Given the intensity of the debate about Brexit’s likely impact on UK house prices, the country’s rapidly growing rental sector has been left rather overshadowed. However, from the expansion of the ‘build to rent’ offering to the more discerning buy to let investors that we’re now seeing, the rental sector is alive and well. Indeed, according to Savills, “Tightening access to mortgage finance and changing demographics is driving demand for privately rented homes at all price points.” This makes it an exciting time to be a buy to let investor.
Jonathan Stephens, MD at Surrenden Invest said:
“As a whole, the UK has seen a reduction in the number of buy to let investors in recent years, as the government’s tax changes have been felt across the sector. However, an interesting result of this is that those investors who do continue to build their portfolios have become more discerning about which properties they choose to put their money into. This is pushing developers to be more creative and ambitious with their property plans.”
In recognition of the continuing demand for premium investment properties, specialist property investment agency Surrenden Invest has produced a regional rental market report that offers expert insights into the UK’s local rental markets. The guide covers five key areas (Birmingham, Liverpool, Manchester, Newcastle and London/commuter belt), analysing everything from demographics and tenures to average rents, yields and void periods.
Rental growth has been rather subdued over the past two or so years. However, the average rise across Great Britain of 1.0% in the year to December 2018 was up from 0.9% in the year to November, and Savills projects that things are going to get brighter still over the coming five years. It projects rental growth of 2.0% across the UK in 2020, 3.0% in 2021 and 3.5% in each of the following two years, with a five-year compound growth rate of 13.7% to 2023.
Jonathan Stephens said:
“The UK’s population is increasing rapidly and this is supporting a thriving rental sector that seems unabashed by the same kind of pre-Brexit jitters that are slowing down house price growth. Add to that the reduction in stock that we’ve seen as amateur private landlords drop out of the market and the overall rental sector has a very positive future ahead.”
Surrenden Invest’s own experience in recent years is that investors are now looking for properties that are a cut above the rest. Manchester’s Ancoats Gardens is a prime example. Located in the hippest part of the UK’s ‘most liveable city’ (according to Time Out and the Economic Intelligence Unit), the development’s 155 spacious, light-filled homes are complemented by a superb range of features. The gym is so large it splits across two levels, while the coffee lounge has been carefully designed to suit a range of uses, from casual catch ups to working from home. Then there’s the rooftop garden – an oasis of greenery and comfy seating that invites you to curl up and enjoy the magnificent views of the Manchester skyline.
Ancoats Gardens is part of a new wave of developments that take their on-site features very seriously indeed, as Surrenden Invest’s Jonathan Stephens explains:
“There are now nearly nine tenant registrations for every new rental listing, according to Foxtons. One might imagine that unscrupulous investors are therefore flooding the market with inferior properties in order to capitalise on demand. While there are no doubt some out there who are taking that approach, what our own experience has shown is that investors prefer to court longer term tenants by offering superior properties. The idea is that the building is so fabulous that tenants stay for longer than average, thus dramatically reducing void periods and driving up returns. As such, investors are being far more discerning about where they put their money, which is great news for sites like Ancoats Gardens!”
Housing Management & Maintenance (HMM). 2019. Surrenden Invest
Available at: https://www.housingmmonline.co.uk/companies/surrenden-invest/