Manchester remains the No.1 UK city on the Economist Intelligence Unit’s annual Global Liveability Survey for the 9th consecutive year, trumping London and underlining a continued demand by people to live and work there.
Manchester has once again clinched this year’s No. 1 spot of Most Liveable City in the UK, for its ninth year running.
The Economist Intelligence Unit’s annual Global Liveability Survey rated 140 of the world’s largest cities based on factors such as education, social stability, education, infrastructure and access to healthcare.
The survey paints a picture of the appeal and desirability of Manchester as a place to live and work.
UK property investment continues to remain on the radar of investors despite the shifting political landscape in the European continent. For behind all that Brexit brouhaha is a serious housing undersupply — a growing dilemma that continues to drive prices and rents in the UK property market. Which cities have the best rental growth? We examine the top cities in the UK and their corresponding vacancy rates.
Research has indicated that property remains a preferred investment among the ultra-wealthy, offering definitive and comparatively rewarding long-term returns.
We always hear investment experts say, ‘Diversify, diversify, diversify!’
It’s easy for them to say that when they have a bank of knowledge available on where to plonk their pennies, right? They have people to study, review and discern the markets every day whilst regular people like you and me tread cautiously — because unlike them, we aren’t subject matter experts.
The focus of those looking at UK Property Investment: one of England’s rising stars, Manchester is undergoing huge economic growth and transformation, drawing young talents and businesses into its arms, and spurring an ever-increasing demand for housing in the city.
The UK Autumn Budget proved that despite the government’s latest initiatives in addressing housing affordability for firsthome buyers, landlords remain pivotal to the supply of housing in the UK.
At a glance, the Autumn Budget (Oct 29) had good news for first-time house buyers in the reduction of stamp duty on jointly-owned property. The relief applies to homes of up to £500,000 and is in addition to the first-time buyer stamp duty exemption announced last year.
The Chancellor also declared that the government would allocate £500m for the Housing Infrastructure Fund to enable a further 650,000 homes to be built. This is on top of the previous pledge of 300,000 homes per year, on average, to raise housing supply by the mid-2020s.
Alongside the newly announced stamp duty relief for first home buyers, this is a laudable measure to alleviate housing unaffordability, yet there remains a lack in optimism where the issue of housing supply is concerned.
Landlords & Private Rental Sector: A Necessity to Solve UK Housing Woes
Historically, the UK has been plagued by a chronic shortage of housing. Not only had the government failed to meet its previous target of building 240,000 homes by 2016 (a target set in 2007), it had also changed Housing Ministers 16 times — more than 20 times faster than the average UK homeowner moves houses!
A research by Heriot-Watt University shows that the undersupply has become even more critical: England alone faces a backlog of 4 million houses.
UK house price and rental forecast 2018-2021 (CBRE)
More houses are needed to address homelessness as well as skyrocketing house prices and rents. And this is where the private rental sector comes in. Not only are landlords pivotal in ensuring the supply of rental housing for the growing number of young people unable to afford their own homes, they also provide flexibility for millennials who prefer to rent.
New research has shown that UK property remains a lucrative investment with 88% of landlords able to gain a profit, as the imbalance in supply and demand continue to drive rental prices.
Updated Incentives/Exemptions for Landlords
Investors and landlords can look forward to the following updates moving forward:
(a) PERSONAL ALLOWANCE
Landlords can claim an increased personal allowance amount of £12,500 off their taxes in 2019/20. The personal allowance is currently at £11,850.
(b) CGT ANNUAL EXEMPTION
The Capital Gains Tax (CGT) annual exemption will be increased from £11,700 in 2018/19 to £12,000in 2019/20.
Potential SDLT surcharge
Some weeks ago, Prime Minister Theresa May announced the possibility of a Stamp Duty Land Tax (SDLT) surcharge of 1% – 3% to be imposed on overseas landlords/ property buyers from Jan 2019.
The government has now revealed that it will propose a surcharge amounting to only 1% during the Budget, and that a consultation on the surcharge will be published in January. Stay tuned as we continue to monitor the news and provide updates in due course.
Interested to invest in UK property and be a landlord? Invest before the foreigner SDLT surcharge kicks in in 2019! Call us and make that smart choice today at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia). Or, email us at info@csiprop.com!
Find out more about Arden Gate, our latest Birmingham residential investment property in the Midlands. Birmingham has been voted one of the UK’s fastest-growing city by PwC. Come meet our developer rep and learn about Birmingham’s bullish property market.
By Lydia Devadas
Edits & additions by Vivienne Pal
Home ownership, especially among the young, in the UK has declined significantly compared to a decade ago. As the name suggests, Generation Rent is growing, now more than ever before.
Today, 40% of young adults are unable to afford one of the cheapest homes in their area even with a 10% deposit.
For 25- to 34-year-olds earning between £22,200 and £30,600 per year, home ownership fell to just 27% in 2016 from 65% two decades ago. This is an indication of home ownership collapse over the past 20 years especially among those from the middle-income range.
Back in 2016, data by the Office for National Statistics had highlighted that the number of homeowners in the 22- to 29-year-old age group stood at 37% in 2008 compared to just 27% over the last 10 years. This drop in homeownership among young adults has several contributing factors.
The drop in homeownership among young adults. Image credit: IFS
Disparity in House Price Growth vs Income Growth
Rising house prices relative to income growth has robbed the younger generation of the ability to buy their own home, while the increase in rental rates has made it almost impossible to save for a deposit.
House prices have risen around 7 times faster compared to wages over the last two decades. New research by the Institute for Fiscal Studies (IFS) reveals that since 1997, the average property price has risen by 173% in England after adjusting for inflation, and by 253% in London. Meanwhile, rental cost has risen from an average of £140 a week to £200 a week in England.
The expanding disproportion between income rate and ever-growing house prices is resulting in a severe unaffordability crisis among young adults.
Income versus house price growth Source: IFS, Image Credit: The Sun
According to a report by the Sun, back in 1995/96, 2 in 3 (65%) of 25- to 34-year-olds from the middle-income bracket were homeowners.
But by 2015/16, the number plummeted to just 27% where only 1 out 4 of this group owned their own home.
At the time, average house prices were a staggering 152% higher than they were 20 years earlier after adjusting for inflation. Meanwhile, the nett family income of those aged 25-34 increased by only 22% over the same period, causing a relentless imbalance between household incomes and house price growth.
A Preference for Experience-focused Living
Another notable factor is the youngsters’ preference for an experience-focused living.
Millennials prefer living amongst a like-minded community. For many, renting a house enables them to live close to the city centre — which also happens to be where they prefer working — and be part of a community that possesses similar lifestyle practices. This aspect seems to have taken the priority seat compared to being able to buy a house.
Purchasing a property near the city centre is close to impossible due to exorbitant prices, hence, renting becomes the next best option.
An Opportunity for Investment
This drop in home ownership and high demand for rental properties amongst the millennials signifies a huge shift for the UK’s rental and investment sector, offering opportunities for investment returns. In Manchester alone, one of the fastest-growing cities in UK, an estimated 11,000 new jobs are forecasted to increase by 2022, yet only 4,000 new properties in the city centre are expected to be built by then.
The lack of supply in residential properties alongside growing job opportunitiesincreases the demand for rental properties which, reciprocally, opens the gateway for investment. In September 2018, the UK government and Barclays Bank announced a new £1 billion loan fund to drive construction levels in the country’s property sector, with a focus on providing greater numbers of purpose-built rental property in key markets.
The ever-growing rental market promising capital growth and rental income clearly opens an array of investment opportunities for investors looking to spend their money wisely.
