How do you know which markets are worth investing in?
We hear this question often and wish there was a simple response. Unfortunately, that’s not the case. When our team of investment experts reviews global markets, there are all sorts of factors that contribute to their evaluation; population growth, infrastructure, and current levels of housing demand are just a few of the key points they research. One must also bear in mind that markets need to be reassessed each year, as they are constantly changing.
It is this careful process which makes it all the more thrilling when we encounter a new market that holds great potential for our clients. This year we’re very excited to expand our offerings for buy-to-let properties in Manchester, a region that continues to go from strength to strength.
In recent years we’ve seen impressive development across Greater Manchester, demonstrated most simply by the 2.4% GVA growth per annum forecast for 2017-2037. Increasing levels of investment, thriving economic growth, and a vibrant cultural scene make this region one that property investors cannot ignore. Forecasts for the region’s property market are strong, with population growth and regeneration initiatives driving prices upward – alongside a demand which is relentlessly increasing.
It is these facts that make the county, including the cities of Manchester and Salford - as well as smaller, developing towns such as Stockport and Altrincham - a key region within our 2019 UK investment strategy.
A leading destination for international business, with a thriving population of 2.8 million, Greater Manchester continues to attract new residents. Already the second most populated urban area in the UK after London, Greater Manchester is projected to grow by an additional 7% between 2023-2035, to realize a population of over 3 million.
Over 100,000 students attend Greater Manchester’s four universities each year, making the region home to one of Europe’s largest student populations. The area also has one of the UK’s highest retention rates for students, outside of London, contributing greatly to the workforce within the Northern Powerhouse area. Manchester has seen an increase in employment compared to the previous year. The employment rate in February 2024 was found to be 73.6% (ages 16-64).
The growing number of young residents, combined with the quality of the area’s higher education institutes, led to Manchester becoming the first UK city to be shortlisted for the award of European Youth Capital, in 2018. This vast University talent pool has also proven to be a major pull factor for international companies looking to expand in the UK, making it a lucrative investment area for buy-to-let properties in Manchester.
Manchester solidified its position as a centre for investment and economic growth by topping Large UK City for Foreign Direct Investment in the FDI Intelligence European Cities and Regions of the Future 2024. Numerous new businesses have been attracted to the Manchester city region - including Amazon, GCHQ, and Jaguar Land Rover. Amazon has selected Manchester as the location for its first major UK hub outside of London, taking over 90,000 square feet of office space and creating 600 jobs.
Booking Holdings, the technology company behind the hotel website Booking.com, has also recently focused on Manchester, investing GBP100 million and acquiring 220,000 square feet of offices. Commenting on the move, Ian Brown, CEO of Booking.com’s transport division, said, ‘We are committed to the city of Manchester and its future as one of Europe’s largest and most important tech hubs.’
The growth in foreign investment is another reason why buy-to-let property investment opportunities in Manchester should be highly considered, as they could be a way to grow your capital quite rapidly.
Manchester is ranked in the top five in the Top Large UK city overall, Top Large UK city for Economic Potential Category, and Top Large UK City for Business Friendliness. Graded on both local and international travel connectivity, as well as the overall quality of infrastructure, the area’s recent developments make the ranking well-deserved.
Manchester Airport, the UK’s largest regional airport, handles over 22 million passengers a year and offers direct flights to international destinations including New York, Paris and Qatar. The region recently secured a direct air route to India and 2018 marked the second anniversary of a direct Beijing air route, which has already increased export sales from Manchester to China by 41%, up to GBP 1.29 billion.
Given the rapid rate of population growth, the government has prioritized improving the county’s transportation infrastructure. Currently, more than 5.6 million journeys are made across Greater Manchester’s transport network each day and this number is only expected to increase.
An impressive 2040 Transport Strategy was established in 2015 to help manage the region’s growth. Improvements to the Manchester Metrolink, the largest transport network in the UK, as well as bus routes and road repairs, have been outlined.
Greater Manchester sits at the core of the GBP7 billion Northern Powerhouse initiative, announced in December 2014. Aimed at drawing attention to the north of England and boosting local economies, this project is focused on business, cultural, and infrastructure developments. The plan has specifically allocated GBP98 million in funding for cultural and leisure aspects in Manchester and GBP3 million for housing within the city including buy-to-let property in Manchester.
Following the announcement of the Northern Powerhouse initiative, impressive growth has been seen within Manchester. The city’s NOMA area is undergoing a complete renovation, using GBP800 million in funding to create 2.5 million square feet of office space, 1,158 new homes and 400,000 square feet of shopping and leisure facilities.
The city will also unveil the Manchester Metropolitan University School of Digital Arts (SODA) in 2021. The university has received a GBP35 million investment to realise the innovative school, set to accommodate 1,500 students each year.
As Greater Manchester continues to grow and welcome new residents, the area’s housing market has struggled to keep pace with demand. This has led to an undersupplied market and rising sales and rental prices.
The GMCA 2018 Greater Manchester Spatial Framework outlines that the county requires a minimum of 201,000 net additional homes to be developed from 2018-2037, to match the area’s demand.
The Greater Manchester Strategic Housing Market Assessment sets out an annual housing requirement figure of 10,583 new homes per annum for the whole of Greater Manchester. GMCA, however, has reported that since 2008, only approximately 3,000 new homes have been built every year in Greater Manchester, resulting in a shortfall of more than 8,000 units.
In reaction to this undersupply, we’ve seen prices across the county rise significantly. Between January 2012 - April 2024 the cost of flats in the county increased from an average price of GBP99,299 to GBP242,000. This is a positive outlook for all buy-to-let property investment opportunities in Manchester.
Altrincham is a modern market town with a thriving business community. Attracting some of the highest property prices outside of London, the town is an established area for residential investment. Significant public and private funding has enhanced the area in recent years, with a new general hospital, large retail outlets, and a multi-screen cinema being realized.
Known for its affluence and younger demographic than the rest of Trafford, recent developments are also helping entice new residents meaning that there is a greater need for buy-to-let properties in this Manchester suburb. In 2018, Altrincham was ranked as the best regional place to live in the UK.
Stockport, a town located in the south of Greater Manchester, is one of the region’s most prosperous boroughs. It has a GBP8 billion economy, over 13,000 operating businesses and a growing population of 295000.
Positioned only 11 km south of Manchester’s city centre, the town’s investment appeal is continually increasing. Stockport offers a high quality of life and excellent connectivity both with the rest of Greater Manchester and other regions and significant inflows of government funding are only adding to its established status and reshaping the town.
Located adjacent to Manchester’s city centre and home to a population of 298,270, Salford is a major city in the North West.
Connected by exceptional road and rail networks, Salford’s population and investment appeal continue to grow. Since 2001 the city has seen a 29% increase in population based on Oxford Economics data, and in 2022 alone there was a 9.6% increase in employment, drawing students and young professionals who require the convenience of a central, vibrant location at a lower price point than Manchester city centre.
Salford’s present housing supply is unable to match the city’s growing demand meaning that there is a growing need for buy-to-let properties in Manchester town. Between 1 April 2015 and 31 March 2035 there will be a net increase of at least 34,900 dwellings in Salford, an average of 1,745 dwellings per annum. Currently, 16,000 new homes have been built in the city over the period 2014-2023.
Leeds continues to thrive as a powerhouse in the north, becoming even more prosperous thanks to a GBP500m investment in what is one of Europe's largest regeneration projects. Leeds future developments aim to take the city to greater heights of success to match other successful cities around it such as 谢菲尔德, 曼彻斯特 and 纽卡斯尔.
Leeds is already home to many high-profile corporate headquarters and offices, including Asda’s National HQ, Sky, KPMG, and Call Credit. It is also a renowned location for start-up friendliness, particularly in the growing sectors of Financial Services and Technology. Over 1,350 digital companies are currently located in the region, collectively employing over 10,000 people.
As the city centre continues to grow organically, with many Leeds-based future developments planned for the coming years. Southwards, due to these high-growth industries, the region of South Bank is taking centre stage. A massive GBP500m regeneration initiative has now been approved to double the size of the Leeds city centre by redeveloping this ex-industrial area south of the River Aire. With this record level of investment secured for this Leeds future development, South Bank will soon be transformed into a ‘globally distinctive’ mixed-use and sustainable destination for creativity, learning and leisure.
At the size of 350 football fields, it will be one of the largest Leeds city centre future development regeneration plans in Europe, capturing the growth of Leeds for the coming decades. The proposed activities cover 253 hectares of land where 8,000 additional homes will be provided and over 35,000 jobs created by 2028. It will be the biggest change the city has seen in more than a hundred years, reconnecting the historic suburbs with Leeds City Centre through sensitively restored buildings and better transport links.
There are lots of plans for the South Bank Leeds future developments, including key developments such as Leeds Dock and Tower Works. All of these development initiatives aim to allow the city to expand and grow exponentially.
Currently, works are progressing on-site to regenerate the historic Hunslet and Victoria flax spinning mills. With phases 1 and 2 of the redevelopment already fully sold and completed, phase 3 is now under construction.
One of the first completed initiatives under Leeds future developments was Granary Wharf in 2009. An award-winning development on the canal with over 300 apartments across Waterman’s Place and the iconic Candle House.
Sustainable development company, Citu, has unveiled its vision to create more than 500 new low-carbon homes alongside eco-friendly manufacturing and leisure facilities in a GBP125 million scheme within the climate innovation district.
This 15-acre area was previously home to an abundance of iron, steel, glass and chemical works which played a vital role in the industrial and engineering revolution. Through harnessing the latest technology, this Leeds future development will be a significant catalyst towards the creation of a modern, sustainable city centre.
In 2015, Vastint acquired the 22-acre site of the former Tetley Headquarters.
Anchored by proposals for a large city park, Vastint has outlined planning permission for a mixed-use development comprised of residential units, 85,000 sqm of B1 office floorspace and 15,000 sqm of flexible commercial use floor space. Construction for this Leeds future development is yet to commence.
Tower Works is a mixed-use Leeds future development scheme made up of the 3 iconic Italianate Towers planned for commercial, residential and public use.
CEG is currently redeveloping an 8.69-acre derelict site that will serve as the new gateway to the city centre from the South West. The now-vacant location will become a vibrant mixed-use space for leisure and commercial use with site clearance having commenced in early 2019.
CEG has also acquired the Grade I listed Temple Works and is now developing comprehensive Leeds future development plans for a 20-acre + area.
To reinvigorate Leeds Dock, Allied London has contributed significant investment into maintaining their Leeds future developments. Plans include creating a major public realm programme and an upgrade of the retail and leisure offers in the area.
Several notable media companies are located here, including Sky, together with many other businesses in the creative and digital sectors.
With approximately 10,000 students studying in the area each day, South Bank is home to the University Technical College, the Ruth Gorse Academy, Leeds City Printworks College and Leeds College of Building making up the Educational Quarter. Although not a development this area is a lucrative addition to the Leeds property market.
As the region of the South Bank Leeds future developments become part of the city centre, it will also see better walking routes and more efficient public transportation. Investment into infrastructure has been made to transform the road network and waterfront, improving neighbouring communities through new public parks, flood protection, and super-fast broadband.
Having climbed to over 6% in Autumn in the wake of former Chancellor Kwasi Kwarteng’s mini-Budget last year, mortgage rates have now fallen three months in a row despite the Bank Rate moving in the opposite direction.
According to Forbes, the average 2-year mortgage rate has dropped to 4.28% today, whilst 3-year and 5-year fixed-rate mortgages are pegged at 4.94% and 4.75% respectively. For lower loan-to-value remortgages, options are available at below 4% - an incredible improvement on the average rate of 6% in November 2022.
In more good news, the average amount of time a mortgage is available before it is withdrawn has increased to 28 days, the highest level since March 2022, and up from just 15 days in January. Product choice has increased as the market stabilises with 4,341 different deals currently available compared to 2,258 options in October 2022.
Mortgage rates spiked last year as a result of central banks increasing borrowing costs to curb demand and mitigate hyperinflation. The steep rise in borrowing impacted the rate at which lenders borrow money on fixed-rate deals. This resulted in mortgage lenders reducing and repricing products, which led to a decrease in the number of mortgage options available to buyers. Only 2,258 products were available in October 2022.
According to the most recent Office for National Statistics (ONS) data, average house prices have fallen by 0.6% over the year leading up to January 2024.
The UK Government reports that the average house price in the UK for January was GBP281,913, which is GBP2,000 less in real terms compared to the same period a year ago.
However, many experts predict house prices will rise again in the second half of 2024 as green shoots have already been seen across some marketing in the latest Zoopla report. A potential silver lining emerges in the latter half of the year. Forecasts suggest a decrease in mortgage rates during this period. This could reignite some buyer interest, leading to price increases in the second half.
Think about remortgaging if you are sitting on a variable rate, the average standard variable rate is 6.84% according to Zoopla. Remortgaging to a 5-year fixed rate deal of 5.2% could reduce costs by GBP200 a month on a GBP200,000 mortgage.
There is more competition for long-term fixed-rate mortgages due to volatility, with the gap between 5-year and 2-year products currently at 0.24% - the largest margin for 5 years.
According to Zoopla, UK mortgage rates are likely to rest between 4% to 5% over the next few months, which is indeed higher than in previous years but relatively cheap in a historical context for mortgage rates. The era of cheap money is over. The good news is that lower mortgage rates will reduce any downward pressure on home prices in 2023 as more entrants will be in the purchasing market. RightMove confirmed that since March 2024, the number of sales agreed has risen by 13% compared to the same time in 2023. London has experienced the most significant surge in buyer demand, both overall and for top-of-the-ladder properties, compared to this time last year.
If you’d like to discuss your options for investing in the UK, reach out to us, and we can answer any questions you may have.
Purchasing off-plan property can be an exciting opportunity for first-time buyers in the UK. It allows you to secure a property at today's prices while enjoying the anticipation of watching it being built. However, buying off-plan comes with its own set of considerations and risks. To make an informed decision and ensure a successful investment, it's crucial to ask the right questions. In this blog post, we will explore five essential questions every first-time buyer should ask when buying property off-plan in the UK.
Before committing to buy property off plan, it's vital to research and evaluate the developer's credentials and track record. Look into their previous projects, their reputation within the industry, and any awards or accreditations they have received. A reliable and experienced developer is more likely to deliver a high-quality property on time, ensuring a smooth buying process.
Knowing the estimated completion date is crucial for planning purposes, especially if you're currently renting or have specific time constraints. Inquire about the construction timeline and any potential delays that may arise. Developers often provide an estimated completion window, so make sure you understand the associated risks and the possibility of your move-in date being delayed.
Understanding the payment terms and schedule is essential to manage your finances effectively. Inquire about the deposit amount required and when it is due. Additionally, clarify whether there are any staged payments throughout the construction process. This information will help you plan your budget and ensure you have the necessary funds available at each milestone.
At IP Global, we offer our property buyers Investment Returns Models for each development so that they can get a clear picture of their equity required and cash flow across a timeline. If you'd like to take a look at an example, reach out to us here, and we'd be happy to provide one.
Reputable developers often provide guarantees and warranties to protect buyers' interests. Inquire about the structural warranty, which covers any major defects that may arise after completion.
Additionally, you can ask about the appliances, fittings, and finishes included in the property and whether they come with their own warranties. Understanding these guarantees will give you peace of mind and ensure you're adequately protected.
Buying property off plan involves more than just the property's purchase price. Inquire about additional costs, such as legal fees, stamp duty, and service charges. Additionally, ask whether there are any ongoing management fees or ground rent associated with the property. Understanding the complete cost picture will allow you to budget accordingly and avoid any financial surprises.
Purchasing off-plan property can be a rewarding experience, but it's essential to ask the right questions to make an informed decision. By researching the developer's credentials, understanding the expected completion date, clarifying payment terms, knowing the guarantees provided, and considering all associated costs, you can mitigate risks and ensure a successful investment.
Remember, knowledge is key when venturing into the world of off-plan property, and these five questions will serve as a valuable starting point for your journey as a first-time buyer in the UK.
Seeking to get involved in buying property off-plan? We can help make it an easily manageable and highly profitable addition to your portfolio. With a proven track record of over USD3 billion invested across 18 countries, we specialise in simplifying property investment for our clients. Learn more about our process and why we're the trusted partner for your real estate journey.
At IP Global, we often get asked whether using a property management service is worth it. We've helped thousands of international landlords, and we know it can be tough when real estate giants offer soaring management fees or when local agencies aren't fully equipped to handle the needs of global investors. So, how do you find the balance – the right lettings and management partner for you? And what are our top 5 picks?
There's a common misconception that opting for cheaper options will result in higher investment returns. However, in reality, this approach often leads to potential costly mistakes, such as inadequate tenant screening. While finding a tenant may not be challenging in many UK markets due to the housing supply shortage, ensuring they are a good fit is essential.
Dealing with problematic tenants can be complex and time-consuming, resulting in periods of rental income loss due to legal proceedings. Therefore, it's important to choose a reputable property management agency that can protect your investment. Additionally, small-scale agents may lack the necessary tools for efficient management services, resulting in increased workload for you.
To help you navigate the ever-changing market, we've put together a list of the top property management firms in the UK right now.
Shelling out more than 20% of your rental income to a lettings and management agency isn't always essential for accessing essential tools, good tenant networks, and 24/7 client support which is why Complete are our first choice.
Complete Prime Residential specialises in property management and lettings, focusing primarily on international landlords while also serving domestic ones. With a large client base and over 600 positive reviews on Google, they have established a strong reputation. Their team includes multilingual staff, enabling effective communication with clients from various backgrounds.
They often manage entire property blocks, allowing them to build relationships with developers, contractors, and suppliers, resulting in cost savings for their clients. When rigorously assessing the fee structure at 10 major property management companies across London and other UK regional cities they came out on top in terms of pricing for clients.
Their services span across prominent markets in the UK, Germany, and Portugal, encompassing consultations, assistance with handovers, snagging, furniture packs, marketing and expert lettings and management. Additionally, they provide useful tools that enable landlords to manage and track tenant profiles, streamline compliance processes, facilitate efficient digital documentation for expedited tenant onboarding, and offer a platform for reporting and resolving maintenance issues around the clock to ensure tenant satisfaction.
With a real estate management portfolio worth $0.9 billion, Complete has a proven track record in letting units for international clients including securing pre-lets, resulting in high occupancy rates and minimal arrears. They offer attractive monthly rates for lettings and management services, with a London fee of 16.8% (inc VAT) and a 12% fee (inc VAT) for other UK cities. The monthly cost for a 1-bedroom apartment in London, leased at £2,000 per month, ranges from £335 to £395. This figure stands notably below the rates of other comparable lettings and management agencies, many of whom fall within the monthly fee of £415 and above category.
Find out more information or request a callback here.
Savills understands the significance of real estate, spanning from the comfort of your home to broader market opportunities. Whether you're buying, selling, or renting, Savills offers unparalleled expertise that is grounded in trust. With over 40,000 professionals across 70+ countries, they have a presence in most global markets. They listen to your needs, offering tailored solutions for your goals. While their services may come at a higher cost, their global reputation speaks for itself. Notably, their lettings and management fee is set at 20.4% of the monthly rent, with a tenant finder's fee of £840. For instance, leasing a 1-bedroom flat at £2,000, would cost around £436 per month, excluding renewal or check-in/check-out charges.
Visit their website for more information here.
For over 125 years, Knight Frank has understood the significance of decisions that involve your property. Whether you're buying, selling, or letting, they ensure they make their clients feel confident and informed about their next property move.
Knight Frank's research team provides helpful insights into global property markets, distilling complex trends, forecasts, expert commentary, and opinions into easily digestible information. Whether you're curious about your current home's value or ready to put it on the market, their reliable property valuations aid you in making informed decisions.
Knight Frank leverages technology to secure comparable prices for your property at the best time, guided by the latest market trends and thorough analysis, they help guide their clients throughout their property journey. They offer similar property management fees to Savills with a fully managed property fee of 20.4% of monthly rent (inc VAT). We have worked out that if you charge £1,000 rent per month, your monthly property management fee will be £207.
To find out more about their services, visit their website here.
source: Circa London
Circa London has expertise in residential properties in prime central London. As a trusted, independent agency, they blend traditional values with modern expertise, ensuring exceptional outcomes for each client.
Operating in two London offices and boasting partnerships in Hong Kong, Singapore, Malaysia, and Shanghai, Circa London offers local knowledge coupled with a global network. This unique positioning provides clients with comprehensive services and valuable international exposure for their assets.
Beyond geographical reach, Circa London prioritises personalised service, treating each client with professionalism and care. Whether navigating the market as a first-time investor or seeking seamless management solutions for busy schedules, clients receive ongoing guidance and unwavering support. Their commitment to fulfilling expectations is reflected in their consistent track record of leaving clients happy in online reviews.
Circa London offers competitive pricing leaning toward Savills and Knight Frank with a management and lettings fee of 19.2%. When factoring in additional fees, the monthly cost for a 1-bedroom flat rented out at £2,000 pm amounts to approximately £450.
Explore their service offerings further on their website here.
Established in 2002, MyLondonHome has carved a distinctive space within the heart of London's real estate and lettings landscape. They have maintained reliability, trust, and exceptional customer service across residential sales, lettings, and new homes sectors for over 2 decades. Their commitment to the highest standards is evident through memberships with Propertymark Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA).
MyLondonHome achieved an impressive 98.5% customer satisfaction score at the 2023 ESTAS awards – which is a testament to their resolute dedication to client satisfaction. Whether navigating the intricacies of buying, selling, renting, or letting, they support you with strategic insights and innovative technology to guide you through the journey.
When assessing MyLondonHome's fees, the calculation for the monthly cost of renting a 1-bedroom flat at £2,000 per month totals around £395, exclusive from certain fees like their £360 renewal fee.
Discover more about MyLondonHome here.
Reside operates out of their Manchester and Stockport offices. They provide a top-tier property management service encompassing all aspects, ranging from identifying suitable tenants to the day-to-day maintenance of the property. Additionally, Reside ensures good service for tenants, giving landlords the peace of mind that their investment is being professionally managed and maintained.
Reside’s experienced lettings managers start off by giving their landlords a complimentary market appraisal. From there, they offer a marketing strategy which includes professional photography, an appealing description, and essential reports shared with a vast applicant database and major property portals to secure suitable tenants. Reside provides support throughout the rental process, including drawing up agreements, managing viewings, and overseeing essential property management tasks such as rent collection, lease renewals, and routine maintenance.
Reside, Manchester, offers reasonable prices relative to their development locations with a 12% full management fee and a tenant finder’s fee of £600. Without this tenant finder’s fee included, the monthly charge for a fully managed 1-bedroom apartment, rented out for £2000 per month will amount to £340.
Find out more about Reside’s services and fees here.
Having wandered through the storied streets of York, I was amazed at a city that breathes history, from its Roman origins as "Eboracum" in AD 71 to weathering Viking invasions, earning it the name "Jorvik". York's narrative intertwines with significant historical events, playing roles in the Wars of the Roses, the English Civil War, and the 19th-century railway revolution.
Today, York stands as a living museum, where every cobblestone and ancient structure tells a tale. Owning property here isn't merely a transaction; it's a connection to centuries of tradition, a tangible piece of the city's vibrant history.
Having recently explored the enchanting town of York, I was captivated by its title as the "UK's Most Romantic Destination," a well-deserved accolade given the seamless blend of historical charm and modern accessibility that defines this heart-warming city at the centre of England. This makes York a perfect canvas for short-term rentals, tapping into a thriving market where property owners often achieve impressive yields of 5% to 10% or higher.
Making my way past the city walls into the city center, I come across the astonishing York Minster which encapsulates the city’s beauty. The accolades bestowed upon York as a top cultural hub, winning titles like "Best UK City" for history and heritage, are well-deserved. Iconic landmarks such as York Minster, the Jorvik Viking Centre, and the National Railway Museum contribute to a rich cultural tapestry, allowing residents to immerse themselves in a vibrant cultural life right outside their doorstep.
A surge of life is coursing through York's cobblestones, propelled by a transformative regeneration project dubbed one of the UK's most ambitious. Anticipating a population boom from 141,700 to 224,000-232,000 by 2032, the city's forward-thinking local plan aims to bolster housing supply with a minimum of 17,795 new homes by 2033.
However, translating aspiration into bricks and mortar has proven challenging. York averaged a meager 299 new homes annually between 2011 and 2021. So, in 2018, the city set a daring goal: 877 new homes a year, a near triple leap from its previous decade's average. Failure to bridge this gap – currently projected at 3,497 homes by 2031 – could fuel price hikes and present fantastic opportunities for astute investors.
Supported by a substantial injection of government investment totaling £132 million, York is ready for this transformative era. This funding not only contributes to the city's overall progression but also introduces over 1 million sq ft of high-quality office, retail, and leisure spaces, expected to generate 6,500 high-value jobs and provide a significant boost to the local economy.
Driving York's dynamic growth are six key sectors—finance, real estate, biotechnology, digital/IT, rail, and tourism/hospitality. These sectors significantly contribute to the city's economy, reflecting a diverse and thriving urban landscape.
The York housing market presents a unique opportunity for investors. The persistent shortage of supply has created a dynamic environment, exerting upward pressure on both house prices and rental rates. Over the period from 2017 to 2022, the market witnessed an impressive 29.2% surge in average property prices, showcasing its resilience and potential for substantial returns. The high demand and fast-paced transactions also indicate a vibrant market with opportunities for investors to capitalize on the competitive landscape, making it an attractive prospect for those seeking profitable real estate ventures.
Looking ahead, Oxford Economics forecasts a robust property market in York, anticipating a 12% growth between 2024 and 2027, outperforming many markets expected to experience more modest growth. This optimistic outlook positions York as an appealing choice for those seeking capital growth and robust returns in the property market.
The rental market in York also forecasts a continued upward trend in rents. Various areas, including student-centric neighborhoods like Heslington and Fulford, professional zones like the city center, Heslington, and Holgate, along with family-friendly regions like Acomb and Bishopthorpe, offer enticing opportunities for potential buy-to-let investors.
As I reflect on my visit to York, it's evident that this historic city is not only a treasure trove of the past but a thriving and evolving urban center ready to embrace growth, innovation, and economic prosperity in the years to come.
Investing in property is a significant decision, and choosing the right location is crucial for long-term returns. York, a historic city in the north of England, offers a range of opportunities for property investors. In this blog, we'll explore three promising areas for property investment in York: Holgate, Tang Hall, and Bishopthorpe. Each of these areas have unique characteristics and will appeal to different types of investors.
One area that has been garnering attention for its investment potential is Holgate, a picturesque neighbourhood located just west of York's city centre.
Prime location: Holgate, tracing its origins back to the 14th century, has seen remarkable growth since the late 1800s, owing much of this expansion to its close proximity to York city center. Among its historic treasures is the Holgate Mill, which dates back to 1770. While it ceased its corn milling operations in 1933, it stands tall today, operating as a flour mill and serving as a popular tourist attraction. The neighborhood also offers a host of other appealing attractions, such as the renowned National Railway Museum and a well-preserved Cold War Bunker.
Situated just a brief 10-minute drive from York city center, Holgate provides convenient access to the city's train station, offering connections to various parts of Britain. The area enjoys a robust network of public transportation, seamlessly connecting residents to the heart of the city via the A59 and serving as a vital entry and exit point via the ring road. Leeds is an easy 45-minute journey away, and the Leeds Bradford International Airport is conveniently located at a similar distance. Moreover, Holgate is on the doorstep of the stunning North York Moors National Park.
In addition to these amenities, Holgate offers delightful walks along Holgate Beck, while nearby West Bank Park and Hob Moor provide serene open spaces for relaxation and recreation. For those seeking more extensive leisure options, there are nearby attractions such as Clifton Park, Rowntree Park, and the world-famous York Racecourse.
Sports enthusiasts will find a diverse range of options, including the York Railway Institute Football Club, York Lokomotive rugby and hockey teams. The district is particularly appealing for families, as it is home to nine schools, making it a well-rounded community for residents of all ages.
Steady property value growth: Property values in Holgate have shown consistent growth over the years with the area seeing an average house price increase of 7% over the last 12 months according to OnTheMarket. This steady appreciation makes it an appealing choice for property investors seeking long-term stability and potential capital gains. The area's popularity and proximity to the city centre contribute to this trend, making Holgate a solid investment choice for those looking for sustainable property value growth.
Variety of property types: Holgate offers a diverse range of property types, from charming period homes to modern developments. This variety provides investors with flexibility in their investment choices. Whether you're interested in buy-to-let opportunities, flipping properties, or long-term rentals, Holgate's property market caters to a broad spectrum of investor preferences and budgets.
Take a look at our latest property for sale in York, Marlowe House.
Tang Hall, an evolving neighbourhood located to the east of York's city centre, offers a range of compelling reasons for property investors drawn to its regenerative nature.
Investment potential: The Tang Hall estate, once designated as greenbelt land, was acquired by the City of York council in 1921 with the aim of providing quality housing for laborers. It lies to the east of the city and consists mainly of houses dating from the 1930s.It has been experiencing significant regeneration and transformation in recent years. This coupled with increased investments in infrastructure and amenities, bodes well for property investors as it has become a very popular location for international students due to its proximity to the University of York.
Student hub: The neighbourhood of Tang Hall offers a mix of housing options, local stores, and community facilities, making it a practical choice for those seeking a convenient and accessible place to live while attending the university. With a substantial student population in the vicinity, the area is ripe for buy-to-let investors looking to tap into the consistent demand for student housing. This provides an opportunity for investors to secure a stable source of rental income.
Affordable Housing Options: Tang Hall offers more affordable housing options compared to some other areas in York. According to Rightmove, the average selling price in the area sits at around £357,296 for a 3 to 4-bed house, a 5% increase from the previous year and a 20% increase on the 2020 peak of £271,071. Flats start at £140,000. This affordability makes it accessible to a wide range of investors, including first-time buyers and those with budget constraints.
The ongoing developments and improvements in Tang Hall signal a promising future. Investors who get in early on this area can benefit from the predicted growth in property values as the regeneration efforts continue and the neighbourhood’s appeal increases.
Nestled just south of York, the charming village of Bishopthorpe presents an attractive option for those looking to buy property in York.
Desirable Village Setting:
Bishopthorpe, a charming village and civil parish, beckons affluent residents with its picturesque setting just three miles south of York in North Yorkshire, England. Nestled by the River Ouse, this setting provides a beautiful canvas for the well-to-do inhabitants. The conservation status granted to Main Street and the Palace in 1989 underscores the area's historic and architectural appeal. With a rich history dating back to the Domesday Book and the first written record of its name in 1275.
Proximity to York: Despite its village feel, Bishopthorpe is conveniently located just a stone's throw away from York's city centre. This accessibility ensures that residents can enjoy the amenities and opportunities the city provides while enjoying the tranquillity of village living. For potential investors, this balance between a calming village setting and city proximity is a unique selling point.
Steady Demand for Properties: Bishopthorpe boasts a consistent and strong demand for properties. Its desirable location and limited housing supply contribute to the area's stable investment appeal. As reported by OnTheMarket, house prices have increased by an impressive 6.8% in the past year, emphasising the region's strong growth potential. Whether you're looking to purchase a property for long-term capital appreciation or as a buy-to-let investment for rental income, the steady demand in Bishopthorpe is a great choice for investors.
When considering investing in York property, it's essential to assess your goals, budget, and target tenant or buyer demographics. Holgate offers a mix of property types and is excellent for those seeking proximity to the city centre. Tang Hall is undergoing positive changes and is suitable for investors looking for growth potential and student housing opportunities. Bishopthorpe, on the other hand, offers a unique village setting and potential for both rental income and capital appreciation.
Ultimately, the best area for property investment in York will depend on your specific objectives and financial circumstances. However, with careful research and the right strategy, each of these areas can provide excellent opportunities for property investors. To find out more about your options in York, request a consultation here.
Are you considering buying property in York? The historic city, nestled in the heart of North Yorkshire, has become an increasingly attractive destination for property investment.
With its rich history, stunning architecture, and vibrant community, York offers a unique blend of old-world charm and modern conveniences. Whether you're drawn to the best areas to live in York or looking to understand the benefits of investing in York property, this city presents numerous opportunities for buyers. Let's explore the ten reasons why investing in property in York is a smart choice in 2025.
York's history is a captivating tapestry that stretches back over two millennia. Originally founded by the Romans in AD 71 as "Eboracum," it served as a pivotal stronghold in the Roman Empire. The city witnessed the coronation of Emperor Constantine the Great and bore witness to the Viking invasion during the 9th century, becoming known as "Jorvik."
Throughout the medieval period, York was a thriving hub of trade, religion, and culture, home to the magnificent York Minster, a masterpiece of Gothic architecture. The Wars of the Roses saw York as a central battleground. It played a significant role during the English Civil War and was a key center of the railway revolution during the 19th century.
Today, York's streets and buildings whisper tales of its storied past, making it a living museum of history and a remarkable place to explore and learn about the fascinating events and people that have shaped its destiny.
Owning a property in such a beautiful place carries with it a profound sense of pride and connection to centuries of tradition. A property in York is not just a piece of real estate; it's a piece of history.
York's rental market is a promising prospect for buy-to-let investors, with average rents growing by 5.9% in 2024.
The city’s rental market benefits from high demand due to its popularity among students, professionals, and families, but it faces challenges with a limited supply, causing higher rents and lower vacancy rates.
According to ONS (Office for National Statistics), the population of York has reached 202,800, which represents a growth of more than 2.4% over the last decade and is expected to increase steadily and reach 218,680 residents by 2035.
In turn, between 2011 and 2021, a mere 299 new homes were built annually on average. In 2018, the city’s 15-year local plan set an ambitious goal of constructing 877 new homes per year, a 193% increase compared to the average number built in the decade leading up to 2021. Should the current trends continue, York is expected to face a deficit of 3,497 homes by 2031.
The forecast for York's rental market is therefore positive, with rents expected to continue rising. Specific areas in York, such as student-centric neighbourhoods like Heslington and Fulford, professional areas like the city centre, Heslington, and Holgate, as well as family-friendly regions like Acomb and Bishopthorpe, are considered attractive for buy-to-let options.
York is a popular tourist destination, attracting millions of visitors each year. The city offers a plethora of museums, cultural events, and immersive experiences that captivate visitors.
It has also been labelled the "UK's Most Romantic Destination" by the Luxury Lifestyle Magazine Readers' Travel Awards due to its charm.
Its strategic location in the heart of England, with excellent transport connections, makes it accessible to travellers from across the UK and beyond.
This combination of historical allure and accessibility highlights the benefits of investing in York property, as the city continues to attract tourists seeking convenient and comfortable accommodations while exploring its timeless charm. York’s thriving tourism industry makes it an ideal location for short-term rentals.
Owning a property in a city known for its tourism means you can tap into the lucrative short-term rental market through platforms like Airbnb. It is not uncommon for short-term rental property owners in York to achieve yields in the range of 5% to 10% or even higher in some cases. However, it's important to note that these numbers are approximate, and actual yields can fluctuate.
To maximise returns, consider focusing on the best areas to live in York, which also tend to offer the highest rental demand and yield potential. To get precise and up-to-date information on short-term rental yields in York, consult our preferred property management company, Complete Prime Residential, who have a deep understanding of the current market conditions and can provide you with specific data and insights tailored to your investment goals and property type.
York enjoys excellent transportation connections, making it a strategic hub in the north of England. Its central location within the country is enhanced by a well-developed network of transportation links.
The city benefits from regular and fast train services, with York Railway Station being a major interchange on the East Coast Main Line, providing easy access to London, Edinburgh, and many other cities.
Additionally, the road infrastructure is robust, with major motorways like the A1(M) and the M62 nearby, facilitating convenient road travel.
For international connections, Leeds Bradford Airport is within a reasonable distance, offering flights to various destinations. Within the city, a comprehensive public transportation system, including buses, makes it easy for residents and visitors to navigate York and its surroundings.
These transportation options make York an accessible and well-connected destination for both residents and travellers alike.
York is actively shaping its future with a dynamic job market that extends beyond its traditional strengths. While finance, tourism, and education continue to thrive, the city is witnessing a burgeoning technology and digital sector, driven by startups and digital agencies.
Financial & Professional Services
Real Estate
Biotechnology
Digital, Creative & IT
Rail Industry
Tourism & Hospitality
York has been recognized as a leading cultural destination, with awards such as the "Best UK City" for history and heritage by the Group Leisure & Travel Awards. It offers a plethora of cultural attractions, including the iconic York Minster, the Jorvik Viking Centre, and the National Railway Museum.
York's vibrant cultural scene extends beyond its renowned historical sites. The city hosts a diverse array of festivals and events throughout the year, such as the York Festival of Ideas, which offers a wide range of speakers, exhibitions, performances, and family-friendly activities each June.
Also, the York Museum Gardens serve as a venue for open-air theatre and music performances, providing residents with cultural experiences in a picturesque setting.
Residents can enjoy a rich cultural life without leaving their doorstep.
With its picturesque streets, green spaces, and the River Ouse meandering through the city, York offers an exceptional quality of life. The city consistently ranks high in quality-of-life surveys. Residents and visitors alike benefit from the city's well-preserved heritage, which provides a picturesque backdrop for daily life.
The city's compact size makes it easily navigable by foot or bicycle, reducing commute times and promoting a healthy lifestyle.
The abundance of green spaces, such as Rowntree Park and the city's ancient city walls, offers tranquil escapes within an urban setting.
A thriving cultural scene, excellent educational institutions, and a diverse array of restaurants and shops cater to a wide range of interests.
The strong local economy, bolstered by tourism, education, and emerging industries, ensures ample job opportunities.
These factors, combined with York's welcoming and tight-knit community, contribute to a high quality of life that continues to draw people from all walks of life to call this historic city home.
York boasts a diverse and robust educational landscape, offering a wide range of educational opportunities.
The city is home to two prestigious universities, the University of York and York St John University, collectively enrolling over 28,000 students.
These institutions consistently rank among the top universities in the UK, attracting both domestic and international students.
Additionally, York has a strong foundation in primary and secondary education, with numerous high-performing schools serving the local community.
The city's commitment to education is underscored by its impressive library system, including the renowned York Minster Library.
With a focus on quality education from primary to higher education levels, York provides fertile ground for academic growth and contributes significantly to the city's vibrant and intellectual atmosphere.
The housing market in York has persistently suffered from a supply shortage, which has placed significant pressure on house prices and rental rates.
As a result, the city saw a substantial 29.2% increase in average property prices between 2017 and 2022.
Homebuyers in York face fierce competition, with properties typically selling 10 days faster than in Leeds (81 days), Liverpool (103 days), and Newcastle (87 days).
Looking ahead, Oxford Economics suggest that York's property market will continue to thrive, with 12% forecasted growth between 2024 and 2027, higher than many other markets set to experience more subdued growth on a national level.
As such, York remains an enticing prospect for those seeking capital growth and solid returns in the property market.
Accommodation options in York are as diverse as the city itself, catering to a wide range of preferences and needs. The city offers a mix of historical charm and modern convenience, with accommodation choices including beautifully preserved period homes and apartments nestled in the city's historic centre.
For students, purpose-built student accommodation and shared housing are readily available, given the presence of two renowned universities. Beyond the city centre, there are modern suburban developments and family homes, providing more space and tranquillity.
Additionally, York boasts a thriving short-term rental market, featuring Airbnb listings and holiday rentals that allow visitors to immerse themselves in the city's rich history. Whether one seeks the allure of centuries-old architecture or the comforts of contemporary living, York offers a diverse array of accommodation options to suit every taste and lifestyle.
Ready to proceed to the next stage of your property investment? At IP Global, we are here to help you every step of the way, guiding you to make smart decisions and generate returns. Whether you want to find out the most desirable places with properties for sale in York or need to learn how York's market can match your investment plans, we can help.
Learn how our proven success has helped investors around the world build solid property portfolios. Meet our team of industry experts who bring market insights and strategic guidance specific to your needs. Contact us today and let IP Global lead you to unlock the full potential of York's property market.
Property investment is a popular way to achieve financial growth and passive income, but it's not without its challenges. To make the most out of your investments, it's crucial to educate yourself and steer clear of common pitfalls. Let’s delve into the top 5 mistakes that investors often make when investing in property in Europe/UK, providing insights and guidance on how to avoid them.
Rushing into a property investment without thorough research is a recipe for disaster. It's imperative to gather comprehensive data about all the factors that could influence your investment’s performance before making a decision.
When researching a property investment, you need to consider the below:
Is this property close to transport links which will improve rentability? Is it in a well-established area which typically will result in a lower yield or is it located in an up-and-coming neighbourhood which offers higher yields? Is there regeneration present which will drive up the value?
The type of investment property you select should reflect the long-term demographic and lifestyle trends. Is there a rise in single-family households meaning it makes more sense to opt for studios and one-bed apartments? Is the work from home movement here to stay and will tenants value remote working facilities more?
It’s important to thoroughly inspect any property you purchase if it is a resale, this includes. When buying off-plan, check the track record of the developer and see that the specification was adhered to or that the property was built to standard and has grown in value as anticipated.
Understanding the property's rental potential allows you to assess its ability to generate rental income, cover mortgage payments, and potentially yield a positive cash flow. Factors such as location, amenities, local rental market trends, and demand for housing in the area influence the property's rental value.
Understanding the property's market value allows you to assess whether the asking price is fair and whether you're making a sound investment decision. This research involves analyzing recent comparable property sales in the area, current market trends, and economic indicators that influence property values. Accurately determining the market value ensures that you don't overpay for the property and that you have a realistic understanding of its potential for appreciation over time. It's a fundamental step to safeguarding your investment.
When you purchase a property you don’t only pay the purchase price of the asset. There are additional expenses such as stamp duty, legal fees, survey costs, and potential maintenance or renovation expenses.
Understanding ongoing ownership costs like property taxes, insurance, utilities, and potential homeowner association fees is crucial for accurately budgeting and ensuring that the property remains a financially viable asset.
Understanding the risks associated with property investment, such as fluctuations in property values, tenant vacancies, and unexpected maintenance costs, enables you to develop a comprehensive risk management strategy. By being aware of these risks, you can make contingency plans, allocate resources wisely, and minimize the impact of adverse events.
Thorough research empowers you to approach property investment with a balanced perspective, making choices that align with your risk tolerance and safeguarding your investment against unforeseen challenges.
Before you invest in any property, you need to have a clear idea of what you want to achieve. Are you looking to generate passive income? Make a capital gain? Or both? Typically you will find that you get more capital growth on an expensive property with a lower yield, as well as lower risk. However, properties with cheaper entry price points may offer higher yields but the future performance of the investment is less secure.
Not having a clear investment strategy is a significant mistake in property investment because it can lead to haphazard decisions and a lack of focus on your financial goals.
Without a well-defined strategy, you might purchase properties that don't align with your objectives, resulting in suboptimal returns or even financial losses. A clear investment strategy guides your property selection, financing choices, and risk management approach. By neglecting to establish a clear strategy, you risk scattering your resources and missing out on opportunities that could have contributed to a more successful and coherent property portfolio.
One of the quickest ways to lose money on a property investment is to overpay. This is why it is important to get a professional valuation before you make an offer.
The valuation will give you an idea of the fair market value of the property. This will help you avoid overpaying and ensure that you get a good return on your investment.
Overpaying for a property is a common mistake in real estate investment due to various factors that can cloud judgment. Emotional attachment, lack of thorough research, and market hype can contribute to buyers offering more than a property's actual market value. Overestimating potential returns or succumbing to peer pressure may also lead to inflated bids. This mistake not only reduces potential profits but also prolongs the time it takes to recoup the investment. By overpaying, investors compromise their financial goals and miss out on opportunities to acquire properties at their true value.
Conducting diligent research, obtaining professional valuations, and maintaining a disciplined approach to negotiation can help investors avoid this pitfall and secure properties at prices that align with their investment strategy.
Effective property management is pivotal for a successful real estate investment, yet it remains a prevalent mistake. Inadequate property management can lead to financial losses, property deterioration, and legal complications.
Proper property management encompasses several key responsibilities, such as tenant selection, rent collection, maintenance, and legal compliance. Neglecting these aspects can lead to unpaid rent, increased repair costs due to deferred maintenance, and potential legal actions from dissatisfied tenants. To avoid this mistake, engage with the following practices:
By prioritizing effective property management, you mitigate risks, enhance tenant satisfaction, and safeguard your investment's long-term success. Proper management not only prevents financial setbacks but also creates a positive environment that benefits both you and your tenants.
Not utilising leverage is a common mistake in property investment with significant implications for potential returns. Leverage involves using borrowed funds, typically through a mortgage, to finance a property purchase. While some investors opt for an all-cash purchase to avoid debt, this approach can hinder the growth and profitability of their investment portfolio.
Using leverage can provide several advantages. Firstly, it allows investors to control a higher-value property than they could afford with their own capital alone, thus maximising potential returns. Additionally, leveraging enables diversification – instead of investing all available funds in a single property, investors can spread their investments across multiple properties, reducing risk. Leverage also magnifies returns: as property values appreciate, the initial investment increases in value, resulting in higher overall returns on investment.
However, it's crucial to exercise caution and make informed decisions when using leverage. While it can amplify gains, it can also magnify losses in a declining market. Investors should carefully assess their risk tolerance, secure favorable mortgage terms, and ensure that rental income covers mortgage payments and other expenses. By strategically leveraging, investors can optimise their real estate investment portfolio's growth potential, achieve higher returns, and diversify their assets for a balanced and successful approach to property investment.
Navigating the world of property investment requires careful consideration and the avoidance of common pitfalls. To safeguard your investment journey and maximise returns, steer clear of these top 5 mistakes: insufficient research, lack of a clear investment strategy, overpaying for a property, inadequate property management, and not using leverage. Thorough research empowers you with knowledge to make informed decisions, while a strategic investment approach aligns with your financial goals. Proper property management ensures tenant satisfaction and financial stability. Leveraging borrowed funds can amplify potential returns and diversify your portfolio. To receive personalised insights and expert guidance on avoiding these mistakes and optimising your property investment journey, take advantage of a free consultation with an IP Global wealth manager. Don't miss the opportunity to enhance your investment strategy and pave the way for a prosperous property portfolio. Schedule your free consultation today to secure a successful property investment future.
In today's dynamic economic landscape, investors seeking stability and growth in their portfolios are facing a formidable challenge in the form of rising mortgage rates. As the real estate market undergoes fluctuations, it becomes imperative to explore effective strategies that can combat the impact of increasing mortgage rates. This article aims to provide a comprehensive analysis of the best ways investors can navigate these turbulent waters and make informed decisions to protect their investments.
From a buy-to-let investor's perspective, increasing mortgage rates have both negative and positive effects on real estate markets. Investing in markets that maintain strong economic fundamentals, such as resilient economic growth, an expanding population and a housing supply shortage indicate that house prices still flourish in the medium to long-run. Rising interest rates often result in a short period of subdued property price growth, creating a potential window of opportunity for buyers as fewer individuals can afford to purchase with mortgages.
Consequently, more individuals will be pushed into the rental market due to the increased mortgages rates. In the right housing market, even a modest 1% increase in interest rates can be outweighed by the growth in rental demand, therefore, forcing rent prices up.
Recent months have seen significant rental growth in many markets of the UK. With demand at an all-time high and tenants paying portions of their rental period up front to secure properties, this creates an advantage for buy-to-let landlords.
Buying off-plan property can be a good idea when property mortgage rates are high for several reasons:
Payment Timing: Purchasing off-plan buyers pay deposits on exchange and the remainder of the purchase price only on completion, allowing them to spread out the cost of the property. With high mortgage rates, this flexibility can be beneficial as it provides you with more control over your financial obligations.
Market Movements: Off-plan property is somewhat insulated from a turbulent mortgage market because the buyers mortgage is processed prior to completion. This means that todays market is not the same mortgage market that many clients will be obtaining their finance in. By the end of 2025, for example, the UK base rate is expected to be back down to around 4% according to Oxford Economics.
Potential Rental Income: If you are considering buying the property as an investment, higher mortgage rates may not significantly impact your income. Many cities including Manchester, Sheffield and Birmingham have seen exceptional rental demand with average rents in Manchester up 6.1%, Birmingham up 4.7% and Sheffield up 5.2% in the year to September 2022.
Potential Capital Appreciation: Real estate markets are dynamic and tend to appreciate over time. By purchasing a property off-plan, you have the potential to benefit from capital appreciation during the construction period. If the market conditions are favorable, the value of your property may increase significantly by the time it is completed, providing you with potential equity gains. Forecasted capital growth in key locations such as Birmingham and Manchester is expected to top 19% over the next 5 years.
Using an example unit in one of our Manchester developments, The Bailey, we estimate that investors can earn up to 10% on their equity in the second year of their investment with an average interest-only mortgage of 6.5% in year 2. To take a closer look at the details, request The Bailey Returns Model here.
One effective strategy to mitigate the impact of rising interest rates is to make mortgage overpayments when possible. By paying more than the required monthly amount, you can reduce the outstanding principal balance and potentially shorten the loan term. Not only does this reduce the overall interest paid, but it also provides a buffer if interest rates increase. Check with your lender to ensure there are no penalties or restrictions associated with overpayments.
A second effective strategy is to opt for a variable mortgage rate in a high mortgage rate environment, before changing back to a fixed. There are several advantages:
Initial Lower Rates: Variable mortgage rates are typically lower than fixed rates at the beginning of the loan term. This can result in lower initial monthly mortgage payments, making homeownership more affordable in the early stages.
Potential for Decrease: If mortgage rates decrease over time (which they are currently forecast to do so), borrowers with variable rates can benefit from lower interest charges and reduced monthly payments. This flexibility allows homeowners to take advantage of favourable market conditions.
Flexibility: Variable mortgage rates often come with more flexible terms, such as the ability to make additional payments or pay off the mortgage early without incurring penalties. This can provide borrowers with greater financial freedom and the opportunity to save on interest costs.
Short-Term Ownership: If you plan to sell the property or refinance the mortgage within a relatively short period, a variable rate mortgage may be suitable. With this, you can take advantage of the lower initial rates and potentially avoid higher rates in the long run.
It's important to carefully assess your financial goals, market conditions, and risk tolerance before deciding on a variable mortgage rate in a high mortgage rate environment. Consult with a mortgage advisor to evaluate the pros and cons and determine the most suitable option for your specific circumstances.
Buying a home as mortgage interest rates are rising is nothing to fear. From a historical standpoint, a 5% mortgage rate is still relatively low. Stress testing criteria now means that the housing market in the UK is more resilient than ever. Typically during the mortgage process, applicants need to evidence that they can afford mortgage rates considerably higher than the one they are applying for, typically around 8% - 10%.
During the 2008 global financial crisis, rental growth remained fairly flat at between 2-3% over the period which limited investors in their ability to cover mortgage costs. Alternatively, rents in the UK are increasing at a blistering pace. In the year to January 2023, average rents increased by 11.1%. This further supports the argument of an extremely robust buy-to-let market with growing returns to cover increased mortgage costs.
Fears of market turbulence are valid but one needs to consider all environmental factors in order to assess the extent to which history can repeat itself.
Intelligent buyers can take advantage of the current market conditions. However, it is crucial for buyers to seek guidance from experienced real estate professionals with extensive knowledge. These experts, who have personally owned multiple properties and facilitated numerous real estate transactions, can provide invaluable advice. Collaborating with such experts instills a sense of confidence, knowledge, and security, empowering prospective investors to make informed and financially sound decisions. If you would like some more information on how to navigate the current market, you can reach out to one of our experienced wealth managers here.
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