More Investors See Property As A Pension

With a growing number of people becoming disillusioned with pensions and bank saving rates at an all-time low, more investors understandably now see their properties as a means of funding future retirement, research shows.

According to a survey conducted by BDRC Continental, 61 per cent of landlords plan to live off the rental income from their investment properties, 20 per cent will sell some of the properties in their portfolio, whilst five per cent intend to dispose of all of the properties in their portfolio to fund retirement.

Mark Long, director at BDRC Continental, said: "Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future. On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy."

With research showing tenant demand increased by seven per cent in the third quarter of this year and average yields increasing 0.5 per cent to 6.7 per cent, it is not surprising that many private landlords view property to be a safer bet than other investments such as pensions.

Adam Feather, managing director of Robert Anthony estate agents, says that his company has seen a sharp increase in the number of people looking to invest in properties in the capital, particularly from people overseas, with houses and flats for sale in Little Venice, Regents Park, Primrose Hill, Marylebone, Hampstead and Baker Street proving particularly popular.

"Property prices in central London and the areas surrounding it are expected to edge up faster in the next few months as the supply and demand imbalance becomes even more pronounced," Feather said. 

The problem facing many tenants is that the supply of houses and flats to rent in Primrose Hill, Regents Park, Marylebone, Baker Street, among a host of other highly desirable areas are in short supply, which in turn is pushing rents higher as a consequence; an attractive proposition for existing landlords and investors looking to acquire properties in those areas.

Andrew Ellinas, director at leading estate agents Sandfords, commented: "We expect an influx of both investors and immigrants including French bankers and entrepreneurs coming over here for the more business-friendly environment. This invasion on two fronts will boost both ends of the market, with lettable flats at the lower end being snapped up by investors and large family homes being in demand from business people looking for somewhere to live." 

Any investor looking to take advantage of high demand for houses and apartments to rent in Marylebone, Primrose Hill, St Johns Wood, Baker Street, among other highly desirable districts, by acquiring property, may wish to consider Neil Yong's ‘10 minute rule'.

Young, founder of property investment firm Young Group, has personally accumulated a private property portfolio collectively worth around £10 million. Geographically, all of Young's investment properties are located in London, where prospects for capital growth and high rental returns are generally good. He says he would not consider buying outside of London or even abroad as it does not fit in with his strategy.

Young has adopted what he refers to as his "10 minute rule", which means that he only buys residential properties which are located within close proximity to good transport links and amenities.

"I'm primarily only interested in properties that are situated within 10 minutes walking distance to good transport links, particularly a tube station, food stores, bars and restaurants, as these facilities are generally in high demand from tenants."

Wherever you choose to invest in property, always ensure that you conduct all necessary due diligence prior to investing.

Rents In London Expected To Continue Rising

It is that time of year again when estate agents, and other property professionals, predict what the property market in London will look like in 2013, and most experts, whether Mayfair estate agents or Primrose Hill estate agents,  agree that property values and rents are likely to rise further next year.

With the UK economy now technically out of recession and growing signs that mortgage lending conditions are improving, confidence in London’s property market is strengthening, with prices generally expected to increase in 2013. This follows on from a rather successful 2012, in which values rose by an average of 5.2% in the year to September, according to the latest data from the Office for National Statistics.

Just over a third of people surveyed by the Halifax recently predicted that the average UK home price will rise over the next year, led by capital gains in central London. 

Trevor Abrahamson, head of Glentree Estates, said: "We are building five per cent of the properties we need in the Capital and new development is as constrained as ever before by the labyrinthine planning processes and acute shortage of funding for property development. Therefore these factors conspire to reduce the supply whilst the demand remains steady and for this reason I don’t believe prices will ease."

Aside from higher property prices, market experts are also projecting that rents in central London will increase further next year, on the back of a shortage of houses and apartments to rent in central London.

Existing market conditions mean that rental price growth in the capital will almost certainly continue to outstrip the national average next year, according to Virginia Ewart-James, head of residential lettings at EA Shaw, a central London specialist based in Covent Garden, who estimates that rents will continue to increase at an annual rate of five per cent during 2013.

Ewart-James commented: "There is still good demand for rental properties which will continue to strengthen as London grows further as a hub and a popular place to live and work. London is still seen to have the best education in the world and remains an attractive option for studying. Students in particularly, are bringing in good budgets; often paying six months in advance, and proving to be valuable and lucrative tenants within residential lettings."

Demand is generally greatest for apartments and houses to rent in central London which are priced under £1,000 according to Marsh & Parsons.
 

"The more buoyant sub £1,000 a week market has seen a strong performance," said Peter Rollings, CEO of Marsh & Parsons. "Based on current trends, Marsh & Parsons expect rents in this segment of the market to rise by a further eight to ten per cent in 2013."

The hike in rental values in central London has convinced many homeowners thinking of selling their property to let their home instead, according to leading estate agents Sandfords.

Julia Garber of Sandfords said: "High rents have persuaded many property owners to remove their flats and houses from the sales market and let them out instead.

"Landlords can still expect excellent returns on their investment, but our advice is to be flexible on the rent to prevent extended voids."

Until there is a major rise in house building activity, it is highly unlikely that the supply of homes in the capital will never meet growing demand for properties which could result in further rental price rises beyond 2013.