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  • The fundamentals of the UK property market remain strong
  • Currency rates have been favourable to international investors recently
  • There is a dynamic market outside of London

It can be tricky to decide where to allocate your money if you’re an international investor looking to gain exposure to overseas markets. Not being familiar with other markets, or out of touch with your home market as an expat, can be off putting.

In this article we will cover five considerations for international investors in UK property to help you on your way.

1. Is it the right time to invest into British property?

UK property has a long and reliable history as an investment for consistent returns, across commercial and residential real estate markets. Naturally, one of the first questions that will crop up in an international investor’s mind will be “What will be the impact of Brexit?”. Considering the historic global economic and geopolitical events UK property has weathered previously, one can have faith that market fundamentals remain highly attractive.

There’s seldom been a bad time to invest into the British property market, and the country’s market remains a global leader, with London standing out in particular. For instance, the latest Schroders Global Cities 30 Index ranks London as the top city in Europe and second best in the world for investment, with the methodology behind the index ranking areas such as projected economic growth, disposable income levels, population size and investment level.

Similarly, Knight Frank’s 2018 Global Cities Report, a comprehensive study of real estate in the leading 40 cities globally, places London in first, citing the economy’s resilience to Brexit, record low unemployment rates and sustained interest from financial and technology firms.

The fundamentals of the UK property market remain strong, with house prices showing sustained, stable growth over long time periods. Land Registry data, which is collated by the British Government, details 26.4% growth over five years, 45.6% over 10 years and 314.2% over 25 years.

Source: Land Registry

There are a huge number of commentators in the UK property market providing investors with a wealth of information and analysis. You can read more about our view on the current performance of the UK residential market here.

And despite what is going on economically and politically, regulation in the UK property market and financial services is also appealing for many, providing investors with a stable and respectable environment. Property Partner is regulated by the Financial Conduct Authority (FCA). Regulation, such as that from the FCA, helps raise the standards in the industry, and we welcome their input. We take our responsibilities seriously and always strive to deliver a high quality and trusted service to our investors.

2. How have exchange rates changed over the last 10 years?

Exchange rates also play an important part in international investment decision making. The below chart shows an index of various currencies’ exchange rates to the British pound over the last 10 years (30 June 2009 – 3 June 3019). For the most part, the last three years have been kind to international investors looking to invest in the United Kingdom compared to historical averages. The chart shows it is not always a stable direction but compared to five years ago, investors in the United Arab Emirates get a huge 33% more for their money based on exchange rate alone, Euro investors 10% more, Hong Kong investors 32% and Singapore 22%.

Source: OFX 3. Should I invest outside of London?

Most prospective investors in the UK will view London at the top of their wish list for areas to invest in, and with good reason. In addition to the above ranking as a leading global city, its thriving economic, cultural and educational scene suggests London will remain attractive to investors for the long term.

Over the last few years, however, other cities across the UK have begun to make serious claims of their own as prospective investment hotspots, and offer higher yields for income focused investors, while retaining the key fundamentals of the entire UK, such as economic and political stability.

Birmingham, located under 90 minutes from London by train, Britain’s second city and the 8th largest metropolitan area in Europe, has undergone significant regeneration in recent years, with a £500 million redevelopment of its New Street train station, its £150 million Grand Central retail destination, and major developments such as Paradise and Arena Central underway.

Savills suggests average residential values in Birmingham have grown by 31% over the last five years, predicting compound growth of 14.8% over the next five years, whilst Knight Frank reports that average asking rents rose by 16% between 2014 and 2018, with net yields at 4.25% in the Build to Rent market. In addition, with four universities and over 70,000 students, the city is a thriving hub for higher education. A £1 billion expansion plan at the University of Birmingham creates further potential for investors looking into the Purpose Built Student Accommodation (PBSA) or Private Rental Sector (PRS) markets.

Manchester, located two hours from London via train and globally recognised for many years due to its sporting and musical contributions, has recently come of age as an economic and investment heartland. As well as being home to MediaCityUK, with tenants including national broadcasters BBC and ITV and employing several thousand staff, consistent high quality regeneration of the city centre since the mid 1990s has attracted multinational companies such as Adidas and Siemens to base their UK headquarters in the city, whilst Brother and Etihad Airways name Manchester as their European headquarters. Manchester will also welcome HS2 in 2026, whilst Manchester Airport is the third busiest in the UK after London’s Heathrow and Gatwick, and has scheduled flights to destinations across the world. JLL suggests rental growth of 3.1% per annum for the next five years, with house price growth of 3% per annum for the next five years, whilst reporting current strong Build to Rent net yields.

Other UK cities such as Liverpool, Leeds, Bristol, Edinburgh and Glasgow are also proving to be increasingly attractive to foreign investment, helped by significant funding into the cities’ commercial offering and infrastructure.

Property Partner allows investors to diversify across the United Kingdom. See all properties here I’m convinced! What now?

At Property Partner we make it easy for investors to access UK property. Investors can build diversified portfolios by spreading their capital across multiple properties on our platform. If you are interested in building your wealth with us there are two ways you can get started:

  • Create an account: it only takes a few minutes to complete your profile and add funds. Click here to see all properties available and pick your own, or alternatively have a look Investment Plans and automatically build a portfolio based on one of three strategies.
  • Get in touch: we are more than happy to talk and discuss your needs and goals. If you’d like to speak to one of our Investor Managers click here for details.

With over 100 properties listed, a number that is ever increasing, and over 13,000 investors to date, Property Partner is a great option for an investor looking for direct access to a popular and rewarding investment asset class.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.


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A new property will launch on our platform in Live Funding at 10am next Wednesday 19 June.

Ramsay Place comprises 28 ensuite rooms and is located in Aberdeen. It will offer a dividend yield of 5.09% after all fees and costs and is leased to Robert Gordon University until 2031, which offers the highly sought-after benefit of having no void risk.

The lease includes annual rent reviews in line with RPI, subject to a ‘cap and collar’ of 3% and 5% (a lower limit of 3% and upper limit of 5%), so we can expect the rent to increase annually by at least 3% year on year until 2031.

Watch the video to hear Rob Weaver, our Chief Investment Officer, talk about what makes this such a great investment opportunity. And make sure you look out for our launch email next week!

Ramsay Place, Aberdeen - YouTube

Can’t wait until next week?

Ramsay Place, Aberdeen is currently available for investment to our premium clients.

Find out more about our Premium Services, and how you can get early access to new properties and benefit from reduced transaction fees.

Find out more about Purpose-Built Student Accommodation

Market update: The secret is out. Professional investors of all sizes from around the world have realised the appeal of the UK PBSA market and are eager to own their share of this popular asset class. Read more here.

Investing in PBSA in 2019: We’re excited about the direction the sector is heading, and how strong yields and potential growth of the market can make it an attractive opportunity for investors. Read more about the asset class here.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

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  • UK PBSA (Purpose Built Student Accommodation) is a mature investment market valued at £53 billion
  • Prices increased by 6.5% in the 12 months to September 2018, putting downward pressure on rental yields
  • PBSA retains highly attractive investment fundamentals and continues to be a core element of the Property Partner investment strategy, building on our £32.6m portfolio, which yields an average cash dividend to our investors of 6.5%

Property Partner launched its first PBSA investment at Verney Street in Exeter in September 2017. Since then, we’ve acquired a further nine PBSA blocks on behalf of our investors, building a £32.6m portfolio diversified across nine university towns.

Today we can reflect on a market which has grown substantially since our entry two years ago. PBSA is now firmly on the radar of a greater number and variety of investors seeking property investments with strong income and defensive qualities.  Investment in PBSA complements the changing nature of demographics and the way in which we live, work and shop in today’s society.

A mature investment market

UK PBSA is now a mature and mainstream property sector which, according to Knight Frank, has reached £53 billion in size, equivalent to 10% of the size of the professionally managed commercial property market.

The secret is out and professional investors of all sizes from around the world now see UK PBSA as an attractive investment. In the past 18 months, increasing numbers and types of buyers have been drawn by the strong income yield, long term stable rental growth and popularity of UK higher education at home and around the world, underpinned by continued undersupply of quality stock in many popular university locations.

You can read more about what makes PBSA such an attractive asset class and why you should add it to your property portfolio here.

In prime locations, for example London, Birmingham and Exeter, the future supply pipeline is under pressure as a lack of available land, the general shortage of housing and local planning constraints are restricting the construction of new PBSA schemes.  Competition for any existing properties which come up for sale has increased, with potential buyers prepared to pay a premium to gain exposure to the market.

According to CBRE, the market leader in PBSA valuation, a reduction in stock coming to market last year was responsible for a fall in overall PBSA transaction levels to £3.2 billion in 2018, from £4.1 billion in 2017, in spite of consistently strong demand for the asset class from investors.

More buyers than sellers in any market will of course put upward pressure on prices and the CBRE PBSA index, based on the billions of pounds of stock that they value on behalf of investors, shows that prices increased by an average of 6.5% in the 12 months to the end of September 2018. This in turn puts downward pressure on rental yields.

Strong investor appetite for UK PBSA looks set to continue. In January this year, Jones Lang Lasalle surveyed professional and institutional investors with combined holdings in non-core property sectors of £61.5 billion (core being office, retail or industrial) to gauge their investment intentions for 2019. More respondents planned to increase their holdings in PBSA than in any other property sector, with those seeking greater exposure looking to expand their portfolios by 26% on average.

Property Partner PBSA investment

We continue to scour the market for attractive PBSA properties to list on our platform, but conditions in the first half of 2019 have meant that fewer opportunities meet the grade as less stock is available for sale and owners of choice blocks hold out for a premium price.  

The factors at play in the wider market, including constrained supply and strong investor appetite, can equally be observed on the Property Partner Resale Market. The PBSA blocks we acquired in 2017 and 2018 are trading at premiums to their underlying valuations, mirroring broader market conditions where prices are being pushed up by yield-hungry investors.

We are highly selective and, as an experienced operator, apply realistic running cost assumptions to our net income estimates, which are usually lower than marketed by the sales agents. As such, we may be outbid by other investors who take a less conservative approach to forecasting running costs and/or pre-acquisition due diligence.

We continue to view PBSA as a highly attractive investment class and it remains a core element of our investment strategy. While prices have increased since we entered the market, the rental yields available still offer a premium over institutional-grade residential investments, with an attractive risk-reward profile, underpinned by a shortage in supply and the enduring appeal of securing a UK university education among potential students around the world.

New PBSA funding: Cornwall Street Studios

Our latest PBSA investment, Cornwall Street Studios, is located in Birmingham, a fundamentally undersupplied market.

Invest now and access a projected dividend yield of 5.10%.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post Purpose Built Student Accommodation Market update, June 2019 appeared first on Property Partner Blog | Latest News.

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At Property Partner, we have recently launched our latest property in the Purpose Built Student Accommodation (PBSA) market for funding. Located in Birmingham and with a forecast net dividend yield of 5.10%, this marks our tenth property in the sector.

You may not have heard about the benefits of investing in this alternative asset class, and how it compares to traditional real estate investment classes such as residential, office and retail. We’re excited about the direction the sector is heading, and how strong yields and potential growth of the market can make it an attractive opportunity for investors.

What’s the difference between PBSA and letting a traditional house to students?

It’s important to delineate between a PBSA asset and a regular / traditional house which has been converted for and let to students (normally described as a house in multiple occupation (HMO)). Unlike a HMO, PBSA has been designed and built specifically for university students by private developers or is a redevelopment and change of use of an existing building.

The three main classes of PBSA are:

  1. Studios  
  2. En suite cluster flats*
  3. Non en suite cluster flats

*a cluster flat is shared accommodation whereby people have their own bedroom, but share communal facilities such as central living areas, kitchens and bathrooms.

The growth of the private sector has been accelerated by a shortage of suitable existing university accommodation and a lack of funds to refurbish current stock. With most top tier universities in the UK also located in popular cities with shortages in housing for permanent residents, PBSA consolidates the needs of students for private studying and sleeping space along with communal living space. This provides a better solution for students, whilst creating greater space and cost efficiency for investors and developers, and freeing up traditional housing for those looking for long term residence. Amongst many professional investors, PBSA is already considered a mature market.

Why should I add PBSA to my investment portfolio?

At Property Partner we advocate a diversified investment portfolio, believing in both residential and commercial property as investment classes for the long term. With yields rivalling other property investment classes and the UK’s world class reputation for higher education, there is a strong case for incorporating PBSA into a portfolio.

Knight Frank reports that PBSA makes up 33% of the institutionally managed residential investment sector, with approximately 600,000 beds or units. The consultancy also reports on the efficiency of the market with a loss of only 23.8% of revenue from gross to net, lower than both PRS (at 25.8%) and senior living (at 28.0%). With Knight Frank reporting rental growth across the country and expectations for future uplift at 3.2% for London and 2.4% for the regions (annualised to 2024), there is a good level of confidence in the sector. Indeed, the value of the UK’s student accommodation sector is set to reach £53 billion by the end of 2019, with growing interest from international, institutional and private investors entering the market at different levels.

Whilst price growth in the sector has been strong in recent years, experts believe there is still value to be found. Competition in the sector is becoming more intense and investors are increasing their exposure, both being positive signs that PBSA is a maturing and stable investment. The majority of returns in the sector are driven by yield, which is still relatively high compared to other property sectors. The attraction of PBSA is part of a larger trend towards growing interest in investments which provide a strong and stable long term income stream.

Currently, Cushman & Wakefield reports that whilst yields are clearly compressing, there is still value to be found. Yields in super prime regional property are between 4.75% and 5%, with prime regional between 5.25% and 5.75%. It’s worth noting that these quoted yields are not inclusive of all costs and fees, so net returns would be lower. At Property Partner we target net dividend yields from rental income, after fees and costs, of over 5%, and our latest property in Birmingham is forecast to return just that.

Naturally, one of the central drivers behind the growth in the PBSA sector is the growth of people attending university in the UK; full time first year higher education student enrolment grew by 2.6% between 2016/17 and 2017/18 to 1,844,545, with increases amongst those studying for their first degree and amongst postgraduates.  

Undoubtedly, this is helped by the UK’s global reputation for top quality universities, which helps attract international students. In its latest World University Rankings, QS reports that 18 UK universities are within the top 100, second only to the USA, with four ranked in the top 10.  Up to 19% of students in the UK are international, with 42% of those studying postgraduate degrees from outside the European Union. Full time first year higher education enrolment for non-UK students increased by 4.5% between 2016/17 and 2017/18 academic years.

Over the past decade, PBSA has proved to be a reliable and consistent asset class, retaining growth in units built and investment despite factors such as the global financial crisis and the introduction of higher university tuition fees in England. Despite global economic and political uncertainty, university admissions are stable, with investment into the sector similarly consistent. Returns are attractive, even before the prospect of potential growth in capital value.

Where are the best places to invest in PBSA?

The majority of the UK’s universities are located within cities and towns that are already well served by good transport connections, are attractive to businesses and provide the cultural and leisure amenities desired by students. As such, with PBSA assets often located close to universities, the availability of a good quality of life in the locality is usually a given.

Factors such as the quality of the university within the city, and the total amount of students in the city are important considerations, whilst future campus and city development plans may attract greater numbers of students in the future. With high quality universities located in areas of the country as diverse as Exeter, Warwick, Durham and Oxford, investors can expose their portfolio to different regions of the UK with confidence. Birmingham, the UK’s ‘second city’, is home to four universities and over 70,000 students, including the University of Birmingham, (UoB) ranked in the world’s top 80 universities. The UoB is currently at the beginning of a ten year, £1 billion campus investment plan, with £365 million worth of facilities opening over the next three years. The UoB also boasts 6,500 international students from over 150 countries.

In addition, the city of Birmingham has undergone significant regeneration in recent years, including a £500 million redevelopment of New Street train station and a £150 million development of Grand Central Rail station. Over the next few years, Arena Central, a major mixed use development, will also complete.

Similar cities to Birmingham, with a large student population ratio to permanent population (because of limited housing supply) and often with multiple universities and wider regeneration plans are attractive, such as Manchester, Newcastle and Bristol. Smaller cities with single universities, such as Exeter, can also have a high number of students in proportion to houses available, causing pressure on supply. This can both cause greater demand for PBSA and sustain yields on PBSA which already exists.

The size of student accommodation properties can be prohibitive for investors to access this market directly, due to the high costs associated with buying entire blocks with multiple units; with Property Partner this process is simplified, as shares in the block are purchased instead.

How do invest in PBSA with Property Partner?

Investing in PBSA with Property Partner is simple. You can find our current portfolio of PBSA here, and details on how to invest with Property Partner are here.

Our latest investment is a 26 bed PBSA block in Birmingham, a significantly undersupplied market, and boasts a strong yield. Invest before 10am 5 June and benefit from 50% off transaction fees giving a net forecast dividend yield of 5.10%, terms apply.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post Investing in Purpose Built Student Accommodation in 2019 appeared first on Property Partner Blog | Latest News.

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  • The Property Partner UK residential property index showed a total return to investment of -0.64% in February, with capital growth of –0.89% and a net income return of 0.25% for the month.
  • Over a 12-month period the total return was 3.05%, with capital growth of 0.07% and an income return of 2.98%.
  • The index measures the change in average house prices and rents from the Land Registry and ONS, applying deductions for operating costs and refurbishment to generate a net total return to investment. It uses the latest figures available.
UK property market
index performance
at 28 Feb 2019
Income
return

Capital
growth

Total
return

Rental
growth

Monthly return0.25%-0.89%-0.64%0.11%
Annual return2.98%0.07%3.05%1.08%
5-year average
annual return
3.16%4.24%7.52%1.78%
10-year average
annual return
3.36%3.20%6.66%1.60%

UK residential property continues to demonstrate positive performance, with an annual total return of 3.05%, albeit below the longer-term trend level of 7.5% p.a. seen over the past five years, due to slower house price growth.

On a regional basis, Wales was the strongest performing region over the past 12 months with a total return of 6.34%, while London delivered the lowest return of -1.35% due to weakness in the prime end of the market.

UK residential market trends, February 2019

The UK residential property market continues to remain resilient in the face of broader market uncertainty.

Average house prices stood at £225k at the end of February, according to the Land Registry UK HPI based on all UK property transactions. This represents an increase of 0.6% over the previous 12 months, below inflation (CPI 2.2%) and below the long-term house price growth trend of (7.5% p.a.). This suggests political and economic uncertainty has begun to have a more noticeable impact on the housing market, albeit with prices still increasing at a low rate.

The average cost of renting property increased fractionally to £865 in March, with annual rental growth steady at 1.1%. This is below the longer term trend of closer to 2% per year, as well as wages and other prices in the economy, indicating that the real cost of renting has reduced slightly in the past year, on average across all regions.

The overall UK residential sales market remains active in spite of the regular reports of slowing listings and buyer demand from traditional estate agents, hinting at increased competition in that industry and a focus on London, where activity has dropped off noticeably.

96,300 residential transactions were registered in November, a 0.4% increase on March 2018, bringing the total number to almost 1.2m over the course of 12 months. This is -1.5% below the previous 12 month period, reflecting a degree of slowdown but still well above the post financial crisis average.

At the same time mortgage approvals have remained stable over the past 12 months, in spite of falling demand for finance from buy-to-let investors, put off by the removal of mortgage interest rate relief.

Private sector housing completions increased by 14.2% in 2017 but remain well below pre-financial crisis levels and with overall net additions of 217,00 still well short of the 250,000 additional homes the government believe are required each year to meet demand.

UK house prices were 8.2 times average individual earnings in February, albeit with significant regional variation. This represents a 2.5% decrease over the past 12 months as house prices have grown at a lower rate than wages, suggesting housing has become slightly more affordable in the past 12 months. The peak level reached in 2007 prior to the financial crisis (August 2007) was 8.6x.

In spite of high house prices, overall affordability among existing home owners is strong given the extremely low cost of servicing mortgages, with average interest rates on a 5-year fixed deal at 75% LTV currently a shade over 2%, compared to above 6% in 2008. The average cost of mortgage interest was 8% of average earnings in Q4 2018, which far lower than historical norms.

Bank of England data shows half of UK homes are currently mortgaged (13.5m / 27m) with a total mortgage value of £1.4 trillion, representing 20% of the total housing stock value of approximately £7 trillion, at an average LTV among those mortgaged properties of under 47%.

Low levels of debt and low costs of servicing debt mean overall affordability among home owners is strong, providing a significant buffer against potential future interest rate rises. BOE guidance indicates interest rates are set to remain low by historical standards.

Property Partner investor sentiment

In April 2019 we carried out a survey of our investors to find out what they think about the health of the UK property market and how they are going to invest over the next six months. Take a look at what they said here.

Data Sources

  • UK house price index, Land registry, ONS
  • Private rental index, ONS
  • Average rental levels, ONS
  • UK residential property transactions, HMRC
  • Mortgage approvals, Bank of England
  • Housing completions, National statistics (Gov.uk)
  • Average wages, ONS
  • Average mortgage interest rate; Bank of England

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post UK Residential Property Market Index: February 2019 appeared first on Property Partner Blog | Latest News.

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In December 2018 we hit an exciting milestone: our property team sold one of our investment properties on the open market for the very first time, achieving an impressive 43% total return for investors. Here, we explain how we did it.

The opportunity

In June 2018, we identified a number of properties on our platform that represented a great opportunity to sell and realise a significant capital return for our investors in advance of their respective five year anniversaries.

We alerted shareholders in each of the properties, providing them with a detailed case outlining why we believed it was the right time to sell. They overwhelmingly agreed by way of a vote to proceed with the sales.

The first sale

Flat 6, Oldham House, Ilford was the first property we sold on the open market. It was purchased in March 2015 for £165,000 owing to its compelling investment case, underpinned by its central location, proximity to local transport links and the fact that a Crossrail station was due to open in Ilford in 2018. Crossrail was predicted to be a game changer for the local property markets, placing upwards pressure on capital values and rent.

An assessment of the property’s open market value in March 2018 indicated that Crossrail had indeed delivered the anticipated boost to the local market, as the property’s value had increased by 42% relative to the initial purchase price in 2015. In June 2018, 88.7% of investors in Oldham House who participated in the shareholder vote, voted to sell, and our property team began the sales process.

In December 2018, Flat 6, Oldham House, Ilford was sold for £235,000 – £10,000 more than the anticipated sale price as valued by an independent RICS surveyor. Prior to sale, Oldham House was trading on the Resale Market at a 13% discount to the latest valuation.

The returns

Investments made in the property when it was brought to the platform in early 2015 achieved a 43% total return (capital gain, plus dividend income) after fees and costs.

We are very pleased to have achieved these returns for our investors as a result of the sale of Flat 6, Oldham House on the open market – the first time an asset has progressed through acquisition, management and sale on the Property Partner platform.

There are similar properties to Oldham House, Ilford that are currently trading at a discount to valuation on our unique Resale Market. Is now the right time to buy them?

Past performance is not a reliable indicator of future performance.

Further sales

We have since sold a further two properties on the open market, returning 27% and 31% total return respectively.

You can read more about all three properties on their ‘property detail’ page linked below.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post How we achieved a 43% total return for investors appeared first on Property Partner Blog | Latest News.

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Welcome to our Open House series. Every quarter we open the doors on our data to share information about our community, investment performance and measures of liquidity in the Resale Market. The series is born of our commitment to data transparency, and we hope you find it useful.

Our Investors

The figures above are correct as of 31 March, 2019. Figures in green represent a net change in the displayed figures from the previous quarter ending 31 December 2018.

The chart above highlights how investment through the platform has grown since its inception in January 2015.

Our Properties

The figures above are correct as of 31 March, 2019.

Rental Income and Property Valuations

We pay rental income on the 5th of each month, on properties that have fully funded, completed and are trading on our secondary market. In some cases, we have managed to secure higher rent than originally forecast when the properties were listed on the platform.

All our properties are independently valued by a RICS qualified Chartered Surveyor at purchase, and then periodically thereafter. Residential properties are revalued every six months on 31 March and 30 September, and Purpose-Built Student Accommodation and commercial properties are revalued yearly on 30 September. All revaluations go live on the platform on the 5th of the following month. To learn more about the latest quarterly valuation and performance on platform, click here.

The surveyor’s valuation feeds into the Latest Share Valuation for each property, along with mortgage debt, amortised purchase costs and any deferred tax applicable to capital gains. You can download an Excel tracker of the historic share price movements below. The Excel tracker is updated bi-annually after each revaluation and will allow you to track the performance of each individual property.Download Historic Valuations and Dividends by Property

The Resale Market

Investors can realise a capital return by selling shares on the Resale Market at any time, by placing an offer to sell at their chosen price or matching an existing bid order. Alternatively, investors can exit at market value five years after a property’s launch on platform. (Read more about 5-yearly mechanics here). Investors looking to purchase shares on the Resale Market can match a sell offer or place bids at their chosen price. Learn more about how the Resale Market works, here.

The figures above are correct as of 31 March, 2019. Past performance is not a reliable indicator of future performance.

We have also prepared a full download of Resale trading activity, including all transactions matched through bids. This spreadsheet allows you to review trading by property, including the trade date, trade price, premium to Initial Valuation, and premium to Latest Share Valuation.Download Resale Market data

We will continue to share information and data, to give investors a clear view on our performance. For those of you who are not yet investors, we hope that this data will help you make an informed decision as to whether to invest in properties through our platform.

If you would like to provide any comments on this article, or offer your time for a call to provide general feedback, please call us on +44 (0)20 3696 5600 or drop us an email on support@propertypartner.co

We’d love to speak with you.

1. ‘Capital returned to investors’ denotes the total value of shares sold on the Resale Market.
2. ‘Units Funded’ refers to the number of individual flats or houses that have been funded to date.
3. ‘Investments Funded’ refers to the total number of properties that have fully funded on the platform.
4. ‘Matched by bids’ refers to the total value of shares sold, resulting from bid orders being matched.
5. ‘Portfolio traded on Resale Market’ is the total value of shares sold on the Resale Market as a percentage of the total value of New Listing investment.
6. ‘Time to sell’ denotes the weighted average time it has taken to sell shares at or below the 30-day weighted average share price.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post Open House: March 2019 appeared first on Property Partner Blog | Latest News.

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In October 2018, we asked our investors about how they planned to invest over the next six months. The timing was intentional. At that point the UK was scheduled to leave the EU in six months time (29 March 2019), and we thought it would be good to know where our investors stood.

Fast forward six months and…we are still in the EU, for better or worse, we don’t take sides (at least not professionally!). We asked our investors the same question and below are the results.

81% of Property Partner investors who responded are planning to maintain or increase the amount they invest in the next six months. This has increased from 74% when asked the same question in October last year. The number planning to decrease the amount they invest in the next six months has almost halved to 6%.

Brexit and uncertainty in the UK property market continues to be cited as a major reason amongst investors unsure how they will invest and those planning to decrease their investment in the next six months.

But despite Brexit, it is worth noting that normal life carries on and that of the 19% of investors who are unsure or looking to decrease their investment levels, personal circumstances were the most mentioned reason. 39% cited such personal reasons ranging from having new babies, moving home, increased cost of living or simply wanting to use their cash for something other than investing.

The data shown was collected over two surveys, the first conducted in October 2018, with 450 responses. The second was conducted in April 2019 with 481 responses.

The UK property market

Want to know what’s really happening in the UK property market? Tap below to read why we think it’s a lot more stable than you might think.

Since launch, over 13,000 people have invested in property through Property Partner.  The platform now manages over 1,000 tenanted units valued at over £135m.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post How much do you intend to invest in the next six months? appeared first on Property Partner Blog | Latest News.

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“Housing market outlook worst for 20 years, say surveyors” BBC News, 17 January 2019

“Negative housing demand for eights successive month says RICS” Property Reporter, 11 April 2019

“Brexit a major drag on UK housing market, says surveyors” The Independent, 11 April 2019

“House price forecasts heavily downgraded as Brexit freezes market ” The Telegraph, 23 April 2019

You could be excused if you find yourself downbeat about investing in the British housing market. Of course, headline property value changes are quick wins for the press, and provide exposure for the sources; whether you are an investor, a homeowner or looking to get on the housing ladder, house prices are important in understanding your financial capacity.

The perceived sentiment in the market is further compounded by the political and economic backdrop. Brexit, the global economic ‘slowdown’, trade deals between the USA and China, the future makeup of the British government all can have an impact, to various extents.

However, a closer look at the facts provides a different picture. Amidst press speculation,  opinions of those with a vested interest and Brexit mania, there is clarity that the UK housing market is trotting along just fine.

As you read on please remember, your capital is at risk when you invest and past performance is not a reliable indicator of future performance.

Why should we question the headlines?

Some commentators on the UK property market have a habit of writing sensational headlines to sell papers or clicks. In the world of media, bad news is good news, and good news is…dull news. We as investors need to read between the lines.

Let’s take a look at the source behind the above headlines. Perhaps the most trusted body in the property industry, the Royal Institution of Chartered Surveyors (RICS), provides a monthly sentiment survey (the UK Residential Market Survey), used by the Government and the Bank of England among others, and journalists. The survey takes into account the views of over 300 Chartered Surveyors in the residential sales and lettings markets.

Understanding the methodology is important. The survey is both qualitative and quantitative, taking into account statistics (e.g. average price change over a three month period) and the estate agents’ opinions (e.g. ‘how do you expect sales to change over the next three months?’). Worth considering is that it does not include responses from online estate agents, such as Purple Bricks, estimated to represent about 7% of the market.

At Property Partner we respect the work done in this survey; it is a valuable gauge on sentiment within the industry. But it is only a piece of the puzzle – to understand the full picture of the market, it is important to also consider other indicators, such as house price performance, the number of transactions and mortgage approvals, as well as looking at long term investment data sets (more about these later on).

Has the UK property market frozen?

Behind the refraction of the headlines, long term housing market trends are performing…well, just fine, actually. In fact one could argue the stability of the market is so mundane that it doesn’t deserve much headline news coverage, but the savvy property investor would recognise stability as the best news of all.

The statistics for house prices show a good level of stability in the market. Nationwide suggests house price growth has been 18.2% over five years, 41.2% over 10 years and 309.0% over 25 years. Land Registry data, which uses a different methodology, is roughly the same – in fact, their measurement of average property price is slightly more optimistic, registering 26.4% growth over five years, 45.6% over 10 years and 314.2% over 25 years.

Whilst headline rates about London and the South East are likely correct in that they are flat or in some cases declining, we have also seen significant price growth in these areas over the last decade, perhaps indicating a current price correction as well as a response to stamp duty and buy to let tax changes.

Data from LSL Property Services, would suggest that the national picture is being distorted by London and the South East, with solid house price growth over the past year in areas such as the West Midlands (1.9% growth), North West (1.5%) and Yorkshire & Humberside (1.2%) offset by falls in London (down 1.1%) and the South East (down 1.9%) – and of course, this is just based on one year’s performance. Indeed, pockets of London are demonstrating strong annual growth, such as Southwark (24.5% growth), Richmond upon Thames (7.1%) and Ealing (6.5%). It’s worth noting that the number of transactions in January and February tend to always be lower than other times of year, so outliers may have more influence on the rolling 12 month averages reported. The point is that there is growth out there and like any complex market, there will be winners and losers.

Much of the property focus in the press is on Prime Central London (PCL) properties. Compared to the rest of the British property market, PCL only makes up a fraction of the housing market and is of little use as a bellwether for the national market. The number of transactions within PCL are insignificant, only 66 per week out of ~23,000 per week nationwide.

According to HMRC’s latest UK Property Transactions Statistics, seasonally adjusted property transactions above £40,000 are remarkably stable. Over both a five and 10 year period, the stability of the housing market remains impressive, as the below graph indicates.

Source: HMRC UK property transactions statistics

The Financial Conduct Authority (FCA) provides further evidence for this trend, with total value of all mortgages in Q4 2018 in the UK increasing at a moderate rate over one, five and 10 year periods. In fact, the total value of all mortgages in the UK increased by 3.1% over one year, 16.4% over five years and 20.1% over 10 years.

Despite the greater restrictions on lending by banks in the wake of the financial crisis, evidence suggests buyers are happy to continue buying houses and banks remain willing to lend. Of course, this data set doesn’t include cash purchases.

Supply & Demand

Many would argue that the housing market remains dominated by the simple economic model of supply and demand. England is still failing to build enough homes to meet demand in several regions across the country, with a Parliament briefing paper published recently estimating the housing supply needed to meet demand at 240,000 to 340,000 per year. As unhelpful such a wide range is, only 222,000 new homes were completed in 2018, well below what is required and that is not an outlier.

Despite expectations that Brexit would impact migration flow, net migration remains positive at over 280,000 in 2018, with the UK population forecast to grow by 5.5% between 2016 and 2026, and England 5.9%. Other demographic fundamentals, such as record low unemployment, wages both steadily growing and consistently outstripping inflation and an ageing population all point towards a market where more housing will be needed.

Rental Income

Rents continue to grow broadly in line with inflation, rising by 1.2% in the year to March 2019 according to the ONS, with inflation currently 1.8% over the same period. The below graph shows all data since January 2011 (noting inflation measures the UK, with rents measuring London, England and Great Britain), using ONS data. The chart demonstrates that rents have been more consistent than inflation over the past seven years, and for the majority of 2015 and 2016 consistently outperformed inflation.

Source: ONS Index of Private Housing Rental Prices

With cities such as Manchester, Liverpool and Leeds attracting increasing levels of Build to Rent development, and Goldman Sachs having recently entered the market by providing a £118 million debt facility to a development in Birmingham, one could conclude that the market has significant potential for growth outside of London. We will be looking at rental income in more detail in future articles.

A stable market

Investment is not meant to be like The Wolf of Wall Street; a sustainable rate of growth through rental returns and capital value rises over the long term are hallmarks of successful property investment. The UK remains home to world leading companies, leading global academic institutions, a world class healthcare system, mature economy, and a respected political system (albeit one that is going through a bit of a tough time right now!).

Property investment needn’t be complicated. Behind every alarming statistic and headline is the ongoing story of a stable real estate market which provides solid returns. With technology changing the way investors can approach any asset class, an industry, which has often lagged behind in its accessibility and propensity for transformation is being reborn – and with clear, unbiased information real estate can remain at the heart of a solid investment portfolio.

To finish off, we thought we’d write some alternative, albeit less attention grabbing headlines – and all are wholly accurate according to the March RICS survey:

“Estate agents are getting MORE efficient and selling MORE of the properties on their books”

“Estate agents in London and South see INCREASE in number of listed properties per branch”

“Estate agents are selling MORE properties in London than a year ago”

Since launch, over 13,000 people have invested in property through Property Partner.  The platform now manages over 1,000 tenanted units valued at over £135m.

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post What’s really happening in the UK property market? appeared first on Property Partner Blog | Latest News.

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It has been a full week since we reopened the Resale Market after our scheduled close period (you can read the updates we released here), and what a week it has been! We have seen some of our busiest days trading ever and we wanted to update you on where the action has been.

Please note: all data is correct as at 11am 17 April 2019

Resale Market activity by region

To calculate the Change in value of shares percentages shown above, we compared the 30 day weighted average share price at the point the market closed with the weighted average share price since the market reopened (10-17 April). This is a comparison of each region before and after the close period during which a significant amount of price sensitive information was released, including revaluations and dividend adjustments.

It is interesting that London has remained stable in spite of the sentiment in the wider London market. The 39 properties on our platform in London have traded on average £1,794 since the market reopened, although Woodgate Court and Flats 1, 5-7 Tower Mint have had the lion’s share with over £10,000 traded each.

The Picture Works in Nottingham is the main reason for a 1.47% drop in the East Midlands. Without this property the change in the region’s value of shares has actually increased by 0.39%.

PBSA leads the way in terms of volume traded since the market reopened with an impressive £90k worth of shares changing hands in seven days. On average, PBSA properties continued to trade at a premium to their latest valuations continuing a long term pricing trend. East of England comes in last, with only £4,134 traded since April 10 with Vista Towers in Stevenage the main drag on this region’s change in share price.

Top 10 traded properties

Here are the 10 properties that have been traded the most since the Resale Market reopened at 11am on 10 April 2019.

PropertyChange in share priceVolume traded Latest valuation changeDividend yield adjustment
Viaduct Works, Huddersfield-0.02%
£40,722
Golden Hill Fort, Isle of Wight4.97%£32,914+0.19%
Heritage Court, Dinnington7.38%£24,521
Birley Moor Heights, Sheffield2.03%£21,292
Marco Island, Nottingham7.08%£16,558+0.65%+0.75%
Stokes Mill, Stalybridge5.76%£13,128
Ty Glyn, Bangor1.37%£11,192
Flat 9, Woodgate Court, Hornchurch1.59%£11,157+1.72%
Barton Court, Warrington1.82%£10,968
Friars Way & Abbotsmeade Close, Newcastle6.27%£10,952+1.09%

Data in italics relates to changes in dividends yield and latest valuations released during the April close period.

Information correct as at correct as at 11am 17 April 2019

Biggest increases in share price

Here are the 10 properties that have seen the biggest increase in share price since the Resale Market reopened at 11am on 10 April 2019.

PropertyChange in share priceVolume traded Latest valuation changeDividend yield adjustment
George Road, Halesowen9.79%
£8,362+5.57%
Norman House, Derby7.83%£4,002+1.82%
Heritage Court, Dinnington7.38%£24,521
Station Road, Redhill7.30%£1,282
Whitewell Road, Frome7.11%£6,962+4.21%
Marco Island, Nottingham7.08%£16,558+0.65%+0.75%
5 Scholars Way, Romford6.83%£1,268+0.50%
Friars Way & Abbotsmeade Close, Newcastle6.27%£10,952+1.09%
Prospect Court, Market Drayton6.03%£6,627
Stokes Mill, Stalybridge5.76%£13,128

Data in italics relates to changes in dividends yield and latest valuations released during the April close period.

Information correct as at correct as at 11am 17 April 2019

Biggest decreases in share price

Here are the 10 properties that have had the biggest decrease in share price since the Resale Market reopened at 11am on 10 April 2019.

PropertyChange in share priceVolume traded Latest valuation changeDividend yield adjustment
Premier House, Edgware-36.29%
£1,164-24.62%
The Picture Works, Nottingham-25.91%£4,199-15.25%
Vista Towers, Stevenage-5.42%£603-1.00%
Spencer Parade, Northampton-4.62%£1,246+1.29%
-1.25%
Chadwick Road, Langley-4.07%£1,875
Riverside House, Bourne End-3.63%£884-4.07%
Stafford Vere Court, Woodhall Spa-3.32%£7,158-1.00%
Stackyard Farm, Staxton-3.19%£2,759-0.10%-1.00%
Flat 22 Rubicon Court, Romford-2.71%£1,187
St Catherines Mews, Lincoln-2.67%£6,534-0.75%

Data in italics relates to changes in dividends yield and latest valuations released during the April close period.

Information correct as at correct as at 11am 17 April 2019

Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.

The post The Resale Market – activity update appeared first on Property Partner Blog | Latest News.

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