The traditional buy-to-let market in the UK’s regional cities is beginning to show strong signs of recovery. For the past 3-4 years, the buy-to-let and off-plan market in London has seen unprecedented growth, in the main due to the large amount of foreign investment that has poured into the city. Continuing on from this trend, Liverpool is one of the strongest rental markets outside of the capital, due to the increasing amount of private renters whose supply is not met in a city, which is failing to house its growing population, providing investors with the opportunity to provide a solution to Liverpool’s housing problems and gain instant financial rewards.
The Mayor of Liverpool has recently pledged to deliver 5,000 new homes to house Liverpool’s growing population, which surged by 5.5% in the last decade. Statistics from Shelter reveal that the average single person in Liverpool needs nine years to save the deposit for a house, while the average couple need four years and facts such as this determine that renting will continue to prove popular in Liverpool for some time and that the majority of the houses pledged by the mayor will be required for rental stock.
Throughout the whole of the UK buy-to-let was once considered the proverbial ‘cash cow’ of any property portfolio, when the market crashed, landlords found themselves having to diversify their assets into alternative investments, as a way to maintain control over their funds. But the market is beginning to turn; the demand for rental accommodation in the UK is the highest it has ever been, as the continued rise in house prices ensures that first-time buyers cannot afford to take that first step onto the property ladder. Instead, tenants are looking for high-quality rental accommodation, in properties, which they can essentially move straight into, without the hassle of waiting for it to be redecorated or repaired.
So is buy-to-let still a ‘safe’ investment? No investment can ever be considered safe, but there are certain sectors, like buy-to-let, where you can minimise your risk. Purchasing a buy-to-let property is once again being viewed as a way to generate a positive cash flow on your investment, as income is generated not only on rent, but from the capital appreciation gained on the property from the start.
So why choose off-plan? The UK has experienced a serious lack of construction in regards to residential stock in its regional towns and cities for the last 5-6 years, which means that many properties which will previously have been classed as ‘new-build’, are now reaching their 10-year anniversary. As properties age, they require more maintenance to keep them at a level regarded as the minimum standard required by tenants, leading to a rise in rents as landlords try and re-coup some of the money they are having to pay out.
As the construction industry begins to pick up pace, we are at the start of a new wave of off-plan developments, many of which will not be complete until 2013/2014. Keeping in mind tenant demand for new-build accommodation, particularly in or around city centres, landlords can charge a premium on their property, at rates which are currently not achievable for existing stock.
Buy-to-let properties are increasingly becoming a more ‘hands-off’ investment than they have ever been, due to the improved quality of the lettings and management agencies that maintain the property. This leaves landlords confident that their tenants are being looked after and, coupled with the knowledge that there should be minimal maintenance required on the property for at least the first couple of years; off-plan buy-to-let is actually a cheaper option in the long-term for any savvy investor.
Constantly sourcing the best-value properties, we have once again extended our portfolio to bring off-plan, residential buy-to-let opportunities to our investors, in some of the best locations in the UK. In direct response to the demand for new-build, city centre accommodation, X1 Town Hall is the second development we have launched this year and interest is already high in this sought-after location.
With the demand for rental accommodation not likely to end anytime soon, off-plan buy-to-let is once again a welcome addition to any property portfolio.
Knight Knox International