Young Index Suvery Shows an Appetite for Investment

Young Index Q2

Increasing numbers of investor landlords say that they are considering purchasing additional investment assets during the next 12 months; a reversal of the previously declining trend seen since the end of 2009.  London leads the way in terms of location with 46.3% of investors considering adding a London property to their portfolio, an increase of 13% on the previous quarter and the largest swing in sentiment seen since Young Index began in 2007.

Appetite for additional PRS assets outside of the capital also grew in the second quarter of 2011, although lags far behind London.  During Q2, 13.3% of landlords indicated that they are considering purchasing additional PRS assets outside London over the coming 12 months, an increase from just 9% in the first quarter of the year.  Appetite for PRS assets in London has recovered to the level previously seen this time last year, but property outside the capital has not yet regained the same level of appeal. (See graph below).

What Mortgage Should I Get?

With the economy slowly climbing out of recession, millions of homeowners with mortgages are facing a dilemma. With pay rates on mortgage products at an all time low, is it time to take advantage and either fix your mortgage for the long-term or opt for the cheaper tracker rate linked to Bank of England base rate?

Many are currently holding out on the Standard Variable Rate (SVR) with their current lender, but with borrowers able to switch mortgage, often for a minimal cost, the more shrewd borrowers can shop around now.

Results: Post-budget financial standing

In our inaugural weekly poll on Monday we asked: ‘Following the budget, where do you expect to stand financially at the end of the tax year?’

The results were perhaps unsurprising given the budget’s focus on deficit reduction and austerity measures…

No respondents expect to be better of, while 76% expect to be worse off as a result of the Chancellor’s changes.  A small number, 9.5%, of voters expect to be neither better nor worse off, staying in roughly the same financial position over the next twelve months.

15% claim that it is too soon to tell; there are clearly the optimistic ones!

Goodbye MIPIM, Hello London

View Neil Young’s profile

My MIPIM 2011 is over, and I am back in the office. So, how was it?

As ever, there was the mix of seminars, networking, events and meeting people – some new, some from the past. Visitor numbers were up 6%, and there was an array of stands from lots of cities with buildings planned dotted all over them. The UK was the country of honour this year, although from what I saw this seemed to be read as the Republic of London not the UK.

There seemed to be a realism around, that the market/lending environment has stabilised and it will stay at the current level for sometime – I tend to agree with this. Lenders were talking about lending on cashflow, so not the speculative lending of the past, but back to focusing on where the money will be coming from to pay the loans/bills. Not rocket science.

Buy-to-Let Lives On

There was an article on the Sunday Times yesterday saying how Buy-to-let lives on. To me this seems a bit of a non story.

Over the last few years commentators have been speculating that buy-to-let does not have a future. Do these people not take note what is happening in the real world.

A few months ago we at Young Group wrote a paper which looked at the demographics of the UK going forward. One of the most obvious findings was the increase in ‘solo’ households – in 2006 it was 6.8 million, forecast for 2031 by the Communities and Local Government is for it to rise to 10.9 million, a 60%+ increase. This is driven by a selection of factors, including increased immigration, people marrying later, higher divorce rate, and importantly individuals wanting greater flexibility.

These points coupled with a growing population/households (in the same 25 year period, UK households are set to increase from 21.5 million to 27.8 million), lead to a need for more housing. However, many of these groups are unable to afford to buy – especially with the current difficulties in raising funds – therefore they look to the rental market.

The term buy-to-let came about in the late ’90′s when the Council of Mortgage Lenders (CML) worked with some lenders to offer more widely investment mortgages. However, there were many investors who had been doing this for years, it was not a new phenomenon but one that in many ways was just a case of rebranding.

For all the years I have been going to property events (MIPIM, Property Week’s Resi, etc) there has been a lot of talk about institutions such as Aviva, Legal & General, etc investing in residential property as was the case early in the last century. Apart from a few funds this has not materialised. It does make sense for them to invest in this asset class – and many are currently evaluating this as an option – but no action has taken place.

This has to be the biggest asset class where the individual investor has greater exposure than institutions. Despite the headlines of the last few years most who have invested in residential property are committed to it. Our recent Young Index survey shows that 98% of investors surveyed intend to hold for the next 12 months, with almost half planning on holding for at least the next 10 years. There are good returns to make out of this sector, seeing it as a long term investment is important.

So, let’s stop trying to kill off one of our oldest and most fundamental industries, and encourage it, as it is paramount for the future growth of the economy.