Invest In UK Property Now To Ride The Rental Wave

Property investors are being advised to snap up UK buy-to-let stock in order to ride the ever-swelling rental wave.

According to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors (RICS), published June 2011, increased tenant demand and low levels of rental property pushed rents even higher in the three months to April. This increase is across the UK, with the most notable rises in London, closely followed by the midlands, the south east and the north.

Rents will continue to rise

As first-time buyer home ownership continues to be a pipe dream for many, rental is the only option and tenants are being forced to pay the booming prices. Supply to the market still remains unable to keep up demand, so landlords with buy-to-let property are keeping a tight hold of their investments.

James Scott-Lee, spokesperson for RICS, explains: “Although we are beginning to see more mortgages aimed at first-time buyers, many potential homeowners are restricted from getting a foot on the property ladder, leading to increased demand in an already over-subscribed rental market. There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise.”

Landlords encouraged to grow portfolios before property price increase

David Newnes, estate agency managing director for LSL Property Services, which owns Your Move and Reeds Rains, comments: “Optimism among landlords is not only buoyant, but increasing. Soaring rents and climbing demand from frustrated first-time buyers are not only making buy-to-let an attractive proposition for new property investors – but are encouraging existing landlords to grow their holdings before property prices increase once more.”

Despite expectations that property values will continue to drift downwards, economists say they can see signs of improvement during the remainder of 2011.

Slowly improving economy will “prevent further fall” and “stabilise values”

Housing economist Martin Ellis says: “The number of mortgages approved to finance house purchase is a leading indicator of completed house sales. Industry-wise approvals in the three months from February to April were 2% higher than in the preceding three months on a seasonally adjusted basis, according to the latest Bank of England figures.”

He continues: “A slowly improving economy and continuing low interest rates should support housing demand. GDP increased by 0.5% between the final quarter of 2010 and the first quarter of 2011, offsetting a similar decline in the previous quarter, according to the Office for National Statistics.”

Ellis believes this will support housing demand, thus preventing a further fall and helping to stabilise property values later in the year.

Prices set to skyrocket with demand

True, subdued lending has been keeping property prices down. Values have fluctuated over the past couple of years, but have actually changed very little when compared to 2009.

The supply side of quality property, during this time, has been scare. Developers have found it difficult to get lending and building was constrained due to a lack of demand on completed developments. However, this is all set to change – and soon!

2012 set to be “the” year for property investors

The market has already started to shift. Firstly, with the dearth of first-time buyer mortgages, lenders are looking to buy to let finance as a route out of recession. Why? Because buy-to-let investment, in today’s economic climate and housing market, is seen as low risk.  So much so, we are seeing new buy to let financial products and services being launched on a regular basis.

We are also seeing developments and off plan deals picking up again – although they won’t all be completed by the time the wave of demand hits. This means demand will be higher than supply and push up values.

Invest now for immediate equity and income

The ripple effect caused by this surge in buy to let, is expected to boom through 2011 and property prices are expected to skyrocket in 2012. In order to ride this wave, investors are being advised to expand their portfolios in 2011. This is for two reasons:

• Right now could be your last chance to purchase at the lowest possible prices, before the property cycle trends upwards again. Buying now, while prices are still at the bottom of the cycle, locks in your profit – especially if you buy below the current low market value!
• Your rental income will immediately give you positive cash flow, typically expected to increase at a rate of 5% per year – or even more, given the current boom in the tenant market!

How to cash flow £1,400 per month net for a £56,000 investment
Investing through Axis means you are guaranteed the greatest below market value discounts and highest rental yields. Currently-available Axis UK deals include:

• A multi-let HMO in the media capital of the midlands, Manchester, which produces a NET cash flow of £1,400 per month and is available to purchase for just £56,000 (with finance).
• Suites in a prestigious student development in leading university city, Liverpool, which have guaranteed tenancy and an assured 10.31% NET yield. These perfect little investments are available to purchase for under £50,000 including all costs.

To find out more about these must-have deals and our other, forthcoming investments in the UK, call Axis portfolio managers David Ball and Russell Bonner today on +44(0)1273 447 300.

Posted in UK Property News

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