Why invest in Birmingham?(2020 overview)

Why invest in Birmingham? Your 2020 overview.

Thanks to city-wide regeneration, property investment in Birmingham is exploding. A vast and ambitious range of regeneration projects is transforming the face of the city as we know it, pushing the buy-to-let market in Birmingham into a more desirable position all the time.

Gone are the days when the city was associated with dreary ‘60s-style urban grime. In 2019, the city is fast becoming a modern force to be reckoned with in property investment and beyond – and the Big City Plan has played a major role.

This 20-year, £10bn City Centre Masterplan identified five key districts to transform, including New Street Station, Paradise and Eastside. Designed to engage different communities, support growth from the very core of the city and create a world-class city, on completion the plan will create more than 50,000 new jobs, contribute £2.1bn to the economy annually and provide more than 5,000 new homes as well as leisure and recreational facilities.

Key Regeneration Projects

Among the exciting and ambitious range of regeneration projects under the Big City Plan umbrella, the Arena Central development will see a former wholesale market area transformed into a sprawling, high-design retail, leisure and office space. This £500m regeneration project is estimated for completion by spring 2020 and sits alongside the Smithfield project, which will see thousands of new homes built in response to demand for high-quality city-centre residential property, as well as retail and office accommodation. 

The Paradise project is also a major part of the Big City Plan; pitched for completion by 2026, it will comprise a mixed-use development of commercial, retail, leisure and hotel space with three new public squares and an authentic historical backdrop giving a nod to the city’s rich heritage.

Transport and Travel 

Transport and travel are another key focus for regeneration. New pedestrianised areas will be introduced in line with the Big City Plan’s mission to provide enhanced walking and cycling routes as well as create a well-connected, efficient and walkable city centre. 

The city’s infamous ring road will be downgraded, creating a better quality of life for residents in – and visitors to – the centre of the city and supporting another of the Plan’s key goals: to integrate sustainable development and address the impact of climate change as part of the future transformation of the city centre. 

The Connected strategy is also focused on a shift from car travel to sustainable transport, including a clean air zone which will be fully implemented this coming January. Segregated cycleways and extensions to the tram route are also taking place; late last year, the local council voted to demolish the A34 flyover as part of a £27 million ‘regeneration’ scheme. 

As a major cog in the Northern Powerhouse property investment wheel across key towns and cities in the Midlands and North, the HS2 development also sits firmly at the centre of travel regeneration in Birmingham. Set to revolutionise connectivity between Birmingham and London with a commute time of just 49 minutes, the new state-of-the-art station in Curzon Street will create thousands of new jobs, support local communities and encourage more and more people away from the bright lights and expensive property prices of the capital to enjoy a better quality of life in the Midlands.

Regeneration in Wider Birmingham

There’s also plenty of regeneration taking place in wider Birmingham and the extended region. Three-miles north, the vast athlete’s village in Pretty Barr is being constructed to house 6,500 people for the Commonwealth Games 2022; after the event, it will be transformed into housing. 

Additional housing is being built in Sutton Coldfield and other key locations around the extended city, while ambitious projects such as Port Loop are being implemented to transform formerly derelict areas of the inner city. On completion, Port Loop will offer a new urban community including modern housing, a vast leisure centre and traffic-free streets. As the first new public green space in central Birmingham in over a decade, the community will be circled by historic canals and include vast communal gardens located just 15-minutes’ walk from the city centre. 

In Edgbaston, the £330 million New Garden Square project will provide a mixed-use development of offices, apartments, shops, restaurants and bars surrounded by green space with easy connectivity to both the city centre and out into the West Midlands.

Property Investment in Birmingham 

Birmingham is certainly in need of additional housing. With a population already exceeding one million, the city expects to welcome an additional 150,000 residents in the next decade as demand surges from both young professionals seeking prime job opportunities and young families attracted to the affordability and good quality of life. Those aged under 25 currently account for a huge forty percent of the population and this has pushed demand for buy to let in Birmingham to impressive highs.

Buy to let in Birmingham is becoming more and more prestigious with new and innovative housing projects creating additional scope for landlords to take advantage of opportunities. In addition, the city is mimicking the success of her northern counterpart, Manchester, by welcoming both more new start-ups than anywhere outside of London as well as acting as the HQ or a key location for many huge companies, including HSBC, Deutsche Bank, PwC and BBC Three. 

As the HS2 project gathers speed, we are seeing more and more groundbreaking tech and design companies choosing the city to start their business journey. In line with the increasing career prospects and the overall strong quality of life that Birmingham offers, the city has seen an increasing number of young people including couples, families and new graduates choosing to stay in the city and take advantage of its opportunities and benefits. The city’s speedy growth attracts more and more inwards investment for a continued positive growth cycle. One thing’s for certain, the future for buy to let in Birmingham looks very bright indeed.

For more information on property investment in Birmingham, contact Ivy today

Stamp Duty 2020 changes (why they benefit investors)

The Changes In Stamp Duty And The Benefits For Investors

Investors have welcomed the news of a stamp duty holiday announced by chancellor Rishi Sunak in his recent summer statement. The threshold at which stamp duty kicks in was increased from £125,00 to £500,000 – the changes came into effect in England and Northern Ireland on the 8th July and will continue until the end of March 2021. So, what does this mean for investors?

These changes are set to benefit buy to let investors, second home purchases and portfolio landlords with significant tax savings, where the average house buyer would save £4500. It also opens up opportunities for buy to let landlords to transfer their properties over to a limited company structure and gain tax relief on their mortgage interest thanks to the absence of the usual stamp duty charges.

Significant Cost Savings

When looking at the predictions through a wider lens, things still look extremely promising. There is no stamp duty owed on any property purchased for under half a million pounds – with the average home in England worth £248,000, the benefits speak for themselves and the Treasury has estimated that nine out of 10 purchasers will pay no stamp duty at all.

The North East of England and certain parts of the Northern Powerhouse have the highest concentration of properties in this bracket and the best opportunities available for investors wishing to gain a double benefit – a buy to let investment in areas with increasingly high demand and low supply and a saving of £2,460 thanks to the absence of stamp duty.

For those purchasing a £500,000 property, the stamp duty holiday would mean a saving of £15,000 while any property purchased over the £500,000 mark will see their stamp duty costs reduced by £15,000.

The Three Per Cent Surcharge

It should be noted that the three per cent surcharge remains in place whereby investors and second home buyers must still pay a three per cent stamp duty charge on their purchases but no further duty will be owed on the first £500,000 of the property’s value. This would still mean a significant reduction in duty payable thanks to the higher nil rate.

The changes have been a long time coming as the taxation of landlords has been on the government’s agenda since 2016 when it was confirmed that mortgage interest relief would be gradually reduced and then withdrawn entirely. While the implementation of those changes and the tighter restrictions deterred some landlords from making further property investments, the UK property market remained strong and competitive thanks to solid evergreen credentials.

Market Revival

Now, the stamp duty holiday is giving the market another boost, which is especially welcomed after the dark shadow cast by the lockdown. During a time of great economic uncertainty, these latest changes represent a positive step forward and huge opportunity for landlords as this development is set to improve the supply of high-quality rental properties and tip the scales in favour of investors.

While much has been made about the potential disadvantages for first-time buyers, who now face fiercer competition from investors and second or third home buyers, this demographic will still benefit as increased movement in the market will see a wider range of homes available for purchase. On the day that the chancellor made his statement, Rightmove reported its busiest ever 24 hours with 8.5m visits – the highest in the 20 years since the website launched with enquiries up 93% on the same day in 2019. Zoopla also reported strong activity with a 29% increase in visits compared with the average for the previous 28 days. These changes have kickstarted the market and given a much-needed confidence boost to those at all stages of property purchase and investment for an overall stronger landscape.

Buyers across the board will also benefit from a stronger position in terms of qualifying for a mortgage as the reduction in stamp duty leaves a greater gap for a larger deposit. For investors, this increase in movement also means higher availability of quality property in sought after areas. Experts have predicted that the changes will revive the market and stabilise house prices to widespread benefit.

Energy Efficiency Rewards

The chancellor’s summer statement brought further positive news for property investors as the chancellor announced a range of measures designed to support landlords upgrading the energy efficiency of their homes. Set to be introduced in September, the scheme fills the gap left by the withdrawal of the landlords’ energy-saving allowance and rightfully rewards those homeowners who are consciously making a decision to operate a more environmentally friendly property portfolio.

While the full details are yet to come available, the scheme will offer the opportunity for landlords to apply for vouchers to cover at least two-thirds of the costs of improving their properties – for example, by installing loft insulation or double glazing.

Vouchers would come to a maximum value of £5,000, or more for low-income households. When we number crunch, this means households could save up to £300 a year on their energy bills, offering landlords another opportunity to improve the quality of their property and attract or retain good tenants.

A Stronger Economic Picture

This highlights another benefit of the stamp duty holiday – the cost savings here provide landlords with excess capital which they can then invest back into their homes to boost their competitive edge and attract a steady stream of tenants for a solid rental income. The stamp duty holiday is also set to have a positive knock-on effect on related industries such as house builders for an overall more solid economic landscape.

For more information on how to take advantage of the stamp duty holiday and gain access to the highest quality buy to let investment properties contact our team at Ivy today. We offer a combination of industry expertise and in-depth market knowledge to provide all of our clients with the highest quality prospects.

Investing off-plan (Why it works)

Investing off plan (Why it works)

For many investors, off-plan can be the best way to secure the most desirable properties and do so at below market value. But what exactly does it entail, and how can you make sure it works for you?

What Investing in Off-Plan Means

Off-plan property investment means investing in a property either before or during the construction process. It became particularly popular following the credit crunch when many banks withdrew their funding into property development, opening up the market to a different type of investor. 

There are many potential benefits and providing you choose wisely, you are likely to reap the rewards. Off-plan is a way of securing investment into luxury property in a prime location before it hits competitive market prices. Furthermore, with many developments being entirely sold out before completion, it is often the only way for investors to access the most desirable properties.

The Benefits of Investing Off-Plan

Properties that are not yet complete are generally priced far below market value, often by as much as 20%. During the construction process, investors benefit from capital growth and even interest on their deposit, in some cases. Many off-plan property investments are also extremely flexible when it comes to the deposit. Instead of intense pressure to put up a large upfront sum, payments can often be split incrementally over weeks or months.

On completion of the build, investors will likely benefit from strong capital appreciation as the property and rental prices must fall into line with the current market values. As many off-plan property investments are springing up across up-and-coming areas, this only serves to increase the possibility of such a prospect. 

How to Make the Right Choice with Your Investment

As with all property investments, location is crucial when it comes to off-plan. Homes are rising in value in many towns and cities across the UK – the Northern Powerhouse in particular, which makes these some of the most prime areas for investment.

With this type of investment, it’s essential to look with a long eye and consider any factors that may impact on the property value in the future. This might include other property developments or general investment into local infrastructure that means improved transport links, easier and quicker commutes, and better local facilities, all of which will push up property prices. 

You also need to consider the build itself and which amenities, fittings and value-added features are likely to be included as this is likely to generate higher and more consistent returns on completion. 

Historic house prices and future trends are also a good indication of the popularity of your chosen area and whether rental prices are consistent or increasing. This will also give you a good idea of what the property is likely to generate on completion and whether strong capital growth is likely to continue.

Due Diligence Process

Due diligence is essential when investing off-plan as the quality of your investment is only as strong as the quality of your build. The best way to minimise risk is to choose a reputable, reliable developer with a strong track record and, ideally, speciality in the area. 

It may sometimes be a case of choosing a mid-market as opposed to a high-end developer to find an investment that suits your financial needs. As long as they can be proven reliable in completing projects to standard, on time and to budget, then that should suffice. 

Some developments may hold investors’ deposits in an escrow account or be covered by a warranty, but many investors choose to take solicitors’ advice for best practice and stronger peace of mind. Due diligence checks also mean confirming that the property has full planning permission; otherwise, you risk construction being cancelled. Be wary of developments that ask for very high upfront deposits, which could mean they are poorly funded and present a higher construction risk. 

Typically, developers will have a brochure that includes essential details. In cases where the construction is already underway, you may wish to view a property before making any decisions about investing off-plan. As an alternative and for those new builds that have not yet begun, we advise asking the developers to provide detailed floor plans and any supporting documentation such as graphics and video content. If the developer has completed another build already, you can ask to visit the site and take a view on the finished product including utilities, interior design and floorplan. 

Conclusion

Buying off-plan offers investors prices up to 20% below market value and the earlier you invest, the cheaper it will be. But it’s important to do your research, invest in the right area and select a trustworthy developer to harness the potential of this investment strategy. There is a massive opportunity for prospective investors, but it’s important to understand the complexities of the market before making any decisions. 

Take the advice of property investment experts who know the market inside out and can recommend tailored investments to suit your financial needs and ambitions. Contact our team at Ivy today for more details.