17 May 2018
York Property RoundUp – May 2018
By DAVID RIDGEWAY & JANE PAVER
Welcome to our monthly Property Roundup. Local property experts in the York area discuss the latest NEWS, VIEWS & TRENDS on the current property landscape. Each month we bring you:
Did you know that over the past 17 years, prices in York have increased by 196%? For the average property owner, this equates to £10,300 every year, almost certainly one of the reasons why investors are so keen on York as a location.
A recent analysis forecasts growth for the private rental sector in 2018, largely driven by demographic changes. In contrast it reports that landlords have sold 50,000 more homes than they’ve bought since the introduction of the 3% stamp duty land tax (SDLT) charge in April 2016.
And with investors only making up 12.3% of purchases in 2017, compared to 16.4% in 2015, it’s evident that they may be thinking twice before adding to their portfolio or replacing homes they’ve sold. There are many routes to becoming a landlord which are thriving however, and which don’t necessarily rely on the purchase of a rental property.
Demand for rented accommodation continues to rise, the private rental sector in England has continued to grow with the number of households who rent increasing by 164,000, pushing rental value up by 2.1% year on year in February 2018.
This trend is not set to change with an estimated 20.5% of households forecast to be renting a property by 2022 in Great Britain. As a result, we’re seeing many landlords putting money back in to improving their properties to maximise revenues.
LOCAL COMMENT:“As an attractive place to live, we have an endless stream of tenants moving to York who are looking for a flexible option to live before deciding whether to stay more long-term. Whilst York is a unique location, it remains affordable for tenants and with high demand, landlords can expect a fast (often within a week) turnaround.” – David Ridgway, York Property Expert.
Rental Market Analysis
The latest rental index research reveals that the average landlord who sold up in 2017 gained £86,651, having owned the home for an average of 8.7 years.
While landlord gains “are slightly behind owner occupiers, who on average made £92,886 when selling their home in 2017”, it’s clear that investing in property – is still hugely lucrative.
LOCAL COMMENT: “Rental yield expectations are around 4-6% in York and landlords are rarely left with a vacant property. A super city, with two sought after universities and a growing economy, we have a diverse set of potential tenants, from students through to families and professional couples, making it a secure location for investors to consider” – Pia Saunders, Rental Property Expert.
One of the key changes uncovered in March’s rental index was the record number of landlords that had released money to invest back in to their properties. When broken down regionally, we can see that the greatest expense for improving properties was in London and southern regions, with landlords in Yorkshire and Humber spending on average a third of what was required in the capital.
When speaking with landlords, we’re hearing that their plan is to hold on to their properties for longer rather than purchase new investments, taking advantage of the continuously increasing rental growth which was reported to have reached an average of £951 per month in March this year.
LOCAL COMMENT:“We do have a landlord however who recently sold his investment property at 59 Rainsborough in York. The launch date brought over 20 viewings and an offer of more than £10,000 over the guide price was accepted. The landlord purchased this property in 2013 for £183,000 and five years later, has made an increase of £43,000 having sold it for £225,000, showing the strength of the property market in York”– Pia Saunders continues.
Legislation & Government Developments
The latest word from Theresa May at a National Planning Conference in London confirmed that new housing is high on her agenda – but reiterated ‘there is no shame in renting.’
While she has announced that the government is “rewriting the rules on planning” to help developers and local authorities build more properties – she reassured those not yet on the property ladder that renting offered a good option – whether by choice or necessity.
Private landlords can offer tenants the flexibility that comes with not being locked into a long-term mortgage agreement, or worse still, negative equity – which is becoming an option that many young professionals, families and first-time buyers are selecting by choice.
LOCAL COMMENT:“The ‘No-Tenant’ fees will have an affect on the letting market and are something for landlords to be aware of. These create a two-fold concern for the sector – those being firstly the ‘income stability’ of agents who relied on this fee, and secondly the’ quality of service’ tenants may now receive as a result. As tenants are no longer paying for their service, some agents are put under further strain to deal with their issues quickly and effectively.”
We’ve also seen EPC legislation present some challenges to Landlords of older properties, however energy efficiency is becoming a changing mindset and so there are ways of meeting the requirements which work for investors”. – David Ridgeway, York Property Expert
Property/Developments Planned for York
As well as having created an attractive hub for students who often go on to live and work in York after they’ve graduated, the city continues to prove itself as one of the most sought-after places to live in the UK, having been named by the Sunday Times in March this year as ‘The Best Place To Live in the UK 2018’.
Describing its romantic beauty, metropolitan café culture and innovative business quarter, York has also been named the UK’s first ‘Gigabit-city’ providing a cutting-edge infrastructure, which will continue to attract more people to live, work and study in the city in future.
This all has a knock-on effect for investors, as it’s proving to be creating a hotspot for landlords who are seeking both short and long-term rental opportunities, with plenty in store in terms of new developments including:
- Phase 3 of Hungate’s city centre living just launched, including a further 196 apartments, always popular with investors.
- Plans for the £30 million Castle Gateway project near Cliffords Tower underway.
- £70 million housing development grant nearing final stages for approval, with a potential for 3800 new homes planned under the schemes.
LOCAL COMMENT: “Hungate has created a highly attractive investment opportunity in York, mainly due to its excellent location and high spec finish. With the first two phases being super successful, it’s likely that the final phase will match these – so long as we stay realistic with rental expectations”. – Pia Saunders concludes.
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In the meantime, have a great bank holiday and see you again in June!
David & Jane – York Property RoundUp