In today's competitive world of property investment, seasoned investors are increasingly turning their attention to commuter towns within the London commuter belt. These areas offer an enticing blend of affordability, convenience, and growth potential, making them highly attractive destinations for both seasoned investors and those just starting their property investment journey. One such town is Wellingborough in Northamptonshire a mere 45 minutes from London by train but a town offering investors good properties at a fraction of the price of London. The Commuter Town Advantage Proximity to London Wellingborough, located just 50 miles north of the capital, benefits from its close proximity to London. This geographical advantage makes it an appealing destination for London-bound commuters looking for an escape from the city's high property prices and a chance to invest in more affordable properties. This is only going to increase in line with the growing trend of employees not required to be in the office since COVID-19 searching for cheaper properties in commuter areas like Wellingborough. Affordability While London's property market remains notoriously expensive, commuter towns like Wellingborough offer a cost-effective alternative for property investors. Investors can acquire diverse property types, from modest flats to spacious family homes, at a fraction of the cost of properties within the city centre. Strong Rental Demand Commuter towns are in high demand among renters seeking a quieter lifestyle while benefiting from easy access to London. Wellingborough's excellent transportation links to London St Pancras International ensure a steady influx of tenants, resulting in a robust rental market. Savvy investors can leverage this demand to achieve competitive rental yields. Infrastructure and Transportation Transportation infrastructure is a key driver of commuter town appeal, and Wellingborough boasts a well-connected railway station with direct trains to London. The town's proximity to major road networks, including the A45 and M1 motorway, further enhances its accessibility. These factors facilitate daily commuting and elevate Wellingborough's attractiveness to businesses looking to establish themselves in an accessible location. Growth Prospects Property investors are always on the lookout for areas with growth potential, and Wellingborough doesn't disappoint. The town is poised for expansion, with several major development projects in the pipeline. These initiatives include new housing developments, infrastructure improvements, and investments in local amenities, all of which have the potential to boost property values and rental income in the long term. Quality of Life Commuter towns provide residents and tenants with a superior quality of life compared to bustling city centres. Nestled within the scenic Northamptonshire countryside, Wellingborough offers picturesque landscapes, parks, and green spaces. It's an ideal place to enjoy a quieter and more relaxed lifestyle while still being within reach of London's vibrant amenities during the workweek. Why Wellingborough in Northamptonshire? Regeneration and Investment Wellingborough is currently undergoing significant regeneration efforts, with substantial investments being made in infrastructure, housing, and commercial developments. These efforts are set to revitalise the town, making it an even more attractive destination for property investors looking for a place with growth potential. Strong Employment Opportunities The town's strategic location provides residents with access to a wide range of employment opportunities across various sectors, including healthcare, education, logistics, and manufacturing. This diverse job market is a boon for investors seeking stable rental income from a pool of prospective tenants. Diverse Property Market Wellingborough boasts a diverse property market, catering to different investment strategies. Whether you're interested in buy-to-let properties, short-term vacation rentals, or property development, you'll find suitable opportunities that align with your investment goals. Educational and Cultural Amenities The town offers access to quality educational institutions, including schools and colleges, making it an attractive choice for families. Additionally, Wellingborough's cultural attractions, local festivals, and recreational activities ensure that there's always something to do, further enhancing its appeal to tenants. In conclusion, commuter towns like Wellingborough in Northamptonshire present property investors with a golden opportunity to diversify their portfolios and achieve attractive returns on their investments. With affordability, strong rental demand, infrastructure improvements, and a promising growth outlook, these areas provide a compelling case for those seeking to invest outside the bustling London property market. As Wellingborough continues to evolve and expand, investors are well-positioned to reap the rewards of their property investments in this promising commuter town.

With yesterday’s announcement from the Bank of England increasing interest rates to 5%, we wanted to provide some reassurance to investors and explain why such hikes in interest rates are not the be-all and end-all for property investors. It’s easy to get lost amongst all of the adverse press from the media so some clarity around the facts is required. While interest rate hikes may have an impact on borrowing costs, there are several reasons why property investors can still find success in a rising interest rate environment. The prospect of interest rate hikes can often send ripples of concern through the real estate market, particularly among property investors. However, it's important to remember that interest rate adjustments should not necessarily deter savvy investors from pursuing property investments. In this article, we will look at a few of the reasons why. Long-term Investment Strategy Property investment is generally a long-term game, and investors should focus on the broader economic landscape rather than short-term interest rate fluctuations. Over time, real estate has proven to be a reliable asset class that can generate steady returns and act as a hedge against inflation. By adopting a long-term investment strategy, property investors can ride out short-term interest rate hikes and benefit from the long-term appreciation of their properties. Strong Rental Demand Diversification is a fundamental principle in investment, and property investors can employ this strategy to minimize the impact of interest rate hikes. By spreading investments across various property types, locations, and financing structures, investors can reduce their exposure to interest rate fluctuations. For example, investing in both residential and commercial properties, or opting for fixed-rate mortgages, can provide stability and mitigate the risks associated with rising interest rates. At Opulent we are seeing a sharp increase in the number of commercial student accommodation units that are being sold simply because savvy investors are buying those with cash to generate an above-average income that in turn is used to subsidise some of the increased monthly mortgage payments caused by interest rate hikes. Negotiating Power When interest rates rise, the property market may experience a slowdown, creating a buyer's market. This situation can present unique opportunities for property investors to negotiate favourable purchase prices. Sellers may be more motivated to sell, and investors who have done their due diligence and have the necessary financial stability can seize the opportunity to acquire properties at attractive prices. By capitalising on market conditions, investors can enhance their long-term returns. Moreover, the city’s property market has exhibited impressive capital appreciation over the years, providing investors with the prospect of attractive returns on their investments. Inflation Hedge Interest rate hikes are often implemented by central banks as a response to inflationary pressures in the economy. Real estate has historically been considered a reliable hedge against inflation. As prices rise across various sectors, property values and rental income tend to follow suit. Property investors can benefit from the appreciation of their assets and the preservation of their purchasing power in the face of inflation. Supply v Demand It’s important that amidst all of the press around interest rates, investors do not lose sight of the fundamental fact that in the UK demand for property far outstrips supply and that housebuilding in the UK currently is at its lowest level since 1920. There is an ever-widening gap between supply and demand which means irrespective of a recession or irrespective of interest rate fluctuations, property prices in the UK will always rebound and increase in value. The gains to be made from capital appreciation will be more significant than the losses caused by interest rate fluctuations thus shouldn’t put off investors from purchasing. While interest rate hikes may initially raise concerns among property investors, a holistic perspective reveals that they should not be a deterrent to pursuing real estate investments. By adopting a long-term investment strategy, diversifying their portfolio, taking advantage of strong rental demand, leveraging negotiating power, using real estate as an inflation hedge, and understanding the supply v demand of new properties, investors can navigate a rising interest rate environment successfully. As with any investment, thorough research, careful planning, and financial prudence remain crucial to achieving long-term success in the property market.

Nottingham has rapidly emerged as one of the premier destinations for property investors in the United Kingdom, offering a plethora of enticing opportunities. In this comprehensive article, we delve into the key reasons why investing in Nottingham is a smart move. It features strategic location and connectivity to its vibrant economy, affordable property prices, strong rental market, infrastructure development, and supportive investment environment. We uncover the compelling factors that make Nottingham the top choice for property investors across the UK. For a number of years Nottingham has often kept off the radar of the mainstream property investor with them favouring better-known cities such as London, Manchester, and Liverpool. However, behind the scenes, Nottingham has built a solid reputation for property investment built on several factors which are described below: STRATEGIC LOCATION AND EXCELLENT CONNECTIVITY Situated at the heart of England, Nottingham boasts a strategic location that provides investors with unrivalled connectivity. The city enjoys seamless access through an extensive network of well-developed roads, efficient rail links, and convenient air transportation options. This outstanding connectivity ensures ease of travel and efficient logistics, making Nottingham an ideal hub for property investors looking to maximise their investment portfolios and capitalise on diverse opportunities. VIBRANT ECONOMY AND REMARKABLE GROWTH POTENTIAL Nottingham’s economy is characterised by its vibrancy and resilience. The city has successfully diversified its economic sectors, with thriving industries including finance, healthcare, creative arts, and digital innovation. This diverse economy, combined with a highly skilled workforce, positions Nottingham as a hub of growth and innovation. Furthermore, economic indicators and forecasts consistently project promising growth potential, making the city an attractive destination for property investors seeking long-term returns and stability. As a result of this demand for property in Nottingham has shot up and forced property prices upwards. Rental’s have also increase rapidly with many plaudits indicating double digit growth in the cost of rents in the area. AFFORDABLE PROPERTY PRICES AND ATTRACTIVE RETURNS   Investing in Nottingham offers a unique advantage with its comparatively affordable property prices. As property prices in major UK cities soar, Nottingham provides an opportunity for investors to enter the market at a more accessible cost. This affordability allows investors to build a diverse property portfolio without compromising on potential returns. Moreover, the city’s property market has exhibited impressive capital appreciation over the years, providing investors with the prospect of attractive returns on their investments. STRONG RENTAL MARKET AND SUSTAINABLE INCOME Nottingham's rental market is thriving, offering a lucrative opportunity for property investors. The city's vibrant student population, coupled with a growing number of young professionals and migrants, ensures a sustained demand for rental properties. This high demand translates into a robust rental income stream and consistent cash flow for investors. Rental yields and occupancy rates remain promising, making Nottingham an excellent choice for those seeking stable and reliable rental returns with minimal void periods. INFRASTRUCTURE DEVELOPMENT AND URBAN REGENERATION Nottingham is witnessing remarkable infrastructure development and urban regeneration projects, further enhancing its appeal to property investors. The city's commitment to improving transportation networks, investing in urban regeneration initiatives, and creating modern living spaces contributes to its long-term growth potential. Such developments not only increase the value of properties but also attract tenants and buyers, ensuring a solid foundation for sustainable property investment in Nottingham. SUPPORTIVE INVESTMENT ENVIRONMENT AND INCENTIVES Investing in Nottingham is bolstered by a supportive investment environment. The local government is committed to fostering growth and encouraging property investment through various initiatives and incentives. These measures include streamlined planning processes, tax incentives, and funding opportunities. Additionally, Nottingham offers a range of professional services, including reliable property management and real estate professionals, ensuring investors receive the necessary support and guidance throughout their investment journey. As property investors seek to expand their portfolios, Nottingham stands tall as on of the premier destinations in the United Kingdom. With its strategic location, vibrant economy, affordable property prices, strong rental market, infrastructure development, supportive investment environment, and real-life success stories, Nottingham offers an unparalleled investment landscape. Delve into thorough research and exploration to capitalize on the city's remarkable growth trajectory. Also, unlock the benefits of investing in this emerging property hotspot in the United Kingdom. Nottingham awaits astute investors ready to seize the wealth of opportunities it has to offer. SUMMING UP Delve into thorough research and exploration to capitalize on the city’s remarkable growth trajectory and unlock the benefits of investing in this emerging property hotspot in the United Kingdom. Nottingham awaits astute investors ready to seize the wealth of opportunities it has to offer. Get in touch with our team of consultants to get started.

The United Kingdom's decision to leave the European Union has been a topic of much discussion particularly around the time leading up to Brexit and for several months after. Many investors were and still are concerned about the impact it will have on the UK property market. While there have been some short-term effects, such as uncertainty and a drop in property prices, the UK property market has shown remarkable resilience and adaptability in the face of change. In this article, we will explore how the UK property market is navigating Brexit and beyond and provide some guidance for investors looking to capitalise on the current market trends. UK PROPERTY MARKETWhilst there is no doubt that Brexit has had a considerable effect on the UK and the UK property market, it has also presented new opportunities, and savvy investors are looking to take advantage of these opportunities. As the UK redefines its place in the world, there is potential for the property market to thrive and evolve in exciting new ways. The UK has a long history of stable and resilient property markets, and there is no reason to believe this won't continue as the country adjusts to its new status outside of the EU.In the immediate aftermath of the Brexit referendum, there was some uncertainty and volatility in the UK property market. This was largely a short-term effect, and the market has since stabilised with record growth in many areas of the UK. While there was a slight decrease in property prices in some areas, this has been largely offset by increases in other regions of the UK. Overall, the UK property market has shown remarkable resilience in the face of change and has weathered the initial storm very well. In fact this is seemingly a reoccurring trend where any major event or threat to the UK property market that’s expected to have a negative impact, doesn’t materialise, there are a few reasons why this is but we believe the main reason for this is the distinct undersupply of property hitting the UK market each year.The UK government has set targets for housebuilding in order to address the country's housing shortage and increase affordable housing options for citizens. The current target is to build 300,000 new homes per year by the mid-2020s.However, the government has struggled to meet this target in recent years. (Source: Property Reporter) In 2020, only 244,000 new homes were built, which was an improvement from the previous year but still fell short of the target. Additionally, the COVID-19 pandemic and associated restrictions have slowed down construction projects and further impacted the government's ability to meet their housebuilding goals.Despite these challenges, the government has continued to prioritise housebuilding and has implemented various initiatives to encourage and support the construction of new homes. These initiatives include measures to incentivise developers to build more affordable housing, streamline planning processes, and provide funding for infrastructure improvements to support new developments, yet the level of new homes is still not sufficient enough to cope with demand.It's this widening gap between supply and demand that will always lead to resilient and robust responses to turbulent conditions from the UK property market and Brexit is no exception to this. Whilst prices will drop in the short term, due to the above, the property prices will always rise again not too long after due to the supply vs demand gap.Looking to the future, there are many reasons for optimism in the UK property market. The country's departure from the EU could lead to new trade deals and relationships with other countries, which could create new opportunities for investors in the property market. There is also the potential for the UK property market to evolve in exciting new ways, as the country adapts to its changing status in the world.It's important to note that the impact of Brexit on the UK property market will vary depending on location. While London may have seen a slight decrease in demand in the short-term, other regions of the UK have seen a rise in demand for properties. For example, the North of England has seen significant investment in recent years, which has led to an increase in demand for properties and a rise in property prices. Investors should consider the regional differences in the UK property market when making investment decisions.For investors looking to capitalise on the current market trends, there are several strategies to consider. One approach amongst others is to invest in new and innovative property developments, such as student green buildings or co-living spaces, which are becoming increasingly popular with younger generations. Investors should also consider the long-term potential of their investments and focus on properties that are likely to appreciate in value over time.Below are a few other strategies investors could employ to make the most of the post-Brexit market conditions: Short-term rentalsWith the rise of platforms such as Airbnb, short-term rentals have become increasingly popular among travellers. This presents an opportunity for investors to purchase properties in popular tourist destinations, such as London or Edinburgh, and rent them out on a short-term basis. By doing so, investors can generate a higher return on investment than they would with a traditional long-term rental. Student accommodationThe UK has a large student population, which presents an opportunity for investors to capitalise on the demand for student housing. Investing in student housing can provide a stable source of income, as students typically rent for the duration of their studies. Void periods are also low as most students will pay for 51 weeks of the year, often in advance at the start of the year. Additionally, investing in student accommodation in university towns or cities can provide a steady stream of tenants. Yields tend to be higher than traditional buy to let with student accommodation also. Commercial propertyIn addition to residential property, commercial property can also provide an opportunity for investors to profit from the UK property market. Investing in commercial property, such as office buildings or retail spaces, can provide a reliable source of rental income and appreciation in value over time.In conclusion, the UK property market is thriving beyond Brexit, with new opportunities and exciting possibilities for investors. While there may be some short-term uncertainty and volatility, the UK property market has historically been stable and resilient, and there is no reason to believe this won't continue in the future. By focusing on the opportunities presented by Brexit and being strategic in their investments, investors can navigate the changing landscape of the UK property market with confidence. The UK property market is an excellent choice for savvy investors looking to capitalise on the current market trends and build long-term wealth. 

Investing in property can be an exciting and lucrative opportunity, but it also comes with important legal and financial considerations that must be taken into account prior to investing into UK property investments. At Opulent we are intent on arming property investors with all the key information they need to stay prepared and avoid unnecessary surprises or penalties. In this article, we will explore the key legal and financial considerations for property investment in the UK, incorporating topics such as tax implications, financing options, and regulations around property ownership and management. Tax ImplicationsOne of the most important legal considerations for property investors is the tax implications of owning and renting out property. Investors must be aware of the taxes that apply to rental income, such as income tax and capital gains tax, as well as the various deductions and allowances that may be available. For example, investors may be able to deduct certain expenses such as mortgage interest, repairs, and maintenance costs from their rental income for tax purposes. The tax implications of UK property investment are an important consideration for any investor, whether they are looking to buy-to-let or develop property. Here are some key tax considerations to keep in mind:Income Tax: If you receive rental income from your property, you will be subject to income tax on that income. The amount of tax you pay will depend on your total income and the amount of allowable expenses you can deduct from your rental income.Capital Gains Tax: When you sell a property, you may be subject to capital gains tax on the profit you make from the sale. The amount of tax you pay will depend on various factors, such as the length of time you owned the property and the amount of profit you made. Whether you decide to purchase a property in your own name or via a company will also affect the level of tax you pay when exiting property investments.Stamp Duty Land Tax: When you buy a property in the UK, you may be subject to stamp duty land tax (SDLT). The amount of tax you pay will depend on the purchase price of the property, and the rules around SDLT are subject to frequent changes. For more information on this visit here Stamp Duty ratesInheritance Tax: If you own property in the UK, it may be subject to inheritance tax when you pass away. The amount of tax you pay will depend on various factors, such as the value of your estate and whether you leave your property to a spouse or charity.VAT: In some cases, property development may be subject to VAT. If you are planning to undertake a property development project, it is important to consider the VAT implications and seek professional advice if necessary.Allowable Expenses: There are various expenses that you can deduct from your rental income when calculating your income tax liability, such as mortgage interest, repairs, and maintenance costs. It is important to keep accurate records of all allowable expenses to ensure you pay the correct amount of tax.In summary, UK property investment can be subject to a range of taxes, and it is important to consider these implications when making investment decisions. It is always a good idea to seek professional advice to ensure you are complying with all relevant tax regulations and paying the correct amount of tax. Financing OptionsAnother key financial consideration for property investment is financing. Investors may need to consider options such as mortgage financing, equity financing, or crowdfunding to fund their investments. Each financing option has its own pros and cons, and investors should carefully evaluate their options to determine the best approach for their investment goals. Below is a list of the different methods to raise finance together with the pros and cons of each: Mortgage Financing PROS:Lower interest rates compared to other types of financingLong repayment terms, typically up to 25 yearsPotential for capital appreciation in the property value over timeCONS:Large deposit required, typically 25% or moreStrict eligibility criteria, including a credit check and proof of incomeLimited flexibility in terms of repayment and other conditions Equity Financing PROS:No repayments required, as investors receive a share of the rental income and/or capital gainsNo credit checks or other eligibility criteriaPotential for high returns if the property appreciates in valueCONS:Loss of control over the property, as investors share ownership with other partiesNo guaranteed returns, as the value of the property can decrease as well as increaseLimited liquidity, as it may be difficult to sell shares in the property quickly Crowdfunding PROS:Low minimum investment amounts, often as little as £10Diversification across multiple properties and/or projectsPotential for high returns if the property/project is successfulCONS:Limited control over the investment, as decisions are made by the crowdfunding platformLimited transparency and information about the investmentPotential for high fees and charges, reducing the overall return on investment Bridging Loans PROS:Quick access to funds, often within daysFlexible repayment terms, typically between 3 and 24 monthsNo restrictions on how funds can be usedCONS:High interest rates, typically around 1% per monthShort repayment terms, leading to higher overall borrowing costsHigher risk compared to other types of financing, as the property may not be sold or refinanced within the term of the loan The best financing option for property investment depends on the investor's individual circumstances, investment goals, and risk tolerance. It is important to evaluate the pros and cons of each option carefully and seek professional advice if necessary to make an informed decision. REGULATIONSProperty investors in the UK must also comply with a range of legal regulations at both the national and local levels. Here are some key legal considerations for UK property investors:Planning Permission: Before making any changes to a property, investors must obtain planning permission from the relevant local authority. Failure to obtain planning permission can result in fines and legal action.Building Regulations: Investors must also comply with building regulations, which set out minimum standards for health and safety, energy efficiency, and other aspects of building design and construction. Failure to comply with building regulations can result in fines and legal action.Health and Safety: Investors have a duty of care to ensure that their properties are safe and free from hazards. This includes complying with regulations around gas safety, electrical safety, fire safety, and other aspects of health and safety.Tenancy Agreements: Investors must ensure that any tenancy agreements they enter into are compliant with UK law, including regulations around deposits, rent increases, eviction, and other aspects of tenancy management.Licensing: Some types of property, such as HMOs (houses in multiple occupation), require a license from the local authority. Investors must ensure that they obtain any necessary licenses before renting out their property.Consumer Protection: Investors must comply with consumer protection regulations, including regulations around advertising, marketing, and selling property.UK property investors must comply with all of the above depending on their investment strategy, failure to do so could result in hefty fines and so it’s important to consider each and every one of the points mentioned above. PROPERTY MANAGEMENTFinally, investors must consider the management of their rental properties, which can be a complex and time-consuming task. Investors may choose to manage their properties themselves often taking up lots of time out of their already busy schedules, or hire a property management company to handle the day-to-day responsibilities of managing tenants, repairs, and maintenance. Investors should carefully evaluate the costs and benefits of each approach to determine the best strategy for their needs. Here are some key legal and financial considerations for property managers:Contracts and Agreements: Property managers must ensure that all contracts and agreements with tenants, contractors, and service providers are legally compliant and enforceable. This includes tenancy agreements, service contracts, and agreements with suppliers.Health and Safety: Property managers have a duty of care to ensure that their properties are safe and free from hazards. This includes complying with regulations around gas safety, electrical safety, fire safety, and other aspects of health and safety.Insurance: Property managers must ensure that they have adequate insurance coverage to protect against risks such as damage to the property, liability claims, and loss of rental income.Maintenance and Repairs: Property managers are responsible for ensuring that the property is well-maintained and in good repair. This includes scheduling regular maintenance and repairs, responding to tenant requests in a timely manner, and complying with health and safety regulations.Rent Collection and Financial Management: Property managers must ensure that rent is collected on time and that all financial records are accurate and up-to-date. This includes keeping track of expenses, maintaining records of income and expenditures, and preparing financial reports for property owners.Tenant Management: Property managers must ensure that tenants are selected carefully and that their rights and responsibilities are clearly defined in the tenancy agreement. This includes conducting background checks, managing security deposits, and addressing any issues or disputes that arise.Legal Compliance: Property managers must comply with a range of legal regulations, including health and safety regulations, data protection regulations, and consumer protection regulations.Property management requires a lot of time and patience as well as keeping abreast of all of the constantly evolving legislation. This is perhaps the area within most property investors get caught out. Experience tells us that it is much easier to entrust the services of a fully qualified letting / managing agent who can take care of all of this for you. Click here for more.In conclusion, property investment in the UK requires careful consideration of a range of legal and financial considerations. Investors must be aware of the tax implications of owning and renting out property, evaluate their financing options, comply with regulations around property ownership and management, and carefully manage their rental properties. By taking these considerations into account, investors can make informed decisions and manage their investments effectively, helping to ensure long-term success in the UK property market.

On the 2nd February 2023, the Bank of England raised the base rate of interest by 0.5% to a total of 4%. This is the latest of 10 rises in the last year and represents the Bank’s latest attempt to combat inflation in the UK. The base rate influences many other rates in the UK. Most importantly for the purposes of investors, it will affect the rate of interest charged for a mortgage. By raising the interest rate as a means to bring inflation down from its current level of 10%, the Bank has acknowledged that the mortgage and property markets will be affected in the short term, possibly in a negative way. However, the Bank believes that this is the best path for long-term, stable economic growth in the UK. It points to the fact that inflation has begun to edge downwards as proof that it is the right move. Current forecasts see inflation falling to 4% by the end of 2023 – much closer to the Bank’s target of 2%. How have interest rate rises affected the mortgage market? In the meantime, what effect has this had on the mortgage market? The short version is that the base rate determines the interest rate which the Bank of England pays to commercial banks, and in turn that influences the rates those banks charge people to borrow money or pay on their savings. Over 2022, mortgage rates increased rapidly and topped 7% in some cases as a consequence of the Bank raising interest rates again and again. As the cost for banks to borrow went up, they passed that onto borrowers. This hurt a lot of property investors. Firstly, those who were borrowing to buy a new property and expand their portfolio. Secondly, those who were remortgaging existing properties on variable rates which shot up unexpectedly. In both cases, these increased mortgage costs negatively affected property yields, especially in cases where the rises could not be passed on to tenants in the form of increased rents. For many, the question became one of whether they could afford to continue as a property investor or whether it was time to sell up. The latter became a difficult prospect in itself as house price growth stalled by the end of the year and in many cases the average property value even fell. What does the future hold for mortgage prices following the latest interest rate rise? Now, in 2023, the mortgage rate has risen again and it would be natural to fear further negative consequences as an investor. However, all might not quite be as it seems at first glance, and in fact there are indications that the worst may be over. Ordinarily, and based on last year’s evidence, we would expect a rate rise to lead to more expensive mortgage products once again. However, it appears that lenders had already priced the possibility of such a rise into their existing products and there has been no sign of increased rates as a result – this is great news for investors using a mortgage. Furthermore, after the latest Bank of England announcement, market expectations are that the likelihood of major rate rises again in the future has decreased. The Bank itself has indicated that rates have either peaked, or are close to doing so. Overall market sentiment shows that traders may be anticipating a further rise of 0.25% at the end of March, but following that a loosening of economic policy may be on the way by the end of the year. This change in expectations has led to a belief in the index swap market – which follows the Bank base rate decisions – that the average interest rate over the coming five-year period will decrease to 3.21%, down from the expected 3.93% which was predicted in January. When it comes to the immediate and long-term effects on mortgages, expert opinion is positive. Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Should the Bank raise rates, base-rate-tracker mortgages will immediately adjust and variable rates are likely to follow. “However, fixed-rate mortgages have been gradually falling in recent weeks and we expect this trend to continue as the market has already priced in a base rate rise. “We expect five-year fixed-rate mortgages to fall below 4 per cent over the next few months and as inflation comes under control, expect a gradually reducing trend throughout the year with base rate reductions expected at the beginning of 2024.” This prediction has already been proven correct with the likes of HSBC and Virgin Money offering five- and 10-year fixed-rate mortgage products at under 4% again for the first time since last August. The rate for shorter-term, two-year products is also falling. Moneyfacts reports that the average rate on two-year fixed deals has dropped to 5.43%, from 5.77% at the start of the year. Simon Gammon, managing partner at broker Knight Frank Finance, said borrowers would welcome a significant drop in the cost of two-year fixed mortgages, and added that the decision on whether to take out a five-year fix had become more challenging as the two-year rates are also looking more favourable. “At the moment, five-year fixed rates are cheaper than two-year fixed rates,” said Gammon, “but a lot of people with uncertainty and those who don’t quite know when to fix are actually more interested in the shorter term deals.” When can we expect further drops in the interest rate? If rates peak at a maximum of 4.5% by the end of 2023 as expected by the markets, then the next phase will be a gradual fall and a period of stability as everything settles. The opinions of experts and indications from the Bank settle on this being around 3.25% for three years from the end of 2023. This will be enabled by a sharp fall in inflation by the end of 2023. The Bank believes there will be three factors behind this. Firstly, the price of energy will stop rising so quickly. Secondly, the prices of imported goods will therefore stop rising as fast as they have been. Thirdly, the Bank expects that this will equate to comparatively less demand for UK goods and services. It is likely that mortgage rates will continue to track downwards over this period of time along with inflation and the base rate. This is good news in general for property investors – and it also suggests a particularly effective strategy for investing which may give you the best results. By investing off-plan while a development is still in construction, it may be possible to secure a property for a 2023 price – at a time where property values have fallen slightly – and get a more favourable borrowing cost in the future. An off-plan investments means that you will be committing to pay the balance in the future and therefore could be able to access cheaper mortgage rates when the interest rates have fallen as anticipated by the market. Compare this to buying a completed property where you will be forced to accept a higher mortgage rate now, even with the knowledge that you will be paying over the odds in future. Another strategy to take advantage of the current and predicted mortgage rate situation is to buy cheaper properties in cash. By doing so, you can avoid high mortgage rates now and save money immediately when compared to investors who borrow to fund their purchase. Furthermore, it will also give you the opportunity to benefit a second time when the market returns to normal as predicted in the coming years. If you manage to buy more affordable properties in high growth potential areas, you can then remortgage them when rates have dropped from the end of 2023 onwards. Taking either of these approaches to investing offers you the best of both worlds and a potential path to earning more while spending less in 2023 and for years after that. Want to learn more about off-plan property and how it can help you get the most for your money? Get in touch with our team today by clicking here.

2022 was an interesting year for UK property and came with many challenges. A cost of living crisis and rising interest rates caused many to question whether moving home was the right idea, and house price growth slowed accordingly. As we begin 2023, it is a good time to ask: is the UK property market is still the best place to invest? Overall, there are potential issues, but the outlook is positive and it seems that better times are not far away. The big news in UK property is that house price growth slowed and possibly even stalled at the end of 2022. Data from Zoopla in January 2023 shows that most regions experienced small declines in house price value at the end of last year, and overall house price growth was just 6.5% in 2022 as a whole. This was understandably something of a shock after years of high percentage growth, it does not indicate the doom and gloom that you might think. While it is true that demand fell by as much as 50% towards the end of last year – as per the Zoopla research – it must be borne in mind that it was falling from historically high levels. Indeed, it has already recovered substantially this year and now sits at just 23% below the five-year average. This may sound negative, but in reality it is in line with the pre-pandemic average and is 10% higher than demand in 2019. Richard Donnell, executive director of research at Zoopla, commented on this, saying: “It’s going to be a slow start to 2023 but we expect demand to pick up in the coming months as the economic outlook becomes clearer and mortgage rates settle around 4% to 4.5%”. The fact is that the pandemic years 2020-2022 were exceptional and should not be viewed as the norm. This is also shown by the average house price growth of 23% over that time period. This means that even the slight in house prices puts property prices in the UK 19.4% above the pre-pandemic record according to Halifax data. To illustrate this point further, Andrew Asaam, Homes Director at Halifax, says: “We expect that UK house prices will decrease by around 8% [in 2023]. To put this into perspective, such a fall would place the average property price back at roughly the level it was in April 2021, reversing only some of the gains made during the pandemic. There is still uncertainty around this forecast, with the trajectory for Base Rate (now expected to peak at 4%) and unemployment levels key to determining any future changes.” So, does the future look brighter for UK property? The simple answer is yes. The aforementioned interest rate peak of 4% - a level confirmed by the Bank of England at the beginning of February – is likely to see increased confidence return to the market as mortgage rates fall. A reduction from the 2022 high of 6.65% to 5.79% has already caused a rise in demand of 55% this year according to Rightmove statistics. Tim Bannister, of Rightmove, said: “Activity has bounced back after Christmas and agents will now be busy trying to match the likely revised expectations of buyers and sellers as we move towards the important spring season. “We expect that the full effect of affordability constraints and last year’s mortgage rate rises will hold back some segments of the market in the first half of the year, but our leading market indicators may start to identify some green shoots of growth that will go on to strengthen in the second half of 2023.” In fact, the strengthening of the UK market is set to go on far beyond the end of 2023. Property investment is a long-term prospect, and the latest forecasts from Savills show this. The agency believes that the average house price in the UK will return to its peak by 2026 and be setting new records again by 2027 – equivalent to growth of 18% over the next four years. Some regions such as the North West (22.1%) and the West Midlands (19.7%) are likely to perform even better, making this a good time to invest in cities like Manchester and Birmingham. The other side of investing in UK property is rental income. In this area, there is nothing but good news for investors. HomeLet reported in January 2023 that the average rent rose by 10.8% in the UK across 2022 thanks to a hugely increased level of demand. The same forces which put people off buying – higher mortgage rates, cost of living crisis – kept more people than ever in the rental market and pushed prices up. All indications are that this will continue not just in 2023, but for years to come. Recent data from the Royal Institution of Chartered Surveyors showed that rents could rise by as much as 15% again in 2023 on top of previous gains. Even more conservative estimates from Savills of 6.5% rental growth in 2023 and 18.3% by the end of 2027 offer great news for investors looking to maximise rental income in the short and long term. So, with the above in mind, should you invest in UK property in 2023? There is no hiding from the short-term uncertainty in the market, and it is understandable that the current conditions may lead to some caution. For example, predictions of lower mortgage rates opening up the market again are well and good, but they have not happened yet. Likewise, most analysis thinks it likely that interest rates will peak at 4%, but further developments in the cost of living crisis mean that we cannot say for certain that this will be the case – and this could have more unpredictable impact on house price and rental growth. However, indications are that 2023 could be a good year for property investors. When asking whether the UK property market is still the best place to invest, the strength of the rental market should be a big indication that the answer is yes. Similarly, the long-term nature of property investment means that the extremely positive future forecasts must also be taken into account. House price growth looks set to return sooner than expected, and the record highs set during the pandemic will be exceeded. This is particularly true for those investing in off-plan property which is still in construction and set to complete in the future. This tried and tested investment strategy arguably offers even more value than ever before in these economic circumstances. By purchasing off-plan now, you can secure a property at the lowest price it has been in years, and then take advantage of high future growth rates to maximise your capital appreciation. At the same time you will avoid the higher borrowing costs now and be able to complete on your purchase in the future when they have fallen once again. Buying off-plan has the potential to be the best of both worlds, and using this strategy gives you the best chance of success in the future. Want to learn more about the UK property market and the best places to invest? Get in touch with our team today by clicking here.

This is an interesting time for the UK property market. Interest rates are higher than they have been for decades and the increased cost of living has many questioning whether now is the right to continue putting money into property. Investors and homebuyers are faced with new questions on what seems like a daily basis at the moment. Now, the new Prime Minister, Rishi Sunak MP, and his team will have to act quickly to calm the market and restore the economic confidence that everyone needs. The initial reaction of the markets to the announcement that Sunak would be the Prime Minister were positive. Pound Sterling (GBP) rose slightly following the recent fall caused by the disastrous economic policies of the previous Prime Minister, Liz Truss. While it was pushed back down slightly by a strong Dollar, we can take this as a sign that the markets have more confidence in Sunak. Likewise, the gilt markets rallied following similar troubles, and investors in those saw yields rise accordingly. As noted by Oliver Shah, Associate Editor of the Sunday Times, this included five-year swap rates that are of particular interest to property investors. This is the rate of interest payable on some long-term financial transactions like property, and it had ballooned to more than 5% under the previous administration. The news of Sunak’s victory pushed it down sharply to just over 4.6%, which is good news for the property sector as a whole. Lawrence Bowles, director of research at Savills, agrees with this positivity, saying: “The uncertainty of the last few months has had a material impact on gilt rates: the rate at which the UK government can borrow. In turn, this impacts the cost of borrowing for the rest of us. It affects mortgage rates for home buyers, development debt costs for housebuilders, and refinancing costs for property investors. “Anything that helps bring certainty and confidence back to the market is likely to reduce borrowing costs. That, in turn, will reduce affordability pressure for households securing mortgage finance, for housebuilders starting on new sites, and for investors buying and operating homes for rent. So, it is clear that Sunak’s appointment as Prime Minister has delivered some immediate benefits for the housing market that investors should take note of. The confidence he inspires in the market has settled the worst of the nerves, and the upcoming Budget at the end of October offers Sunak and his new team an opportunity to further embed certainty into the markets once more. While it is impossible to know exactly what will be in that Budget, it is reasonable to predict that housing will be a major focus. We are likely to see additional clarity around housing policies – including rental reform, cladding, planning reforms and more – as the government attempts to return to ‘business as usual’. This is likely to be welcomed by the markets, and it would not be a surprise to see borrowing costs fall again as confidence returns to the national economy. However, as noted by Tom Bill, head of UK residential research at Knight Frank: “Falling borrowing costs will support demand and transaction volumes in the UK housing market, but this should be seen in context. Mortgage rates may come down compared to the period following last month’s mini-Budget but a 12-year period of ultra-low borrowing costs is over. As demand subsides, 18 months of double-digit house price growth will also come to an end.” On the surface, the end of double digit house price growth sounds like a definite downside for property investors. It is true that a reduction in house price growth will cut profits – but is it all negative? For a start, there are suspicions that ongoing house price growth at this level will eventually lead to a much larger crash, and that is something all investors will surely wish to avoid at all costs. Secondly, property investment is most successful when entered into as a medium-to-long-term prospect. A slight reduction in annual growth is not necessarily a negative if it leads to a more sustainable sector which delivers high returns for longer. Indeed, overall confidence in the market appears to be as strong as ever, even before Sunak’s promotion to Prime Minister. Research carried out by Yopa over September and October 2022 – the worst of the economic crisis – shows that people’s faith in housing remains unshaken. Despite conditions being the worst they have been for decades, more than 46% of respondents thought it was a good time to buy more property, and more than 57% had confidence that house prices would continue rising regardless. This level of confidence is almost unprecedented in today’s economy and it speaks to a market underpinned by sound fundamentals.   The overall lack of available supply will continue propping house prices up, and that situation is unlikely to change given that current building levels create a shortfall of tens of thousands of homes each year. It is to be expected that further clarity from Sunak’s government will continue to increase confidence in the market. Even if borrowing rates remain higher than expected for the short term, a Sunak government can gradually bring those back to more reasonable levels as normality is restored over time. What does this mean for investors? If the UK property market fundamentals of demand being far higher than supply stay true as mentioned above, but the current market situation is not ideal, there is one obvious course of action. By investing in off-plan property in the UK that is still under construction, you can make the most of a market that is still performing extremely strongly and avoid the worst of the current economic conditions at the same time – the best of both worlds. Whether you are paying in cash or with a mortgage, you will not have to provide the majority of the funds until the property is complete. This gives interest rates and the mortgage market time to return to more a more favourable state for you, while at the same time your property will be generating capital appreciation as construction goes on. By investing off-plan in a strong, growing market with future potential such as Manchester or Birmingham you can buy at what will end up being a below-market price and maximise your returns. At the same time, you will minimise your costs by waiting out the current tough economic moment and borrowing when rates are better. Want to learn more about investing in off-plan property in the UK? Get in touch with your team today for more information by clicking here.

One of the most pressing questions facing buy-to-let landlords in the UK concerns cladding. This is the biggest story in the industry and it is attracting a lot of attention as many people – including landlords – are beginning to face mounting bills and increased uncertainty due to a problem they did not cause. Is the UK cladding scandal all bad news for landlords? Or are there some potential positives too? Why is cladding such a big issue at the moment? Cladding is the process of adding an extra layer to a building which can protect it better from the elements or increase its insulation rating. The Grenfell Fire disaster made it clear that not only is a lot of existing cladding ineffective, but it is also flammable and often dangerous to life. This has led to a rush to replace flammable cladding on high rise and other buildings before another tragedy occurs. In practical terms, this means that expensive retrospective work is being carried out on buildings across the country and there has been a huge row over who is paying for it, with developers trying to make leaseholders pay to fix a problem they did not cause. What new cladding legislation has been brought in? To help leaseholders combat this issue, avoid unfair fees and get unsafe cladding removed from their properties, the government has brought in the Building Safety Act 2022. This will protect leaseholders in law for the first time and prevent the costs of replacing unsafe cladding being payable by them. Instead, the Secretary of State at the time the law was written, Michael Gove, has shifted the burden onto the developers and freeholders. Put simply, those responsible for installing dangerous cladding and those who own the buildings will be required to fund essential repairs. This applies to all buildings over 11 metres in height, although campaigners from the End Our Cladding Scandal group have questioned why it does not also apply to buildings under 11 metres in height. This is an ongoing issue that will also need to be resolved in future. The bill also opens up a new phase of the Building Safety Fund (BSF) – a £5.1bn pot for the next 10 years to fund the removal of dangerous, flammable cladding from buildings. Gove said the Building Safety Act 2022, “marks a major turning point for building safety in this country, as we introduce a tough new regime to make homes safe and help rid the sector of bad practice once and for all. “Hundreds of thousands of innocent leaseholders now have the legal protection they rightly deserve, freeing them from a financial burden they should never have faced.” How does the cladding crisis affect buy to let landlords in the UK? Landlords were initially excluded from the list of leaseholders who could apply to the Building Safety Fund and were expected to cover all costs themselves. Later on, this was amended to say that landlords who owned two or fewer properties would benefit from a cap on how much they could be asked to pay. This still leaves portfolio landlords with huge potential costs and it is the unfortunate truth that these people will face mounting costs as they have to replace cladding under the new laws. There are multiple stories of larger landlords facing bills for tens or even hundreds of thousands of pounds. The cladding scandal also offers landlords of properties clad in flammable material a range of other problems, including: Remortgaging to a lower rate is impossible as most lenders will not loan you money Properties drop hugely in value Almost impossible to sell and exit the market Renters may be unwilling to move into blocks with fire safety issues What can buy to let investors do to limit the impact of the cladding crisis? The process of working out how the cladding scandal in UK property will be solved is still ongoing. In the meantime, there are some types of landlords who will benefit, and a strategy to take for your next investment that will help limit your exposure. The first group that could benefit are smaller or new landlords who will only have two or fewer properties in the same building. As mentioned above, the Department of Levelling Up, Housing and Communities has specified that cladding relief will be available to these buy-to-let landlords in the form of a cap on the cost of cladding work - £10,000, or £15,000 in London. This will help smaller landlords keep costs down and incentivise new landlords to keep investing in a limited number of properties. The second group are those landlords who purchase new build properties. New developments will have to meet the new, higher standards of cladding in order to complete and will therefore not come with any concerns about flammable cladding. Similarly, the fact that new build developments are known to not include flammable cladding will also make them more attractive to potential renters. Furthermore, when you choose to sell your property, you will not face any issues selling it in the same way that landlords caught up in the cladding scandal have. Your investment is therefore more protected and future-proof, particularly if you buy an off-plan property which is currently in construction as that will be using the most up to date materials. Want to find out more about our brand new buy to let investment opportunities? Get in touch with our team today by clicking here.

An Energy Performance Certificate (EPC) must be provided as part of every property purchase in the UK according to the law. It measures the energy efficiency of a property on a scale of A-G and gives detailed information about its sustainability and carbon emissions. In April 2018, new Minimum Energy Efficiency Standards (MEES) were introduced which made it a legal requirement for all privately owned properties to have an EPC rating of at least an 'E' before they are sold or let. This legislation applies to both domestic and commercial properties, although there are some exceptions around properties which are Listed and therefore may not be suitable for energy efficiency works. However, it applies to 98% of residential properties in the UK and as a landlord you should assume that you will need to achieve an EPC rating of at least E. Those who fail to meet this standard could be charged up to £5,000 for each residential property. In future, these regulations are set to become stricter as the need to increase the sustainability of the built environment becomes more urgent. New government legislation means that all residential properties which are rented out will need to achieve an EPC rating of C or above by 2025. If they do not do so, they are not eligible for rent. Similarly to previous legislation, this will first be applied to all new tenancies by the initial 2025 date and then be expanded to all tenancies including existing ones by 2028. The final thing to note is that the penalty for not having a valid EPC will increase from £5,000 to £30,000 from 2025. What is the effect that this legislation will have on landlords? Clearly, it will increase the responsibility on landlords with existing properties – especially those with older properties. These could require a serious amount of retrospective work to bring them up the standard required to meet the required EPC ratings by 2025. A whole package of works could be needed including better insulation, remedial structural works, a new boiler, improved windows and other possibilities. These have the potential to be very expensive and it is recommended that landlords take action sooner rather than later. However, there are notable upsides to increasing the EPC rating of your property too. Notably, the evidence points to higher EPC ratings leading to a sales premium and higher rents. These are the two income streams available to landlords and increasing them is the primary target for a successful portfolio that is profitable in the long term. Andrew Harvey, senior economist at Nationwide, agrees, stating: “Decarbonising and adapting the UK’s housing stock is critical if the UK is to meet its 2050 emissions targets, especially given that the housing stock accounts for around 15% of the UK’s total carbon emissions. With this in mind, we used our house price dataset to explore the extent to which owner occupiers pay a premium or discount for a home due to its energy performance rating. “Our analysis suggests that a more energy-efficient property (rated A or B) attracts a premium of 1.7% compared to a similar property rated D - the most commonly occurring rating. There is a more noticeable discount for properties rated F or G - the lowest energy efficient ratings. Indeed, an F or G rated home is valued 3.5% lower than a similar D rated property.” Harvey also notes that the value that people attach to energy efficiency is likely to change over time, especially if the government takes measures to incentivise greater energy efficiency in future to help ensure the UK meets its climate responsibilities. Overall, it is estimated that the average cost of upgrading an existing property to an energy efficiency rating of C is approximately £8,000 – and that number goes up if it is currently rated in band F or G. That is a serious outgoing which will have a major impact on landlords in the future who will have to find that money in order to meet their legal requirements. If they do not, they cannot rent the property out and it will become increasingly harder to sell it. With that in mind, many landlords are wondering what the solution is and whether they should continue investing. While it is a large issue, there is a simple way to avoid the issue entirely when making new investments in future – and that is to buy new build properties rather than existing ones. Over the past decade, energy efficiency measures have improved significantly in all areas and are now being incorporated as standard into new properties. Improved insulation, more efficient boilers, electric panel heaters, decentralised energy and more sustainable building materials are just a few of the sustainability features that new build homes typically include in 2022. Due to this, new build properties will tend to have a much higher EPC rating than existing properties. Approximately 94% of new builds are rated at band C or above, and therefore they are cheaper to run and more attractive to tenants. Additionally, they will retain their value and be future-proof in this way against further legislation changes for many years to come. Looking for your next investment? Get in touch today to learn more about our available properties which all feature a high, legislation-proof EPC rating. Click here to contact us today.

Britain is facing a cost of living crisis unlike anything else in living memory. Inflation is at a very high level and energy companies are raising prices despite making huge profits – both of which are playing major roles in squeezing the spending power of millions of households up and down the country. This situation was compounded by news this week that the energy prices are set to double again by the end of the year. With government action non-existent and all support delayed due to the Conservative Party’s latest leadership contest, more people than ever before are looking at an uncertain future. This situation has left many wondering about the state of the overall economy and whether its reliability should be called into question. One area that is proving to be resilient in the face of the cost of living crisis is the UK property market, and perhaps here we can see that there is some potentially good news for many people. The latest figures from the Nationwide house price index show that annual house price growth actually increased in August to 11%, from 10.5% in July. Prices rose by 2.1% in total month-on-month when seasonal changes are taken into account, and overall prices are now 13% higher than they were in 2019 before the COVID-19 pandemic began. Robert Gardner, Nationwide's Chief Economist, said of the figures: “The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. Moreover, the monthly price increase was substantial – at 2.1%, it was the second largest monthly gain in 15 years. “Lack of supply is likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.” With that lack of supply in mind, how might the market react as the cost of living crisis deepens? It is fair to say that the outlook is still cloudy, though the housing market’s fundamentals remain strong. Underlying demand is likely to stay strong in the near future as the basic principles of supply and demand remain in place. There are nowhere near enough homes being built to meet demand and that won’t change in the foreseeable future. Due to this, prices in the housing market are likely to retain stability and growth prospects. Likewise, the employment market has remained resilient and this has also contributed. Employment rates are at their highest in decades (over 75%) according to figures released recently by the Office for National Statistics, and that has given more people the kind of certainty that is needed to contemplate a new property move or purchase – leading to a stronger market. However, it is worth noting that some experts believe these conditions may ease slightly in the near term. If the cost of living crisis does cause people to cut their spending the housing market will be affected briefly and some sellers may be forced to lower prices to accommodate this reality. Likewise, there is a danger that the crisis will have an impact on the affordability of new mortgages thanks to the growing rate of inflation. This will also potentially have a negative effect on the market which people should be wary of. However, despite this, a potential slowdown is far from assured and is only speculation at the moment. Indeed, the past behaviour of the housing market and people buying property in the UK suggests that fears could be overblown. The aforementioned factors which are serving to increase the value of property in the UK – especially the lack of supply and the accompanying low rates of new construction – are long-term factors which are not going to be resolved. This should give confidence in the housing market through any possible tough times in the short term. Whether we look at Brexit, the COVID-19 pandemic, increasing inflation or government uncertainty, one of the central facts of life in the UK is that the housing market has remained stable. While nothing in life is ever completely certain, the property market’s reliability is more certain than most, and that remains the case even in the face of a cost of living crisis. Are you looking for your next property in the UK? Find out more about the market and our available buy-to-let opportunities by getting in touch with our team today. Click here to get in touch today.

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.