UK Property Investment Increases 8% In A Year

UK Property Investment Increases 8% In A Year

UK Property Investments Rise By 8% During 2014

UK property investment is booming again, thanks in part to the Government changes to the way pensions are controlled. The changes allow interested property investors to release pension funds for property purchases early, because bricks and mortar continue to offer a greater return than pension funds currently provide.

Property investment in the UK is becoming even more popular with the number of property investors increasing by 8% during the past year, according to data recently released by letting agent, Ludlow Thompson, with landlord numbers rising to approximately 1.63 million controlling approximately 3.1 million private rental sector (PRS) properties in the UK. 

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The recently reported fall in inflation has calmed fears of a sharp rise in the record low interest rates on bank deposits and Government bonds and the private rental sector has continued to attract more property investors into the market as they are struggling to achieve comparable yields from other investment opportunities.

Capital growth in UK residential property averaged 7% in 2014 (However, this figure is 16% for properties in London), whilst the FTSE-100 index only increased by 0.7% over the same time frame.

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The regulatory changes to the mortgage market introduced in April 2014 under the Mortgage Market Review, made it much harder for would be buyers to secure mortgages, as all personal expenses, lifestyle and affordability are now taken into account.

Decent rental yields on offer from property investments purchased with Buy To Let mortgages make property one of the few options for investors who want to avoid the volatility of the stock market.

However, according to a survey conducted by one of the UK’s leading landlord associations, 3 out of 5 UK PRS landlords would leave, or consider leaving, the private rented market if rent controls were introduced.

The findings come after Residential Landlords Association (RLA) chairman, Alan Ward, warned that proposals for rent controls will leave tenants worse off, pointing out that official figures showed that in the social rented sector, rent controls have seen rents massively outstrip inflation.

Residential Landlords Association (RLA) Chairman Alan Ward

Residential Landlords Association (RLA) Chairman Alan Ward

Mr Ward said: “These results blow a hole through the myth that rent controls would be good for tenants. At a time when tenants need more choice over where they live, state-controlled rents would choke off supply, increase rents and reduce quality. It would be history repeating itself. The reality is that rent controls would leave many tenants paying more than they do at the moment. Rather than coming up with ideologically-driven ideas, proponents of rent controls need to address the root issues, namely the need to boost the supply of homes to rent.”

According to the results of a survey of more than 1,000 RLA members, more than 75% of landlords either froze or cut their rents in 2014. In the current year, over 65% intend to do so again.

Data taken from the most recent English Housing Survey (EHS) shows that between 2008/09 and 2012/13 social sector rents increased by over 25%, in comparison private sector rents increased by just 6.5% over the same period. Inflation as measured by both CPI and RPI over this period was around 16%.

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