Wednesday, 6 January 2016

Top 10 Predictions For The Sunderland Property Market in 2016

Last night I took part in a webinar hosted by Paul Preston of the consistently excellent Progressive Property, outlining their predictions for the UK property market in the coming year. It was insightful and informative and a number of their predictions will apply to the Sunderland property market in 2016...




I'll outline each of the Top 10 Predictions in turn along with my interpretation of how they may apply to the Sunderland property market

1. Rents Will See A Notable Increase In 2016
Estimates vary for the actual rate of increase but most analysts suggest that the recent 'Landlord Bashing' stamp duty and mortgage interest relief changes by George Osborne will see the supply of rental properties reduce as some hobbyist or highly leveraged Landlords exit the market. Combine this with increasing tenant demand and simple economics suggests that this will cause an increase in rents

I can't fault the logic and it would be of some consolation to the Sunderland Landlords who do stick it out, as generally speaking most Sunderland rents have remained static since around 2007/8 with some rents (for flats and apartments in or around the City Centre for example) falling significantly

I still can't help feeling that just as Sunderland is expected to see lower house price growth than pretty much all other areas in the UK, any rent increases in the next 12 months will still be relatively modest

2. There Will Be No Significant Change In The Base Rate In 2016
The recent economic recovery, with many households now feeling that they are back to doing 'OK' has been based to some extent on the 0.5% base rate that has been enjoyed since March 2009.

Even a relatively modest 1% rise on a £120,000 mortgage will result in an extra £100 per month in mortgage payments and many commentators suggest that the Bank of England will be unwilling to risk the relatively fragile recovery in the short term

This means that 2016 may be a good time to fix your mortgage rates prior to an increase which many expect to come in 2017 or conversely to continue taking advantage of low variable rates in the short term for 'Flips' etc

3. January - March Will See A 'Mini Buying Frenzy' With A 'Mini Slowdown' from April
Whilst those planning for the long term shouldn't be put off by the 3% Stamp Duty that will be applied to Buy To Let purchases from April, it would clearly make sense for those investors in a position to buy quickly to do so before 1st April and avoid the tax

Looking at Sunderland compared to other parts of the UK I see this as having less of a negative impact in Sunderland as in the more expensive areas - for example I was discussing this with a Landlord yesterday who was asking about the impact it may have on a purchase of a £70,000 property she was considering

I worked out that it would only increase her purchase costs by £900 - the first £40,000 is 'free' and then the 3% Stamp Duty is only charged on the amount paid over this - look at this over a 10 year period and it's £90 a year or £7.50 per month

I can actually see areas like Sunderland benefiting from this with increased interest from investors looking to minimise the Stamp Duty paid on their investments - clearly some may look to avoid the tax altogether by buying properties for less than £40,000 but that will very much limit what/where they can buy and the calibre of tenants they can expect to attract, which leads nicely onto...

4. An Increased Focus On Working Tenants As Housing Benefit Is Squeezed Or Cut
It is anticipated that at best Housing Benefit rates will be frozen or at worst they could be cut in 2016

This will mean tenants will be forced to 'top up' a larger amount or run into arrears

Combine this with the additional pressures facing Landlords as a result of the phasing in of mortgage tax relief changes and it may be that Housing Benefit tenants become an increasingly less attractive option, especially where margins are tightest on single lets

5. Smart Investors Will Move More Towards HMO's For Significant Returns
Once again this may be driven by the 'Anti Landlord' measures hitting single let Landlords in the pocket however as many smart entrepreneurs see every challenge as creating an equal or greater opportunity, it may just need a change in approach or focus to generate significantly greater returns

There are still widespread negative perceptions about HMO's being exclusively for students or generally being of low quality and many feel that it won't work 'in their area' but experience suggests that if priced and presented right, this strategy, aimed at working tenants, will work in all but the most rural of locations

It's true that it still remains a relatively niche sector of the market in Sunderland but even a quick look on www.spareroom.co.uk or the like will show that there is demand for this sort of accommodation and I would predict that it will become more popular with working tenants in Sunderland during 2016 and beyond  

6. More Use Of Ltd Company Structures To Buy Property and 7. More Lenders/Products Aimed at Ltd Companies & HMO's
It is widely accepted that buying a property using a Limited Company is an inexpensive (you can setup a Ltd Co online for £20) and simple way to avoid the changes to mortgage interest tax relief, however this was previously a less attractive option because of the limited choice of finance products available combined with the increased cost and relative inflexibility of such products

Lenders have a vested interest & a commitment to their shareholders to ensure that they do not lose out as a result of the changes to the BTL market which is expected to see significant numbers of less professional or more highly geared Landlords throwing in the towel (as per George Osborne's ultimate master plan of seeing the private rented sector controlled by a small number of institutions rather than thousands of individuals)

Such institutions will have seen many market changes and will have reacted accordingly to ensure the long term profitabilty of their business, and I see no reason why the changes being implemented in 2016 should be any different

To highlight this I read this week that Aldermore (traditionally a provider of bridging finance) is soon to launch a product aimed at Ltd Company Buy to Lets and it is anticipated other lenders may be forced to follow suit

This means that Sunderland Landlords looking to purchase property via a Ltd Co or switch from single lets to HMOs should have more choice in the finance options available to them

8. 'Buy to Sell' (Flips) Will Become More Popular As Single Let Margins Are Squeezed
I agree that many who face increasingly slim pickings from single lets may look to other ways to profit from property, and Flipping (buying a wreck or below market value property, improving the property then selling at a profit) is an established way of making short term profits

It tends to work best in buoyant, rising markets (as those Flipping benefit not only from the increase in value from the work they have done but the natural organic price increase during the time the work is undertaken) so traditionally I'd say Sunderland may be less naturally suited to this strategy than say the Southeast but as always there will be opportunities in any market and success will come in having a clear exit strategy in mind then selecting the right property type or area to make it work and/or buying at a significant discount

9. Development Projects Will Provide Excellent Opportunities For Savvy Investors
Whilst there is (justifiable) concern over the negative impact of the Stamp Duty and Mortgage Tax Relief changes on the BTL market, one positive is that the government has recently extended the permitted development of commercial property into residential use

Whilst quite a specialist field and one requiring more upfront investment than many strategies it should not be discounted as training/knowledge is widely available and finance may also be secured for the right opportunity, through traditional lenders or Joint Venture partnerships

I can see this happening in Sunderland next door to our office with unused office space currently being converted into studio apartments and predict this trend, along with the conversion of disused pubs, to continue throughout 2016 and beyond  

10. Creative Methods Will Continue To Be Used By Contrarian Investors
Whatever you may think about the forthcoming 'Landlord Bashing' measures, proactive investors will continue to profit from property through creative methods such as using Lease Options/Exchange With Delayed Completion, Joint Ventures/Private Finance, Bridging Finance etc

I was very impressed with the level of insight provided by the Progressive Property webinar and it certainly gives food for thought in what is likely to be a challenging year ahead - I'd strongly advise anyone who is serious about property investment to check them out as they have a wealth of knowledge & advice at their fingertips

If you would like to discuss how any of the points raised above may affect you or the Sunderland property market or to have a discussion about your property investment strategy for 2016 please feel free to give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

17 comments:

  1. Wisconsin Mortgage Corporation has been providing quality home loans across Wisconsin.Meet our loan officers. Please choose the loan officer that you were referred to view their personal page and apply online.Wisconsin Mortgage Each loan officer's page includes the following services.

    ReplyDelete
  2. Wisconsin Mortgage Corporation has been providing quality home loans across Wisconsin.Meet our loan officers. Please choose the loan officer that you were referred to view their personal page and apply online.Wisconsin Mortgage Each loan officer's page includes the following services.

    ReplyDelete
  3. That is the excellent mindset, nonetheless is just not help to make every sence whatsoever preaching about that mather. Virtually any method many thanks in addition to i had endeavor to promote your own article in to delicius nevertheless it is apparently a dilemma using your information sites can you please recheck the idea. thanks once more. villa for sale sierra blanca Marbella

    ReplyDelete
  4. This comment has been removed by the author.

    ReplyDelete
  5. It is interesting to read your blog post and I am going to share it with my friends.aybabg

    ReplyDelete
  6. Hello! I simply would like to give a huge thumbs up for the great info you’ve here on this post. I might be coming back to your weblog for more soon.


    Apartments For Rent In Hyderabad
    flat for sale in hydrabad



    ReplyDelete
  7. In our scenario, we want to find out what kind of financial return we can expect from an investment property given certain information about the investment. Fix Flip Loans Maryland

    ReplyDelete
  8. So weird. I was just searching for information about this stuff and you popped up. You must be doing something right.taxattorneynearme.me

    ReplyDelete
  9. This comment has been removed by the author.

    ReplyDelete
  10. I am happy to find your distinguished way of writing the post. Now you make it easy for me to understand and implement the concept. Thank you for the post. La Manga Club Property For Sale

    ReplyDelete
  11. The quarterly monitoring process allows for adjustments to the budget when unusual items of income and expenditure are evident.real estate practice test

    ReplyDelete
  12. Air Angels is a leading hospitality and Airbnb short let property management company based in London, Portsmouth Southampton and Brighton. We maximise your rental income. Forget traditional estate agents, give and angel a call today.

    Airbnb Management

    ReplyDelete
  13. I am frequently to blogging i really appreciate your content regularly. This content has really peaks my interest. Let me bookmark your internet site and keep checking choosing information. https://www.trainingroomsg.com

    ReplyDelete
  14. Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I'll be subscribing to your feed and I hope you post again soon. Big thanks for the useful info. Stone Steps and Paving

    ReplyDelete
  15. spain for sale
    villa Los Flamingos for sale in Marbella
    Luxury Rental villas in Marbella and VILLAS and TOWNHOUSES FOR SALE IN MARBELLA
    in spain houses for sale Luxury Villa for sale in Sierra Blanca
    marbella Spanish bank repossessions Properties for sale
    advice Spanish property investment in marbella
    mansions for sale in La Zagaleta in benahavis
    Villas for sale in Los Flamingos Golf
    Seaviews Penthouse for sale in Marbella
    villa for sale la alqueria benahavis
    VILLAS and TOWNHOUSES FOR SALE IN MARBELLA
    Bank repossessions in Marbella for sale
    SPAIN FOR SALE PROPERTIES
    LUXURY or Bargain VILLAS for sale in Marbella costa del sol
    villa in la zagaleta for sale in Benahavis Marbella
    villa in Guadalmina baja for sale in Marbella
    villa the golden mile for sale in Marbella
    luxury new apartments for sale in an exclusive area of Marbella
    PLOTS FOR SALE IN MARBELLA
    Luxury Villa for sale in El Madroñal
    Villas for sale in the Costa Blanca
    Best Selection of Properties: Villas, Plots / Lands, Townhouses, Apartments & Penthouses, .. For Sale / Rent. Bargains, Opportunities, Distressed, Reduced price Property For Sale SpainForSale.Properties

    Best Selection of Properties: Apartments & Penthouses For Sale / Rent - Invest in x x x. Bargains, Opportunities, Distressed or Reduced price Property For Sale in x x x with SpainForSale.Properties

    Best Selection of Properties: Villas For Sale / Rent - Invest in x x x. Bargains, Opportunities, Distressed or Reduced price Property For Sale in x x x with SpainForSale.Properties

    Best Selection of Properties: Plots / Lands For Sale / Rent - Invest in x x x. Bargains, Opportunities, Distressed or Reduced price Property For Sale in x x x with SpainForSale.Properties

    Best Selection of Properties: Townhouses For Sale / Rent - Invest in x x x. Bargains, Opportunities, Distressed or Reduced price Property For Sale in x x x with SpainForSale.Properties
    SpainForSale.Properties is an Exclusive Real Estate Agency offering Luxurious Properties For Sale and Rent on the Costa del Sol, such as: Luxury VILLAS FOR SALE NUEVA ANDALUCIA SpainForSale.Properties is considered one of the most trusted Exclusive Real Estate Agencies in Marbella, Costa del Sol and other “Prime Locations” in Spain. Live on the Costa del Sol and Enjoy a Luxurious lifestyle in one of the most beautiful places of the World. Luxury Properties For Sale in Prime locations of the Costa del Sol: Mijas, Marbella, Benahavis, Estepona ….
    #LuxuryRealEstateMarbella #LuxuryPropertiesMarbella #Investment #PropertySpecialist #Immobilienmakle #العقارات #недвижимость #Fastigheter #Mäklare #ForSaleMarbella @SpainForSale.Properties
    @SpainForSale.Properties #Marbella #Costadelsol #PuertoBanus #VillaForsaleinMarbella #VillaForSaleMarbella #RentalsMarbella #ApartmentsForsaleinMarbella #PlotForSaleinMarbella #CostadelGolf




    SpainForSale.Properties is an Exclusive Real Estate Agency offering Luxurious Properties For Sale and Rent on the Costa del Sol.

    ReplyDelete
  16. It’s not no problem finding knowledgeable people with this topic Boulevard 88 Condo

    ReplyDelete
  17. We would like to remind you of this south facing outstanding villa, located in Marbella Hill Club and exclusive to spainProperties. Due to its elevated position the property offers great views of the sea. The property has a total built area of 1.278 sqm. on a 4.795 sqm. plot and is distributed over three levels, offering 6 bedrooms and 6 bathrooms. Upstairs: huge en-suite master bedroom with a spacious dressing area, a large bathroom and a private terrace with nice views to the garden. Semi-basement: en-suite bedroom that could have an independent access from outside; children's games room that could be converted, for example, into a gymnasium; machinery room. Luminous and spacious, the house is built with great quality construction throughout. Close to Marbella, Puerto Banús, golf courses and all the other amenities of this area, the villa is set between sea and mountains, offering not only commanding views but also a sense of peace and privacy close to nature trails at the edge of a protected reserve. This well-presented property is offered with a garage for two cars and a generously sized drive.


    Contact spainProperties to arrange a viewing Web Version
    Stunning mansion with fabulous sea & golf views in Reserva de La Quinta

    Remarkable frontline golf hilltop mansion in a gated complex in La Quinta, enjoying superb sea and golf views, and with beautiful landscaped tropical gardens with pool and BBQ area. Upstairs: gallery; en-suite master bedroom with fireplace, "his and hers" walk-in wardrobes and terrace with sea views; 3 further en-suite bedrooms. Basement level: temperature controlled wine cellar with bar; store room; laundry room with interior patio; tool room. On an even lower level, an impressive gym with indoor heated pool, sauna, changing and shower rooms. 3 independent apartments: one with 1 en-suite bedroom, another with 2 en-suite bedrooms with walk-in wardrobes and staff´s apartment with 2 bedrooms. Garage for 3 cars. Gardener's room with bathroom.
    A unique residence with outstanding views!
    SpainForSale.Properties is an Exclusive Real Estate Agency offering Luxurious Properties For Sale and Rent on the Costa del Sol, such as: Luxury VILLAS FOR SALE NUEVA ANDALUCIA SpainForSale.Properties is considered one of the most trusted Exclusive Real Estate Agencies in Marbella, Costa del Sol and other “Prime Locations” in Spain. Live on the Costa del Sol and Enjoy a Luxurious lifestyle in one of the most beautiful places of the World. Luxury Properties For Sale in Prime locations of the Costa del Sol: Mijas, Marbella, Benahavis, Estepona ….

    ReplyDelete