The only way is up for property in Q3 of 2013

A host of stories this week confirms that the property market is continuing its recovery and we thought, we'd share the good news.

Figures from both the Office of National Statistics (ONS) and the Council of Mortgage Lenders (CML) are showing that - despite a seasonal dip in September - the last quarter has been the industry's strongest since 2007, well before the recession set in.

The CML reports that buy-to-let (BTL) lending is up 36% year on year with 43,900 loans compared to the same quarter last year. The value of these loans - £5.7 billion - even equals a rise of 43% compared to 2012.

Numbers for BTL house purchases and remortgaging also continue to grow at a healthy level.

Where the property market as a whole is concerned, house prices have risen 3.8% in the year to September, up from 3.7% in the 12 months to August.
It's a small rise, showing that the recovery continues - without a bubble.

Looking regionally, London continues to grow fastest, whilst Scotland as a whole still shows falling prices. Edinburgh itself has always enjoyed a microclimate when it came to the property industry and prices are starting to grow slowly with more growth forecast. Interesting times!

No property price bubble in sight as BTL yields grow

For a few weeks now, there has been talk about a property price bubble getting ready to burst. With prices on the up for a few months now, more properties coming onto the market and mortgage finance options increasing, it's easy to see where the concern comes from, although it does seem to be a little premature.

This week's Halifax House Price Index confirms that there is little or no threat of a bubble as house prices are rising more slowly. The latest quarterly increase was measured at 1.6%, the slowest since May. At the same time, mortgage approvals and home sales have risen sharply compared to the same time last year.

Part of this development may be the beginning of the seasonal slowdown in the property market, which may see activity remaining the same or dropping slightly as the colder weather sets in.

Looking at the buy-to-let market, London property specialists Assetz are seeing continued rental yields of around 7 to 8%. Those strong yields are connected to investors having bought when prices were relatively low. However, current price rises are not strong enough to lower rental yields.

Taking the maths one step further and considering combined capital and rental yields in Edinburgh, two current examples show that there are a number of very interesting properties for investors to consider. As prices are rising (and they are in selected areas of Scotland despite the quarterly average for the country), capital growth will follow, thus adding to rental yields.

These are exciting times for investors!

Buy to let returns on the up as investors shell out more

Buy-to-let investments are providing higher gross yields despite rising property prices. This is the tenor of Mortgages for Business' Complex Buy-to-Let (BTL) Index.

According to the index, standard residential properties increased their yields by 6.3% in the three months to the end of September, up from 6.1% in the previous quarter. HMO properties, which are especially popular with student tenants, showed even more improved yields.

Gross yields tend to fall as property prices rise, but the fact that they are keeping up is taken as an indicator of the strong rental market.

At the same time, the Landlord Centre has found that BTL investors are purchasing more expensive properties with the average price stopping just short of £170,000 over the last quarter, an increase of over £7,500 compared to the period from April to June.

Apart from increased confidence and consistently high yields, competitive mortgages with low interest rates are cited as the main reason for investors to spend more. The research also showed that student properties performed better than other types of residential properties.

Whilst there is a plethora of news about the sector each day, the overwhelming trend has remained the same for a number of months: property prices are rising, but rents are keeping up. And despite more property sales, a large number of people remains keen to rent long-term, giving investors the security to be able to make long-term decisions about their properties.

Property market continues to soar

The Office of National Statistics (ONS) has published its latest statistics for the UK housing market and reports the highest year on year change since 2010.

House prices increased by 3.8% between August 2012 and August 2013 due to price increases in England, Wales and Northern Ireland. Scotland is currently lagging somewhat behind with a 0.7% decrease in property prices.

The overall trend for the UK property market is clear - prices are rising steadily. There is no sign of a housing bubble yet, but there is certainly an upwards movement. For potential investors, this is an interesting time to look for their next property.

Rising house prices are attracting more sellers into the market, increasing investors' choice of suitable properties. At the same time, while prices are starting to rise across the UK, they are moving slowly. Therefore, investors can still find very good deals.

Edinburgh is currently especially well placed for property investment. With sellers' confidence rising, more properties have come onto the market. At the same time, property prices in Scotland are rising even more slowly which means often property prices can be negotiated.

Looking at the longer-term development of your investment, demand for rental properties continues to be high and rents for high-quality properties are rising steadily. With property prices now rising as well, the capital value of the investment is increasing, too.

Look after your property and your property will look after itself

Well, maybe your property won't quite look after itself, but looking after your rental property is key to its performance. 

Whilst much has been written about competition for the best rentals among prospective tenants, there are certainly enough properties available to allow tenants to choose the better quality flats and houses first. For you as a landlord or a property investor, having a desirable property translates into achieving higher rents whilst maximising occupancy. 

So, what makes a flat desirable? There are obvious factors, such as location and number of bedrooms that can't be changed. However, a surprising number of small adjustments can make the difference between a property standing empty or being snapped up:

1) First impressions count

Make the property look fresh, welcoming and cared for. A new lick of paint will make a huge difference to someone looking to move into a new home. At the same time, you are showing tenants that, as a landlord, you care about the state of your property, encouraging them to look after it better.

2) Make your property energy efficient

If you are looking to invest in your rental property at all, improve its energy efficiency. Cavity wall insulation, double glazing, energy-saving light bulbs and efficient white goods are some of the ways you can help tenants lower their utility bills, making your flat more desirable.

3) Deep clean the property

Invest in oven cleaner, grout stick and a professional carpet clean. Showing your property at its best does not necessarily mean redecorating. Investing in a professional clean might well do the trick. 

Is it all worth it? A recent study by Strutt & Parker found that those who regularly invest in the maintenance of their investment, even with a sitting tenant, spend less over a three to five year period than landlords who wait until things get dire. 

Looking at Edinburgh, there is strong tenant demand, but at the same time, tenants do have a lot of choice, making desirable properties fly off the shelves. 

Reluctant landlords leaving the market

New research from the Association of Residential letting Agents (ARLA) suggests that so-called 'reluctant landlords' might become a thing of the past.

The term was coined for those who decided letting their property because it could not be sold. ARLA members have reported a decrease of 5% in properties being let because they couldn't be sold over the last three months, bringing the total figure of 'reluctant landlords' to 21% of the residential property market.

The numbers are even more impressive when we compare them to last year's when ARLA members recorded that up to 42% of landlords had entered the market as a last resort.

ARLA's Managing Director, Ian Potter, puts some of these developments down to the increased activity in the residential sales market which will have caused a number of people to leave the lettings market and sell their property as originally planned.

The developments mean that competition for great value rentals may increase over the next few months. However, in our experience many reluctant landlords have not only been reluctant to enter the lettings market, but in many cases their properties have not necessarily been the most desirable for potential tenants.

This is not about properties not being looked after, it's simply the difference between a property bought with its potential as a rental in mind and a property bought as a family home. In Edinburgh, residential lettings have traditionally been strong. Especially sought after are larger, traditional tenements in areas popular with students. Whilst there is some competition over the more popular ones and viewings are usually very well attended, students do find somewhere suitable to live - although they may have to compromise on location at times.

Are your properties safe?

It's Gas Safety Week this week, an opportunity to remind landlords as well as home owners to look after their gas appliances.

It's all too easy to assume that cookers and boilers will work year-in, year-out and many of them actually do function faultlessly. But think about it like this: you wouldn't skip your car's MOT - it's equally important to have gas appliances checked annually to ensure they are working correctly.

According to research conducted by Gas Safety Week's organisers, 43% of Britons don't have their appliances checked regularly and 10% own appliances that have never been checked. Quite a disconcerting statistic.

For our landlord clients, we arrange annual checks with registered gas engineers as part of our comprehensive landlord services. If we source an investment property for you, manage its renovation and let it out, we also make sure that all relevant checks are completed before your first tenants move in. After that, annual checks are scheduled to ensure both your investment and the tenants are safe.

Whilst we are lucky to work with a trusted supplier who are registered 'Gas Safe' engineers, if you need to look for your own engineer, make sure to select a reputable company that will carry out checks carefully and thoroughly. More information can be found here.