Property Investing Trends - Projections for 2015
The key is to appreciate and interrogate your local market information. Just because property prices may have increased around 15% in London in 2014, it is useless to you if all of your property purchases are based in Bolton. To hear that student accommodation requests are outstripping supply in your local town is not helpful when you focus your portfolio on middle income employed rentals.
According to a recent article from the Daily Telegraph, the latest trend in buy to let property investment in the UK is the newly named 'refurbish to let' philosophy.
What does that mean exactly? Well, as the name suggests it is all about making a healthier profit through buying a run-down property and doing it up before renting it out to tenants. How so? Well, the price of property in the UK is beginning to pick up again - which means there is no longer any real bargains out there to be snapped up at auction. No, the only way you will find one of those instant money makers is to buy cheap and finance your renovation process.
Coupled to this is the fact that the mortgage rate is set to increase any day, the instruction to buy an 'ordinary' property without work needing done to it, isn't on the property strategy of many investors I know. And nor is it likely to be as the UK property market begins its slow recovery back to normality.
Doing up a property means a lot more work of course (whether you are attempting to carry out the actual work yourself or you are managing a DIY project with various contractors). And when we say a lot, we do mean a massive amount, such as adding more rooms, extending a kitchen and building a roof extension. It's a clever strategy.
The drawback however is the difficulty getting hold of finance to do the renovation work in the first place. There are renovation mortgages available, but they are few and far between. But the plus side? As well as adding value to the property, the new renovation work - provided it's done well - should also attract a better class of tenant.
House of Multiple Occupancy (HMO) investment
Despite the huge amounts of work involved in their upkeep - not to mention new and tougher laws introduced in recent years designed to make registration with local authorities mandatory (the latter in a bid to quash rogue landlords), HMOs have always been extremely popular with the braver property investor. This is especially so in areas with high student populations or cities. With their numerous tenants, HMOs always brought in the best yields, and nothing has changed in that respect.
The latest trends in student digs are 'pods.' These compact new, purpose-built city digs are usually snapped up by wealthy parents in a 'fractional ownership' deal whereby the tenants has a short-term rental guarantee. They don't have to worry about the upkeep either since the whole building is looked after by an independent factoring firm.
Fashion for eco-houses
Although they haven't gone up for some time, utility costs are at the back of every householder's mind (and especially tenants who already feel hard done by because they are paying high rents considering the small mortgage lending rates). As a result rented homes which have eco measures such as first class insulation, triple glazing and even solar panels and ground source pumps will all be snapped up quicker than those homes with a huge gas guzzling boiler.
Demand for high-tech appliances
Many youngsters have grown up with gadgets during their teens and simply can't envisage a home without a flat screen TV, app-run music centre, LED flashing lights and, of course, smartphones chargers. Then there is the 'apparent' need for access to high-speed broadband in every room in the house.
Change in direction
London still demands the highest rents but the best yields are now being found in the north and midlands where property maybe doesn't move as quickly as it does down south, but is certainly a lot less expensive to buy in the first place and there is little chance of being squeezed out financially (and perhaps literally) by a rich Arabian businessman. London is becoming a little too self-assured of its success when it comes to property prices (at one point property prices were falling everywhere in the UK except London where they soared thanks to the input of foreign investors).
Meanwhile, upmarket estate agency Savills claim that a report commissioned by them showed that house prices in Scotland were expected to increase by around 18 per cent within four years.
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