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Confidence in London market is good news for landlords

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The launch of a home finance product designed to help buy-to-flip investors has given the whole of the London property market an unexpected shot in the arm. 

Confidence in London market is good news for landlordsSmall-scale mortgage provider OneSavings Bank, a business that was only established in 2011, has unveiled a loan package aimed at secondary investors in property developments.

As a business whose success is based on getting landlords the maximum rental income on their property, Assetgrove is not in a position to recommend one finance product over another.

But the significance of this new loan being offered in conjunction with mortgage broker John Charcol is that it shows the buy-to-flip market is back to a level of strength last seen before the financial crisis of 2008.

In those heady days – when it was not unheard of to take a taxi from one end of the office to the other and claim the fare on expenses – investors who bought into off-plan developments would often sell on their holding to a secondary investor before the scheme was complete in order to cash in on any gain in value made.

And the secondary investors were still able to profit because the plot in question was continuing to rise in value.

Since 2008, this small segment of the London property market has been restricted to cash investors because many finance companies have cold feet about lending on homes that have yet to be completed.

The fact that this new mortgage product is only being made available for secondary investments in London and south-east England shows OneSavings Bank has confidence in the capital’s prospects for property price growth.

This confidence is shared by the Royal Institute of Chartered Surveyors, which is saying house prices in London and the south-east will continue to rise by 5% a year for the next five years.

London property values jump 12.4%

New property finance product targets buy-to-flip marketAlthough that figure falls short of the 12.4% rise in London house prices reported by the Land Registry last month, the RICS’s optimism is still welcome.

However, these views contrast with the opinion of property economist Hansen Lu.

Mr Lu, who works for independent research company Capital Economics, claims the outlook for prime central London housing is “lacklustre” and “prices in the most expensive parts of the capital will struggle to do more than mark time” during 2016.

He warns that the relatively strong pound, global economic turmoil, the free-falling oil price and tax increases for high-value homes could paralyse the top end of London’s housing market over the next 12 months.

Assetgrove is not in the business of making property price predictions. We are unable to see into the future.

But we are sure that all the time the Bank of England’s base rate remains at 1% or below, London experiences economic growth and demand for property in the capital outstrips its supply, the rental market will stay strong.

In fact, London’s landlords will play an increasingly important role for many years to come.

However, we recognise that the increasingly intrusive and complex legislation being passed by the government – which now includes fines of up to £3000 if a landlord fails to confirm a tenant has the right to live in the UK – places an unfair bureaucratic and legal burden on London’s landlords.

Since being set up in 1975, Assetgrove has worked with landlords to help generate the maximum rental income on their property.

That is why we offer a rent guarantee scheme that allows landlords to receive a fixed monthly income while we get on with the business of handling all the day-to-day tasks of managing a property portfolio, such as inspections, lettings, viewings, maintenance and legal issues.

Whether you let out a single property or a large portfolio of rental homes, Assetgrove’s rent guarantee scheme can take the hassle out of managing tenants. For more information about our services for landlords, contact Assetgrove today.

Neil Jennings

Neil is the Operations Director at Assetgrove Lettings, London's Leading Rent Guarantee Company, providing Landlords with no voids, property maintenance, fee-free property management and stress-free service.

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