House prices remain steady across the UK
The UK House Price Index for June 2019 recorded that house prices remain steady across the UK.
With a small 0.7% drop, the average property value is down to £246,728.
London saw the largest annual price drop, with housing prices down by 2.7%, bringing the average property value to £466,824.
There is no doubt the uncertainty around Brexit coupled with tax implications for foreign buyers has hit London house prices over the last 12 months.
However, this could be a lucrative time for homeowners in London, as rental demands remain high and suitable rental properties continue to sell at more affordable prices.
Good news for buy to let landlords
The drop in housing prices may tempt more buy to let landlords back into the sector.
London remains a highly popular place to live with a healthy market of potential renters who are willing and able to afford higher rental payments.
Rent prices in the UK reached an all-time high, according to the latest lettings index.
The average rent in the UK reached £970 in August, up by 2.4% on the same time last year.
When London is excluded, the average rent in the UK is £802, which is up by 2% year on year. In the capital, rents increased by 3.5% to £1,689 shown from the data in the HomeLet rental index.
The Home.co.uk asking price index report says that London boroughs including Wandsworth, Hackney, Haringey, Hammersmith and Fulham, Southwark and Islington are all showing double-digit rent inflation.
For those who already own a home, this is great news and may be the final push needed for those thinking about purchasing a buy-to-let property in the capital.
The tax implications for landlords have to be a consideration as they decide where and when to buy.
Potentially the astronomical capital growth seen on property in London may be a thing of the past so income yields and actual return on capital invested could be key deciding factors for investors.
It is predicted that all the top-performing boroughs in the lettings market in terms of rent growth will soon translate into the top-performing sales markets in London.
This is because more investors will spot the opportunity to capitalise on property in these areas and find the income yield to provide adequate profit.
Another sign of a healthy housing market is the recorded successes of London estate agent Regent Property. Examples of their achieved sales agreed before Christmas last year included:
- Chelsea and Kensington leasehold flat agreed at £2.82 million GBP – proving there are still high purchase buyers.
- N1 – success in letting 26 flats in a new development with 16 studios and 10 1 bed and 2-bed flats, with an average rental of £1956 GBP pcm and void periods low.
- Company recordset with an SW1 letting agreed at £12,500 GBP per month.
Regent Property’s success shows that there are buyers available for the right type of property, as well as potential tenants available for current landlords.
There is clearly still a strong market in London with more affordable pricing.
This attracts new buyers and the opportunity to build properties with the potential to earn profitable revenue.
Both for home builders looking to sell them on the open market and landlords looking at building a portfolio of investment properties.
This is especially attractive when utilising the option of buying these through a limited company which is a growth area throughout the UK.
There is expected to be strong rental growth this year because supply is potentially reducing but London continues to attract international students and professional tenants, and as a result, demand continues to exceed supply.
London remains a promising place to purchase property.
With steady returns clearly achievable for buy to let landlords who are prepared to take a long term view and understand the tax implications and how best to navigate a clear route to a profitable property rental business.