Why you should invest in a property in Birmingham

Why you should invest in a property in Birmingham

Birmingham is one of the fastest growing cities in Europe and with house prices at £234,827, there’s never been a better time to invest into the West-Midlands area.

A thriving and expanding economy

Birmingham is the third biggest city in the UK, with a population of 2.607m as of 2020. Of that demographic, 64.25% are working age.

That population is one reason why businesses like HSBC, Deutsche Bank, and PWC have built headquarters in the city. HSBC’s created 1000 jobs alone.

The benefits of HS2 Railway network

Although it has been delayed till around 2033, when Britain’s planned high-speed railway is built, it will cut the journey time between Birmingham and London by 40% to one hour and 21 minutes.

The city will sit at the heart of the rail network, which will boost property prices.

Properties in 1-mile areas around London’s Crossrail saw their prices climb by 66% in 8 years.

HS2 Railway network

Ongoing regeneration projects in the city

Birmingham has a series of major regeneration schemes currently ongoing. The Big City Plan will create 50,000 jobs, and pump £2.1 billion into the local economy. The Midlands Metro Expansion will further improve transport links for the city. ‘Paradise’ is a £700m project adding 1.8m square feet of office space in the city centre.

Growing recent rental demand

According to Barrows and Forrester, there was a 25.2% rise in rental demand in the Birmingham area in 2021, one of the largest increases in rental demand recorded last year across the UK.

As businesses have made their headquarters in the city, it has attracted workers from across the midlands, and with an average gross rental yield of 5.25%, there’s scope to make strong returns.

Your chance to invest in Birmingham

Property Cohort have many investment opportunities in the Midlands and North of England.

Email us at: investments@propertycohort.co.uk to book in a strategy session and view your opportunities.

Winners & Losers of Property in 2021

Winners & Losers of Property in 2021

A look at some of the people who came off better in 2021’s UK Property Market, and those who got less lucky with the tumultuous circumstances the last 12 months have brought us.

WINNER: Stamp Duty Tax Holidayers

Arguably the biggest driver behind the busiest property market since 2007, the stamp duty holiday saw thousands allowed to avoid paying tax on properties below the value of £500,000.
Though this helped drive up prices by nearly 20% in some areas of the UK, lots of people were able to get on the property ladder avoiding a tax that could have priced them out previously.

LOSER: Hesitant Property Sellers

Rightmove reported that house sales between March and April 2021 were up 55% on 2019 levels, with demand for properties reaching new levels.
Though house prices remain high, many estate agents expect the market to cool in 2022. Those who sat on the fence over selling their property in 2021 potentially missed out on making more money from their sale.

WINNER: Homebuyers in London

One area in the UK that in some cases saw house prices decrease against the curve, was London. Nationwide reported that the capital was the only region in the UK to experience lower annual price growth in 2021 compared to 2020, with 6.2% growth year-on-year.
Average house prices there may still be sky-high, but some buyers may have got a property at a lower price than expected.

LOSER: Homebuyers in Leeds

The High-speed railway project, HS2, which has been in development for years, received more updates in 2021. Firstly, the completion of the tracks joining London to Birmingham is now likely to be delayed from 2026 to 2029-2033. Worse though for people in Leeds and others on the proposed ‘Eastern Leg’, is that their link to HS2 was scrapped in November 2021. That’s despite Transport Secretary Grant Shapps saying in May, “We are going to include HS2 on the eastern leg to Leeds”.

WINNER: Property Investors Flipping Homes

‘Flipping’ is where a property investor purchases a property, then looks to sell it a short time later at a higher price.
Figures from Hamptons showed that 19,000 properties were flipped during the pandemic, with the average investor making £48,190.

LOSER: Buyers Delayed by the Pandemic

Our ‘How I got on the Property Ladder series’ revealed buyers who, after agreeing purchases early in 2021, had to wait several months to move in. Even while the COVID situation in the UK began to stabilise, the Aldermore found that between March 2020 and March 2021, the pandemic cost first time buyers over £1 billion in extra costs, or around £5870 per person on average.

“Purchasing my home during the COVID-19 Pandemic was a challenge. I made my offer in March 2020, and completed at the end of June 2020, due to lawyers working from home. Furniture was also delayed by several months, so I didn’t move in until August 2020” -Lillian (How I Got on the Property Ladder Series 3)

Olamide’s story – How I got on the Property Ladder (Series 3)

Olamide’s story – How I got on the Property Ladder (Series 3)

Here’s how 23-year-old Olamide turned his finances around and bought a home just 15 months after completing university.

Who is Olamide?

Olamide is a 23-year-old financial analyst at Barclays.

“I did a 4 year course at university (a work placement year) and during that year I severely mismanaged my finances and so after that, I went searching on how to get better at personal finance. This search led me to property and that got me interested in all things buying a home.”

What problem did he face?

Olamide got his finances in shape, and began the hunt for a property which suited his needs. He found a few hurdles on the way.

An initial struggle was looking for the type of property I wanted in my price range and in my radius. I would say what I wanted was very specific and so took a while to even find properties to view. The next struggles were managing the process of the purchase along with working full time. The seller of the property I was buying was in a chain further up and would lose their property, which would cause my purchase to fall through if I didn’t exchange by a certain date, so leading up to that was manic.

What happened?

After previously sorting out his finances, Olamide now knew how to get on top of the situation.

“To overcome I’d say you need to manage your time very effectively. I kept on top of all parties (solicitor’s and estate agents) and document/tracked absolutely everything so I didn’t forget anything along the process, and it’ll help with any possible future property ventures.”

What did he buy?

“I eventually found a , two bed, Terraced house in Essex. I completed the purchase for £212,000.”

Olamide’s home in Essex, bought for £212,000

His advice for others?

My advice would be to use all resources available to you. If you can stay in your parents home, do that. If there’s an opportunity to increase your salary, take it. If a gifted deposit can come along, use it. Also, be very intentional about where each penny goes each month. It’s very easy to look back and think how did I spend so much every month.

Why Is There a Shortage of Affordable Homes?

Why Is There a Shortage of Affordable Homes?

In August 2021, property listings on Zoopla were down 26% from the same period in 2020. More recently, Savills have predicted that houses built annually will not return to pre-pandemic levels until 2026.
What has caused this housing shortage?

A Shortage Predating the Pandemic

While most circumstances have been exacerbated by COVID, the UK was facing a growing housing shortage way before 2020. Studies had been released showing how population growth had outpaced housing growth.
For example from 1980 to 2018, 29,430 homes were built in Cambridge and Oxford. In that time, the population there grew by 95,079.

Falling Short of Government Targets

Boris Johnson’s government pledged to build 300,000 new homes in their 2019 manifesto. However, through a number of circumstances including party backlash, builder shortages, and existing pandemic limitations, the Government is falling short of the target.
That is despite 50,000 homes being built in the first quarter of 2021 – a 20-year record.

Record High Demand in 2021

The mix of boosted savings via furlough, the stamp duty land tax holiday, and increased demand for family homes has led to a surge in housing demand. In fact, Zoopla has stated that the average time taken between listing and agreed sale is now 26 days. In 2019, that period was 46 days.

The Effects of the Building Safety Crisis

Due to changes in building safety standards after the Grenfell tragedy, money from housing providers is now being diverted to repairs. Combustible cladding and fire safety defects are being replaced across the UK, with some providers estimating they will still need to spend £3 billion on repairs.
Not only does this mean a lack of new houses being built by these providers, but other homes are being rendered redundant and valueless.

5 Ways to get Property Below Market Value

5 Ways to get Property Below Market Value

In March 2021, 23% of homes were sold within a week of being advertised – outlining a record shortage in housing.
Here are some updated methods on how to get a property below market value (BMV).

Check if the Property Needs Work Done

A property survey can unveil if work needs to be done to a property.
This could provide you with an opportunity to take the cost of this work away from the asking price.
It is important that you have an idea of how much the additional work will cost. You don’t want to negotiate £3000 off because of damp and then you find out after buying that it will cost you £10,000 to fix.

Don’t be in a Property Chain

There might be a situation where the seller needs to sell their property before they can finance the purchase of another one. This may incentivise them to accept an offer BMV.
If you are in a chain, you may find the seller unwilling to accept your offer because of the risk associated with a chain. Alternatively, a seller may be willing to accept a lower offer if you are chain-free, as there is less risk of the sale falling through or stalling.

Find Properties that are Completely Empty

An empty house cannot and does not generate any income. However costs like mortgage bills, utility bills, council tax and general maintenance still must be paid. That means an empty house is one an owner will want to get rid of as fast as possible, leaving negotiation room for any bidder.

Properties that have been on the Market for the Longest

If a property has been on the market for a long period of time there is a chance that the buyer has become a desperate seller. Low demand is always a tell-tale sign that you can put in a BMV offer.
Even in 2021, there are properties on Zoopla and Rightmove that have been on sale since 2020! So this is still a process that applies in today’s market.

Never Offer the Asking Price & Negotiate

This one is a simple but effective way to get a property BMV. Always offer lower than the asking price!
Have you ever asked for something cheeky then been surprised when it’s actually granted?
When you have identified reasons for why a property should be cheaper, make sure you follow it up with a “cheeky offer” (even if there are no reasons why the property should be cheaper … still put in an offer lower than the asking price!)

The Real Reasons why Property & Rental Prices have Increased

The Real Reasons why Property & Rental Prices have Increased

Average house prices in the UK fell to £230,000 in March 2020, but currently stand at an estimated £263,000. Rental prices also reached a record high in August 2021, to a high of £1053 pcm. Here are the detailed drivers behind this growth.

Increased Savings due to UK COVID Measures

In March 2020, the UK COVID Furlough scheme was put into action, and paid over 9.5 million UK Residents 80% of their normal wages, mainly from March 2020 -June 2020. During the first UK Lockdown, expenditure was low amongst furloughed workers too. Travel costs were effectively cut.
Those people are now in a better financial position to purchase a house or rent.

The Stamp Duty Land Tax (SDLT) Holiday

In July 2020, The Government announced a holiday on Stamp Duty Land Tax to help buyers whose finances were affected by a COVID. With rates cut from July 2020 to July 2021, there was an added bonus of saving money by purchasing a property at this time.
This increased demand led to a rise in prices.

Sky-High Demand for Space

Family homes are the type of property most in-demand. The latest house index report from Zoopla suggested the number of buyers after a family home is up 114% compared to numbers from 2017-2019.
Furthermore, the number of properties for sale has decreased to its lowest level since 2015.
There is simply higher demand and a lack of supply, especially in family homes, causing prices to rise.

New Desire to Leave London

More people are looking to leave big cities in favour of moving into suburban/rural areas. This has led to London rent prices falling by 3% (in the past year), while rent rates outside of the capital are rising at their fastest rate in 13 years. Rent rates in Wigan and Greater Manchester have risen by 10% in the past 12 months.

People are also reported to be renting now as the property supply is at a noted low, waiting out the soaring demand before they make their step to buying their desired home.

Natural Forecasted Growth

Despite the artificial effects of the UK COVID measures, it’s arguable this growth was always coming. The 18 year Property Cycle theory depicts the UK in the explosive stage. The recognised author of the theory, Fred Harrison, believes this himself. He argues that COVID simply delayed house price growth, and it was arriving regardless.