Private Rented Sector: Looking Back and Moving Forward

Rajiv Mehta, Asset Manager – Business Development, Young Group

Rajiv Mehta, Asset Manager – Business Development, Young Group

As 2014 is drawing to a close this PRSupdate article will focus on what has been happening over the past 12 months in housing and the Private Rented Sector, as well as a brief look ahead to 2015.

House Building

While the lack of housing stock is a current hot topic it has been encouraging to see statistics, released by the Government, which shows that house building has steadily been on the rise since the financial collapse of 2008.

The number of private dwelling construction starts for 2014 is set to exceed the 2013 levels by at nearly 25,000 units (106,750 in 2014 compared to 81,980 in 2013).

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Landlords find ‘going it alone’ stressful

Landlords find 'going it alone' stressful (Image by Firesam!)

Landlords find ‘going it alone’ stressful (Image by Firesam!)

A survey of 759 landlords found that 1 in 4 feel the whole experience of letting and managing their rental property was far more stressful than they had expected. A huge 67% of those questioned stated that they felt that their stress levels were higher than they were 12 months ago.

Unsurprisingly, expat landlords felt that they were under the most stress due the distance between them and their property, hampering their ability to properly manage it.

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Can You Trust House Price Index Data?

Can you trust House Price Index stats?

Can you trust House Price Index stats?

A House Price Index… is it worth the paper it’s written on?

It seems that every month the property industry, and the general public, is bombarded with another statistic relating to average house prices. The headlines usually heap a lot of importance on these statistics, either stating that it highlights the impending burst of the “property bubble”, its continued inflation or using it to show people are being priced out of the market.

But each House Price Index uses different measurements and covers different sample sizes, areas and date ranges. Many can indicate a national average property price that varies greatly from the consumers experience.

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Number of Amateur Landlords on the Increase

Rajiv Mehta, Asset Manager – Investment, Young Group

Rajiv Mehta, Asset Manager – Investment, Young Group

According to a new report the level of amateur (part time) landlords, those who use their investment property to supplement their other income, have reached the highest ever levels.

The National Landlords Association (NLA) claims that amateur landlords now make up more than 70% of the Private Rented Sector and that they typically own around four properties.

Due to the current strength of returns seen in the rental market 25% of these amateur landlords are intending to add to their property portfolio with 40% planning to use buy-to-let financing to fund their lettings portfolio.

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Mortgage Market Review: What you need to know

Mortgage Market Review: What you need to know

Mortgage Market Review: What you need to know

What was the MMR?

The Mortgage Market Review (MMR) was a comprehensive analysis of the mortgage market. Following on from the MMR new regulations were implemented by the Financial Conduct Authority (FCA) on April 26.

Why was the MMR needed?

The MMR set out reforms to the current mortgage market to ensure its continued recovery and sustainability in the wake of the credit crunch.

Policy makers believed that the current regulatory framework was ineffective in keeping high-risk lending and borrowing in check. The policies stemming from the MMR will ensure that those who can afford mortgages can access them, while preventing a return to the poor practices of the past.

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Area Update – London Bridge & Borough

Area Update: London Bridge & Borough

Area Update: London Bridge & Borough

The latest edition in Young Group’s Area Update series is now available to view and download.

The London Bridge & Borough area is the focus for this edition as the area has undergone massive transformation over the past 6 years.

The improvements to the area have made it a highly desirable location for residents and businesses alike and as the development of the area continues it can only lead to a positive impact on income returns and capital values.

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Capital Gains Tax Targets Overseas Investors

HM Revenue and Customs

HM Revenue and Customs

This article is for information purposes only and in no way constitutes advice.

From April 2015 there will be changes to the current Capital Gains Tax (CGT) rules for overseas sellers. Currently the disposal of UK property by a non-resident individual is not normally subject to UK CGT, while UK residents pay 18% of the profits for basic rate tax payers and 28% for higher rate payers.

However, it is not yet clear exactly how the new rules will be implemented as the Her Majesty’s Revenue and Customs (HMRC) have yet to release the consultation documents. Until then, we will not know exactly what is being proposed.

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Overhaul of Bank interest rate policy

Bank of England

Bank of England

Mark Carney, governor of the Bank of England (BoE),  has overhauled his guidance policy on interest rates as part of his latest inflation report. The governor had originally stated that a rate rise would not happen until there had been a fall in unemployment, but this policy has now been reviewed after the jobless level fell faster than expected.

The governor has reiterated that the BoE will take into account a number of economic factors before raising interest rates, these indicators would include wages, productivity and spare capacity within the economy.

Mr Carney was quick to point out that when rates increase, they will “only increase gradually”.

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Bank of England in no rush to raise rates

Bank of England

Bank of England

The UK unemployment rate has dropped to 7.1%, close to the point at which the Bank of England (BoE) has said it will consider raising interest rates.

Data released by the Office for National Statistics shows that the number of people out of work fell by 167,000, to 2.32 million, in the three months to November.

The BoE said it would consider increasing the base rate, from its current historic low of 0.5%, when unemployment hit 7%.

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The Top Do’s and Don’ts of Residential Property Investment

Residential Property Investment

Residential Property Investment

Property as an investment class is a tried and tested proposition for stable, long-term wealth creation.  Add the effects of gearing (using mortgage finance), buying the right property in the right location at the right price and the returns regularly outperform all other asset classes.

So what’s the key for successful investment in residential property?  David Mackenzie, Young Group Director of Asset Management, shares his top 10 dos and don’ts for sound property investment.

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Economic Roundup

David Mackenzie, DIrector of Asset Management

David Mackenzie, DIrector of Asset Management

With the year coming to a close I thought I would take this opportunity to use the last PRSupdate of 2013 to focus on headline economic data and PRS statistics, and look at their implications for 2014.
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How location can affect rental values

How Location can affect rental values

How location can affect rental values

Residential property in London is currently outperforming other mainstream asset classes in regards of total returns.

The current rental market offers the prospect of a steady rental uplift and this is attracting a broader range of investors who now see residential property as a steady source of long-term income.

However, the rental income and rental uplift of a property will vary due to a number of factors. One of the major factors that can affect rental income is the location of the asset. An identical property would achieve different rent levels dependant on its location.

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Killing off Commission

Neil Young

Neil Young

Commission motivates staff to do their best!

This is a statement that is a truth wrapped up in a lie.

Commission based remuneration, which is the norm for the lettings industry, is where an employee is rewarded on the value of the transactions they get, can help to drive a business’s bottom line but it could encourage the wrong sort of behaviour and cause staff to: fight over the best leads, pressure applicants into signing as quickly as possible and, occasionally, lead to outright lies to get a deal.
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Analysing Private Rented Sector investment and yield

Neil Young

Neil Young

Current Private Rented Sector (PRS) market conditions are such that finding the next ‘hidden gem’ for an investor is proving to be a challenging task.

This is due to a continuation of overseas money chasing, and overpaying for, property situated in London. The factors that drive this situation are; favourable exchange rates due to a weakening pound sterling, favourable interest rates on debt (especially in the Far East) and capital protection in countries such as Greece, Portugal and Spain.

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Extension of London Overground Completed

Transport For London - Extension of London Overground

Image: Transport For London – Extension of London Overground

News of the completion of the extension to the London Overground line has been greeted with much cheer at Young Group, not in small part due to the fact that more than 7 years ago (pre-approval of the extension), we identified areas along this route as excellent investment opportunities.

The new Overground lines link the areas with popular commuter destinations throughout London, such as Islington, Stratford and Clapham. It provides an orbital route around the capital in much the same way that the M25 motorway does.

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