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Where are UK property prices and rental growth forecast to rise the most?

Property investors, landlords and owner-occupiers should all be looking to the north for the best property investment opportunities for the future.

Manchester will lead UK cities with the most significant increase in sales prices and rental growth over the next five years. This is according to JLL’s recent Living With 2020 Vision Regional Forecasts Report.

Across the UK housing industry, the report says there will be stronger price growth and more transactions in 2021-2022. This is partly due to the greater political and economic certainty we saw at the start of 2020.

From the end of 2020 through 2024, Greater London, the north-west of England and the east will see the most growth, says the report. There, property sales prices could rise by 17%, 16.5% and 16.4%, respectively. Regional cities in particular could see some of the most significant amount of growth.

Manchester leads the way

JLL believes Manchester will see the largest increase in sales prices over the next five years, up by 17.1%. This is markedly higher than the national average of 14.8%. The report also predicts Manchester will rank highest for rental growth at a 16.5% increase.

The city’s growing economy and rising population are big reasons behind this growth. A Stone Real Estate report recently named Greater Manchester as the most lucrative new-build property hotspot in the UK. The north-western area has seen a huge amount of growth and development in the last few years. Nevertheless, the city’s property market is set for another record year with rafts of new developments due to complete.

As Greater Manchester’s population continues to rise significantly, the city region still has room for growth in the rental sector and property market. Manchester is now classed as the best city in Europe for business in 2020/2021, according to a Financial Times Report. This means more businesses and young professionals could be on their way to the city.

As more people come to Manchester, demand in the rental market is likely to increase. This will continue to provide lucrative opportunities for landlords and investors in the coming years.

Other property hotspots in the north of England

Leeds and Liverpool are also continuing to evolve as strong UK property investment hotspots. Both areas have a number of developments currently in the pipeline. Property sales prices in Liverpool could increase by 13.1% over the next five years, while rental growth could rise by 14.8%, says JLL.

Recently named the most profitable city to become a landlord in the north of England, Leeds is expected to see prices rise by 13.7% and rental growth by 14.2%. Both of the cities’ economies and populations are likely to see significant growth in the next couple of years. As a result, forecasters expect a boom in the regions’ property markets, bringing forward rewarding investment opportunities.

As numerous cities in the Northern Powerhouse are set for an exciting future with a significant amount of development and regeneration in the works, the property markets in the north will continue to thrive. And the region is likely to be home to a plethora of profitable investment choices for investors and landlords across the next five years.

Credit Source: Kaylene Isherwood

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High speed rail coming to the UK – should you invest in property near HS2?

Earlier this month, Prime Minister Boris Johnson confirmed that plans to build HS2 would go ahead. Here’s how it might affect house prices.

Plans to connect London to the Midlands and north of England via a high-speed rail link have once again been given the green light by the government. The controversial proposals have been under debate after the projected costs for the scheme had more than doubled, while the time frame has seen yet another extension.

However, the latest affirmation for HS2 is being hailed as a hugely positive step for the UK by its supporters. The new line will shorten travel times between the capital and the rest of the UK, boost capacity, create new jobs and reduce the impact of the existing north-south divide across the country. The government also says the line will increase output and boost the country’s economy.

HS2 is currently the largest infrastructure project in Europe, and its implementation will no doubt affect the economies of the areas it passes through. House prices in these locations will almost certainly be influenced by the new line over the coming years – and to some degree this impact is already being felt.

What are the plans?

The proposals remain largely the same as they were before Boris Johnson’s latest announcement, but with slightly extended timeframes. Phase one, connecting London to Birmingham, is now due to complete between 2028 and 2031, and will reduce journey times between the cities to just 52 minutes. Phase two is then expected to complete between 2035 and 2040, and will see the connection extend from Birmingham up to Manchester, Leeds and hopefully beyond.

The following representation was published by the BBC:

HS2 journey times bar chart

What about house prices?

How the HS2 project will affect house prices will depend on the location of the property in relation to the new route. Ultimately, any major improvements to transport in an area are likely to boost its attractiveness to prospective residents, and as a result this will push up house prices.

The effects have already been seen in many areas just from the promise of the future railway line. In Birmingham, a number of major regeneration and property investment projects are currently underway, and many investors have cited HS2 as part of their reason for backing these projects. Those who invest now are expecting major house price appreciation over the coming years as HS2 comes to fruition.

In an analysis by the Guardian, it takes examples of how past infrastructure projects have affected house prices. When the M40 was extended from Oxford to Birmingham in 1991, house prices in nearby Warwick increased, according to the report, because the town was now within easier commuter distance of the city.

Crossrail in London is another good example. Despite delays, properties along the line have already doubled in value since 2008, even through the financial crisis, when the new line was given the go-ahead. According to Benham and Reeves, this is expected to grow by a further 4.7% between now and 2021.

According to the Guardian report, properties within a 10 to 15-minute walk of stations along the Crossrail line are expected to see house prices rise by between 30% and 60% over the construction period.

However, on the flip side when looking at HS2, properties that are very close to the new line could see depreciating value, according to Property Road. It says homes within 500m of the line could see house prices harmed in the short-term because of disruptive building works as well as increased traffic levels in the area during construction. This is something to bear in mind when selecting a property close to HS2.

Places to invest

Birmingham is the first place set to benefit from the new HS2 line. Not only will the project itself create new jobs in the area, but a number of major firms have already begun to open offices in the city ahead of the transport improvements.

With the promise of better accessibility, house prices are expected to increase in the area as more people choose to live and work there. For property investors and homebuyers alike, the sooner you make an investment in the city, the more likely you are to see house price appreciation as the HS2 project progresses.

When the second phase comes in, cities such as Manchester, Leeds and Nottingham will come into its remit, slashing travel times to the capital. Similar to Birmingham, these cities have also seen more businesses open offices there, attracting a bigger talent pool and more residents.

Even more peripheral towns are expected to be boosted by HS2, as the plans will also include improvements to existing lines. If you’re looking to buy away from a major city, in a place where house prices could see a boost, it’s worth keeping an eye on areas that are within easy travel distance of the new line.

Birminghams landmark residential skyscraper. Contact us for more information and we can keep you up to date with projects close to the new HS2 line.

Credit Source: Eleanor Harvey

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Expat mortgages – what you need to know to invest in UK property

For expats, owning a UK property for rental income or the security of having somewhere to live if they want to return home is an attractive proposition. However, applying for a UK mortgage when you live abroad is not as simple as a regular mortgage application.

Expat mortgages are less cost-effective for lenders since the Mortgage Credit Directive (MCD) was introduced by the European Commission in 2016. For borrowers paid in a foreign currency, it means lenders cannot use their automated affordability checks. Ultimately this has increased the burden of administrative and regulatory monitoring of foreign exchange rates resulting in fewer mortgages being available to the expat market.

As an expat, you should expect the mortgage criteria and application process to be more complicated, and the available mortgage products to be more expensive than if you were applying for a regular UK residential mortgage.

Buy-to-let from abroad
If you want to buy a property to generate rental income while you live and work abroad, borrowers will need a “buy-to-let expat” mortgage, but property purchased to be your primary residence will require a “residential expat” mortgage.

UK Property Investments

To apply for either, borrowers will require a substantial deposit (ideally held in a UK bank account), evidence of the deposit’s source, proof of residency (for the past three years) and proof of income for a residential mortgage; for a buy-to-let mortgage, borrowers will be assessed on their expected rental income.

Consideration should also be given to the repayment currency. MCD means that lenders must monitor exchange rates to ensure foreign currency loans remain affordable for the borrower, and some specialist lenders have an “approved currency” list.

Benefits of an expat mortgage
The fall in sterling means that it’s currently cheaper for international buyers to purchase property in the UK. Expats looking to invest in the UK have to save less for a deposit because they’re getting more Sterling for their foreign currency. Plus, as the mortgage repayments will be made in Sterling, they work out cheaper too when they revert back to their earning currency.

Expats seeking to buy a rental property will find that as long-distance landlords they can take advantage of specific mortgage products and join the HMRC’s non-resident landlord scheme which exempts them from UK income tax. In addition, having a buy-to-let property is a great way of maintaining a UK credit rating, which means securing UK borrowing in the future will be easier.

An expanding market
Andrew Sadler, senior business development manager at Ipswich Building Society, said: “By far the biggest hurdle for expats is the lack of choice when it comes to mortgage providers, with many of the high street lenders seeming reluctant to get involved due to the perceived risks and challenges involved…

“This underserved area of the market is where we and other smaller lenders really come into our own, with our ability to manually underwrite cases in-house and look at the details more carefully.”

And it seems that lenders might finally be seeing the opportunities in this neglected market. Skipton International recently launched a remortgage deal for the British Expat and Foreign National Market, and Tipton and Coseley has announced that it is considering expanding its expat mortgage offering to include residential properties and foreign income loans.

Credit Source: Samantha Taylor.