Strong rental income remains the key driver for property investors when considering location and, with buy-to-let lending continuing to rise for those looking to augment their portfolios, despite the last budget looking set to put paid to the trend.
According to Dena Brumpton, Chief Executive of Wealth and Investments at Barclays, landlords are still in it for long-term gain.
‘It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long term investment security’, she commented earlier this year on Property Wire.
Indeed, Knight Frank has allayed any tax change fears that should, on paper, have taken hold. According to Property Wire, the real estate firm, Knight Frank, has highlighted a rise of more than 10% in the number of re-let properties to August 2017 and seen its letting division turnover increase by 50% in three years.
‘We see no signs of an exit, confirmed Tim Hyatt, Head of Knight Frank’s lettings division. ‘Buy-to-let investors typically hold properties for an average of 16 years and most professional investors will ensure their portfolio is able to weather such storms.’
In September 2017, the HomeLet Rental Index revealed that average rents across the UK rose by 2.1% in September compared to the same month a year ago with the average monthly rent now standing at £927 and rents rising in 11 out of the 12 regions of the UK. In the southwest, the average rental value for new tenancies is £814 a month, which represents an increase of 3.4% when compared to the same period last year.
Certainly for the South Coast rental sector, the forecast looks very bright – and that’s largely due to the burgeoning student housing market.
Corporate property management and investment company, JLL, suggests the student housing marketing will account for £1 in every £10 invested in UK commercial property this year and highlights Southampton’s growth plans for the its position as next in line for the trend.
Development Finance Today (DFT) points to Southampton seeing a rise in the number of private rented sector (PRS) and co-living housing schemes. These are initiatives that see investors buying up blocks of property for the purpose of buy-to-let and benefiting from rises in value – and rent.
Emma Eaglestone, Head of Office in Southampton for JLL, commented: ‘The decision by central government to lift the restrictions on student numbers within the university sector – coupled with the huge increase in revenue from student fees and increasing numbers of foreign students – has fuelled a major investment across the sector in capital projects.
‘We have witnessed this in all of the five universities across the South, two in Southampton, Bournemouth, Portsmouth and Chichester.’
Of course, the advent of the first interest rate rise in 10 years should lead to an expectation of the trend slowing, but, if the Chancellor’s tax changes have done little, if anything to dent our investors’ thirst for more, it seems a minor rate rise is likely to either.
You can read the full DFT article here