Two stories attracted my attention recently – the first being that buy-to-let lending has increased by more than 10% in 2012. This was a report from CML advising that in 2011 and 2012 there has been an expansion in buy to let lending with a 10% increase last year. The second story was a report by specialist lender Paragon Mortgages advising that Landlords achieved an average yield of more than 6% in 2012. John Heron, Director of Mortgages said “yields are a critical measure for Landlords and would-be Landlords in assessing the relative value of an investment in property. With returns on cash falling in recent months and continuing high demand for rented property it is not surprising that we are seeing an increase in activity from both new and existing Landlords.”
A number of years ago one of the Sunday newspapers called Dundee the buy to let capital of western Europe. I am certainly noticing an increase in activity from buy to let investors and although I had anticipated this increase happening earlier, I am now receiving a number of enquiries in relation to property investment. This demand is across the whole spectrum from large property funds to individuals who are looking to buy one or two properties either to supplement income or as a long-term investment.
Why is Dundee so appealing:-
1. I think high tenant demand is caused by three things: –
- 1a. A local population that is willing to rent.
- 1b. A strong and ever-growing student population.
- 1c. A lack of funding for first time buyers.
2. Good low entry prices – compared to certain areas in Scotland Dundee’s average house price is lower making it easier for people to get on the buy-to-let investment ladder but also indicating that there is good potential for capital appreciation.
3. Good yields – while this is property type and area dependent i.e. a flat in Broughty Ferry could yield 4% to 5% – there are some deals going through at 12% to 15%.
4. The opening of the VMA in 2015 – this will have a big impact on local economy and the housing market. There are also a lot of capital investment projects and Dundee is certainly a City that is going places.
I think the future is very bright for property investment especially in Dundee and 2013 is the year that this is really going to begin. I will keep you advised of trends.
Partner – Head of Property
I was interested to read the recent quarterly report from the Halifax House Price Index which reported that house prices were now 1.9% higher than they had been in the previous 3 months. They also indicated that market activity has improved with sales in 2012 at their highest level for the last few years.
In relation to market activity this certainly accords with my feeling for the start of 2013. I was recently commenting to a colleague that so far in 2013 (to 15 February 2013) I have offered on more closing dates than I did in the whole of 2012 and, although at this stage, I am not seeing any particular rise in house prices I hope that increased activity and stronger market sentiment will point towards an improving housing market.
I enjoy reading David Smith’s economic column in the Sunday Times business section and his recent article about the new Governor of the Bank of England was very thought provoking. I am of the view that the new Governor should look at ways to increase lending in the housing market which will have a positive impact on the economy as a whole. I would also urge the Chancellor, working closely with the new Governor, to come up with a Government organisation to ensure a steady flow of funds into the UK property market and to act as a stabiliser if either prices start increasing too rapidly or if mortgage funds dry up – both of these scenarios we have experienced over the last decade.
How could this be funded:-
1) Tweaks to the Stamp Duty regime.
2) Tightening up on the Capital Gains Tax Rules in relation to property.
3) Direct contribution from the Bank of England.
I hope the new Governor understands the importance of the housing market to the UK economy and takes steps to assist.
Partner and Head of Property
Building on the success of our previous three auctions, we are delighted to bring you the 4th Blackadders’ property auction!
If you’re in the process of selling your property but are concerned about the lack of activity, the Blackadders auction could give you the increased exposure to inject some interest and get it moving. Your property will be showcased in our property auction catalogue which will be sent out to our extensive database and the catalogue will feature as part of an ad in The Courier ensuring that numerous people see your property. 32% of the properties in our last auction were sold or received a negotiable offer.
If you’re a buyer looking for your next home or wanting to add to your property investment portfolio why not come along to view our range of properties. See below for details.
Partner and Head of Property