Despite rising interest rates causing uncertainty in the UK’s housing market, many seasoned investors remain undeterred and see the current conditions as an opportunity to grow their portfolios in Leeds.
In recent weeks, HOP Investments has agreed more than £1.5million worth of investment sales. Following its recent success, HOP is now preparing to sell a further £5million worth of off-market investment properties this summer. Two and three bedroom properties in the likes of Armley, Bramley, Beeston, Holbeck and other suburbs surrounding Leeds city centre are proving particularly popular.
Although some of this is accidental and single unit landlords wanting to exit the market, it’s largely being purchased by professional landlords and overseas investors.
The main difference in the current market is there are fewer first-time investors now, who are more circumspect due to the cost of borrowing, regulatory changes and tax implications, which makes it a bigger leap for them.
Neil Dawkin, Director of HOP Investments says:
We’re typically seeing older landlords deciding that now is the time to cash out and sell up. Many don’t want to adapt to the potential new legislation proposed in the Renters (Reform) Bill and instead are taking advantage of the price rises the market has seen in recent years. In their place, a newer generation of investors are buying and modernising the properties for today’s market, with our typical clients now in their late 30s and 40s.
Even though The Bank of England increasing interest rates to 5% certainly isn’t helping the market, many experienced and professional investors, who think long term and block out the noise, see this as a good time to add to their portfolios, because they are competing with fewer buyers. They’re focussed on the medium to longer term returns and will often have larger deposits or be full cash buyers, so they are less impacted by interest rates.
Rising rents, which have grown by approximately 10% in the past 12 months, still make buy to let a very attractive investment, especially because there’s a shortage of available rental stock. Most of our current buyers are based in London and the South of England and are attracted to Leeds because prices are much lower, meaning they can achieve yields in excess of 6%.
All of this is boosted further by Leeds’ four universities, with more than 60,000 students, which also drives demand for houses in multiple occupation (HMOs), from both investors and tenants. At HOP, we are currently progressing several HMO acquisitions and sales for our clients, as well as undertaking refurbishment projects on properties we secured for our clients to further increase the rental and capital returns the HMOs have to offer.
HOP has recently handled acquisitions for buyers from the likes of the US, Europe, Hong Kong and Singapore, who want a foothold in a stable and growing housing market. Often clients won’t even visit the property in person and we’ll provide a turnkey service that involves sourcing it, progressing the purchase, overseeing work from light refreshes through to full renovations and developments, as well as furnishing the property, before handing it over to our lettings and management team.
The majority of HOP’s Property Sourcing clients go on to buy further properties as a result and repeat the process. In fact, we’ve had one client who bought two properties last year and is seeking six more this year.
This is all helped by the profile that Leeds has earned itself in recent years and the fact that it’s widely recognised for being a vibrant and contemporary destination. Its growing economy is also extremely strong across many sectors including legal, financial, technology, retail, medicine, manufacturing and creative, as well as TV and film as part of Channel 4’s continued investment in Leeds.
It’s therefore no surprise Leeds is one of the UK’s fastest growing cities, as well as consistently ranking as one of the best when it comes to investment returns from property and there is a lot more to come as well!
HOP Investments offers both new and experienced residential property investors a complete turnkey property sourcing service, as well as an exclusive investor club providing off-market investment opportunities.
For more information about our investment services, give us a call on 0113 467 1584
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