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.