LETTING & ESTATE AGENT

2016 has been great for buy to let, and the time to act is now

2016 has been great for buy to let, and the time to act is now
Rightmove's latest housing data has shown that buy to let enquiries have 'soared' 30pc since May, suggesting that investor demand may be returning.

The UK's housing market as a whole has experienced some inertia since June's EU Referendum vote, and the buy to let sector in particular was already reeling from April's Stamp Duty changes, so Rightmove's figures are hugely reassuring to those in the sector.

Also, because of the pre-April second home rush, there was a surge in rental supply once those buy to let sales were finalised. Newly-marketed rental properties went up 6pc in Q3 of 2016 over the same period 2015.

London led the way in supply increases, at 10pc.

Rents have also increased slightly this quarter, up 0.5pc to £779pcm. The North West recorded the biggest growth, with a Q3 increase of 2.0pc, and Scotland followed with 1.5pc.

Rightmove has also recorded which buy to let rush areas have generated the best yields since date of investment. In London, yields have reached 13.8pc in East Croydon and 13.4pc in Greenford. Beyond the capital, the best performing areas were Southend-on-Sea (14.7pc), St Leonards-on-Sea (13.7pc) and Clacton-on-Sea (12.4pc).

The news is good for landlords, who can sleep easy knowing that buy to let's downturn was only a temporary and reactive move, and not necessarily a pointer towards an ultimate downfall. Because, on the other side of the coin, Rightmove's latest house price index has signalled another death knell for first-time buyers.

Those looking to take their first steps onto the property ladder are struggling . first-time buyers are facing a monthly jump of £6,240 in properties new to the market, a 3.3pc increase over August and 10.5% in the year, so they continue to be priced out at £194,477 for an average first-time property.

Noting this, given that Rightmove's September House Price Index shows house prices have stayed steady since June's EU referendum vote, up 0.7% from August, the first-time buyer jump is stark compared with the average.

A logical conclusion is that an increase in prices at the bottom of the market could shunt the rest of the market upwards, and this therefore gives landlords an opportunity to invest where perhaps there had been no motivation before - the promise of higher prices will entice them to act fast.

The impending discontinuation of the government-led help-to-buy mortgage scheme will also shut some people out of the affordability bracket going into 2017. Therefore, we may expect a spike in landlord activity relative to first-time buyers at the start of next year, so it could be wise for landlords to pre-empt this shift in demand before the market becomes too competitive.

Martin & Co have released their latest sets of market intelligence reports, including the latest figures around the private rented sector and landlord sentiment surrounding the EU referendum and the upcoming changes to landlord tax relief. They found that, out of 2,500 landlords, 90pc said they will maintain or grow their portfolios in the next two years. The report is available for free download here.

These findings, in addition to Rightmove's latest figures, paint a positive picture for landlords and buy to let in general, and plenty of opportunities around the UK are still presenting themselves to those who wish to expand their portfolio in the coming months.

To find out more about your local property market and investment options, please contact your local Martin & Co office today.