Traditionally, the end of the year is a good time to look over your property portfolio, see which are performing well and whether others need an upgrade or to be sold. It is also an ideal time to work out the strategy for the following year, analyse the forecast income and expenditure for each property and determine whether to add to the portfolio.
If investing in new property is the plan, there are several things to consider. Targeting properties in the north of England could be a sound investment because property prices tend to be low and rental yields are high. Contrast this with London where the prices are much higher and rental yields lower than in the North of England. However, there are other factors to consider when adding to your portfolio. In addition to rental yields, capital growth needs to be factored in, together with forecasts as to how the recent tax changes will affect the investment. Look into whether there are landlord licensing schemes in the areas you are considering making your investment as these will also have an impact. Obviously, local public transport links and the local economy need to be researched too.
Look at future plans for employment, investment and public transport. For example, more people are choosing to live further away from London but work in the Capital because of improved rail links. Crossrail’s expansion will increase the popularity of towns such as Reading while the Javelin trains connecting key areas of Kent with London will also make more towns attractive to commuters.
It would be advisable to move quickly because residential property prices increased in the end of the year for the first time in eight months. A surge of buy-to-let investments in the South West, North West and West Midlands boosted this growth. The average price of a home in England and Wales now stands at £300,859 – an increase of 0.3 percent since March. Prices fell 0.6 percent in London and 0.1% percent in the South East, however.
Despite the tax hikes and new regulations, interest remains healthy in the buy-to-let sector. Sales of buy-to-let mortgages rose by 10.8 percent – £334.1 million – in November compared with the previous month, according to analysis by Equifax Touchstone. This is the fourth consecutive month in which buy-to-let mortgages have risen. It is forecast that this trend will continue, particularly as demand is rising for rental properties because more people are being priced out of the property market.