already worth £23bn) even further – making the area even more attractive to students. The area also has a real shortage of high quality student accommodation at a time when student numbers are increasing, and the government is targeting an additional 200,000 international students annually by 2030. It is for reasons like the above that, in the words of Merelina Sykes, Joint Head of Student Property at Knight Frank: “Global investors continue to acquire PBSA assets in the UK, fundamentally underpinned by the UK’s world renowned higher education system. The asset class offers a stable income stream, with strong year-on-year rental growth prospects. When compared to more mature, traditional asset classes, PBSA continues to stand out.” To learn more about the PBSA investment market in the UK, and why it is such an attractive asset class, please click here. 2022 has the potential to be a good year for property investors, especially those investing in areas like the ones targeted above. Get in touch with our team today to learn more and get started with your next investment by clicking here.
Sanjit Dhanjal
27th January 2022