Graham Flaherty

There are many different types of buy-to-let mortgages available, such as interest-only buy-to-let mortgages to repayment mortgages. You may choose to purchase through a company, in which case you would need to take out a limited company buy-to-let mortgage. Mortgage availability and criteria also differs if you are based overseas, so your location should be considered before applying for certain mortgages.  The first thing you may be wondering though, is what is a buy-to-let mortgage, and what is the difference between a buy-to-let mortgage and a residential mortgage? Buy-to-let mortgages vs. residential mortgages In truth, buy-to-let mortgages are not really that different from residential mortgages, but there are a few important things you would need to be aware of. When we talk about residential mortgages, we mean mortgages people take out if they wish to live in the property themselves. Buy-to-let mortgages are taken out if you wish to rent out the property to people outside of close family members. Buy-to-let mortgages require you to have a larger deposit, usually at least 25% of the property’s value. Interest rates and other fees associated with buy to let mortgages also tend to be higher. Most buy-to-let mortgages are available on an interest-only basis, where you would only be paying off the interest for the duration of the term, and then the full amount is payable afterwards. They are also not regulated by the Financial Conduct Authority unless you wish to let the property to a close family member. How to qualify for a buy-to-let mortgage   With a normal residential mortgage, lenders would assess your salary and outgoings before deciding upon the amount you can borrow. This differs from a buy-to-let mortgage, which hinges on different factors such as the rental income you expect to generate from the property.   It is a bit more difficult to qualify for a buy-to-let mortgage as the Bank of England tries to cool the buy to let market. This means that potential landlords will be subject to strict affordability tests. How much you can borrow through a buy to let mortgage is based on the Interest Cover Ratio (ICR). This is how much rental income you expect to receive and how this will cover mortgage repayments. You will typically need to be receiving around 125 – 145% of your mortgage costs in rental payments. Lenders will also consider how many properties you have in your portfolio, as the more properties you own the more difficult it is to obtain finance. If you own over 4 properties, you are considered a “portfolio landlord” and you will be subject to stricter regulations. Some lenders will stipulate that you can only have a certain number of properties in your portfolio. Others base their decision on the loan to value ratio, and others demand that the ICR for every property be above a certain percentage. Most buy to let mortgage lenders would require you to be earning your own income too, this minimises their risk as you still have a possible way to afford mortgage repayments. Buy to let mortgages for first time buyers   It is possible for first-time buyers to obtain a buy to let mortgage, but you may need a larger deposit. There may also be fewer mortgage options available to you. With regards to stamp duty, you will not benefit from first-time buyer’s stamp duty relief, but you will avoid paying the additional 3% surcharge levied on buy to let investors. You may find it difficult to obtain another mortgage as lenders will examine the debt owed on your existing buy to let mortgage, and you will have to pay a surcharge for any other property you end up buying.   How to get a buy to let mortgage through a company   If you set up a company for the sole purpose of owning property, the company is sometimes referred to as a Special Purpose Vehicle (SPV). When financial institutions look at lending, they would generally take into consideration the financial standing of the company. When buying a property through a limited company you generally need to provide two years of profitable trading history and a good balance sheet to be given a mortgage. That can be a problem for SPVs as they have no financial history at all. What frequently happens is that a lender would require a personal guarantee from each company director. This means that if the company is unable to honour its debts, the company directors are personally liable and can be chased for payment. The lender will assess the company directors and their own ability to pay the mortgage, so the affordability will be dependent on your personal financial standing. Depending on what you want to use the money for, there can be some tax benefits of investing in property through a limited company.  Can an overseas investor get a buy to let mortgage?   The UK property market performs well, and property is one of the strongest asset classes. It is not surprising that many people from all over the world are wanting to invest. Perhaps you are living overseas and want to invest in the UK property market but are unsure how to obtain a mortgage. The truth is, there are UK buy to let mortgages available to non-UK residents. Generally, the mortgage availability for non-UK residents is more restricted and more stringent checks are put in place to ensure that the rental coverage is 125% of the mortgage payment. As property is something people put a large amount of money into, identity checks are needed, as are checked to see where the money is coming from. If you are a non-EU citizen looking to invest in UK property, these checks are even more thorough to minimise lender risk.  Available buy-to-let mortgage options   Most high street banks will offer buy-to-let mortgages. You can also use the service of a mortgage broker who will help you arrange a mortgage that will meet your requirements.  There are websites such as Compare the Market which will compare various mortgage options, although there may be hidden charges or caveats that are not immediately obvious on first sight.    Arranging a mortgage can take a lot of work so it is good to know the basics of what a buy to let mortgage would entail and how to qualify for one. How you purchase your property will also impact mortgage availability, as there are different mortgage options available for limited companies compared to an individual. Our guide gives an outline as to what to expect when applying for a buy-to-let mortgage, but it is also worthwhile exploring these options further. There are other commercial property investments that do not require a mortgage. Care home investments come with a long-term commercial lease between 10 – 25 years so rental insurance is not required. Read the in depth buy to let mortgage guide here to find out more about the types of mortgages available and what interest-only mortgages are. 

Before you even consider a property investment, you should read our ultimate guide on how to invest in property. There are many ways you can access the property market. You do not need to buy a property outright yourself, as that will only be an option if you have significant capital in the bank for a deposit. There are other ways, you can also invest in a crowdfunding scheme or loan money through peer-to-peer lending. Sometimes you can invest as little as £100 in those schemes. Each option is not without its own obstacles. We discuss the pros and cons of investing in property through a company vs. as an individual, crowdfunding and peer-to-peer lending. How to invest in property Before making an enquiry to a property, have you considered whether you want to buy a property or explore the other ways you can invest in property? There are many ways to access the UK property market. We will briefly explain how to invest in UK property and outline some of the advantages and disadvantages of each: Buying a property There is an age old saying that an Englishman’s home is his castle. Meaning that a person has control of what happens in their own home. Many people prefer to buy the actual property, the brick and mortar (as some people say) for the sense of security that they feel from owning the legal title. Having been active in the property industry for more than 11 years and working with a lot of overseas investors from Hong Kong, Middle East, South Africa, Israel and Russia, we are absolutely aware that investors don’t just buy property for the investment returns. They like the idea of having a foothold in another country and having something tangible, like property. If you are looking to find out more about the UK property purchase process or the differences between the freehold and leasehold ownership, our property investments guides will help empower you with the knowledge you seek. One can find suitable investment properties via online auctions, property portals, estate agents - like One Touch. Buying shares in a listed property company The typical available on our website requires a minimum investment of £60,000. If you do not have that sort of budget, then purchasing shares in a listed property company may be a way to access the property market with less capital. The London Stock Exchange has over 50 listed property companies and REITS. Just like when choosing a property, you would have to conduct your due diligence on the sector and the specific company. It is easy to get it wrong, as there are lots of changes that can take place. For instance, a change in trends has resulted in a significant downturn in the fortunes of retail investment companies. Shopping centre owner, INTU has gone into administration. If you owned shares in that company, you would probably have lost all your capital. Whereas - when you own a buy to let property - even if the market demand goes down, you still receive the rental income and with all-time low interest rates, you will certainly be able to maintain the mortgage payments. Buying shares in property companies which focus on healthcare have been more resilient. One such company is Primary Healthcare Properties (PHP). It pays a dividend of nearly 4% from leasing doctors’ surgeries to the government. UK investors buy shares via online investment platforms like AJ Bell or Hargreaves Lansdown can benefit from tax savings when they invest through their ISA or SIPP. Overseas investors can also set up International Trading Accounts but some of the overseas platforms only have a limited selection of shares to invest in. Buying shares in REIT A REIT is an abbreviation of Real Estate Investment Trust. Shares can be purchased. More Risky Property Investment Options Include: Crowdfunding Generally, you would provide equity towards a development for a share in the profits. The risk profile makes it only suitable for sophisticated or high net worth investors. The higher risk means you could also achieve higher returns; if the developments works out as expected you could achieve between 11% and 18% returns. However, you could also potentially lose all your capital invested because you would sit behind the creditors if the developer went bust. Peer-to-peer lending Is slightly less risky than crowdfunding in most instances because provide the loan to a developer and take a first charge on the property. That way, they have access to the assets in the underlying property. With the lower risks come returns between 4% and 6% per annum. You can invest as little as £100 into Peer-to-peer lending platforms. With peer-to-peer lending, you would earn interest on the loan and the capital is repaid upon completion of their project. The main difference between crowdfunding and peer-to-peer lending is that with crowdfunding you own the equity (the property), and with peer-to-peer lending you are loaning money, so you own the debt. Conclusion Property is a non-liquid asset and during tough times you may not be able to sell your shares or you property. However, there is a good steady income on offer and some capital growth opportunities that will provide handsome returns for medium to long term investors. Do you like the sound of the traditional route and the simplicity of – the bricks and mortar? This is where One Touch can help you with your property search. Helping to find the best property to match your investment and lifestyle goals.

Buy to let property can be profitable, but you must be mindful of the taxes that you will have to pay, which will impact your revenue. Here is your definitive guide to tax on buy-to-let property, which details what taxes may be levied on your property, both when you buy it and also on the income you make from it.  Buy to let Stamp Duty One of the first taxes you will pay on your buy to let property is stamp duty. Stamp duty is applicable to anyone buying property over a certain price in England and Northern Ireland.  The current threshold is £125,000 for residential properties and £150,000 for non-residential land and properties. Any property bought below this value is not subject to stamp duty charges. The tax is tiered depending on the value of the property. Below are the bands. It is worth noting if your property is £400,000, the entire sum is not subject to 5% stamp duty. 0% will apply to the first £125,000, 2% will apply to the portion between £125,001 - £250,000 and stamp duty will be applied at 5% to the portion between £250,001 - £400,000. Stamp duty is applied differently to first time buyers and those buying a second property.    One can reduce buy to let stamp duty by purchasing student property or care homes rooms because it is commercial property and the stamp duty exempt under £150,000 purchase price. To explore the options in more detail you may benefit from learning more about the fundamentals of the student market and whether care homes are worth investing in. It is worth noting that until March 2021 there is a stamp duty holiday. This means that only investors stamp duty is applied, and regular stamp duty rates are not applied.  From April 2021, those investing in UK property from overseas will be subject to an additional 2% stamp duty. What is investor stamp duty? Those looking to buy an additional property, either as a second home or as a buy to let, must pay an additional 3% stamp duty for each band as well as current rates.  Overseas investors, just like any investor, will pay stamp duty on property purchases. Most investors will have already purchased their own home, so an addition 3% of the total purchase price is to the usual stamp duty. It is otherwise known as second home stamp duty. Married couples are considered one entity, so stamp duty would be applicable if either party purchased residential property. You cannot avoid investor second home stamp duty if your partner purchases the property in their name.   Up until March 2021, the government has introduced a stamp duty holiday, which means that only the additional 3% stamp duty is levied on property under £500,000 for investors. Other stamp duty rates are suspended.  Income tax on buy-to-let Buy to let tax rules There are a few changes to buy to let regulations and tax rules that you should be aware of before deciding to invest in the industry. The most notable being that landlords will no longer qualify for mortgage interest tax relief. Instead, landlords will receive a 20% tax credit for mortgage interest payments.  Capital Gains Tax is a tax applied to property owners who see their houses increase in value from the time they bought it to the time they sell it on. They are taxed on the increase with basic rate taxpayers taxed at 18% on the difference, and higher rate taxpayers taxed at 28% on the difference.  Before April 2020, if a landlord rents out a home that was once their main residence, Capital Gains Tax only applied to the amount the house went up in value when they were not living there. Before 2020, landlords could also add on an extra 18 months of time spent at the property, and this would also be exempt from Capital Gains Tax. From April 2020 this reduced to 9 months.  Mortgage interest tax relief If you are wondering what mortgage interest tax relief is, you are not the only one. Prior to 2017, landlords could deduct mortgage interest payments from their profits before calculating tax. Since 2017 this has been gradually phased out and from the start of the 2020 tax year, landlords were no longer able to deduct mortgage interest payments from their rental income. Instead, you will only be allowed to subtract a flat rate of 20% of your mortgage expenses from your rental income.    Capital Gains Tax on buy to let   Capital gains tax on property can be avoided by purchasing commercial property under £150,000. Purchasing commercial property such as care home rooms and hotel room investments which provide a high yield is one way of reducing your capital gains tax obligation. Where properties are purchased on a long-term lease with contracted rate of return which is fixed, when it comes to selling the property the potential buyers would also want the same yield. So, where the yield stays the same, there is little chance of selling the property for a capital gain. That way capital gains tax is mitigated. There are some ways you can lower certain taxes, such as buying property through a limited company. Although you may be subject to other corporation taxes. To find out more about buy to let taxes on investment property, read our full buy to let tax guide. If you are at the beginning of your property search, you may want to devise a buy to let strategy, and one starting place for that will be to research the best places to invest in UK property.   

A strategy is a plan of action and steps that one should take to achieve a long-term goal. Buying to let simply means purchasing property to generate rental income, some people call it btl investment. Purchasing rental investment properties seems straightforward. However, there are various types of buy-to-let property investment opportunities to invest in. We will outline some buy-to-let ideas and how you could go about finding good rental investment properties to... Start building a buy-to-let property portfolio People looking to find out how to build a buy-to-let portfolio will benefit from finding out how other people make money from buy to let. The methods include buying at a discounted property, conducting property refurbishment to uplift values, social housing high income rents and off-plan property developments. Investing in buy-to-let property Buying a bargain property Finding a below market value property can immediately add equity to your property. In recent years’ it has become increasingly challenging to find a property bargains because unemployment rates have been low and the Bank of England interest rates at all time low has meant that it has been easier for people to afford their mortgage interest payments. Due to Covid-19, there have been several company closures – particularly in the retail sector – which could see unemployment rise to 10% according to the Financial Times. Increased unemployment could result in more distressed sellers seeking to make a quick sale. Working with property buying companies There are various companies such as such as National Property Buyers, We Buy Any Home and Property Cash Buyers that offer to purchase property from distressed sellers. They would take an option agreement with a distressed seller at a 20% below market value and then try find a buyer for the property. If you were to purchase the property, you may be able to achieve 10% below market value and still have to pay a property sourcing fee in the region of 3% - so the net benefit is 7%. The sales transaction is often complicated; the distressed seller may not want to leave the property and is highly emotional charged. Read the reviews on these companies and if you feel that you are ethically aligned to business model, then it can be possible to financially benefit from another person’s misfortune. BMV property and distressed sales is not a part of the market that One Touch operate in. Befriending Local estate agents Another way to find property is by befriending local agents. They can give you first dips on some outstanding rental investment properties. You would need to be able to show that you can move forward quickly with a property purchase by having a mortgage in place. They would have a lenders decision in principle – to find out more about that check out our BTL mortgage guide. Attending Property Auctions In the recent years property auctions have been a very successful way for property owners to sell their properties. Bids are even accepted online or by telephone. Prominent auctioneers including Savills, Bernard Marcus, Allsop and Clive Emson have been achieving 85%+ success rate of total lots on offer being sold, with the most attractive properties securing sales twenty per cent more than their asking price. Bargains can still be achieved at property auction during times of uncertainty. A short-term drop-in auctioneers success rates were registered during Covid-19 as less buyers attended. Making alterations to your property Refurbishing property A lot of people choose to get into property though buying at auction and then refurbishing the property. An ideal refurbishment property project is a dilapidated property that is in desperate need of repair. From a convenience point of view, it makes sense for aspiring landlords to target properties their own area. That way they can manage the property and keep costs under control. Reconfiguring a property to increase rental income Low wage growth and house price increases have made owning property increasingly unaffordable. Property ownership has continued to fall and the age of first-time buyer increasing. That means in general that more people are living in rental investment properties. The number of new homes being built is not keeping up with population growth and inward migration. For that reason, savvy landlords have been converting terraced houses from 2 bed homes into five bed houses of multiple occupation (HMO). Reconfiguring a property through innovative design can vastly increase the rental income. A modest amount spent on a conversion can amount to significant increase in rental income with gross yields of more than ten per cent being achievable. Taking on a conversion projects takes a large amount of trust in the professional team that will carry out HMO conversions. Be selective and try speaking with previous buyers. Do not commit funds ahead of finding a specific project and agreed time frames for conversion. If you like what you are reading and want to learn more, why not download our buy-to-let guide. High income social housing as buy-to-let We have some partners that source social housing in the North East of England and Scotland which have a low-income demographic. Affordable properties circa £60,000 are often rented to social tenants. As the property is has a low entry point and rents are determined by the (LHA) local housing allowance, rents can be £500 per month. That equals makes and attractive 10% gross. However, you can have problem tenants which may be difficult to evict if the local housing authority or council is still paying the rental income. The property values do not tend to go up and the local housing authority sets the maximum LHA rental rates. With government cutbacks it is unlikely that the rental yields for LHA property will increase. Off-plan property developments This means buying property off-plan from a property developer. The majority of the off-plan property projects that we source are in major UK cities and are typically 6 months to 18 months from completion. An investor would usually make and exchange deposit of between 10% and 30% of the purchase price. The nationwide and listed property companies may keep the deposit with the solicitors. It is common for the deposit to be used towards the construction costs in the case of small to medium-sized developers. One Touch can help you as we source off-plan property in high growth areas, like Manchester which has experienced 35% capital growth over 5 years since 2015. Cities Where there is good supply versus demand fundamentals. Manchester has highest population of young professionals under 30. You can read more about Manchester regeneration, London commuter towns article and Birmingham regeneration which outline the drivers for capital and rental growth. Conclusion about investing in rental properties When choosing to invest in rental properties one can add value through active management or take a more passive approach by focusing on capital growth. For those who do not have the time and are still motivated to take advantage of the UK residential property market excellent fundamentals while benefitting from the stamp duty holiday -until March 2021- a vanilla investment approach may be more suitable. With only 30% deposit with balance on completion, buy to let properties rented to tenants on an AST agreement. New build properties have build warrantees and property management in place. Typical net yields are 5.5% and the bank finance with low rates means that expenses will be covered. This buy to let strategy is best for those with the aim of growing their UK property portfolio by focusing on good capital growth. If this sounds like a suitable way forward, please do get in touch. We would be delighted to assist you!

It is a well-known fact that London is one of the most unhappy places in the UK. The gap between the wealthiest residents and the poorest can exacerbate anxious and unhappy feelings and the capital is consistently ranked as one of the most unequal cities. We have seen that economic equality positively correlates with personal wellbeing.  You may be wondering what life satisfaction has to do with investment. But what if these factors actively influence where people live? Should you be considering areas with good levels of personal wellbeing for your next investment and how do you uncover these areas? People Moving from London to Manchester was Commonplace for those Searching for Better Life Satisfaction    In recent years, many have moved away from London and Manchester has been the preferred destination. In 2017, a whooping 10,200 people moved from London to the Greater Manchester area. It’s not surprising that Manchester is a popular place to settle, it has undergone a huge amount of regeneration and has been named one of the best places in the UK to live for several consecutive years. According to “The Economist’s Global Livability Scale”, based on factors such as environment, healthcare, education, culture and infrastructure, Manchester ranked 35th in 2018 and 38th in 2019. The Economist’s Global Livability Scale ranks 140 worldwide cities on issues such as social stability, crime rates, education, and healthcare.  With accolades such as being the most livable city in the UK, Manchester has been one of the most popular places for Londoners to relocate to. London ranks just 48th out of the 140 worldwide cities assessed. However, these scales only rank cities and it means that towns and villages are overlooked, even if they offer the same or better in terms of life satisfaction.  How Do Commuter Towns and Villages Measure Up Against Cities in Terms of Life Satisfaction?    City life is typically busy and fast paced. Although there may be green spaces, they are often crowded on sunny days and overshadowed by towering buildings. Aside from the very wealthy, people usually rent or buy smaller living spaces, often without a garden. As people are packed tightly into dense living spaces, being disturbed by neighbours is commonplace and can affect quality of sleep or relaxation. Leaving the house to escape the noise is not an option as the streets are bustling. Heavy traffic and the pollution that comes with it affects air quality, surroundings, health and degrades buildings.  On the contrary, towns and villages offer a quieter way of life. It is rare they would have restaurants offering cuisines from around the world, and the range of museums, galleries and theatres would be smaller. Also, public transport is not as extensive and does not run for 24 hours as it does in some cities. That aside, there are some benefits which help with people’s wellbeing. People can get more for their money in terms of property and have more space. Towns and villages are generally less densely populated which lends itself to a more peaceful environment. Traffic is lighter and the countryside is more easily accessible. There are many differences in lifestyle that can impact wellbeing and life satisfaction. From how the local economy is faring, pollution levels, safety, and housing options. Read on as we explain in a more tangible sense how these factors have proven to affect life satisfaction and wellness. We will also show data comparing key UK cities with commuter towns to find out which offer better life satisfaction.   Data Comparing Life Satisfaction in Key UK Cities and Commuter Towns     As we have mentioned above, towns and villages are quieter and more peaceful. People often live in larger houses and can buy more for their money. Living arrangements are more serene compared to the city. However, before we just supposed this would positively affect life satisfaction, we had no figures to back it up.  Data from the Office for National Statistics generally indicates that our suppositions are true. From the data we extracted, we compared an area of London (Camden), with two key UK cities (Birmingham and Manchester), and the popular London commuter town (Luton).  From the data we can see that Camden ranked highest for those reporting that their life satisfaction is “Good” at 58.54. Yet its average fared poorly and was the lowest of all areas compared at 7.48. Coming back to what we asserted previously, London is one of the most unequal places in the UK. The inequality is particularly felt in the London Borough of Camden, which is home to the 10% least deprived and 10% most deprived areas of the UK. Juniper Crescent and Gilbey’s Yard are in the 10% most deprived areas in the country, whereas Gloucester Avenue and Regent's Park Road are the 10% least deprived. They are situated just across the train tracks from one another, which can spark despondence and anxiety for those living in the less wealthy area.  Places that scored low on wellbeing rates were in built up areas. For example, Lambeth scored a low 2.55 out of 10 on the local environment subdomain which regards the level of air pollution in the area.  Perhaps surprisingly to some, Luton fared well with regards to average wellbeing rates, at 7.65. Rents are considerably more affordable, and earnings are greater. Economic security and income can have a huge impact on personal wellbeing. Health, marital status and economic activity are the three biggest factors that impact our life satisfaction according to the Office for National Statistics. It may come as surprise that Luton scored higher than Manchester in term of employment and economy.     The Personal Wellbeing report is released seasonally by the Office for National Statistics. Data is collected as people are asked to rate their well-being on an 11-point scale. We analysed the data and used it as a marker that will drive capital growth with regards to property prices. You can download our full analysis to find out more. Affordability and Wellbeing comparisons   Luton has the lowest average rent of every place we compared. The average property rent in Luton according to Home.co.uk is £832, compared to Manchester at £1,155 pcm and London at £2,896 pcm. The Office for National Statistics reported a higher life satisfaction score for those who can spend money on life experiences rather than essentials such as mobile phones, rent and food. That residents in Luton have more income to spend on non-essentials positively contributes to its personal wellbeing score.    Another factor that can lower personal wellbeing is a long commute. It is understandable that people are working long hours and do not want to spend hours travelling to and from work. Not only does it eat into their personal time, but it is often stressful, tiring, and expensive. According to the Office for National Statistics, those with a long commute of 60-90 minutes were the most likely to feel anxious and report lower life satisfaction. Even though people live in the capital for convenience, they also have the longest commute of anywhere in the UK at 74 minutes. London was also found to be the most stressful according to a survey of 2,000 UK workers. Trains from Luton to London St Pancras take just under half an hour, so it is likely this convenient commute positively impacts personal wellbeing and life satisfaction.    We have already written about how the Coronavirus pandemic and flexible working arrangements will impact the sorts of properties people choose and we think personal wellbeing will play a big part in that too.  In recent years personal wellbeing has been brought to the forefront of discussions and the Coronavirus pandemic has made people to take more action to safeguard it. With the stresses that come from city living, we can see people moving to commuter towns and villages where there is a slower pace of life and reportedly higher levels of wellbeing.   Consider Investing in Locations People are Moving to from London   If people are looking to live in commuter towns and villages as opposed to cities, it makes sense that investors should consider those areas as demand will be higher. The Orion is a new development in Luton town centre, due to complete in Q4 2020. The average rent for a one-bedroom apartment is £950 and can be purchased from £179,900. There is no ground rent to pay and projected yields that can be attained hover around the 6% mark. Bannatyne Health Spa is only 5 minutes’ walk from the Orion development thereby providing access to one of the nationwide health club groups with amenities which include swimming pools, jacuzzies, personal training and treatment centres.  It is also just a 11-minute walk from the train station, ensuring residents a swift commute to central London as travel times can be as little as 25-minutes. An annual season ticket Luton to London King’s Cross costs £5576. A London Zone 1-6 travelcard is £2640 per year, but average house prices in Luton are still considerably lower. Luton’s population is growing faster than the UK average which will positively affect rental yields and capital growth as property becomes more in demand. These are just some of the fundamentals we feel investors should be considering about London Commuter Towns before making a buy to let investment decision. If you want to know what other fundamentals aside from population growth, happiness and prospects for capital growth you should download our buy to let investment guide. Start the conversation with a property expert by getting in touch with one of our investment consultants who will guidance you through the key aspects of the UK property market and present exclusive opportunities not always listed on our website. 

The exchange rate between the rand and other currencies continues to fare poorly.  Despite some uplift due to the election of Ramaphosa, it has failed to do much better. It seems for the long term it will not, is there a better time to consider investing elsewhere apart from now? Or do we just adopt a “wait and see” attitude in the hope that things will miraculously improve? The exchange rate for the rand has been skyrocketing for some time now. In 2012 it was 14:1, in 2016 it crept up to 17:1, in 2017 it was 18.5:1 and now in 2020 it has soared to 24:1.  The rand is subject to short-term volatility due to political upheaval. When Nene was fired it jumped to 24:1 although it recovered quickly as it was a one-time shock. These short-term revelations cause the rand to drop and of course it has risen again due to positive changes. However, they all seem to be short-term and in the long term for eight years now we have seen it steadily decline.  The rand has enjoyed short term positive uplift, but long-term outlooks are negative  Although the rand has enjoyed a period of improved exchange rates, for example when Ramaphosa got elected the value of the rand jumped and was worth 16:1. However the improved outlook was short-lived as Ramaphosa failed to live up to expectations with regards to sorting out the corruption in the ANC. Eventually, the people’s confidence in Ramaphosa has been eroded. He said good things before his election with regards to sorting out corruption and prosecuting those who had been responsible for it which had subsequently instilled confidence in the market.  One person who has been associated with corruption is Ace Magashule. Investigations have revealed that he was part of the Gupta network. However, perhaps from constraints within his own party, Ramaphosa has failed to convict him.  Another was Malusi Gigaba who approved the R38.6bn locomotive deal for trains that did not fit the South African rail lines and (according to Fin24.com) approved the Gupta-owned company sponsorships of R17.8m for 8 breakfasts with leaders of the state owned Eksom. During the Zuma years the efficiency of SARs tax collection services decreased. It may well have been deliberate planned to decrease that department’s resources in order to limit the possibility of the Gupta-Zuma misuse of public funds being identified.  At the FT Summit 2019, Ramaphosa stated that the estimated impact of Zuma state capture was $34Bn. The endemic corruption across all level of the South African government cannot be changed with one person. Especially since The President has not had any successful prosecution of those involved.    Rand Not Likely to Improve Any Time Soon South Africa will rely heavily on its exports to keep its economy afloat, in 2019 its exports totaled $94.4 billion. These consist mainly of goods rather than professional services. The top ten exports that account for 75% of its global shipments are: 1. Gems, precious metals: US$15.3 billion (17% of total exports) 2. Ores, slag, ash: $13.1 billion (14.5%) 3. Vehicles: $11.4 billion (12.7%) 4. Mineral fuels including oil: $9.1 billion (10.1%) 5. Machinery including computers: $5.5 billion (6.1%) 6. Iron, steel: $5.4 billion (6%) 7. Fruits, nuts: $3.4 billion (3.8%) 8. Aluminium: $1.8 billion (2%) 9. Electrical machinery, equipment: $1.7 billion (1.9%) 10. Plastics, plastic articles: $1.4 billion (1.6%) The only issue is with the Coronavirus pandemic, activity such as mining and vehicle manufacturing has paused, and ports have been closed. It has rendered South Africa unable to trade with other countries, and with the decrease in trade comes a decrease in the amount of money generated from it.  Further to that, the countries that buy the bulk of South Africa’s exports have been hardest hit by the Coronavirus pandemic. China buys 10.7% of the global total, followed by Germany at 8.3%, the United States at 7% and the United Kingdom at 5.2%. Globally, there is uncertainty when the Coronavirus pandemic will subside and trade will resume, and even when trade does resume it is uncertain whether it will be to previous levels as the pandemic would have affected global economies. This means that South Africa will struggle to recover economically as exports would be lower than before, further affecting the rand value.  Outside of the Coronvirus pandemic, South Africa’s own political environment and even weather patterns play a part in the success of its sector exports. Water shortages and land expropriation have impacted agriculture.  SA Junk status – delays future recovery Dollar denominated debt. Dollar is the reserve currency and since South Africa government bonds are now junk status from all rating agencies, there is little trust that they can repay their loans. Not only does the interest rate increase under junk status but the impact of loans being in a foreign currency is catastrophic because as the currency devalues, loans values soar in real terms.  For a country trying to recover, South Africa is printing money (purchasing bonds).       Printing money without increasing production will lead to inflation. An Oxfam report stated that 55% of South Africans are living in poverty. Increasing inflation could place more people living below the breadline and exacerbate the political tensions already apparent due to the inequality of income.      Do people in South Africa really think it is going to get better? Many South Africans have started to invest, or at least considered investing overseas. They’ve chosen countries with a more stable and less corrupt political environment and a stronger currency. The pattern we’ve noticed is that as the rand devalues, more and more South Africans begin to invest overseas. In 2016 the rand crept up to 17:1. In the 18 months prior to that, the number of South Africans investing in UK property soared by 400% according to Cape Business News.  One buy to let strategy for example could be to invest in buy to let student accommodation. In this case, investors usually receive rental guarantee for a set number of years, for example 8% (of the purchase price) for 5 years. Many investors keep the income in a UK bank account. Even if after the end of the rental guarantee investors sell it for the same price, they still essentially make money if they convert it back into rand and the currency has depreciated in that time. Here is an example of a student property purchased 6 months off-plan in 2013. The investor typically receives 4% interest during construction. The rental income started in April 2014 and is adjusted to rand with the exchange at the time. The property is sold to another investor in 2019 at the same purchase price.       The contractual five-year rental return may not have seemed that interesting for the investor who could have earned a similar amount by having the savings in a South African bank. However, in real terms the investor would have received an annualised return of 19.3%.  Investment property companies like One Touch Investment have been assisting South Africans diversify their portfolio by investing in property UK. Their experienced consultants usually visit South Africa every three months. You could arrange a virtual meeting to discuss your ideals and find out which type of investment works best for you.   At the moment, there are care home investment opportunities paying 10% net income per annum on a 25-year lease. Clear exit strategies with built in capital uplift can be realised within 5 years. Buy to let property investment opportunities also allow investors to achieve capital uplift in the long term.  The thought of Brexit and Corona virus do not make any investment clear cut. However, of the two countries medium term prospects, which look more appealing at this stage?  

What should investors consider when choosing to invest in student property? Since the Conservatives lifted the cap on university admissions, the number of students going to university has swollen. However, not all institutions have benefitted equally. Whilst Russell Group universities have generally seen their numbers swell, newer universities and former polytechnics have struggled. Elite institutions faring better since the admission cap has been lifted The intake of students to Russell Group institutions has grown by 16%. Some elite institutions such as Oxford and Cambridge have chosen not to expand, but many have, using the extra tuition fees to fund research. Bristol’s intake shot up 62%, Exeter’s by 61% and Newcastle’s by 43%. On the other end of the scale, the University of South Wales saw its admissions shrink by around 40%, and London Metropolitan by over 40%. Students are also expressing a preference for campus-based universities as opposed to universities with sites sprawled across the city centre. With the rise of those aged between 16-24 reporting as being teetotal reaching almost 30%, students are placing less of an emphasis on being close to clubs and pubs and more on being close to their university. Student property development potential   Looking at research from Savills which measures the potential of student property developments in the UK’s university towns and cities, it is of no surprise to see the universities with increased intake ranking in the first or upper second tier. These demonstrate the most potential due to supply and demand imbalances and yields that can be achieved. Generally, the influx of students has not been matched by an increase in beds, increasing demand for existing stock. Universities such as Bristol, Manchester, Birmingham and Nottingham rank well across all league tables. That’s not to say a good university ranking translates directly into a good investment though. Many other factors are at play such as the availability of accommodation and its quality, prices, planning restrictions and projected future admissions. Demand for student accommodation and competing developments Having a consistent demand is key to achieving good occupancy levels and rental yields. Investors should look at towns and cities with strong performing universities where admissions are increasing year-on-year. It’s not just about student numbers though. If student numbers are increasing but there are enough developments to accommodate them, your property will face tough competition from others as students will have more choice. If you have set your sights on a particular city, your next step would be to examine other student developments in the area. Although almost all areas in the UK are seeing an increase in demand to one degree or another, the demand hasn’t risen equally and in some cases the number of beds being built has outstripped demand.   Source:  JLL Student Housing Report The midlands has one of the most drastic contrasts between increase in demand and increase in beds, with demand increasing by 37,895 vs a 10,662 increase in beds. This is likely why places such as Loughborough and Nottingham fare so well on the Savills Student Development League Table as they are home to prestigious universities with fewer student beds compared with demand. You should also consider the potential number of students who will apply to study in a city. This is not only dependent on the rankings of the universities in the city or how many universities are based there, but also how far people are willing to travel to attend it and the pool of potential candidates. Most domestic students only really move a short distance away to study. Universities such as Durham and Exeter  recruit around 70% of their students from over 100 miles away and this means that a) they will have a more pressing need for accommodation and b) there is a larger pool of potential candidates applying. International students and their need for student accommodation When assessing the need, also consider the proportion of international students. Unlike many domestic students who live close to their university, it would be physically impossible for them to commute for lectures. There is usually a correlation between how well universities rank and the percentage of international students enrolled as these universities enjoy worldwide acclaim. The universities with the highest proportion of international students are as follows: University College London: 12,742 The University of Manchester: 10,880 The University of Edinburgh: 8,138 Coventry University: 7,658 The University of Sheffield: 7,486 King’s College London: 7,054 The University of Liverpool: 6,919 University of the Arts, London: 6,689 The University of Leeds: 6,566 The University of Birmingham: 6,498 The importance of international students and occupancy levels cannot be underplayed. Around 94% of international students rent, compared to 70% of UK-based students. This equates to around 250,000 international students renting across the UK each year. 79% of international students that rent do so in the PBSA sector, and they are much more likely to remain in the same accommodation for a number of years, providing steady yields for investors.  International students are much more willing than UK-domiciled students to pay for premium features such as 24-hour security, onsite gyms and cinema rooms.   The percentage of international students could also influence what sort of student accommodation you choose to invest in. For example, you might choose a more premium  student accommodation investment in Sheffield to accommodate the high number of international students in the city who would gravitate towards a property with modern features. HMOs are not as appealing to international students and therefore might not do so well in a city that attracts a lot of people from overseas. In conclusion, there are many fundamentals you would have to consider before choosing to  invest in student property. Not only would you have to study the current supply and demand, you will also have to research upcoming student developments, how many will need to be refurbished and therefore taken out of service, and the ability of the universities in the area to attract new students. You’d then have to analyse the student demographic and match them with a preferred student accommodation type. Choosing to invest in student property means a lot of research and we understand it can be quite overwhelming, especially to someone who has not invested before. Whilst real estate providers such as Savills and JLL release research papers weighing up each city’s investment potential, it can take a long time to effectively go through all the data and pick an investment that works for you. Here at One Touch Property we offer  student accommodation investments that have been scrutinised by our in-house investment analyst. We also offer other  UK property investment opportunities or you could simply keep up to date with  property investment news and get in touch when the time is right.

Landlords are finding it increasingly difficult to make a profit through buy to let property due to additional taxes levied and the scrapping of mortgage interest tax relief. The government has made buy to let a less attractive option and due to the difficulties, between 24% – 38% of landlords will consider selling up. This is despite the lowest amount of rental reductions ever according to ARLA and a lack of supply across a significant number of the 390 local authorities across the UK. Where opportunities exist The student property sector has been a favourite amongst investors for several years. In 2019, £8 billion of transactions were conducted in the sector, indicating that the appetite for student property is not subsiding. The two-year work visa after international students graduate will have a positive effect and was introduced to address the fall in international student applications. Over the next decade the government wants to increase the number of international students studying in the UK to 600,000. Sir Dominic Asquith, British High Commissioner to India, said: This is fantastic news for Indian students, who will now be able to spend more time in the UK after completing their degree, allowing them to gain further skills and experience. The UK is home to some of the best higher education institutions in the world and continues to welcome international students. I’m delighted that numbers of Indian students coming to study in the UK are constantly increasing, having doubled over the last three years. Last year alone we saw a massive 42% increase. Investing in Student Property through shares There are various investors platforms like AJ Bell where UK investors can purchase shares in student accommodation a REIT like LSE:DIGS which has recorded 37% increase value since March 2019 and pays a yield of 3.04% OR LSE:ESP with 9% growth since 27th March 19 and pays a 5% dividend yield. Unite Group the largest listed student accommodation provider in the UK recently acquired the Liberty Living portfolio PLC for £1.4 billion in Q4 2019. The confidence that Unite has placed in the student accommodation sector to make the purchase is certainly an indication of the future profitability of the student property sector, with Knight Frank estimating that the industry is worth £53bn. Further confidence is indicated as in February 2020 Blackstone has agreed to purchase IQ Student Accommodation from Goldman Sachs and Wellcome Trust. Unite also announced that the value of both its associated funds rose during the third quarter of 2019. Its property portfolio was independently valued at £2.45bn, an increase of 0.6%. To June last year, London-focussed student accommodation real estate investment fund GCP Student Living bucked the broader commercial real estate market and reported a 14.8% total shareholder return. With large companies and trusts making such profits, it is no wonder the sector is becoming appealing to individual investors. Investing directly into student property Some investors prefer to own property directly rather than take out shares in a company. The good news is that they can purchase student property investment without having to pay stamp duty as it is commercial property under the £150,000 threshold. Property investment companies like One Touch Investment source properties within the best student towns and cities. One student property investment example is The Mill in Lancaster. Lancaster University is consistently rated in the top ten across all the league tables and attracts a large proportion of international students due to its prestigious reputation. Units in The Mill start from £85,000 and an 8% yield is guaranteed for five years. Another popular student city is Sheffield because of its vibrant nightlife, excellent universities and affordability. Trippet Court is a student property development in Sheffield’s city centre. It is located just a ten-minute walk away from Sheffield University and a thirteen-minute walk away from Sheffield Hallam University. Trippet Court also offers an 8% net rental yield for five years but has a slightly lower entry point at £64,950. Investors would typically purchase student property off-plan with stage payments over the development period of twelve months. This makes the cash investment amount more manageable for the average investor. For those that prefer to invest in property that is already complete and generating income, we have completed student property units in Liverpool. The units are priced at an affordable £54,500 and generate a 7% rental yield per annum. Investing in care homes The UK has an ageing population and does not have the facilities to accommodate it. The UK also does not have the resources to build new care facilities and is becoming increasing reliant on private companies to bridge the gap. Demand is expected to rise by 9,000 care beds per year whereas the current build rate is 5000- 6000 care home beds per year. These statistics alone prove that there is a sustainable need for care beds from private companies. The problem with the lack of care home beds is only compounded by Britain’s ageing population. The number of over 85s is set to double within the next 25 years, new data from the Office for National Statistics has shown. Investing in care home REITs Target Healthcare REIT only invests in modern, purpose-built care homes which it leases to experienced operators across the UK thereby providing a diversified tenant and geographical spread and income mix. The current yield is 5% less performance fees and some projected capital uplift. Octopus healthcare is a closed fund which invests in elderly care homes and specialist healthcare such as GP surgeries. The fund has shown steady earnings growth and continues to attract capital. Purchasing a care home room Investors can purchase a room in a care home facility. A developer would usually buy the property and allow investors to purchase rooms for a set cost. Then the developer would put a management company in place who would undertake the day-to-day running of the facility. The investor would usually receive a set yield for a certain number of years. After that time a buy back option is offered where the management company can either buy back the unit from the investor at 125% of the purchase price or a new contract is negotiated between the investor and the management company. Benefits of investing in the care home sector The benefit of care home investment is that it is hands-off. A management company is put in place which undertakes the day-to-day running of the care home. Investors do not have to worry about finding someone to occupy the room or the maintenance of it. It is also classed as a commercial investment and stamp duty is not applicable on commercial investments up to £150,000. As we have previously highlighted, there is significant demand for care home beds in the UK and as the government is not keeping up with that demand, they are looking to private companies to bridge the gap. Here at One Touch Property, we source care home investment opportunities in areas with the highest demand, allowing for good occupancy levels and rental yields for investors. We think it is important to source care home investment opportunities with reputable developers who have a record of operating care homes successfully. One opportunity we have is Clement House in the Acklam area of Middlesbrough. Clement House is as 5* rated care home that has been operational for 20 years. Units are priced at £69,500 and investors receive a 10% net income guaranteed for 25 years. If investors wish to sell their unit before then, there is a buy back option in year 5 for 110% of the purchase price, and in year 10 for 125% of the purchase price. Duchess Gardens is another care home investment opportunity in Bingley, West Yorkshire. It comprises 85 rooms and offers an 8% rental income for 22 years. Duchess Gardens is also complete and operational, and investors can start to receive income immediately. It is also below the threshold in which buyers would need to pay stamp duty, as units are priced at £77,400. Located close to the major towns and cities of Harrogate, Skipton and Leeds, the care home is well-placed to host the elderly and allow for their families to visit them easily. It lies next to some of England’s finest countryside and enjoys a prestigious horticultural heritage. Duchess Gardens accommodates people who need 24-hour personal support and would find it difficult to cope in their own home without assistance. On site features include a hairdresser’s, day centre, cinema room and religious service. Yorkshire has been identified as a county with a pressing need for new care home facilities. Local councils in Yorkshire have recently closed or are planning to close numerous care homes, due to many being ‘outdated’ and unsuitable for the purpose which they are intended. This will allow existing care homes such as Duchess Gardens to achieve good occupancy levels and rental yields. Conclusion It is becoming increasingly difficult for buy to let landlords to make a profit on their property due to stamp duty charges and tax relief on mortgage interest being phased out. Commercial investments in the care and student sector are usually below the stamp duty threshold and the demand is underpinned by the country’s age demographic and the global standing of its universities. Returns are often underwritten in contracts and can be between 8% – 10%. As these are hands off investments investors will not have to deal with the hassle of finding new tenants or day to day maintenance as they may have to do with a buy to let, freeing up more time for them to pursue interests elsewhere.

Now that 2020 is upon us, we give our analysis on what will happen within the property market in the year ahead Property prices will increase In the 2019 general election the Conservative party won a majority. This has allowed them to press ahead with Brexit and has allayed the uncertainty surrounding it. Uncertainty within the political sphere often has ripple effects, one can be the economy and subsequently the housing market. This had a profound effect in 2019 on the property market with prices in the UK rising at a sluggish 1.4% in the year according to Nationwide building society. Now that the uncertainty surrounding Brexit has been cleared up somewhat, we expect prices to increase at a much faster rate. In 2019 we noted many adopted a “wait and see” approach and wanted to postpone buying property until greater clarity was brought to the Brexit situation. Now that we have a majority government in the UK, political issues will no longer be left in limbo for the foreseeable future. We predict that this pent-up demand will result in a surge of buying in the first half of 2020. We expect modest property price increases in 2020 and a few bodies such as The Royal Institution of Chartered Surveyors have predicted rises of around the 2% mark. We expect this will be followed by sharper increases in future years when trade deals have been negotiated. Rightmove has predicted that prices will rise more drastically in the north, and we think more specifically the north west. Movement in first-time buyers The modest increase may be encouraging for first-time buyers. Sales to first-time buyers account for roughly half of all house purchases. An increasing number of mortgage lenders are giving access to 5% deposit mortgages and lending on 40-year mortgage terms. The consistent demand from first-time buyers coupled with the shortage of supply and lack of house building should push house prices towards an upwards trajectory. Landlords to retain their portfolios During the general election, one of the main concerns we noticed was from landlords on the impact of a Labour government. One policy which was dropped just before the general election campaign was to bring in a radical “right to buy” scheme that would allow private tenants to buy their rented home at a “reasonable price”. Although this idea was abandoned, Labour were always tainted as the party that would be the most hostile towards landlords. Their housing policies such as rent controls aggravated those concerns. The Conservatives have always been the party most sympathetic towards landlords. It is understood that their new policies and what they will announce in the Spring Budget will not have as harsh ramifications for landlords. Currently we are aware that new legislation will mean properties with an energy efficiency rating of F or G will not be able to be rented out, and landlords will no longer be able to claim tax relief on mortgage interest payments. Around 52% of landlords are hopeful that they will see an increase in their rental yields this year, indicating a renewed enthusiasm for the sector. In conclusion, we feel that the conclusive general election result and certainty that comes with that will provide a boost to the property market. Although Brexit is a cloud which hovers over the economy, we can only see property prices increasing as greater clarification is achieved. There is still a demand for property in the UK, and the government’s lacklustre attempt at housebuilding will only strengthen the demand. Although house building to June 2019 was at an 11-year high at 170,000, it still falls way short of the target set by Theresa May’s government of 300,000 new homes per annum. We feel as though areas in the north of England where prices are lower provide the best opportunities for investors. Because of uncertainty, we understand that people are not wanting to invest vast amounts into the property market. There is a preference for buying properties at lower values where there is scope for more capital growth. For example, property prices in cities such as Birmingham are predicted by Knight Frank to increase by 12.5% in the years to 2022. The north west is predicted to see the strongest growth, with prices increasing by 24% according to forecasts from Savills. With the political situation in the UK calming down somewhat, but with property prices not quite accelerating, we feel like now is the ideal time to consider UK property investments. We offer a range of Liverpool buy to let investments, which is the area forecasted to have the strongest growth. We also have investment opportunities in other northern cities, such as this buy to let investment in Leeds city centre. For further 2020 UK property market predictions, see our best places to invest in UK property in 2020 article.