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UK Property News – April 2018 Summary

UK Property News – April 2018 Summary

It’s that time again – a recap of last month’s UK property investment news.

April was not a bad month for the property investment sector. Even with the government’s mortgage interest tax relief changes that cut landlord profits at the start of the month, the UK buy-to-let sector and UK property investment in general remains optimistic and a realistic option for investors to grow their capital.

One reason for the continuing buoyancy in the UK property investment market is the many alternatives to investing in property through the traditional buy-to-let landlord model. The modern model of property investment involves fully-managed investments which means as an investor you can get an assured return without carrying the burden of the responsibilities a landlord has. That means that you know exactly how much you will receive at the end of each year, without sacrificing any of your time or profits to run the property.

In this article, we will be going over the flourishing property investment sector, the positive perspective of buy-to-let landlords, overseas investors showing interest in Glasgow and the UK hotel sector attracting overseas investors. To catch up on the March property news recap click here.

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The Property Investment Sector Is Not Only Surviving, It’s Flourishing

Eureporter recently did an article about a report from the Office for National Statistics which dismissed the detrimental effects of Brexit on UK investment stating, “Investment in property is not just surviving, but flourishing two years after the poll that shook the UK population.”

The ONS report found that total investment during the last quarter of 2017 concluded an annual rise of 4% that year. This figure is up 1.1% from the previous quarter. In addition, around £84 billion was spent on the economy’s commercial, residential, building and construction sectors.

Whilst fears about negative effects of Brexit have so far been unfounded, it would appear that part of the reason that the UK buy-to-let sector is flourishing is that there is less competition due to buyers withdrawing from the market prematurely because of the confusion and ambiguity surrounding Brexit. Those who are more confident and experienced have stood their ground regardless of this and look set to reap the rewards.

The weaker Pound has also attracted many foreign investors, with Chinese buyers pumping £2 billion into the UK property sector in 2017. Although the British themselves seem a bit more sceptical, the investor pessimism is certainly just the beginning, and once the market settles those who were once hesitant will be quick to jump back on the ladder. Eureporter states that those who, “take advantage of the positives of an independent Britain can enjoy a freer industry up against less contenders to secure the best investments.”.

We give our clients confidence in our fully-managed investments by working closely with developers to offer assured NET yields and a professionally managed service, allowing all our clients to secure the highest returns regardless of the property’s location.

Buy-To-Let Landlords Remain Positive Despite The Barriers

Investor appetite is still strong for the UK buy-to-let sector even with all the recent hurdles. Buy Association’s, Eleanor Harvey wrote that a survey by specialist bank Aldermore found more than 40% of UK landlords surveyed expect the private rented sector to grow over then next year whilst 17% have plans to expand their buy-to-let portfolio.

On the other hand, only 8% of those UK landlords plan to reduce their portfolios and some revealed that they were going to do so because of the added government lending restrictions and higher taxes. Harvey expands by writing, “The positive attitude from landlords flies in the face of the recent raft of changes that have been implemented in the market recently, and shows that the other side of the coin – the fact that more people than ever across the country rely on the rental sector – means that there will always be a place for buy-to-let.”

The article also includes data from another report by OneSavings Bank who found that 51% of UK brokers have been contacted in the past 6 months by landlords looking to diversify their portfolios to improve profits. Out of those brokers, 14% were approached about commercial and semi-commercial properties.

We see the commercial sector as the way forward when it comes to the future of lucrative property investment in the UK. Sterling Woodrow tend to focus on fully-managed commercial property investments such as purpose-built student accommodation, hotels and nursing home investment opportunities. Not surprisingly, many investors contact us to discuss diversifying their portfolios to spread their risks and increase their profits.

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Glasgow Is Popular Amongst International Commercial Property Investors

In other news, Glasgow as a location for property investment has been exceptionally popular with foreign investors, especially commercial property investment.

In 2017 alone, international buyers pumped £300 million into Glasgow’s commercial office properties, easily outspending domestic buyers during the busiest 12 months the city has had since the financial crash. A total of £461 million was spent in office deals alone, which is Glasgow’s highest volume of investment deals since 2006 when only £367 million was spent.

The article by FutureScot also added that Glasgow has seen a “significant increase in interest from investors in Asia, New Zealand, the Middle East, Europe and America in recent years. The city’s appeal for international investors is due to a number of factors including reduced competition from UK Institutions, value for money, a weakened pound, and strong local market fundamentals.”

Although domestic buyers aren’t as active in the city’s commercial market, there are still prosperous buyers from Glasgow, investing into Glasgow properties. Director of Singer Vielle Scotland, Graham Waggell states, “Are Scottish buyers too close to the market, too cautious and in conjunction with agents suffering from paralysis by analysis? With the more pro-active investors coming from outside Scotland, that would seem to be the case. They are recognising the value in Scotland and are willing to buy based on quality of covenant, income stream and return.”

Our clients come from the UK and overseas. No matter where they are in the world, they can invest in our properties because everything is managed for them. Our purpose-built student property investment in Glasgow has done particularly well with our clients because the location is ideal and with higher yields than London and the South, it is proving to be very lucrative. This investment also has an assured NET return and buy-back at 20% above the purchase price. This is so popular, that there are only a handful of units left. Click the button below to book a call for more information.

Hotels In The UK Remain A ‘Safe Harbour’ For Overseas Investors

Property Week covered the UK government’s announcement of a change to tax laws regarding commercial property owned by non-UK resident investors. The change proposes to subject non-UK investors to capital gains and corporation tax, parallel to the tax changes already made for residential property investments.

The change in tax laws was announced in the 2017 Autumn Budget and are scheduled to take effect in April 2019. One might think that the hotel sector would be predominantly impacted by this change with over half of the £5 billion invested in 2017 coming from non-UK investors. Yet, many have come to see it in a positive light. Robin Dabydeen of Winckworth Sherwood wrote, “The changes will overhaul an archaic system, merely aligning the UK with other major jurisdictions and creating a level playing field. Currently we are unusual in that domestic and overseas residents are taxed very differently on the disposal of commercial land.”

Nevertheless, the weaker pound and continued confidence in the UK as a ‘safe harbour’ means there is strong inward investment flow into UK property. The weaker pound has also led to a boom in the UK’s tourism industry, further strengthening the prospects of the UK’s hotel industry. Besides, there are a lot of reasons why overseas investors choose the UK, and they aren’t all financial. There is also no evidence that this change will put off future investors.

We currently have highly lucrative hotel investments that are also ‘first-time investor friendly’. Everything is managed for you and there are no grey areas or guessing about profits as similar to our investments in other property sectors, our hotel investments have assured NET yields, giving clients the security they need.

The UK has been the number 1 country in Europe for hotel investment for 2 years in a row. Read our previous blog post about the UK hotel sector for more information.

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Summary

Yet again, last month saw further changes in legislation and regulations for property investment, but the sentiment among investors remains positive. The UK is still a top location for many property investors - both domestic and overseas, which gives first-time UK investors more confidence in the long-term benefits of a UK property investment.

At Sterling Woodrow, we pride ourselves on helping new property investors get a solid start in the market and are happy to speak to you about your long-term goals and ambitions in property investment.

We also work with experienced investors to help them increase the value and profitability of their portfolios.

To book your complimentary property investment consultation with one of our senior portfolio managers simply click the button below and complete the short form and we will call you back at the appropriate time.