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Leeds - a thriving buy-to-let market with healthy yields Hot Topic
What does 2017 hold in store for property investors?
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appy New Year to you all and welcome to issue seven of Property Focus - our free online magazine for landlords, letting agents and property investors.
In this issue, we'll be taking a close look at Leeds. As usual, we will also be rounding up all the latest property news, views and figures, and looking at what 2017 holds in store for the UK property market. Plus, for a chance to win ÂŁ50 to spend at Amazon, simply answer the following question: Which popular sweet was invented by accident by a Leeds scientist? Email your answer to email@example.com or tweet it to @rentguard for a chance to win!
Richard Williams â€“ Editor firstname.lastname@example.org
The Great Hall of Marshall's Flax Mill
THE SURVEY SAYS...
Characteristics show that there is a trend of landlords moving towards larger portfolios. Landlords are looking to expand their rental portfolios in 2017, new research has revealed. A new survey of landlords and property managers in England has been carried out by the Council of Mortgage Lenders (CML) partnered with BDRC and the London School of Economics to replace a previous one taken in 2010.
The vast majority of respondents in both 2010 and 2016 (92% and 95% respectively) do not consider letting to be their main business or occupation. 87% of landlords in 2016 revealed that they manage their portfolio as an individual or as a couple which is almost unchanged from the 89% which reported the same in 2010.
The updated survey aims to give an insight into how landlords have responded to recent changes in the rental market.
Furthermore, the proportion operating as a company or other group made up 14% in 2016, a 3% rise from 11% in 2010.
The survey reveals that while most landlords still own just one property in 2016, there is an apparent trend towards larger portfolios.
The share of landlords receiving no rent for example as a result of a property being unoccupied has fallen significantly from 21% in 2010 to 5% in 2016 which is positive news for landlords.
Between 2010 and 2016, the proportion of respondents who manage only one property fell from 78% to 63% while the share of landlords managing two to four properties rose from 17% to 30%.
The survey went on to reveal that the share receiving up to 25% of their income from rent has risen by almost 7% to 65% while the proportion claiming between 25% to 50% of their income from rent is up to 21%.
In each issue we take a sneaky look at what’s been going on in rental properties across the UK Cricklewood landlord ordered to pay back £700,000 and has property repossessed
Company fined £250,000 following disregard for planning rules’
A landlord from Cricklewood had been ordered to pay more than £700,000 after converting his semi-detached house into nine flats. He was originally refused consent but went ahead and rented out the flats despite the fact that they were ‘substandard in size and poorly designed.’
A company letting out an illegally converted house in North West London has been ordered to pay £250,000 under the Proceeds of Crime Act 2002.
The landlord was ordered to pay back a record breaking amount including £555,954 in profit that he was able to generate from the illegal tenancies, as well as a £65,000 fine for planning offences and £80,000 in legal costs. Failing to pay the money in full means the landlord could face a prison sentence of up to five years and four months. However, the rogue landlord has struggled to raise the funds, meaning the north London property has been repossessed. The six bedroom house has been added to an auction with a guide price of £675,000.
The property was converted into five self-contained flats with an additional outbuilding constructed in the back garden. The property further put tenants’ health at risk because it suffered from severe mould and fungus growth. While Brent council demolished the outbuilding, the company continued to rent out the rooms in the property leading the council to prosecute the company for breaches of planning law to which they pleaded guilty at Willesden Magistrates Court. The company has been fined £250,000, which represents the rental income that the company has made, in addition to £20,000 in costs to Brent Council. Under a Home Office Incentivisation Scheme, Brent will receive approximately £90,000 when the order is paid and will use this money to fund future enforcement work.
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RENTING BUYING RENT
Property Prices saw a growth of 6.5% in 2016
The number of rent rises in the UK has reached the lowest level since
December 2015 as recorded by letting agents. (Association of Residential Letting Agents)) (Royal Instituition of Chartered Surveyors)
Landlord confidence is bouncing back, with 54% of investors optimistic over the prospects of their portfolio. The commercial property market in the City of London remains attractive to overseas real estate investment despite Brexit, with (Kent Reliance Buy-to-Let Britain Report)
approximately ÂŁ2.5 billion of transactions taking place in the City since the vote.
Landlords in the UK private
UK property prices are tipped
sector are not facing large extra costs due to the new ban on letting agent fees, with the average increase being just ÂŁ25 per month.
to rise by just 2% next year, while inner London prices could fall by 5%
(The House Shop) (Rightmove)
HOT TOPIC It is safe to say that 2016 was an eventful year, a new prime minister, the surprising outcome of the EU referendum, Donald Trump coming to power in the US and a number of hits to UK landlords from the government. But in this issue’s Hot Topic, we are looking forward, not back and asking:
Will 2017 be a good year for property investors?
While recent forecasts suggest that residential property prices in the UK as a whole are likely to be flat, or see minimal increases in 2017, some agents surveyed are optimistic on seeing a return to sustained price growth in the second half of the year. Estate agents Savills have forecast that average UK house prices are expected to remain stagnant in 2017, however they expect them to increase by 2% in 2018, 5.5% in 2019 and to a total of 13% by the end of 2021, meaning that 2017 could be a good year for investors to expand their portfolios while prices are modest, and reap the rewards in the coming years. An imbalance in supply-demand could also mean that rents will outperform house price growth, rising 19% over the same period, potentially increasing profits for buy-to-let investors in the private rented sector. “Challenging circumstances can create exciting new opportunities for investors. Political change can have a big impact on property markets, but that doesn’t mean the impact will necessarily be negative. Where one asset class or location may miss out, another will surely come along to reap the benefits!” says Jean Liggett, CEO of property investment consultancy Properties of the World.
Commercial Property Many estate agents have seen a shift in buyers with traditional residential buy-to-let portfolios moving towards purchasing hotels, student accommodation and care homes, a trend that is expected to continue in 2017. The commercial property market in the City of London is also set to remain attractive in 2017,
despite Brexit, especially to buyers from Southeast Asia, according to new figures from Knight Frank. Since the result of the vote, approximately £2.5 billion of transactions have taken place in the City, more than 80% of which can be attributed to overseas buyers, and there are higher hopes for the next 12 months as the market adjusts to the “new normal” and buyers take advantage of low interest rates.
Good returns in the North Plans for the ‘Northern Powerhouse’ scheme, which would pool the strengths of the cities and towns of the north as one cohesive unit, remain intact and are designed to rival London and the South East as the main driver of economic growth in the country. “Building the Northern Powerhouse is a longterm government priority and central to our plans to rebalance the economy,” said Andrew Percy, Northern Powerhouse minister. Buy-to-let landlords could be wise to turn their attentions away from London and towards the major towns and cities in the north of England, which could offer greater yields and potentially better prospects for capital growth in 2017 and beyond.
“The dual impact of Brexit and tax changes in the UK are going to be felt in 2017. It’s going to be a very interesting year for the property sector, with the usual laws of supply and demand encountering some significant interference from external political and economic factors,” says Jean Liggett.
Stagnating sales While there was a rush of sales in March 2016 as investors looked to beat the tax relief and stamp duty changes, there was a considerable drop in property transactions from April onwards, while the Brexit vote further added to uncertainty in the summer. 2017 is expected by many experts to continue in the same vein, dominated by yet another landmark political event in the triggering of Article 50 of the EU’s Libson Treaty, which Prime Minister Theresa May has said will happen by the end of March. “The biggest talking point in 2017 will be triggering Article 50 to begin the process of Britain’s exit from the EU, and what immediate effect this might have on property prices and the value of sterling,” said Camilla Dell, managing partner at Black Brick property consultants.
Stamp duty The 3% stamp duty hike on buy-to-let and second properties introduced in 2016 has slowed the housing market, yet reportedly raised only half the amount of money the Treasury predicted, it is therefore unsurprising that there are calls for a Government rethink in 2017. The changes, and in particular the 10% levy on properties worth between £925,000 and £1.5m and the 12% charge on properties above that, have had a negative impact at the top-end of the market, best displayed by the slump in home sales and prices in London’s prime areas. The effect is expected to continue by many well into 2017. “Disproportionately high stamp duty levies introduced in the last two years have done considerably more damage to the market, its associated industries and the supply of new homes than anything else, including an impending Brexit,” says Edo Mapelli Mozzi, CEO of Banda Property.
Prime London Market The signs are that prime central London is set for another year of critically low transaction levels, combined with slightly negative price growth, as high buying costs and economic uncertainty continue to suppress demand. “London’s golden postcodes are in stalemate going into 2017 and this is unlikely to change in the foreseeable future,” said Louisa Brodie, Head of Search and Acquisitions at Banda Property.
CITY SPOTLIGHT In each issue we shine our spotlight on a different part of the UK, focussing on what it has to offer everyone from property investors to casual day trippers.
Located in West Yorkshire, Leeds is the third largest city in the UK (after London and Birmingham) in terms of population. The origins of the city can be traced back to the 5th century when the name referred to a wooded area of the Kingdom of Elmet.
Connections With good connection to London and the rest of the UK, Leeds has the third busiest railway outside of the capital, as well as the ninth busiest airport in England. Whilst the region was identified as one of the most car-dependent cities in the UK in 2012, a major investment of more than £180million in bus services to double passenger numbers within 10 years and improve air quality has been proposed to combat this. The second phase of High Speed 2 rail network also CITY SPOTLIGHT
plans to better connect the city to London via East Midlands Hub and Sheffield Meadowhall, allowing for much quicker journey times.
Economy Historically, Leeds was a major centre for production and trading of wool, especially in the 17th and 18th centuries. Today, the city has arguably the most diverse economy of all the UK’s major cities. After London, Leeds is the largest legal and financial centre in the UK, with its financial and insurance services industry worth an estimated £2.1 billion, with over 30 national or international banks located in the city. The city is one of the major manufacturing hubs of the UK, particularly when it comes to engineering,
DID YOU KNOW? Leeds attracts more annual visitors than traditional holiday destinations such as Brighton and Torquay.
Leeds Clarence Dock LEEDS LEEDS
DID YOU KNOW? Leeds’ motto is ‘Pro rege et lege’ which means ‘For king and the law’ in Latin.
printing and publishing, and food and drink, with around 1,800 firms employing an estimated 39,000 people. Other major companies based in the city include William Hill, International Personal Finance, ASDA, Leeds Building Society, Northern Foods, Capita Group, KPMG, Direct Line, Aviva, Yorkshire Building Society, and the BT Group. Leeds city centre has over 3.5 million square feet of retail floorspace, five miles of shopping streets and one of the country’s largest pedestrianised shopping areas.
Green spaces As well as a bustling city centre, Leeds has many large parks and open spaces. With more than 700 acres of parkland, lakes and gardens, Roundhay Park is one of the largest parks in Europe. Other areas such as Middleton Park, Temple Newsam, Woodhouse Moor and Meanwood Park, help make Leeds one of the CITY SPOTLIGHT
Greenest cities in the UK.
Education Leeds is home to four universities and has the fourth largest student population in the country. Its strong demand for rental properties makes it a firm favourite with landlords in the student sector. The city was voted the Best UK University Destination by The Independent newspaper in 2011.
Property market Leeds and Manchester were among the British cities that enjoyed strong growth in house prices in 2016, at a time when the London housing market was slowing, according to end of year figures. In November 2016, the average house price in Leeds was £155,100, a year-on-year increase of 6.2%, according to the recent Hometrack UK Cities House Price Index.
Leeds Town Hall
House sales in the city were up 6.7% in 2016, a rate only surpassed in the UK by Leicester with 7.3%. Rents in the city have also jumped 3.6% over the past 12 months, with an overall yield to investors of 4.8%. ‘Leeds is a city in growth, economically and physically and is, we believe, very well placed to withstand the impact of external forces. Job creation is high, a wide variety of skills are within reach, our economy is diverse across sectors as disparate as manufacturing and legal and professional services and the housing market is accessible to most,’ says Morgan Estate Agents. ‘Whilst the London market is unaffordable to most and due a correction, the same should not be said of Leeds. A recent search on Rightmove of all Leeds postcodes showed that there were over 120 three bedroomed properties available for sale at under £120,000’.
Leeds Southbank At 136 hectares, the South Bank of the city centre represents one of the largest city centre regeneration
projects in Europe. Equivalent in size to 190 football pitches, it is hoped that the residential and commercial initiative will create over 4,000 new homes as well as 35,000 new jobs.
Quarry Hill Plans for a multi-million pound regeneration project which will help transform Leeds’ ‘cultural quarter’ have also been given the green light. The 685,000 sq ft Quarry Hill scheme next to West Yorkshire Playhouse, is the latest significant step in the transformation of that part of the city centre, which also houses the BBC’s Yorkshire headquarters, Leeds College of Music, Phoenix Dance and Northern Ballet. This exciting mixed-use development will include new homes, offices, a multi-storey car park, leisure and retail facilities, a medical centre and a series of public squares.The site was a former social housing development and has been vacant since the 1970s. LEEDS
Leeds – the facts and figures Get the lowdown on the city with our handy infographics
PROPERTY RENTS BY BEDROOMS (source: home.co.uk) 1 BEDROOM
AVERAGE RENTS BY PROPERTY TYPE (source: home.co.uk) ROOM
AVERAGE CAPITAL GAINS 8.3%
AVERAGE YIELD 10.79%
AVERAGE ASKING PRICE (source: home.co.uk) £188,611
Twinned with Leeds is twinned with the below cities: Dortmund
Tourism • The city has received several accolades in the field of tourism, including being voted as the “UK’s favourite city” by Conde Nast Traveler magazine in the past. • Tourism supports over 20,000 full-time jobs, and on average Leeds attracts around 1.5 million visitors annually. • Visitors from across the UK and Europe bring in nearly £735 million to the local economy each year.
Population = 794,250 (2016 estimated)
Did Yo u Know?
Jelly Tots w ere acciden tally d isco vere d in 1967 by Lee d s scientis t Br ian B offey, f ro m Horsforth. H e was tr yin g to co me up w ith a w ay to pro d u ce a pow dere d jelly that s e t in s tantly when it wa s adde d to co ld water.
PLACES TO VISIT
Leeds is a modern and vibrant city with plenty to offer day trippers. Below are our top picks:
Kirkstall Abbey Abbey Road, Leeds, LS5 3EH
Kirkstall Abbey is a Cistercian house founded in 1152. The picturesque remains include a roofless church with a narrow choir and ruined tower, an almost completely preserved chapterhouse, a refectory and kitchen. www.leeds.gov.uk/museumsandgalleries/Pages/Abbey-House-Museum.aspx
St. John the Evangelist’s Church 23 New Briggate, Leeds, West Yorkshire, LS2 8JA
The finest of Leeds’ churches is St John’s in New Briggate, built in 1634. The interior is notable for having two naves, as well as its original Renaissance rood screen, pulpit and stalls. www.visitchurches.org.uk/visit/church-listing/st-john-leeds.html
Trinity Leeds Albion Street, Leeds, LS1 5AT
Trinity Leeds is a modern shopping centre located in the city centre. It opened in 2013 with over 130,000 recorded visitors on opening day. The centre has an incredible display of architectural and sculptural pieces of art, designed by Scottish sculptor Andy Scott. trinityleeds.com/
Harewood House Harewood House Trust, Harewood House, Harewood, Leeds LS17 9LG
Harewood is one of the Treasure Houses of England. The house was built in the 18th century and has art collections to rival the finest in the land. There are exhibitions of contemporary art, an award-winning educational department, renowned Bird Garden, Farm Experience and over 100 acres of exquisite gardens for visitors to explore and enjoy. harewood.org/
Grand Theatre 46 New Briggate, Leeds, LS1 6NZ
The Theatre and Opera House was built in 1878. The interior has unique gothic motifs such as fan-vaulting and clustered columns and is widely regarded as a major milestone in Victorian theatre building. www.leedsgrandtheatre.com/Online/default.asp
Royal Armouries Museum Armouries Drive, Leeds, LS10 1LTQ
The Royal Armouries is Britainâ€™s national museum of arms and armour. There are over 8,500 objects on display in five galleries, covering some 3,000 years of history. royalarmouries.org/visit-us/leeds
Temple Newsam Templenewsam Rd, Leeds, LS15 OAE
This Tudor-Jacobean mansion is set in a 900-acre park on the outskirts of Leeds. It was the birthplace of Lord Darnley, the husband of Mary Queen of Scots. The house stands amid beautiful grounds with marvellous rose bushes and rhododendrons, as well as one of the largest working rare breeds farms in Europe. www.leeds.gov.uk/museumsandgalleries/Pages/Temple-Newsam.aspx LEEDS
Famous Residents Leeds has a rich heritage of historical figures, as well as musical and film personalitites. Here are just a few of the city’s favourite sons and daughters.
George Edwin Ellison
Ellison was the last British soldier to be killed in action during the First World War. He died at the age of 40 at 09:30 on 11 November 1918; 90 minutes before the armistice came into effect. Ellison was born in Leeds and is buried in the St. Symphorien Military Cemetery in Belgium.
Nicknamed “The Killer”, Madden grew up in Leeds but was a leading underworld figure in Manhattan, most notable for his involvement in organised crime during Prohibition. He also ran the famous Cotton Club and was a leading boxing promoter in the 1930s.
Born in the Harehill area of the city, Melanie Brown became a member of Spice Girls in 1994 where she was nicknamed ‘Scary Spice’. The group’s three albums sold more than 40 million copies worldwide and they had nine UK number one singles.
Louis Aime Augustin Le Prince Born in Dijon, France in 1841, Louis Aime Augustin Le Prince was a French inventor who shot the first moving pictures on paper film using a single lens camera. He has been heralded as the “Father of Cinematography” since 1930. Le Prince conducted his ground-breaking work in 1888 in the city of Leeds.
Nicola Adams Nicola Adams MBE was the first British woman to win an Olympic boxing title. She is the 2012 and 2016 Olympic gold medallist flyweight division. Adams was born in Leeds in 1982, and was educated at Agnes Stewart Church of England High School in the city.
Michael Marks & Tom Spencer Back in 1884, Michael Marks opened up his Penny Bazaar stall in Leeds Market before enlisting the help of Tom Spencer a decade later. They moved to a permanent spot just around the corner soon after and went on to become the internationally known brand Marks & Spencer. CITY SPOTLIGHT
History The phrase ‘Industrial Revolution’ can be interpreted in many ways and while it is most often considered a matter of technical innovation, it is also the economic, social and political changes made possible by the revolution in technology. For Leeds, wool and cloth were the starting points for this revolution. Leeds’ first beginnings in its eventually prominent wool trade may have sprung from the wool producing of the Cistercians at Kirkstall Abbey. The township was mainly concerned with agriculture and trade related to what was considered the necessities of life, primarily food and clothing. Traded woollen cloth was predominantly manufactured at home, produced in the villages and settlements surrounding Leeds. In the centre of the city itself however there was a fulling mill as early as 1400 and cloth dying may also have been an early centralised activity. Ralph Thoresby, credited with being the first historian of Leeds, was involved in the establishment of the first covered cloth market in Leeds. Known as the White Cloth Hall, the market was erected in Wetherby in 1710 and opened in May 1711. The market lasted for 65 years before being moved to a new site in the Calls and then once more to its present trading hall. Leeds prospered in the seventeenth and eighteenth centuries, expanding to become the centre of the woollen industry. This expansion continued rapidly in the Industrial Revolution. During this period of time, the population of the city grew from 10,000 to 30,000 and Leeds was identified as mainly a merchant town, manufacturing cloths and trading with Europe via the Humber estuary. By the 1770s, Leeds merchants were responsible for 30% of the country’s woollen exports, valued at £1,500,000 when 70 years previously Yorkshire accounted for only 20% of exports. While the closure of coalfields and the invention of synthetic fabrics and materials led to a relative decline in the industry, the region’s mills continue to produce the majority of England’s worsted and woollen fabric. These are used by many of the world’s luxury fashion brands and high end retailers including Gucci, Hugo Boss, Prada, Burberry and others.
Did you know?
Soft Yorkshire Pennine water has been claimed to be one of the secret ingredients for the production of high quality cloth in Leeds and the region.
SALES & RENTAL INDEX Average Rent per Region Overall UK average = £898 (+3.1%) North East = £524 (2.8%) North West = £678 (+4.5%) Yorkshire and Humber = £620 (+2.4%)
East Midlands = £596 (+1.6%) West Midlands = £662 (+4.3%) East Anglia = £901 (+3.1%) Wales = £604 (+2.4%) London = £1,521 (+1.6%) South East = £1,009 (+4.7%) South West = £786 (+2.5%) Homelet Rental Index: November 2016 (Year on year change)
Average House Price per Region Overall UK average = £216,674 (+6.9%) North East = £124,749 (+2.7%) North West = £148,586 (+4.6%) Yorkshire and Humber = £150,401 (+4.2%)
East Midlands = £176,084 (+7.5%) West Midlands = £177,937 (+6.2%) East Anglia = £279,148 (+12.3%) Wales = £147,065 (+4.4%) London = £474,475 (+7.7%) South East = £312,509 (+9.1%) South West = £240,322 (+7.2%) UK Land Registry: October 2016 (Year on year change)
Chapter House of Kirkstall Abbey
Did you know?
The first ever Cluedo board was created in Leeds by game makers Waddingtons in 1949.
Design We hope you've enjoyed this issue of Property Focus, we welcome any feedback or suggestions, please email all correspondence to email@example.com.
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Published on Jan 13, 2017
The City of Leeds comes under our spotlight in this Issue. We'll also be rounding up all the latest property news, views and figures, and lo...