30 Nov

Liverpool Rents Set to Rise to £982 pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Liverpool peaked at 1.9%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Liverpool rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Liverpool rents will regain their upward trend and continue to increase as demand for Liverpool rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Liverpool). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Liverpool, that Liverpool landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Liverpool buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Liverpool landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin).

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth.  It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Liverpool? In my considered opinion,

Rents in Liverpool over the next 5 years will rise by 9.3%, taking the average rent for a Liverpool property from £899 per month to £982 per month.

To put all that into perspective though, rents in Liverpool over the last 12 years have risen by 15.2%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Liverpool economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

In the past, making money from Liverpool buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Liverpool property market, as a Liverpool landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Liverpool, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Liverpool Property Market blog www.liverpoolpropertyblog.com

29 Nov

1 bedroom apartment for sale Kings Dock Mill, City Centre, Liverpool L1 8DW

I’ve just been doing my weekly property search, and noticed this modern one bedroom apartment in L1 in the ever popular development, Kings Dock Mill. This property is being marketed at £100,000, which is a very reasonable price compared to similar properties in this area.

The property is situated in Liverpool City Centre, in the heart of the Baltic Triangle. Walk minutes from this development and you will find yourself in the centre of Liverpool One, and just a little further is the Albert Dock! This is a very desirable area for a variety of tenants, and in my experience, this development in particular attracts professionals, students and even small families!

The apartment briefly comprises of a hallway, an open plan lounge/dining area complete with a modern kitchen, and Juliette balcony, one double bedroom and a bathroom. The property is secure and benefits from fob entry and a concierge at the entrance.

This property is currently tenanted to young professionals who is tied in until February, bringing back a rental income of £6,900 per annum. This figure secures an excellent gross yield of 7%! This property truly is a fantastic investment for anybody looking for a low maintenance investment with immediate return and a very high potential for capital growth!

Click here to view the property.

If you want any information or advice on this property or any other properties, then contact me on adamr@liverpoolpropertyblog.com

23 Nov

Increase in Interest Rates to cost Liverpool Home Owners £188.22 a year

Liverpool homeowners will be among those affected by the latest rise in the Bank of England interest rates. The first increase in 10 years; they have just been raised from 0.25 percent to 0.5 per cent. This uplift comes as inflation hits a 51-month high of 2.9 per cent whilst the national unemployment rate is at an all-time low of 4.3 per cent.

Interestingly, the Governor of the Bank of England has indicated that the interest rate is likely to increase again over the next couple of years, but Mr Carney said mortgages and savings would not be affected in the short term. However, look at all the big banks and just about all of them have increased their standard variable mortgage rate..

The average Liverpool mortgage is £75,288

I have to ask by how much Liverpool homeowners (on variable rate or tracker mortgages) will see their repayments increase?

In the L1-19 postcodes there are 50,363 homeowners with a mortgage, of which 21,636 have a variable rate mortgage (the remaining have fixed rate mortgages). The total amount owed by those L1-19 homeowners with those variable rate mortgages is £1,628,925,548, meaning the average monthly mortgage payment for those home owners on variable rate mortgages before the interest rate rise was £587.04 per month and now its £602.72 per month … meaning

The interest rate rise will cost Liverpool homeowners on average an extra £188.22 per year

Whilst this is the first raise in interest rates in over 10 years, it must be noted it is at a significantly low level compared to figures in the 1970s and early 1990s. Many of my readers talk of interest rates at 17 per cent when Sir Geoffrey Howe increased them to try and combat the hyperinflation (from the fallout of the financial crisis that hit Britain in the 1970’s) and Norman Lamont in September 1992 with the infamous Black Wednesday crisis, when interest rates were raised from 10% to 15% in just one day.

So, what will this interest rate actually do to the Liverpool housing market?

Well, if I’m being frank – not a great deal. The proportion of Liverpool homeowners with variable rate mortgages (and thus directly affected by a Bank of England rate rise) will be smaller than in the past, in part because the vast majority of new mortgages in recent years were taken on fixed interest rates. The proportion of outstanding mortgages on variable rates has fallen to a record low of 42.3 per cent, down from a peak of 72.9 per cent in the autumn of 2011.

If more Liverpool people are protected from interest rate rises, because they are on a fixed rate mortgage, then there is less chance of those Liverpool people having to sell their Liverpool properties because they can’t afford the monthly repayments or even worse case scenario, have them repossessed.

However, and this will be of interest to both Liverpool homeowners and Liverpool buy to let landlords …

.. for every 1% increase in the Bank of England interest rate, it will cost the average Liverpool homeowner on a variable rate mortgage £62.74 per month

So, what next? Because UK inflation levels are at 2.9 per cent (the country’s highest rate since April 2012) and the Bank of England is tasked by HM Government to keep inflation at 2 per cent using various monetary tools (one of which is interest rates) – you can see why interest rate rises might be on the cards in the future as increasing interest rates tends to dampen inflation.

Now of course there is a certain amount of uncertainty with regard to Brexit and the negotiations thereof, but fundamentally the British economy is in decent shape. People will always need housing and as we aren’t building enough houses (as I have mentioned many times in the Liverpool Property Blog), we might see a slight dip in prices in the short term, but in the medium to long term, the Liverpool property market will always remain strong for both Liverpool homeowners and Liverpool landlords alike.

20 Nov

1 bedroom flat for sale Portside House 13-15 Duke Street, Liverpool, L1 5AP

I’ve just spotted this one bedroom apartment in L1 at the fantastic asking price of £96,500.

The property lies in the heart of Liverpool City Centre, and briefly comprises of a hallway, an open plan lounge/dining area complete with a modern kitchen, one double bedroom and a bathroom.

The property sits on the popular Duke Street, just a stone throw away from Concert Square and minutes away from the ever famous Albert Dock.

Looking at other prices in the area, this property has been very reasonably priced. There have been 6 properties in this award winning development within the past 3 months with an asking price of £110,000. The property appears in good condition, and I would expect this property to let out very easily, securing you a nearly instant return.

I would expect this property to attract young professionals or students due to its prime location. The property could expect to receive a rental figure between £550-£600pcm. These figures will secure an impressive 7.5% gross yield, along with a high potential for capital growth!

Click here to view the property.

If you want any information or advice on this property or any other properties, then contact me on adamr@liverpoolpropertyblog.com