Post COVID-19 Market Projection
CategoriesInvestor Advice

What Will Happen to the UK Property Market After Covid-19?

Post COVID-19 Property Market Video Presentation

A quick run-through of our forecast for the UK property market presented by one of our Directors, Tobi. Making use of recent industry reports, market data and what’s happened internationally, Tobi gives an insight into the impact and likely future effect of COVID-19 through his property market prediction.

Click Here To Watch

The 18 Year Property Cycle

In the presentation Tobi refers to the 18 Year Property Cycle, you can see the article he was referring to here. Tobi explains how once you grasp this, it will become an essential tool for buying and selling at the right time. As a property investor (and if you’re in property in general) this is one of the most important things you should learn.

So how do you profit from the property cycle?

  • Do not panic. Being knowledgeable and recognising what is happening in the market will help.
  • Don’t put yourself into a position where you would be forced to sell at the wrong time e.g. over-leveraging.
  • Don’t buy and overpay for property at the peak of the ‘explosive’ phase.
  • If you pick the right points of the cycle, you can offload properties when everyone is buying and cash in.
  • Cashing in can generate a healthy ‘war chest’ of money ready for when the next crash happens. Meaning you will be ready to pick up great deals. “Be fearful when others are greedy and greedy when others are fearful” – Warren Buffett.

So watch the presentation and review the article on the property cycle and you should be better armed to make investment decisions.

If you found this property market prediction helpful and you’re looking to capitalise on the current property investment environment and secure exclusive incentives, then please get in touch using the details below to discuss your objectives and our opportunities. We charge no fees to investors.

Email: [email protected]

Tel: +44(0)203 627 3987

CategoriesWeekly News

Property Investment News UK – 01.05.20

We have Boris Johnson back at the helm and he has said that the UK has ‘past the peak of the outbreak’ which is great news. Following this announcement, we are now shortly due to get the government’s comprehensive plan for easing lockdown and restarting the economy which will no doubt have a positive impact on the property investment market.

We also had Hometrack’s most recent report this week that has some interesting data which you will see below. We really recommend taking a look at the full report as there is some excellent information which is impossible to summarise in this email.

So let’s take a look at the media headlines that we have found insightful this week:

Property news this week

 

  • Hometrack Report: March 2020

    The latest Hometrack report helps to give us a good insight into the early impact of COVID-19 on the property market. It explains that there is a huge pause on property transactions with a combined estimated value of £82bn. Demand fell over March (which is to be expected) but has begun to increase over recent weeks. Annual house price growth actually increased 1.8%, this may of course change in the April report so this will be interesting to see. We feel that if house prices do go down in April then it won’t be by very much and we would be surprised if it surpassed 1%, let’s check the next report and see.

  • How the Coronavirus pandemic has impacted BTL mortgage rates

    This is a great article that looks at and compares the current mortgage rates on the market. The 70% LTV 2 year average fixed rate is the only rate to actually decrease since 1st April and stands at 2.78%. The most appealing average rate is still the 2 year fixed 60% LTV mortgage at 2.39%. The Mortage Works offers the lowest rate with their 65% LTV 2 year fixed product offering 1.19%. This article is definitely worth a look, especially if you are currently looking at purchasing a property investment with a mortgage or a remortgage.

  • There is a ‘massive amount of pent up-demand’ in the rental market

    ARLA’s CEO David Cox is predicting that once the lockdown is eased, we will see a major release of pent-up demand in the rental sector. They are foreseeing that the first Friday out of lockdown will be one of the biggest moving days in the lettings industry’s history. We have been hinting for a while that there will be a surge in demand for rental properties post lockdown and it will be interesting to see if this has an upward effect on rental prices.

  • Housing market could be back in business soon

    The Royal Institute of Chartered Surveyors (RICS) has confirmed that it is preparing a new set of guidelines for valuers across the UK to enable home valuations to restart safely meaning that the secondary housing market could be back up and running in just a few weeks. The government advice still remains that you should not move unless it is into an empty home but this is a step in the right direction and could see more mortgage products come back to the market with lenders being able to carry out physical valuations.

  • Impact of virus and lockdown set to cause historic decline in housing delivery

    Knight Frank has reported that COVID-19 and lockdown will result in 56,000 fewer homes being delivered in the UK this year. The UK has struggled with a shortage in supply of new homes for numerous consecutive years now, always missing the government’s target of 240,000 new homes per year. This is going to put even more strain on the supply and demand problem and while supply is considerably lower than demand, we might see house prices remain strong and even increase. The lack of new housing being built won’t be great news for the government as they are constantly under pressure to deliver the quota of new homes needed.

We have a really helpful blog from Property Road that we wanted to share with you this week called ‘How To Get A BTL Mortgage As A Limited Company’. It is a question we get asked quite often so if you are considering buying your next property investment in a limited company using a mortgage then please check this piece out.
That’s it for this week, folks.

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You can view our current property investment opportunities here.

Team Track Capital

CategoriesWeekly News

Property Investment News UK – 24.04.20

The UK is still asking questions as to when and how the lockdown will ease and we still have very limited answers. The Government is under immense pressure and we hope that with the return of the PM Boris Johnson at the helm any day now, we will start to get some decisions and answers in this difficult time (I know I wouldn’t want to be in his shoes), read on for property investment news.

We are still enjoying home working here at Track Capital and that has probably been helped this week by the sunshine plus the fact that we sold out our Opal Ridge care home investment. If you missed out on this particular investment then please get in touch as we have a very small number of units available from the same provider in a different development offering similar returns.

So let’s take a look at the property news headlines that we have found insightful this week:

Property news this week

  • Demand for rented homes bounces back by 30% in two weeks – Our first piece of property investment news. There are a lot of headlines about property prices but not much being said about the rental market. According to Zoopla’s recent article, the rental demand fell 57% in the last 2 weeks of March 2020 and has seen demand rebound by 30% in the first two weeks of April. The additional flexibility in the lettings market, which has allowed agents to agree rental contracts with delayed start dates and based on online viewings, means that activity has continued throughout the lockdown which ties in with what our industry insider was telling us last week. The most popular price bracket across the country (excluding London) was £500-£600 pcm which is similar to the trend we saw prior to the coronavirus. However, London renters seem to be looking for cheaper rental homes with online interest focused on the £1,200-£1,300 pcm price bracket in April.
  • Chinese interest in UK property soars despite Covid-19 – The drop in sterling along with China’s emergence from the virus crisis seems to have ignited a high level of Chinese interest in buying UK residential property. At Track Capital, we have definitely seen an increase in enquiries, especially for our Liverpool investment, Kingsway Square. The main driver behind property purchases is Chinese students as parents look to purchase property for their children studying at UK universities. The US trade war has also affected Chinese demand for US real estate pushing them to look more at other countries such as the UK and Canada.
  • Build-to-rent boom drives new housing supply across the UK – BTR has jumped 12% when compared to the previous year with outside of London seeing the biggest jump in the number of homes completed with an increase of 58%. It is too early to see the impact of coronavirus on the BTR sector’s pipeline but these homes are going to be needed once we come out of this pandemic so you would hope that if there was to be any indication of issues then the sector would receive the support and help needed to keep the much-needed homes coming. We predicted this sector would grow and this pandemic may be a catalyst to assist in this as the demand for good quality, safe rental property will be even higher once this is over.
  • Lenders kick-start mortgage deals – Now our final bit of property investment news, We have mentioned a few times that lenders are returning to the market with different articles and that is because it affects different types of buyers and gives an indication of market confidence at a corporate level e.g. residential owner-occupiers and previously buy-to-let products. This week has seen the return of higher loan-to-value residential mortgages with Nationwide being one of many offering 85% LTV’s. This sort of stimulus is promising for the property market as it means potential buyers are still able to stay in the market and obtain finance, not like the 2008/9 financial crash where you could not get lending for love nor money.
As a final note on property news, whilst we cover complete and operational property, as well as off-plan developments which are sold during the construction period, we were pleased to see some of the larger public developers returning to construction sites. The majority of developers continued construction at a slower pace, but the listed companies are generally more PR conscious so had to stop really. Taylor Wimpey and the Vistry will restart next week with precautions in place, read more here.

Social Links for daily news: Facebook | Twitter | LinkedIn 

You can view our current property investment opportunities here.

Thanks for reading.

Team Track Capital

CategoriesInvestor Advice

Off-Plan Property Investment in 2022

Note: This post was originally published in 2020, but has been updated since. The last update was in October 2021.

Investing in off-plan property is a strategy that is often a point of consideration for investors during a ‘normal’ investment environment and even more so during the COVID-19 era. So today, we wanted to explain what off-plan property investment is, if you should rule it out and if not, how it can be advantageous to those exploring investing in the UK property market throughout 2022 and beyond.

Firstly, buying off-plan involves purchasing a property during the construction process. This can be a couple of months from completion or up to 2 years in some cases. The key benefits include purchasing at a discounted price, as developers need to incentivise investors to purchase during the construction period and this mostly comes from a reduced rate. Furthermore, it gives investors the chance to buy direct from a developer at the base pricing, rather than from another investor on the secondary market with a mark-up on the pricing.

Our purpose in this article is not to go through all the advantages but more so to address how it can be beneficial in the current market. If you want to discuss the pros and cons and if it could potentially suit your investment objectives, then do reach out to the team.

Is off-plan investment for me?

Before we dive into the potential further benefits of an off-plan purchase, it’s clear that this type of purchase is not for everyone and the points below will help you decide if it might work for you.

Mortgage Ability

Typically, when purchasing an off-plan property with a mortgage you can obtain a formal offer from a financial provider approximately 3 months out from completion, prior to this you will obtain an offer in principle based on your circumstances and the property. If you do obtain an offer it will likely be for a maximum of 6 months. With this in mind, you do not want to commit to a purchase without being sure you can get a mortgage closer to completion, if you typically have a wide range of lenders open to you this shouldn’t be an issue but if you struggle to get a mortgage on a property on the secondary market it’s best to ensure you’ve discussed at length with an experienced mortgage broker/advisor.

Specific Completion Date

If you’re heavily reliant on the income starting to accrue from the projected completion date and you will be in financial difficulty if there are any delays, then put directly, you shouldn’t be investing in any property let alone off-plan projects.

Whilst an investment company can relay projected completion timeframes and updates from developers, in some cases progression is simply beyond control, COVID-19 or extreme weather being prime examples. So just consider that when buying off-plan there is always a slim chance of a delay, all be it mitigated by going with an experienced developer and construction company. We typically add a few months onto the projected completion date to be on the safe side.

You are a worrier!

This is a big factor that some investment firms overlook, you may be financially and practically well suited to off-plan property investment but if your general thought process includes worrying and affects your day to day quality of life, then of course you shouldn’t invest in off-plan property to save 10-15%. There is no point investing and then worrying for the next 6, 9 or 12 months. So in general, if you are very risk-averse then we suggest sticking to an investment without construction risk, no matter how good it looks on paper.

Why off-plan now?

Ok, so you’ve decided that you may be open to considering an off-plan project, the next question is why would you, other than the pricing, buy off-plan?

We’ve outlined a few of the main reasons below.

Potential to Flip?

When purchasing off-plan, the right property can present the opportunity to flip. What do we mean by this? When you buy a property off-plan, you will most likely pay a discounted price compared to what it would be worth if the property was built and complete. So, let’s say you secure a property now for £200,000 and in 24 months’ time, before completion, it is re-valued at £250,000. If you then sell it, you will have made a £50,000 gross profit from just putting down your initial deposit e.g. less any costs. This is an extreme example and that would be a phenomenal return, but it does demonstrate how you can profit from a low cash outlay and limited risk exposure of the deposit but still benefit from the capital growth on the entire property value.

Now while this is potentially a lucrative strategy, we do not advise this to be your only exit strategy as it is market dependent and comes with risk. You should always factor in the option that you will have to hold the property and rent it out so make sure those numbers work for you, and of course, choosing a genuinely discounted project is crucial, so be sure to do your research.

Miss the Voids and Capitalise on Tenant Demand

Due to delayed completion, you miss the current period of uncertainty and issues such as tenants not being able to pay rent (the Government have currently allowed 3 months with no eviction proceedings) or a tenant moving out and not being able to re-let the property due to no viewings taking place.

When the development completes in 12-24 months’ time, the uncertainty will have gone and the rental market should be an even more buoyant one due to more people being forced to rent. More demand can lead to rental price increases which will be more prominent in city-centre locations.

Beat the Bank

The UK interest rate is currently at an all-time low of 0.1% and we do not anticipate that going upwards much anytime soon. This means, leaving money in the bank is not wise and if you take inflation into account, you could be losing money with it sitting in the bank earning minimal interest.

However, with some (but not all) off-plan opportunities, the developers will actually pay interest on your deposits. So, during the period that your investment is being built, your capital is earning interest, which is rolled up and deducted from the purchase price.

Summary

So hopefully, the above has given you a bit of an insight as to if off-plan property investment is for you, or at least a starting point. There are countless articles to be found online which will go into further detail and we suggest you have a good read into it.

Construction from some of the substantial public developers has stopped in the UK currently but a lot of sites are ticking over at a slower rate, so just bear this in mind for completion dates but we expect things to return to normal (within reason) shortly. This may also be a good time to lean on developers to negotiate an incentive as (with all businesses) most will be keen to keep on moving with sales, it is not guaranteed they will say yes, but worth asking the question.

If you want to discuss it with an experienced Investment Consultant then feel free to reach out to us on +44(0)203 627 3987 or via [email protected] and we can run through your plans, work out if it’s best suited for you and look at live projects across key UK cities.

Track Capital 2020
CategoriesInvestor Advice

Property Market Projections for 2020

As we come to the end of the year the demand for property and investment advice remains substantial, it’s been a great 12 months for us and we are looking forward to growing even further in 2020.
 
The UK remains a global magnet for savvy buyers and widely considered a tier-one investment location. I’m sure many of you are thinking about the market outlook for 2020 and wondering what’s expected, we wanted to give a quick insight and provide our thoughts on what we are likely to see over the coming year.
– Section 24 – many would have heard of the tax changes for residential landlords introduced recently in relation to mortgage tax relief. The changes were phased in and the full impact will hit next year as the introduction of the rates conclude. We do envisage some landlords leaving the market or looking at alternative asset classes, which could lead to a further dent in the supply of rental properties in some areas and consequently increased rental prices. Do note, there are ways to limit your tax exposure and whilst professional advice should be taken, investing via a limited company could be the solution, read more here.
 
– Property Prices – overall we believe we will see a marginal average UK house price increase of around 1-2% as we now have certainty back in the market seeing as the General Election is complete and the Conservatives were appointed back into power with a majority, albeit with the significant trade deal still to be agreed. However, even though the UK figure is conservative, there will be vast regional variants, for example, Liverpool is likely to experience a 4-5% increase due to the attractive yields and high demand along with continual improvement of their already positive fundamentals. Knight Frank recently released their UK Regional Market Forecasts for 2019 – 2024, see the figures below and full info here.
Mortgages – given the recent government changes, the pattern of more investors buying via a limited company and the general market sentiment, it’s likely there will be a spike in investors utilising finance for purchases via limited companies. Due to this demand, it could mean providers/brokers will respond by offering a wider product range of mortgages for limited companies and potentially more attractive rates.
 
– Locations – even since the referendum in 2016, whilst the Southern regions and London, particularly prime and super-prime locations slowed down, Northern cities have been growing significantly. Manchester and Liverpool were the two flagship cities leading the way, we expect this trend to continue. Having said that, we’ve identified three cities below which should also be given strong attention. There are developments in Manchester now which are being sold with comparable rental yields to that in London at 3-4% net, so it is pricing some people out of the market, therefore if you would like the balance of a low entry-level, high yields, strong demand and good capital growth potential, take a look at the below:
  • Leeds (+3.4% Growth Oct 18 – Oct 19 – Hometrack) – Leeds has the fastest-growing population of any UK city outside of Manchester and nearly £7 billion of development in the pipeline, demand is significant for one of the largest economic centres outside of London. The incredible regeneration of the South Bank area that aims to double the size of Leeds City Centre shows that redevelopment is a key driver for Leeds, the city definitely has a massive part to play within the Northern Powerhouse plans.
  • Sheffield (+3.1% Growth Oct 18 – Oct 19 – Hometrack) – Placed at a slightly earlier stage in the property cycle, this means prices remain attractive in comparison with other city centres and thus so do yields. Sheffield’s local authority seems to be targeting demand with incredible amenities, including £480 million spent on regenerating Sheffield’s shopping and entertainment offering. Definitely a city to get into before it moves along the property cycle where prices begin to increase and the yields begin to decrease as we’ve seen in Manchester.

  • Nottingham (+3.4% Growth Oct 18 – Oct 19 – Hometrack) – This is a city that we’ve have had on our radar for a few years now as it has all the indicators to show strong potential, supported by fundamentals – employers, transport, a strong student market etc, It’s infrastructure is incredibly well-developed and offers opportunities in and around the city centre and provides direct access to many key destinations. It still has affordable prices and strong demand from students and working professionals, Nottingham is also benefiting from regeneration, with intu Broadmarsh shopping centre being an example.
– Debt Investment/Loan Notes – whilst we saw interest in the key regional cities, the most attention from our now thousands of investor contacts was in the debt investment market. e.g. loan notes, this was an asset class that received significant attention by both retail/day to day investors and institutional funds, many of the multi-million-pound pension/insurance funds of Europe identified this sector as being one of their top areas of focus over the next few years, read more from City AM here.
 
In summary, whilst the market has been slow in recent years, sophisticated investors have been able to secure property at below market value and with additional incentives from developers, effectively, they’ve purchased on more attractive terms whilst the market was low and will sell when values increase over the coming years. 2020, will no doubt see a flurry of investors in the market, now confidence has returned.
All the best for 2020 and get in touch with us to discuss your property investment plans. We can discuss the most attractive options based on your criteria, we charge no fees for our service and will happily provide unbias advice. Click Book Consultation at the top right of the page to book a quick call with one of the experienced team.
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