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Exchange rate in SA – Is there any better time to invest than the present?

The exchange rate between the rand and other currencies continues to fare poorly.

Despite some uplift due to the election of Ramaphosa, it has failed to do much better. It seems for the long term it will not, is there a better time to consider investing elsewhere apart from now? Or do we just adopt a “wait and see” attitude in the hope that things will miraculously improve?

The exchange rate for the rand has been skyrocketing for some time now. In 2012 it was 14:1, in 2016 it crept up to 17:1, in 2017 it was 18.5:1 and now in 2020 it has soared to 24:1.

The rand is subject to short-term volatility due to political upheaval. When Nene was fired it jumped to 24:1 although it recovered quickly as it was a one-time shock. These short-term revelations cause the rand to drop and of course it has risen again due to positive changes. However, they all seem to be short-term and in the long term for eight years now we have seen it steadily decline.

The rand has enjoyed short term positive uplift, but long-term outlooks are negative

Although the rand has enjoyed a period of improved exchange rates, for example when Ramaphosa got elected the value of the rand jumped and was worth 16:1. However the improved outlook was short-lived as Ramaphosa failed to live up to expectations with regards to sorting out the corruption in the ANC. Eventually, the people’s confidence in Ramaphosa has been eroded. He said good things before his election with regards to sorting out corruption and prosecuting those who had been responsible for it which had subsequently instilled confidence in the market.

One person who has been associated with corruption is Ace Magashule. Investigations have revealed that he was part of the Gupta network. However, perhaps from constraints within his own party, Ramaphosa has failed to convict him.

Another was Malusi Gigaba who approved the R38.6bn locomotive deal for trains that did not fit the South African rail lines and (according to Fin24.com) approved the Gupta-owned company sponsorships of R17.8m for 8 breakfasts with leaders of the state owned Eksom. During the Zuma years the efficiency of SARs tax collection services decreased. It may well have been deliberate planned to decrease that department’s resources in order to limit the possibility of the Gupta-Zuma misuse of public funds being identified.

At the FT Summit 2019, Ramaphosa stated that the estimated impact of Zuma state capture was $34Bn. The endemic corruption across all level of the South African government cannot be changed with one person. Especially since The President has not had any successful prosecution of those involved.  

Rand Not Likely to Improve Any Time Soon

South Africa will rely heavily on its exports to keep its economy afloat, in 2019 its exports totaled $94.4 billion. These consist mainly of goods rather than professional services. The top ten exports that account for 75% of its global shipments are:

1. Gems, precious metals: US$15.3 billion (17% of total exports)

2. Ores, slag, ash: $13.1 billion (14.5%)

3. Vehicles: $11.4 billion (12.7%)

4. Mineral fuels including oil: $9.1 billion (10.1%)

5. Machinery including computers: $5.5 billion (6.1%)

6. Iron, steel: $5.4 billion (6%)

7. Fruits, nuts: $3.4 billion (3.8%)

8. Aluminium: $1.8 billion (2%)

9. Electrical machinery, equipment: $1.7 billion (1.9%)

10. Plastics, plastic articles: $1.4 billion (1.6%)

The only issue is with the Coronavirus pandemic, activity such as mining and vehicle manufacturing has paused, and ports have been closed. It has rendered South Africa unable to trade with other countries, and with the decrease in trade comes a decrease in the amount of money generated from it.

Further to that, the countries that buy the bulk of South Africa’s exports have been hardest hit by the Coronavirus pandemic. China buys 10.7% of the global total, followed by Germany at 8.3%, the United States at 7% and the United Kingdom at 5.2%. Globally, there is uncertainty when the Coronavirus pandemic will subside and trade will resume, and even when trade does resume it is uncertain whether it will be to previous levels as the pandemic would have affected global economies. This means that South Africa will struggle to recover economically as exports would be lower than before, further affecting the rand value.

Outside of the Coronvirus pandemic, South Africa’s own political environment and even weather patterns play a part in the success of its sector exports. Water shortages and land expropriation have impacted agriculture.

SA Junk status – delays future recovery

Dollar denominated debt. Dollar is the reserve currency and since South Africa government bonds are now junk status from all rating agencies, there is little trust that they can repay their loans. Not only does the interest rate increase under junk status but the impact of loans being in a foreign currency is catastrophic because as the currency devalues, loans values soar in real terms.

For a country trying to recover, South Africa is printing money (purchasing bonds).

Printing money without increasing production will lead to inflation. An Oxfam report stated that 55% of South Africans are living in poverty. Increasing inflation could place more people living below the breadline and exacerbate the political tensions already apparent due to the inequality of income.  

Do people in South Africa really think it is going to get better?

Many South Africans have started to invest, or at least considered investing overseas. They’ve chosen countries with a more stable and less corrupt political environment and a stronger currency. The pattern we’ve noticed is that as the rand devalues, more and more South Africans begin to invest overseas. In 2016 the rand crept up to 17:1. In the 18 months prior to that, the number of South Africans investing in UK property soared by 400% according to Cape Business News.

One buy to let strategy for example could be to invest in buy to let student accommodation. In this case, investors usually receive rental guarantee for a set number of years, for example 8% (of the purchase price) for 5 years. Many investors keep the income in a UK bank account. Even if after the end of the rental guarantee investors sell it for the same price, they still essentially make money if they convert it back into rand and the currency has depreciated in that time. Here is an example of a student property purchased 6 months off-plan in 2013. The investor typically receives 4% interest during construction. The rental income started in April 2014 and is adjusted to rand with the exchange at the time. The property is sold to another investor in 2019 at the same purchase price.

The contractual five-year rental return may not have seemed that interesting for the investor who could have earned a similar amount by having the savings in a South African bank. However, in real terms the investor would have received an annualised return of 19.3%.

Investment property companies like One Touch Investment have been assisting South Africans diversify their portfolio by investing in property UK. Their experienced consultants usually visit South Africa every three months. You could arrange a virtual meeting to discuss your ideals and find out which type of investment works best for you.  

At the moment, there are care home investment opportunities paying 10% net income per annum on a 25-year lease. Clear exit strategies with built in capital uplift can be realised within 5 years. Buy to let property investment opportunities also allow investors to achieve capital uplift in the long term.

The thought of Brexit and Corona virus do not make any investment clear cut. However, of the two countries medium term prospects, which look more appealing at this stage?  

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Fundamentals to consider before investing in student property

What should investors consider when choosing to invest in student property?

Since the Conservatives lifted the cap on university admissions, the number of students going to university has swollen. However, not all institutions have benefitted equally. Whilst Russell Group universities have generally seen their numbers swell, newer universities and former polytechnics have struggled.

Elite institutions faring better since the admission cap has been lifted

The intake of students to Russell Group institutions has grown by 16%. Some elite institutions such as Oxford and Cambridge have chosen not to expand, but many have, using the extra tuition fees to fund research. Bristol’s intake shot up 62%, Exeter’s by 61% and Newcastle’s by 43%. On the other end of the scale, the University of South Wales saw its admissions shrink by around 40%, and London Metropolitan by over 40%.

Students are also expressing a preference for campus-based universities as opposed to universities with sites sprawled across the city centre. With the rise of those aged between 16-24 reporting as being teetotal reaching almost 30%, students are placing less of an emphasis on being close to clubs and pubs and more on being close to their university.

Student property development potential

Looking at research from Savills which measures the potential of student property developments in the UK’s university towns and cities, it is of no surprise to see the universities with increased intake ranking in the first or upper second tier. These demonstrate the most potential due to supply and demand imbalances and yields that can be achieved. Generally, the influx of students has not been matched by an increase in beds, increasing demand for existing stock.

Universities such as Bristol, Manchester, Birmingham and Nottingham rank well across all league tables. That’s not to say a good university ranking translates directly into a good investment though. Many other factors are at play such as the availability of accommodation and its quality, prices, planning restrictions and projected future admissions.

Demand for student accommodation and competing developments

Having a consistent demand is key to achieving good occupancy levels and rental yields. Investors should look at towns and cities with strong performing universities where admissions are increasing year-on-year.

It’s not just about student numbers though. If student numbers are increasing but there are enough developments to accommodate them, your property will face tough competition from others as students will have more choice. If you have set your sights on a particular city, your next step would be to examine other student developments in the area. Although almost all areas in the UK are seeing an increase in demand to one degree or another, the demand hasn’t risen equally and in some cases the number of beds being built has outstripped demand.

Source: JLL Student Housing Report

The midlands has one of the most drastic contrasts between increase in demand and increase in beds, with demand increasing by 37,895 vs a 10,662 increase in beds. This is likely why places such as Loughborough and Nottingham fare so well on the Savills Student Development League Table as they are home to prestigious universities with fewer student beds compared with demand.

You should also consider the potential number of students who will apply to study in a city. This is not only dependent on the rankings of the universities in the city or how many universities are based there, but also how far people are willing to travel to attend it and the pool of potential candidates. Most domestic students only really move a short distance away to study. Universities such as Durham and Exeter recruit around 70% of their students from over 100 miles away and this means that a) they will have a more pressing need for accommodation and b) there is a larger pool of potential candidates applying.

International students and their need for student accommodation

When assessing the need, also consider the proportion of international students. Unlike many domestic students who live close to their university, it would be physically impossible for them to commute for lectures. There is usually a correlation between how well universities rank and the percentage of international students enrolled as these universities enjoy worldwide acclaim.

The universities with the highest proportion of international students are as follows:

University College London: 12,742

The University of Manchester: 10,880

The University of Edinburgh: 8,138

Coventry University: 7,658

The University of Sheffield: 7,486

King’s College London: 7,054

The University of Liverpool: 6,919

University of the Arts, London: 6,689

The University of Leeds: 6,566

The University of Birmingham: 6,498

The importance of international students and occupancy levels cannot be underplayed. Around 94% of international students rent, compared to 70% of UK-based students. This equates to around 250,000 international students renting across the UK each year. 79% of international students that rent do so in the PBSA sector, and they are much more likely to remain in the same accommodation for a number of years, providing steady yields for investors. International students are much more willing than UK-domiciled students to pay for premium features such as 24-hour security, onsite gyms and cinema rooms.

The percentage of international students could also influence what sort of student accommodation you choose to invest in. For example, you might choose a more premium student accommodation investment in Sheffield to accommodate the high number of international students in the city who would gravitate towards a property with modern features. HMOs are not as appealing to international students and therefore might not do so well in a city that attracts a lot of people from overseas.

In conclusion, there are many fundamentals you would have to consider before choosing to invest in student property. Not only would you have to study the current supply and demand, you will also have to research upcoming student developments, how many will need to be refurbished and therefore taken out of service, and the ability of the universities in the area to attract new students. You’d then have to analyse the student demographic and match them with a preferred student accommodation type.

Choosing to invest in student property means a lot of research and we understand it can be quite overwhelming, especially to someone who has not invested before. Whilst real estate providers such as Savills and JLL release research papers weighing up each city’s investment potential, it can take a long time to effectively go through all the data and pick an investment that works for you. Here at One Touch Property we offer student accommodation investments that have been scrutinised by our in-house investment analyst. We also offer other UK property investment opportunities or you could simply keep up to date with property investment news and get in touch when the time is right.

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Reducing buy to let taxes through these property sectors

Landlords are finding it increasingly difficult to make a profit through buy to let property due to additional taxes levied and the scrapping of mortgage interest tax relief. The government has made buy to let a less attractive option and due to the difficulties, between 24% – 38% of landlords will consider selling up. This is despite the lowest amount of rental reductions ever according to ARLA and a lack of supply across a significant number of the 390 local authorities across the UK.

Where opportunities exist

The student property sector has been a favourite amongst investors for several years. In 2019, £8 billion of transactions were conducted in the sector, indicating that the appetite for student property is not subsiding. The two-year work visa after international students graduate will have a positive effect and was introduced to address the fall in international student applications. Over the next decade the government wants to increase the number of international students studying in the UK to 600,000.

Sir Dominic Asquith, British High Commissioner to India, said:

This is fantastic news for Indian students, who will now be able to spend more time in the UK after completing their degree, allowing them to gain further skills and experience.

The UK is home to some of the best higher education institutions in the world and continues to welcome international students. I’m delighted that numbers of Indian students coming to study in the UK are constantly increasing, having doubled over the last three years. Last year alone we saw a massive 42% increase.

Investing in Student Property through shares

There are various investors platforms like AJ Bell where UK investors can purchase shares in student accommodation a REIT like LSE:DIGS which has recorded 37% increase value since March 2019 and pays a yield of 3.04% OR LSE:ESP with 9% growth since 27th March 19 and pays a 5% dividend yield.

Unite Group the largest listed student accommodation provider in the UK recently acquired the Liberty Living portfolio PLC for £1.4 billion in Q4 2019. The confidence that Unite has placed in the student accommodation sector to make the purchase is certainly an indication of the future profitability of the student property sector, with Knight Frank estimating that the industry is worth £53bn. Further confidence is indicated as in February 2020 Blackstone has agreed to purchase IQ Student Accommodation from Goldman Sachs and Wellcome Trust.

Unite also announced that the value of both its associated funds rose during the third quarter of 2019. Its property portfolio was independently valued at £2.45bn, an increase of 0.6%. To June last year, London-focussed student accommodation real estate investment fund GCP Student Living bucked the broader commercial real estate market and reported a 14.8% total shareholder return. With large companies and trusts making such profits, it is no wonder the sector is becoming appealing to individual investors.

Investing directly into student property

Some investors prefer to own property directly rather than take out shares in a company. The good news is that they can purchase student property investment without having to pay stamp duty as it is commercial property under the £150,000 threshold. Property investment companies like One Touch Investment source properties within the best student towns and cities.

One student property investment example is The Mill in Lancaster. Lancaster University is consistently rated in the top ten across all the league tables and attracts a large proportion of international students due to its prestigious reputation. Units in The Mill start from £85,000 and an 8% yield is guaranteed for five years.

Another popular student city is Sheffield because of its vibrant nightlife, excellent universities and affordability. Trippet Court is a student property development in Sheffield’s city centre. It is located just a ten-minute walk away from Sheffield University and a thirteen-minute walk away from Sheffield Hallam University. Trippet Court also offers an 8% net rental yield for five years but has a slightly lower entry point at £64,950.

Investors would typically purchase student property off-plan with stage payments over the development period of twelve months. This makes the cash investment amount more manageable for the average investor.

For those that prefer to invest in property that is already complete and generating income, we have completed student property units in Liverpool. The units are priced at an affordable £54,500 and generate a 7% rental yield per annum.

Investing in care homes

The UK has an ageing population and does not have the facilities to accommodate it. The UK also does not have the resources to build new care facilities and is becoming increasing reliant on private companies to bridge the gap. Demand is expected to rise by 9,000 care beds per year whereas the current build rate is 5000- 6000 care home beds per year. These statistics alone prove that there is a sustainable need for care beds from private companies.

The problem with the lack of care home beds is only compounded by Britain’s ageing population. The number of over 85s is set to double within the next 25 years, new data from the Office for National Statistics has shown.

Investing in care home REITs

Target Healthcare REIT only invests in modern, purpose-built care homes which it leases to experienced operators across the UK thereby providing a diversified tenant and geographical spread and income mix. The current yield is 5% less performance fees and some projected capital uplift.

Octopus healthcare is a closed fund which invests in elderly care homes and specialist healthcare such as GP surgeries. The fund has shown steady earnings growth and continues to attract capital.

Purchasing a care home room

Investors can purchase a room in a care home facility. A developer would usually buy the property and allow investors to purchase rooms for a set cost. Then the developer would put a management company in place who would undertake the day-to-day running of the facility. The investor would usually receive a set yield for a certain number of years. After that time a buy back option is offered where the management company can either buy back the unit from the investor at 125% of the purchase price or a new contract is negotiated between the investor and the management company.

Benefits of investing in the care home sector

The benefit of care home investment is that it is hands-off. A management company is put in place which undertakes the day-to-day running of the care home. Investors do not have to worry about finding someone to occupy the room or the maintenance of it. It is also classed as a commercial investment and stamp duty is not applicable on commercial investments up to £150,000.

As we have previously highlighted, there is significant demand for care home beds in the UK and as the government is not keeping up with that demand, they are looking to private companies to bridge the gap. Here at One Touch Property, we source care home investment opportunities in areas with the highest demand, allowing for good occupancy levels and rental yields for investors.

We think it is important to source care home investment opportunities with reputable developers who have a record of operating care homes successfully. One opportunity we have is Clement House in the Acklam area of Middlesbrough. Clement House is as 5* rated care home that has been operational for 20 years.  Units are priced at £69,500 and investors receive a 10% net income guaranteed for 25 years. If investors wish to sell their unit before then, there is a buy back option in year 5 for 110% of the purchase price, and in year 10 for 125% of the purchase price.

Duchess Gardens is another care home investment opportunity in Bingley, West Yorkshire. It comprises 85 rooms and offers an 8% rental income for 22 years. Duchess Gardens is also complete and operational, and investors can start to receive income immediately. It is also below the threshold in which buyers would need to pay stamp duty, as units are priced at £77,400. Located close to the major towns and cities of Harrogate, Skipton and Leeds, the care home is well-placed to host the elderly and allow for their families to visit them easily. It lies next to some of England’s finest countryside and enjoys a prestigious horticultural heritage. Duchess Gardens accommodates people who need 24-hour personal support and would find it difficult to cope in their own home without assistance. On site features include a hairdresser’s, day centre, cinema room and religious service.

Yorkshire has been identified as a county with a pressing need for new care home facilities. Local councils in Yorkshire have recently closed or are planning to close numerous care homes, due to many being ‘outdated’ and unsuitable for the purpose which they are intended. This will allow existing care homes such as Duchess Gardens to achieve good occupancy levels and rental yields.

Conclusion

It is becoming increasingly difficult for buy to let landlords to make a profit on their property due to stamp duty charges and tax relief on mortgage interest being phased out.

Commercial investments in the care and student sector are usually below the stamp duty threshold and the demand is underpinned by the country’s age demographic and the global standing of its universities. Returns are often underwritten in contracts and can be between 8% – 10%. As these are hands off investments investors will not have to deal with the hassle of finding new tenants or day to day maintenance as they may have to do with a buy to let, freeing up more time for them to pursue interests elsewhere.

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Our Predictions for the Property Market in 2020

Now that 2020 is upon us, we give our analysis on what will happen within the property market in the year ahead

Property prices will increase

In the 2019 general election the Conservative party won a majority. This has allowed them to press ahead with Brexit and has allayed the uncertainty surrounding it. Uncertainty within the political sphere often has ripple effects, one can be the economy and subsequently the housing market. This had a profound effect in 2019 on the property market with prices in the UK rising at a sluggish 1.4% in the year according to Nationwide building society.

Now that the uncertainty surrounding Brexit has been cleared up somewhat, we expect prices to increase at a much faster rate. In 2019 we noted many adopted a “wait and see” approach and wanted to postpone buying property until greater clarity was brought to the Brexit situation. Now that we have a majority government in the UK, political issues will no longer be left in limbo for the foreseeable future. We predict that this pent-up demand will result in a surge of buying in the first half of 2020.

We expect modest property price increases in 2020 and a few bodies such as The Royal Institution of Chartered Surveyors have predicted rises of around the 2% mark. We expect this will be followed by sharper increases in future years when trade deals have been negotiated. Rightmove has predicted that prices will rise more drastically in the north, and we think more specifically the north west. 

Movement in first-time buyers

The modest increase may be encouraging for first-time buyers. Sales to first-time buyers account for roughly half of all house purchases. An increasing number of mortgage lenders are giving access to 5% deposit mortgages and lending on 40-year mortgage terms.

The consistent demand from first-time buyers coupled with the shortage of supply and lack of house building should push house prices towards an upwards trajectory.

Landlords to retain their portfolios

During the general election, one of the main concerns we noticed was from landlords on the impact of a Labour government. One policy which was dropped just before the general election campaign was to bring in a radical “right to buy” scheme that would allow private tenants to buy their rented home at a “reasonable price”. Although this idea was abandoned, Labour were always tainted as the party that would be the most hostile towards landlords. Their housing policies such as rent controls aggravated those concerns.

The Conservatives have always been the party most sympathetic towards landlords. It is understood that their new policies and what they will announce in the Spring Budget will not have as harsh ramifications for landlords. Currently we are aware that new legislation will mean properties with an energy efficiency rating of F or G will not be able to be rented out, and landlords will no longer be able to claim tax relief on mortgage interest payments.

Around 52% of landlords are hopeful that they will see an increase in their rental yields this year, indicating a renewed enthusiasm for the sector.

In conclusion, we feel that the conclusive general election result and certainty that comes with that will provide a boost to the property market. Although Brexit is a cloud which hovers over the economy, we can only see property prices increasing as greater clarification is achieved. There is still a demand for property in the UK, and the government’s lacklustre attempt at housebuilding will only strengthen the demand. Although house building to June 2019 was at an 11-year high at 170,000, it still falls way short of the target set by Theresa May’s government of 300,000 new homes per annum.

We feel as though areas in the north of England where prices are lower provide the best opportunities for investors. Because of uncertainty, we understand that people are not wanting to invest vast amounts into the property market. There is a preference for buying properties at lower values where there is scope for more capital growth. For example, property prices in cities such as Birmingham are predicted by Knight Frank to increase by 12.5% in the years to 2022. The north west is predicted to see the strongest growth, with prices increasing by 24% according to forecasts from Savills.

With the political situation in the UK calming down somewhat, but with property prices not quite accelerating, we feel like now is the ideal time to consider UK property investments. We offer a range of Liverpool buy to let investments, which is the area forecasted to have the strongest growth. We also have investment opportunities in other northern cities, such as this buy to let investment in Leeds city centre.

For further 2020 UK property market predictions, see our best places to invest in UK property in 2020 article.

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How Will The 2019 General Election Affect Property Prices?

Parties will soon be releasing their manifestos to rally support from the public. What will their policies towards the property market be, and how will the general election affect property prices?

With deadlock in parliament regarding Brexit negotiations, Boris Johnson has called a general election for the 12th December 2019. His aim is to get a majority Conservative government so that his deal for exiting the European Union can be passed through parliament. Currently the Conservative party forms a minority government and has had difficulties achieving a majority when parliament votes on certain bills, including the Brexit deal that was negotiated.

The Conservative approach to the property market

Although neither party has formally released their manifestos yet, Boris Johnson has referred to cutting stamp duty on all homes worth £500,000 or less. This move would save first time homeowners £5,000 and all other homeowners £15,000. Johnson also wants to cut the top rate of stamp duty from 12% to 7%. This move is in hope that property transactions in London and the South East – where there is a higher average house price – will be boosted.

The Labour approach to housing

Rather unsurprisingly, Labour have a different approach to the property market. A report pledged to scrap stamp duty for homes people will live in themselves. Landlords will find themselves penalised by Labour as the capital gains tax for second homes and investment properties would increase under a Labour government.

McDonnell has previously alluded to allowing private tenants to buy their rental home. This may make private landlords nervous about buying more property, and they may hold out until more details on the policy have been released.

Although the Conservative proposals may look to be more accommodating to landlords, it is worth noting that under their tenure in government, stamp duty has increased on the purchase of second properties and buy to let tax relief was scrapped. This suggests that neither government has had a recent record of being particularly landlord friendly, even the Conservatives. Indeed, landlords are realising it and a poll undertaken by the National Landlord Association suggests they have lost faith in the Conservatives, with just one-in-six saying they would support them in a general election.

Regardless of which party gets into government, there are still ways to make property investment work for you. Commercial assets such as hotel room investments and care home investments avoid stamp duty charges if under £150,000. Britain’s ageing population and requirement for care facilities remains a fact that will not be affected by government measures against landlords, and Brexit will likely encourage more domestic holidays which will increase the demand for hotel rooms.

Follow One Touch Property to hear more property market news and insights with regards to Britain’s political and economic situation and how that can affect property investment. Also find out how individuals can choose investments that are least likely to be affected.  

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Investment Opportunities in London’s Student Hot Spots

London is a large city with many varying neighbourhoods. Where you live will impact your university experience to an extent, as you will want to choose an area you feel comfortable in.

Beginning your studies in London can be overwhelming. The city is made up of 32 boroughs covering 607 square miles and home to almost 9 million people. There are 40 higher education institutions (excluding London branches of foreign universities) educating over 400,000 students. It goes without saying that there will be a lot of choice when it comes to choosing your university institution and accommodation.

Universities in London tend to have their campuses in the city centre, with London School of Economics, Queen Mary and King’s College being situated around Aldwych and Holborn, and Imperial being in South Kensington. UCL is around Russell Square and Euston.

Many students decide to live near their university site and in central London as they will be close to all that London has to offer in terms of places to eat, museums, transport hubs and other attractions. They will also be less reliant on public transport and will have the ability to explore most of London on foot. Here are our suggestions on areas to consider living if you are a student in London.

Shoreditch and Spitalfields

Located along the outskirts of the City of London and close to Liverpool Street, Spitalfields and Shoreditch are popular areas for Chinese students. East London is often considered “trendy” and “arty” and will really resonate with students who are undertaking more creative degrees. Shoreditch is famed for its nightlife and Spitalfields is home to a large market which is open daily. Both areas have plenty of restaurants and cafes for students to spend their free time refuelling and studying. Universities in the immediate vicinity include London Metropolitan University (Aldgate campus), and London campuses of Northumbria University and Coventry University. The University of Law and City University are also close by.

South Kensington

South Kensington is in west London and is considered leafy and upmarket with tree-lined streets and Georgian housing. Here you will find many of London’s world-famous museums such as the Science Museum, Victoria and Albert and the Natural History Museum. Imperial College London have a site near to the Science Museum, so students can spend their days in lectures and expanding their minds attending the many exhibitions the Science Museum hosts each year. King’s College and London School of Economics are a short underground ride away.

King’s Cross

Recently regenerated King’s Cross is a great area for students who like industrial-style housing and having everything on their doorstep. One such industrial-style development is Coal Drops Yard, which won a RIBA architecture award as the judges appreciated the sensitive refurbishment of the original structures and the ‘kissing roofs’. The name Coal Drops Yard was chosen to pay homage to the gas manufacturing works in the area.

King’s Cross is one of the best-connected areas of London, with 6 lines running through its underground station, an overground train station that has services to various cities to the north east of London and Scotland, and nearby St. Pancras where holidaymakers can catch the Eurostar to other cities in Europe such as Amsterdam, Bruges and Paris.

Not only is King’s Cross one of the most coveted areas in London with the best-connected transport hubs, it is also close to some of London’s top universities, including UCL and SOAS.

The Plimsoll Building King’s Cross overlooks Regent’s Canal and Gasholder Park. The Plimsoll development was built when the regeneration of King’s X was underway, and investors can use the increased attractiveness of the area to their advantage.

The ground and first floors are dedicated to its two schools, so there is a strong sense of community and longer-term tenants with families living in the immediate area.

One Touch Property on offer a 10th floor apartment which boasts spectacular views, two double bedrooms, two modern bathrooms, open plan living area, fully fitted kitchen and balcony. Available furnished, the apartment is 69 square metres, including the balcony. Residents will benefit from the use of a 24-hour concierge, residents’ lounge, rooftop conservatory, courtyard garden and fitness suite. The apartment’s layout is ideal if it were to be let as a rental property. It boasts two bedrooms and two bathrooms, allowing each occupant maximum privacy and independence.

Investors do not have to worry about immediately finding a tenant as the property is already occupied and the tenant intends to stay. Find out more about this property investment in King’s Cross today.

In conclusion, different neighbourhoods will appeal to different students. Those who are into the arts scene with pop-up shops and fusion restaurants will enjoy the Shoreditch / Spitalfields area. Those who want leafier surroundings close to museums and concert halls will be attracted to areas such as South Kensington, and those who wish to shop in curated boutique stores, be close to the action and navigate the city with ease will appreciate the convenience of the King’s Cross area.

Speak to One Touch Property to learn more about buy to let investments, property investments in London and student property investments in hotspots across the UK.

Speak to One Touch Property to learn more about buy to let investments, property investments in London and student property investments in hotspots across the UK.

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Look to the midlands for high yielding property and capital growth

Nottingham is one of the fastest growing cities for house price increases in the United Kingdom. Luton is also a favourite with investors, and here’s why…

Often overlooked for property investment, towns and cities in the midlands provides some of the best returns in the country. The rest of the UK is easily accessible from the midlands which makes it attractive to people who need to commute across the country for work or to visit relatives. With the arrival of HS2 it will be even easier, Nottingham will be connected to the HS2 via Toton which will cut travel times to London to just 52 minutes and it will take just 33 minutes to travel to Birmingham.

Alongside its convenient location, the midlands is home to many historic towns, some of which have been voted as some of the most desirable places to live such as Shipston-on-Stour and Ludlow. It also boats vast expanses of varied countryside and landscapes such as the Peak District and the Lincolnshire Wolds area of outstanding natural beauty.

The housing market in Nottingham

In terms of house price growth, Nottingham registers the fastest growth of any city in the UK at 7.5% year-on-year. As prices rise from a low base there is still scope for investors to take advantage of any capital growth. There are approximately 43,300 students studying in the city of Nottingham, and the University of Nottingham is well ranked across the UK and worldwide. Upon graduating, many stay in the city and this provides opportunities to investors to achieve good yields and capital growth once the graduates have the savings to purchase a house.

Regeneration sparking the economy and rejuvenating recreational facilities

Nottingham’s economy is growing faster than most other cities in the UK, so people are choosing to work in the city rather than commute elsewhere. Nottingham regeneration projects including the £250m scheme to improve the accessibility of Nottingham from the south have inspired enthusiasm in the city. Nottingham also leads the way with regards to technology contributions in the UK, and the new £30 million BioScience building at BioCity cements its position and brings more jobs and professionals to the city.

Not only has Nottingham experienced regeneration with regards to its infrastructure and economy, facilities such as the Broadmarsh Centre are due to be refurbished to improve its shopping and dining options which will make Nottingham an enviable retail location. With all the regeneration underway, it has made property in Nottingham more attractive as people want to live close to work and recreational facilities.

Shifting down the east midlands line to Luton

Although not technically in the midlands (although sometimes classed as being in the south east midlands), the east midlands line does connect Luton with London, and by train it takes as little as 25 minutes to commute between the two places.

According to LendInvest’s Buy-to-Let annual index, Luton is the fourth best area to invest in the country. Luton offers itself as a viable alternative for those finding themselves priced out of the London housing market or for those who need to travel across Europe as London Luton Airport is conveniently on their doorstep.

Property prices in Luton

Luton has an overall average house price of £261,124 making it one of the most affordable commuter towns for London, the affordability has increased its appeal as house prices have increased by 13% since 2016. Comparing that to London where the average is £727,767 and prices have only increased by 5% since 2016 and you can understand why people are choosing to invest in Luton where prices are lower but rising at a more rapid pace.

Luton’s population is also increasing at a faster rate than they are building houses in the town; with approximately 430 houses being built a year yet needs 1417 houses to be built to meet demand.

Luton’s improving economy

Although its history of hat making (Luton produced 70 million per year, and Luton Town are often nicknamed The Hatters) is almost forgotten, there have been efforts to stimulate employment opportunities in the town. The Luton Airport Enterprise Zone is just one example of this. The Enterprise Zone will consist of three linked sites over 395 acres of land. The total number of jobs created by the Enterprise Zone is expected to exceed 10,000, and this will add to the housing demand in the city.

At present the train station for Luton airport is not situated conveniently for the airport, however plans are in place for a new £200m Luton Airport Parkway station that will connect the airport terminal to London from 2020. Improved transport links will further put Luton on the map.

Luton LU1 is a completed buy-to-let investment opportunity consisting of 66 studios, one-and-two-bedroom apartments starting from £139,995. Just a 10% deposit is needed and there is a rental yield of 6% guaranteed for 12 months. The apartments are suitable for people working in the centre of Luton as the development is located on the fringe of the city centre. Being just a ten-minute walk from the station, Luton LU1 is also ideal for those working in London as they can get into the city in as little as 40 minutes.

From Nottingham in the midlands down the east midlands line towards Luton, there are still pockets of the UK where buy to let is profitable and the ability to achieve good levels of capital growth is possible. Nottingham has one of the fastest growing housing markets and Luton is the fourth best area to invest in buy to let property in the UK and we think investing in property in either location would be a prudent move.

Contact One Touch Property today to find out more about investment options in Luton and Nottingham, and how other property sectors can withstand Brexit and provide attractive returns for investors.

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Liverpool in the top five tourist destinations in the UK

Liverpool has overtaken Birmingham to become the fourth most visited city for overseas tourists in the UK

The home of The Beatles, two Premier League teams, the largest collection of Grade-II listed buildings and the European art outside of London. Liverpool has plenty of attractions but in the past, it may have been overlooked as an attractive tourist destination. Since being selected as the European Capital of Culture in 2008, Liverpool has been catapulted into the spotlight. In 2004 a developer was willing to invest £1 billion into its regeneration and combined with the investment money received through winning the European Capital of Culture, the city of Liverpool has received an extensive facelift. The regeneration has drawn tourists to the city, and more are expected to visit over 2019 / 2020 as Liverpool won the Champions League.

Regeneration in Liverpool making it more attractive to tourists

Regeneration projects include Liverpool One, a new space which combined retail units and leisure facilities. Its completion made Liverpool one of the most popular shopping destinations in the UK. The Albert Dock had operated successfully for around 50 years until 1900 was repurposed and new mixed-use accommodation, restaurants and bars, offices and retail space were created.

Another area that has also undergone substantial regeneration is the Baltic Triangle, which has emerged as Liverpool’s creative district. Cains Brewing Village is based in the area, and Furnace was named by the Times as one of the coolest restaurants in Britain. Hip workspaces are emerging, and creative businesses are cropping up every week, either converting warehouses into offices or making use of the affordable office spaces in garden sheds. Not only has the Baltic Triangle made a name for itself as the place to be for creative businesses, its abundance of unique venues makes it the place to be after work.

Constellations is an urban retreat that hosts art fairs, festivals, craft beer expos and exhibitions. It is also home to street food stalls, outdoor spaces and a bar. The Yellow Sub is an actual submarine-turned-bar taking you back to the swinging 60s playing retro tunes.

Professionals beginning their career in Liverpool are drawn to the area as the quirky venues and unique spaces appeal to a younger crowd.  As they are just starting out in their respective careers, they do not have the capital to buy and instead would be looking to rent. Baltic Place is an ideal option for them as it sits just behind Cains Brewing Village. Baltic Place is a new residential development comprising 172 one-and-two-bedroom apartments. One-bedroom apartments start from £114,750 which is 20% below the RICS valuation.

The new development pays homage to the area’s industrial roots, and combines hard-wearing, chunky wood and black metal finishes to give it an urban theme. Apartments will be on average, 15% bigger than neighbouring city centre apartments which will put it at an advantage when young professionals are choosing their new homes. This will positively affect occupancy levels leading to good rental returns. A 7% rental return is guaranteed for twelve months. Good capital uplift is predicted as Baltic Place is in an area where there are new creative workspaces and venues popping up all the time.

How many extra tourists have visited Liverpool since the regeneration?

The number of overseas visitors to Liverpool rose a quarter between 2017 and 2018, with 671,000 people visiting in 2017 to 839,000 overseas people visiting Liverpool in 2018. Liverpool now welcomes over 54 million tourists and 4.8 million overnight guests annually and football tourism is expected to increase by 20% this year due to Liverpool winning the Champions League.

All the tourists that stay overnight in Liverpool are looking for suitable accommodation in a location which means that the attractions are easily accessible. Vincent House is a serviced apartment development located within the L1 post code, a central district which is a leisurely walk to many of Liverpool’s attractions – perfect for an overnight guest with limited time to spend in the city. Prices start from £79,500 and a 7% yield is guaranteed over a 5-year lease. Investors who are mindful that serviced apartments will need constant managing in terms of finding and organizing rentals need not worry as there is a management company in place to take care of that aspect.

Popularity of serviced apartments in the UK and particularly Liverpool

Serviced apartments nationwide reported an average occupancy rate of 81.7% which is rising year-on-year, especially as Brexit and the drop in the pound has made it more expensive to go abroad and cheaper for overseas tourists to holiday in the UK.

As tenants stay for a shorter period than a regular to-let property, the rental prices can be higher which means investors can achieve higher yields. Typically, this works for the tenant as well, as serviced apartments are usually less expensive than staying in a regular hotel.

Serviced apartments in Liverpool have a higher than average occupancy rate than those in other cities outside of London. The average occupancy rate over the last four years for hotels and serviced apartments in places outside of London sits around 76.6%. In Liverpool this is significantly higher at 81.8% according to documents published by Liverpool City Council and the Local Enterprise Partnership.

The increase in occupancy levels will mean that investors who purchase units in Vincent House will be in good stead to receive excellent rental yields as there has proven to be consistent demand for hotel rooms and serviced apartment accommodation in Liverpool.

In conclusion, the regeneration in Liverpool has made it a more desirable place to live. The regeneration of the Baltic Triangle into a creative hub with a vibrant nightlife has drawn young professionals to the area. Properties such as Baltic Place would appeal to them because they can easily travel from their home to their creative job in one of the renovated warehouses and onwards to one of the creative venues after work.

Not only has the regeneration made Liverpool a more attractive place to live, it has also made it a more attractive place to visit. Soaring tourism numbers combined with a high demand for hotel and serviced apartment accommodation will make Vincent House a good investment option for those looking for hands-off commercial property investments. Its enviable location and high-quality amenities will appeal to tourists, whilst its hands-off nature will appeal to investors who cannot spare the time for day-to-day management.

Contact One Touch Property today to learn more about these Liverpool property investments.

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Where is the UK’s Second City for Property Investment?

Whilst Birmingham and Manchester compete over the UK’s “second city” status. They also compete on which place is more lucrative for investment

The birthplace of The Smiths vs the birthplace of Duran Duran; Manchester and Birmingham both contribute massive amounts to the UK in terms of culture. Manchester boasts two world class football teams and the infamous Eccles cake; Birmingham has the Balti Triangle and the most Michelin star restaurants outside of London. The recent regeneration of the cities, and influx of new companies means that they have become increasingly attractive to young professionals looking to kick-start their career. These two cities go head-to-head as we compare them to see which place is better for buy to let property investments.

Businesses moving to Birmingham and Manchester from London

Both Birmingham and Manchester are enticing professionals out of London. 7,620 people left London for Birmingham and 10,200 people left London for greater Manchester according to figures from the Office for National Statistics and Reach PLC respectively. Both cities have experienced a large amount of investment and some companies have been moving their headquarters from London to Birmingham and Manchester due to cheaper rents. Amazon are setting up their first building in Manchester later this year and the transformation of MediaCityUK has attracted brands such as ITV and Kellogg’s. Similarly, companies are finding Birmingham increasingly attractive, PwC has announced it will take up all the commercial space at One Chamberlain Square and BBC Three have moved part of their business to the city.

Young professionals leaving London for Birmingham and Manchester chasing jobs and a cheaper way of life

One reason why people are moving out of London in such numbers could be the cost of living, including rent and house prices. According to Rightmove, the average house price in Birmingham is £202,721 and in Manchester it is £203,203. This is compared to London which has an overall average house price of £618,065. Rent is also considerably cheaper in Birmingham and Manchester compared to London, which stands at a whopping £1,473 per month on average.

With more affordable rents and job opportunities like what is available in London, it is understandable that young professionals have been moving to Manchester and Birmingham. In fact, Birmingham has one of the youngest populations in Europe, with 40% of the city’s inhabitants being under the age of 25. Manchester’s city centre population has grown by 149% between 2002 – 2015 and job growth has been 84% between 1998 and 2015.

Areas such as Digbeth in Birmingham are attracting a young, artistic crowd and this is reflected in the number of creative working spaces and craft breweries that are popping up – mirroring the popularity of Shoreditch in London. One particular investment option in Digbeth is Moseley Gardens, a new development comprising 67 one and two-bedroom apartments. Due for completion in Q2 2020, one-bedroom flats in Moseley Gardens start from £185,000. These could be an ideal option for someone looking to live in the area, or the astute investor who knows Digbeth will soon be one of the most coveted areas in Birmingham.

Similarly, Salford Quays is an area in Manchester which has been propelled into popularity due to the creation of MediaCityUK and the relocation of broadcasting companies such as the BBC and ITV to the area. A waterside location with polished high-rise flats, it is like the Canary Wharf of Manchester.

Manchester’s city centre has experienced a lot of regeneration, from Spinningfields and Deansgate to Ancoats and New Islington. Local Blackfriars is a new development on Blackfriars Street close to the Northern Quarter and Manchester’s shopping district. Residents will be spoilt for choice in terms of eateries, bars and shops to explore. Local Blackfriars boasts impressive communal spaces and amenities such as a 24/7 concierge service, bistro, bar, a gymnasium, cinema room and fully equipped laundry room.

Birmingham v Manchester head to head in investment terms

With regards to population growth, Cushman & Wakefield estimate that Manchester’s population will swell by 56,000 by 2034. Between 2018 and 2028 Birmingham’s population is estimated to increase by 7.2% (81,400) according to Birmingham city council.

Although Birmingham’s population is predicted to increase more than Manchester’s, Manchester has a higher average house price indicating that property is more in demand in the northern city. Not only that, it got named as the best place to live in 2018 in the UK by The Economist’s ‘Global Livability Index”. Birmingham holds no such accolades, which may swing things in favour of Manchester in terms of how much people are willing to pay for homes in the area.

Graduate retention

Manchester and Birmingham are relatively evenly matched when it comes to graduate retention and attraction, probably due to the multi-national companies moving to the cities. These young professionals will obviously contribute to rental yield and eventually capital growth, as they will rent whilst getting settled in their career and will eventually buy. Manchester retains 51% of the city’s graduates and Birmingham retains 49% of all its graduates. Birmingham saw the third largest inflow of graduates who had no prior links to the city – just behind Manchester. 53% of those who grew up in Birmingham returned to the city after graduation, and it was 58% for Manchester. There is no great disparity between graduate figures and we do not think the difference will be enough to swing investment fundamentals in either city’s favour.

Rental yield and capital growth prospects in Birmingham and Manchester

Manchester performs slightly better than Birmingham in terms of rental yields, offering an average of 5.55% compared to Birmingham’s 4.61%.

In Birmingham, the average weekly wage is £527, this is compared to an average weekly wage of £512 in Manchester. Although not a massive disparity, the higher wages coupled with lower property prices could mean that in future residents in Birmingham are in a better position to buy property compared to residents in Manchester. A larger proportion of wealthy young professionals looking to buy property will obviously have a positive effect on capital growth. This is reflected in house price growth, with Birmingham edging Manchester slightly at 16% compared to 15% since June 2016.

Birmingham also has the advantage of more rapidly improving transport infrastructure. HS2 will shorten travel times to London from 82 minutes to 45 minutes. Being in the midlands, it is also easier to access other parts of the United Kingdom. Manchester’s transport infrastructure is also improving as part of the Great North Rail Project. All of Manchester’s train stations have been connected by a 300m long bridge called the Ordsall Chord which helped people travel across Manchester more easily, as well as making Manchester Airport more accessible.

So, where is the UK’s second city in terms of investment?

Manchester certainly commands higher rental yields, and more people have left London for Manchester compared to Birmingham. However, the transport infrastructure improvements in Birmingham will make it increasingly attractive and this is reflected in the fact that its population is due to increase at a higher rate than Manchester’s.

If investors are looking for a more short-term investment, we would recommend investing in property in Manchester as it is already attractive to tenants and buyers. Manchester has already enticed global companies and young professionals to the city. Longer term, is there scope for much more growth and regeneration? It appears Birmingham has more regeneration in the pipeline and room for property prices to increase more, whilst still allowing investors to buy into the market at a lower price.

Contact a property investment company such as One Touch Property Investment today, as we have ideal investments in each city and we can provide guidance to help you achieve your financial goals.

Which is the UK’s second city for you?

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Applications To Universities Rise

Applications to universities rise as students still find studying in the UK attractive – despite Brexit

Applications to universities rose for the first time in three years. A total of 561,420 people applied to start a course in 2019, almost 2,500 more than at the same time last year. This was mainly fueled by the increase in applications from international students. According to UCAS figures released in February, a record number of international students have applied to study at university in the UK. There has been a huge rise in the number of applicants from China, and along with Hong Kong these now make up almost a third of all non-EU applications.

Despite Brexit, studying at a university in the UK remains attractive to many from overseas due to the international reputation of the country’s educational institutions. A survey carried out by Study Portals in 2019 ranks the UK as the top study destination for students within the EU / EE (37%) and international students (18%).

According to a recent survey conducted by Knight Frank in partnership with UCAS, 83% of international students are happy with studio apartments, making them a good investment choice for individuals looking to cater for the international market. Students currently outweigh available PBSA spaces by 3:1, and with the increased reliance on the private sector, now is the ideal time to consider student property investments.

The Met – property development in Newcastle-Under-Lyme

The Met is a new property development in Newcastle Under Lyme which has a growing student population of 25,000. The student property market has been very popular amongst investment funds due to the low vacancy rate. The market is seen as Brexit proof because if the pound falls it becomes cheaper for overseas students to study in the UK.

Situated in the very heart of the town, The Met is near lots of amenities and in a convenient location for the growing student population of Keele and Staffordshire universities.

The Met Investment Features:

Returns over 5 years at 7.5% per annum

Fully managed Student Property

Close to Keele and Staffordshire universities

Studios and Premium Studios available

Purchase price from £73,500

One Touch Investment has found the studios easy to resell on the open market and we could do the same for you. We have recently helped one of clients sell their student property in Leicester and they reinvested the money into a higher yielding property in Liverpool. The developer has a 100% occupancy rate track record across the UK for their student properties ensuring stable rental returns.

Contact One Touch Investment today to find out more about this student accommodation investment in Newcastle-Under-Lyme.

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What Is Capital Growth And Rental Yield?

Before investing in property, it is vital that you are familiar with these terms and understand what you want to achieve from your property investment

What Does “Rental Yield” Mean?

The term rental yield is used to determine how much profit you will make through renting out your property.

To calculate a rental yield, you will take the annual rental income amount and divide it by the purchase price of your property. Then you will times that by one hundred.

Gross Annual rental income £6,000

Purchase price £80,000

Formula 6000 / 80000 x 100

= 7.5% is the rental yield

High rental yields are attractive if the investment is classed as commercial, such as a hotel room or student property investments. These types of investments often offer high rental yields as capital growth is expected to be limited. They are usually kept for a set number of years and then sold back to the company or a company such as One Touch Property can help with the resale of your unit. We have testimonials from many of our clients who we have successfully helped with the resale of their units. One example is Patricia Readshaw. We managed to sell her student property units at a higher price, and she used the extra money to visit family in Australia.

Here at One Touch Property we work hard to help you achieve your financial goals. Like Patricia, you can also use UK property investment as a way to make extra income so you can do the things you have always wanted to do.

What Is Capital Growth?

Capital growth is how much your property will increase in value over time. This can be due to many factors such as regeneration in the area, job growth and improved transport links. Generally, buy to let investments are more likely to achieve levels of capital growth as opposed to commercial property investments because there are available to a larger pool of potential buyers, and increased demand means an increased price. Investors extract the level by remortgaging and acquiring more property. By choosing properties in areas with good capital growth fundamentals, investors would be able potentially acquire another property ever five years.

You really need to analyse an area as population growth does not necessarily mean capital growth. It needs to be the perfect balance of an attractive property type in an increasingly attractive location, with a sizeable population who are looking to buy and have enough income to be able to do so.

Investors will need to research the area to discover the demographics and whether there are any proposed regeneration projects. You would also need to consider taxes such as stamp duty which will be 8% on properties over the price of £250,001 if it is your second property. That will affect the amount of capital growth.

One Touch property investment researches the best areas for capital growth and buy to let investment sector guide can provide empower investors to make better investment decisions.

Buying a property to achieve good levels of capital growth is seen as a long-term strategy. It is unlikely property will increase a significant amount in a year or two, and it would be worthwhile to hold onto the property for a while to maximise capital gains. This is especially the case if you are trying to off-set the tax implications of purchasing a second property.

The expert team at One Touch Property have many years of experience in sourcing UK property investments and providing guidance to investors to match them with a UK property investment that will suit their financial goals.

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Investing in Student Property Checklist 2019

When deciding whether an investment will be fruitful, there are many factors you will need to consider. Consider our investing in student property checklist to learn more…

Location

Developments in certain areas fare better than others when it comes to student accommodation investments.

For example, a house in a leafy suburb probably would not do as well as a city centre apartment or room. Students’ requirements are ever-changing, and whilst several years ago they might have been content in a shared house away from town, now they want to live centrally with easy access to the city’s nightlife and university campuses.

Similarly, purchasing accommodation in a smaller town with a couple thousand students will not generate a massive income. There will not be much demand if there are too few students or if there are indicators in cities, like Bradford, where a large proportion of students tend to live at home (Unipol). To make sure your student accommodation investment stacks up, you will need to consider the number of students, amount of existing accommodation developments (including their location, amenities etc) and how many new developments are in the pipeline. Additionally, you will need to research the scope for attracting new students, such as the university’s rate of growth and expansion plans.

Consider when the property will be completed

If the property is a new development, you would need to consider its completion date. Students start university in September and will want to move into their accommodation at that time. If the development is not ready by then it is less likely that it will be filled, and you will be looking at several months without any rental income as students are generally on year-long tenancies and will not consider moving midway through that.

Consider the type of accommodation

There are many different types of student accommodation, from HMOs to student pods and apartments which fall under the category of purpose-built student accommodation.

HMOs were typically popular with students who wanted cheap accommodation and were not concerned about location. Since HMO licensing reforms it has become a less attractive option and purpose-built student accommodation has come to the forefront. Purpose built student accommodation is popular with investors as the management company deals with the upkeep of the building and landlords will face fewer licensing restrictions.

Do you have the capital required?

Student property typically has a lower entry rate compared to regular buy to lets. There are some drawbacks with this kind of investment though, as the size of units in purpose-built accommodation blocks and their commercial nature means most lenders will not be prepared to offer mortgages on them. Ensure you have the full amount in cash for the unit you are deciding to purchase, or that you will have the full amount within the timescale specified if the developer offers a flexible payment plan.

What are you hoping to achieve from the investment?

Are you looking to achieve high yields or good levels of capital growth? Purpose-built student accommodation is not intended to be an investment that achieves high levels of capital growth. Its attractiveness is underpinned by the demand and the rental yields that can be achieved, alongside its low maintenance nature as a management company will maintain the pod or apartment. You are not likely to get much of an uplift when it comes to reselling the unit.

Those looking to achieve high levels of capital growth should instead consider buy to let investments in towns with a short supply of housing. They should also aim to keep the investment for the long term as prices may fluctuate in the short term due to political upheaval or demographic changes.

One Touch Property has a range of student accommodation investments in some of the most desirable locations. Our property sourcer scrutinises every opportunity we are presented with to ensure the fundamentals stack up. Our investment consultants can provide guidance on which UK property investment will best help you achieve your financial goals. 

On the draft https://www.onetouchinvestment.co.uk/news/student-accommodation-investment/checklist-successful-investing-student-property-investment/

Liverpool Town council have been unrelentingly passing planning permission for student accommodation. The Liverpool Echo newspaper states that over 5000 new student beds have been approved for development over the past year.

We still sell quite a lot of Liverpool student property. Please change the example to Newcastle https://www.chroniclelive.co.uk/news/north-east-news/newcastle-city-centre-home-even-12872235

Replace ‘unrelentingly’ to ‘fairly lenient in’

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What Is A Freehold Property? How Does It Differ From A Leasehold?

When buying property, freehold and leasehold are just two terms you will come across. It is vital you know the difference between a freehold property and a leasehold property, so what sets them apart?

When buying property in England and Wales, you will come across the terms freehold and leasehold. The two terms describe the different ways you can own a property and generally apply to different property types. Note in Scotland and Northern Ireland slightly different rules apply.

What is a freehold property?

A freehold generally means outright owning the land and the dwelling that sits on it. Most houses in England and Wales are owned on a freehold basis.

A freehold property is typically seen as more desirable and thus more expensive due to the owner having absolute control of the property and land.

What is a leasehold property?

A Leasehold title refers to tenure. You are leasing the property, you own it and receive the title deeds for your property. However, you do not own the land on which it sits. It could be the case that someone who owns the freehold of the land grants a leasehold title which set about the length and annual ground rent.

Historically, these were 99 years, although the typical lease nowadays is for 125, with some leases being a long as 250 or even 999 years.

If this is the case, the lease will be lengthy, and an agreement will be drafted based on property and contractual law between the freehold owner (Lessor) and the tenant (Lessee). The leaseholder usually pays an annual fee called ground rent typically between £50 – £250.

Most flats are owned on a leasehold basis. Leases can easily be renewed and the freeholder has no way of denying the extension.

The length of the lease generally only impacts the properties price when there is less than 80 years on remaining. The good news is that a lease can easily be extended and the cost thereof determined by the by valuers using a standard formula. The UK government funded, Leasehold advisory service https://www.lease-advice.org/ is there is assist leaseholders with any disputed with the freeholder.

In general, leaseholds are preferred by oversea investors because it is the freeholder’s responsibility to maintain the communal areas.

Service Charge

The freeholder appoints a management company to take care of the structural integrity of the building and the common areas. They would also arrange building insurance and other aspects relating to the building and its exterior.

If the company is not doing a good job, under the terms of the Landlord and Tenant Act 1985 and 1987, the leaseholder can obtain the Right To Manage and appoint their own management company.

Conclusion

Leasehold is not bad. In Layman’s terms you own your apartment for which you obtain the title deeds. The freeholder owns the ground and receives an annual ground rent. The freeholder appoints an independent management company to provide maintenance and upkeep the communal areas for which the leaseholder pays an annual service charge. It means that owners only need to be responsible for the upkeep of their own property, which if you find the right tenant, is also taken care of.

At One Touch Property, we offer new build flats in modern developments mainly on a leasehold basis. Contact One Touch Property today to find out more about our range of buy to let property investments.

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Digbeth – The Shoreditch of Birmingham?

Why is Digbeth being touted as the Shoreditch of Birmingham?

Interspersed with street art, craft beer pubs and creative working spaces, you could be mistaken in thinking you were walking through London’s Shoreditch. It’s Birmingham’s Digbeth, an exciting area that is experiencing a phenomenal amount of regeneration and has piqued the interest of Birmingham’s creative crowd.

Digbeth is conveniently situated just a five-minute walk away from the Bullring shopping centre. It was once the industrial heart of Birmingham and due to its location and affordability, has recently been pulled into the limelight and has undergone quite the transformation.

Now Digbeth is home to breweries and tap rooms such as Dig Brew Co and street food markets such as Digbeth Dining Club. Both day and night there is always something new to discover and the neighbourhood’s streets are buzzing with artistic expression. With these trendy new things to do in Digbeth, it is no surprise that it is becoming an appealing place to live and work for creatives. Due to the heightened reputation of the area, a creative working space called the Custard Factory (aptly named after the Bird’s Custard factory that occupied the same area) has been developed. It is now home to some of the country’s most creative well-known businesses such as the BBC’s digital innovation unit, Channel 5’s the Gadget Show as well as many digital start-up companies. It is also home to craft beer and cinema venues such as The Mockingbird, and Chitty’s Cakes – a cake shop that sells bespoke novelty cakes.

King’s Cross: another creative hot spot

Another area with an emerging creative sector is King’s Cross. Google recently set up its new headquarters in the area and the office is the first outside of its US office to be completely owned and designed by the company.  Other companies setting up office in King’s Cross include Facebook, the Guardian, Universal Music and Nike.

How do property prices compare between Digbeth and King’s Cross?

King’s Cross is just one stop from Euston, which will receive trains from Curzon Street in Birmingham. The total journey time will be 51 minutes. Curzon Street is just a ten-minute walk from Digbeth, making Digbeth a viable alternative for those who work in the creative industry in King’s Cross but cannot afford the high price tag of accommodation. King’s Cross has an average house price of £950,019 compared to £147,336 in Digbeth (according to Rightmove).

One particular investment option in Digbeth is Moseley Gardens, a new development comprising 67 one and two-bedroom apartments. Due for completion in Q2 2020, one-bedroom flats in Moseley Gardens start from £185,000. These could be an ideal option for someone looking to live in the area, or the astute investor who knows Digbeth will soon be one of the most coveted areas in Birmingham.

Why invest in Birmingham?

A lot of companies are investing in Birmingham and this is evident with HSBC’s chosen city for their new headquarters was Birmingham which created 1000 jobs. Also, Deutsche Bank increased the number of people they employ in Birmingham from 50 to 2,000. Outside of London, Birmingham produces the largest number of new businesses due to the availability of affordable office space, housing and young talent. It’s no surprise then that Knight Frank recently named Birmingham as the UK’s number one business hotspot and with the creation of new jobs, young talent has followed. In 2015, 6061 people moved from London to Birmingham which is more than to any other city.

As above, young talent has followed job creation. This has meant that Birmingham has a significant young population with under 25s making up almost 40% of the city’s inhabitants. Its young population lends itself well to the rental market, as they often don’t have the capital to buy a property and enjoy the freedom of renting before they decide where to lay down roots. The demographic can also contribute to capital uplift, as once they have saved up the money for a deposit, they will be a captive audience to purchase existing properties in the future. This makes buy to let investments particularly attractive, as there will be a significant demand for property from young professionals.

Contact us today to find out more about property investment UK and why Digbeth is one of the most exciting hotspots to be considering this year.

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Is “Brexit Boredom” Boosting House Prices?

Delays to the leaving process has caused some buyers and sellers to take their chances with the process as they cannot put their lives on hold and wait for a deal

As March 29th (the day Britain was supposed to leave the EU) loomed, both sellers and buyers were reluctant to make a property decision due to the predicted risks. They wanted to “wait it out” and discover what sort of deal the UK was going to get (or not) before making any big decisions regarding their living arrangements.

However, it’s now mid-April and an agreement still has not been reached. It does not seem like the UK is any closer to an exit deal with the EU, and many politicians are not keen on the prospect of leaving without any sort of agreement.

Brexit boredom boosting sales prices as buyers and sellers refuse to sit on their hands

According to experts, this has led to a so called “Brexit Boredom”. People can’t put their lives on hold and wait forever for a solution to Brexit. Eventually they must decide and act, regardless of whether the timing is considered ‘ideal’.

In April the average asking price for a home jumped up by almost £3,500, which is the biggest month-on-month rise in a year. This takes the average asking price on a home to £305,449 according to figures from Right move. Although it is usual for house prices to bounce back in the spring time, this marked the biggest increase for an April since 2016, with both April 2017 and 2018 experiencing far more modest rises.

Despite Brexit, house prices have been on an upward trajectory since 2009.

Property fundamentals underpinned by certain demographics and requirements

Of course, performance is dependent on certain characteristics. Rightmove has found that family houses with three to four bedrooms (excluding four-bedroom detached houses) are performing particularly well compared to other stock as people look to take their “second step” in home ownership. The demand is driven by family needs which cannot be put on hold for longer. These could be, for example, needing more space for a growing family or moving to a catchment area for a good school.

Inescapable demographics and trends are underpinning the success of the buy to let sector. Other sectors predicted to be resilient to current affairs (including Brexit) are the retirement home and student accommodation sectors.

The success of the care home investment and student property investment sectors relies upon factors outside of current affairs. Britain’s population is ageing and by 2041 it is predicted that the over 65s in the UK will make up roughly 26% of the total population. Investors needn’t wait until 2041 to discover that retirement home investments are a lucrative business however, as over 50s currently hold 75% of Britain’s housing wealth meaning many are currently in a good position to afford retirement home fees. The shortage of available homes also means that there is a good level of demand for existing purpose-built homes. It is estimated that 3.3m people in the UK wish to downsize, yet only 7,000 specialist homes for the elderly were built in 2016. The growth in the over 65s segment of society and the lack of availability means that retirement homes can be a sustainable investment in the long-term. Indeed, many multinational firms already recognise it. Legal and General recently acquired an existing operator and stated its intentions to build 3,000 homes for older people over the next couple of years.

Why studying in the United Kingdom will always be attractive and what that means for student property

The success of student accommodation investments is also underpinned by factors outside of the current political state of the UK. The University of Oxford and the University of Cambridge come first and second respectively on the Times Higher Education World University Rankings 2019 and 7 of the top 50 universities in the world are in the UK. With such an old and prestigious education system and a culture seeped in history, it is no wonder that many travel from across the world to study in the United Kingdom. For international students, the UK is the second most popular study destination in the world, and they make up 13% of all those in higher education.

Some cities in the UK are already well catered for in terms of student accommodation. For example, in Cambridge, the university owns many houses in the city-centre and students in any year of study can get accommodation relatively easily. Also, high house prices in the city could mean that the rental yield is lower, unless you choose a house in a cheaper area, which may not always be desirable for students.

Some other cities are better positioned for student property investment and we’d usually advise to observe where the big investment funds are developing. They pinpoint cities that are lacking a certain type of student accommodation, cities with planning restrictions, cities which have expanding student populations due to new campuses being built or are going through redevelopment where many older accommodation blocks are no longer fit for purpose and need replacing. These funds also develop in areas which in the past have not been considered, such as city centres. Throughout the years the desires of students have changed, and many are wanting to make the most of the city they study in and live centrally close to all the amenities and cultural hot spots.  

Last year, the UK’s biggest provider of student accommodation, Unite, saw half-year pre-tax profits jump by 70%. According to figures from JLL, in the first nine months of 2018, investment in purpose-built student accommodation rose to £3.1bn. The market was of interest to Hong Kong, the US and Singapore as demonstrated by the acquisition of Unite’s Mayflower portfolio for £180m. 2019 is predicted to follow a similar pattern with Singapore Press Holdings recently acquiring £133.7 million worth of student assets in the UK which was announced on Tuesday 16th April.

One Touch Property researches high yield investment options such as care home investments and student property investments which will stack up against the current political climate due to unrelenting requirement.  Large investment funds are already buying student and retirement home developments, but we can also source UK property investments in areas that are still undiscovered or developments that have unique features that will appeal to the intended demographic.

Contact One Touch Property today to discover our current investment property offerings.

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Consider Investing In Property In Nottingham For High Yields

Rising House Prices In The East Midland’s City Means That High Yields And Good Levels Of Capital Growth Can Be Achieved

House prices in Nottingham have risen by 5.6% between October 2017 and October 2018, according to the Land Registry. The overall average price for a property in Nottingham is now £195,797. The capital of the east midlands is not just an excellent choice for investors looking for opportunities to make capital gains, the rental yields achieved are some of the highest in the country.

High Yields Achievable Through Property Investments In Nottingham

Research conducted by Mortgage Broker Private Finance has shown that average rental yields in Nottingham are the second highest in the country at 5.6%. It also performs well in terms of capital growth, as according to eMoov.co.uk over the next 10 years Nottingham will top the tables for average house price growth at 0.8% per month. This means that the average property price will increase by 160% between 2017 and 2027, from £133,215 to £346,592.

The attraction of Nottingham is that 25% of its population is aged between 16-24 – one of the prime demographics that will be looking for rental property as they just start out in their careers and providing an opportunity for capital uplift when they have saved enough money for a deposit and are ready to buy. The city also boasts excellent travel connections, that makes 90% of England’s population accessible.

Regeneration In Nottingham Will Only Boost Property Prices

Regeneration to Nottingham’s city centre will improve desirability to live in or around the city. For a while, shops have stood empty in Broadmarsh shopping centre, but this is all due to change as Intu has committed to making improvements. New retail outlets are not the only way in which the council is looking to improve the city centre. An empty building on Carrington Street is due to be transformed into a gym and other initiatives are in place to improve the number and quality of facilities in the city.

A new HM Revenue and Customs centre is due to be built in Nottingham too, which will create 4,000 new jobs and of course, those new employees will be vying for accommodation in the city so now could be the ideal time to invest in buy to let property in Nottingham.

Sherwood Square is one buy to let opportunity based in the Nottingham suburb of Carlton. The development is a contemporary collection of 42 one-bedroom apartments starting at £104,995. Features include anti-slip vinyl flooring, custom built kitchens and stylish bathrooms.

With an estimated 6.75% per annum gross rental yield, Sherwood Square provides a robust investment opportunity for the astute investor. The ‘Monthly & Mortgage’ plan, where the 30% exchange deposit is divided by the 24 months build schedule and the remainder paid on completion by way of mortgage or cash, provides an attractive low point of entry into the property market.

Contact us today to find out more about buy to let investments in Nottingham and around the UK.

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Look Outside Of London For Brexit - Beating Property Investment Opportunities

Brexit is looming and much is uncertain. This has certainly had an impact on property in London, but are there any other areas that are “Brexit-proof”?

With Brexit looming and a deal still not reached, many investors are feeling hesitant about investing so much money in London. As a result, there has been a decrease in the number of people putting their houses on the market. Rightmove report that the average house price in London has now dipped below the £600,000 mark.

Regardless of the Brexit uncertainty, the UK remains one of the most attractive places to do business and topped the Forbes list for the second consecutive year. As investors are becoming more cautious of the London property market, the spotlight has shifted to other cities where the impact of Brexit on house prices is predicted to be much lower.

Cities That Have Seen High Annual Growth For A Sustained Period

So far, six cities have seen annual growth of more than 6%, including Leicester (7.7%), Edinburgh (7.4%), Manchester (6.3%), Birmingham (6.2%), Nottingham (6.1%) and Liverpool (6%). Properties in these cities have also experienced the fastest price growth since the EU referendum, and Sheffield also joints the list in 4th place. In ten years in Sheffield prices have risen by more than £33,000 on average.

How Hs2 Can Further Stimulate Growth In Northern Cities

The construction of HS2 will also mean that the country will grow less reliant on London, and businesses will look outside of the capital when it comes to deciding a location for their headquarters. The main aim of HS2 is to connect the north of England to the south, as currently most business activity occurs in London and the surrounding areas. The project to stimulate economic growth in northern cities is referred to as the Northern Powerhouse. Although it is mainly focussed on Manchester, other major northern cities such as Leeds and Sheffield are also due some redevelopment.

Regeneration in Leeds, Manchester and Sheffield

New developments in Leeds include a plan to redevelop abandoned warehouses in the south of Leeds into houses, hotels, offices, restaurants and bars. There is also the £150m redevelopment of Quarry Hill which will be transformed into offices and residential spaces.

Regeneration in Manchester includes The Factory, a creative space that will allow artists to produce work on a large scale. Plans have also been approved to regenerate the Great Northern Warehouse area in the city centre’s Civic Quarter and to create a new residential quarter in the city centre called St John’s. Football legends Gary Neville and Ryan Giggs have also proposed their own regeneration project that has recently received the green light. The project will include a 5-star hotel with 216 bedrooms and a 39-storey tower block that will contain 189 apartments and office space, a rooftop terrace, a public square and a synagogue.

Sheffield is also experiencing vast amounts of regeneration, as the next phase of major work to the city centre gets underway. The main focal point is a project named Heart of the City II. This is a £470m plan for hotels, shops, a food hall and public spaces for an area just behind Pinstone Street. Plans for a new set of buildings that will include boutique office space, a café, a courtyard garden and over 50 apartments have also been submitted.

Properties in places such as Leeds, Manchester and Sheffield start at a lower base point compared to property in London. The overall average property price in Sheffield for example stands at £198,103 (according to Rightmove), which is a rise of 6% compared to the previous year. The regeneration work within the city will help lift the prices further as new amenities and entertainment venues will make it a more attractive place to live in.

When Is The “ideal” Time To Invest?

Sherwood Square is one buy to let opportunity based in the Nottingham suburb of Carlton. The development is a contemporary collection of 42 one-bedroom apartments starting at £104,995. Features include anti-slip vinyl flooring, custom built kitchens and stylish bathrooms.

With an estimated 6.75% per annum gross rental yield, Sherwood Square provides a robust investment opportunity for the astute investor. The ‘Monthly & Mortgage’ plan, where the 30% exchange deposit is divided by the 24 months build schedule and the remainder paid on completion by way of mortgage or cash, provides an attractive low point of entry into the property market.

Contact One Touch Property today to find more about this buy to let investment in nottingham, and about investments offered elsewhere in the United Kingdom.

Buy To Let Investment Alternatives

retirement home investments may be a useful alternative to those who are still wary of the buy to let market in the lead up to Brexit. Unlike traditional UK property investments which rely upon supply and demand, the need for retirement homes is underpinned by the UK’s ageing population. Retirement homes that attract self-sustaining residents are being seen as increasingly attractive investments with Knight Frank estimating that £20bn of overseas equity is set for investment in the sector. They also estimate that that over 60s in England alone have over £1,200billion in unmortgaged housing wealth, which means they are in a good place to afford the fees associated with luxury living. A luxury retirement suite typically starts from £70,000 and offers a 10% return over a ten-year commercial lease.

To conclude, even with Brexit around the corner, there are still opportunities for investment. Property prices in northern cities seem to more resilient to the uncertainty, and the sustainability of retirement home investments is underpinned by Britain’s ageing population rather than demand.