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Cogress Investment Outlook for 2018

They say the only constant in life is change, and this was certainly the case for the UK property market following several key events across 2016 / 2017. The team at Cogress discuss below how these events will impact Cogress’ Investment strategies for the year ahead.

A major concern over recent years has been housing affordability in London. The Government’s continued push for affordable housing options in 2017 saw stamp duty abolitions offered for first time buyers of any property under £300,000, and then exemptions on the first £300,000 of any property up to the value of £500,000. It is anticipated that this move will save four out of five first-time buyers up to £5,000 [1]. However, recent survey results seem to suggest it has little buoyed the market [2].

Stamp duty changes in 2016 to deter private investors acquiring multiple properties had an impact across the market, and most prominently on the prime London market. The change saw an additional 3% surcharge added to the existing rates for any buy to let investments and additional homes bought.

New home building over 2016 / 2017 increased 20% on the previous year, with 184,000 new homes coming to market in England [3][4]. This is more than in recent years, but still slightly below the 2007 / 2008 pre-recession figures of 200,000. Of these new builds, it is estimated approximately 80% of the purchases are being assisted by the ‘Help to Buy’ initiative. The ‘Help to Buy’ scheme was further strengthened in 2017 with a further £10bn boost coming from the Government and ensuring funding up until 2021 [5]. This is a great result for anyone trying to enter the market, and is good news for the new build market, provided sites can be found that economically allow for catering to this market.

In April 2017, policy changes were introduced to the way landlords are taxed on their buy to let investments, reducing the ability for private landlords to claim relief on their mortgage interest payments at their marginal rate of tax (potentially 45%). This will now move to 20%, and the change will be phased in completely by April 2020 [6]. Add to this the proposed abolishment of letting fees, which are often charged by landlords and other third parties as an additional cost to tenants, it appears the outlook for private landlord is far from peachy [7].

Any market summary would undoubtedly be amiss not to mention the continuing concerns of Brexit and political uncertainty as major events for 2017. Whilst one can speculate, the exact impact of Brexit is still largely unknown. It is understandable that many will opt to ride out the Brexodus wave of uncertainty to see what lies ahead, before making any substantial financial investment.

The Cogress analysis team takes the responsibility of being the eyes and ears of our investors very seriously. As such, we regularly review our investment strategy with the knowledge of the latest market trends in mind. To that end our focus for 2018 will be:

  • Lower capital values
  • Lower £/sqft
  • Outer London locations within the commuter belt
  • Other large cities within the UK (with the right development partners)
  • Commercial property options where appropriate
  • Potential options outside of the UK
  • Investment models that give preferred return to our investors*
  1. Hatched, ‘Annual Review of the Property Market and Predictions for 2018’, Hatched, 16 January 2018, [Online]. Available at: https://www.hatched.co.uk/blog/157/annual-property-market-review-and-2018-predictions-online-estate-agents (Accessed: 19 January 2018)
  2. Cahill, H. ‘Stamp duty cut for first-time buyers having minimal impact on market, says property expert’, City A.M., 18 January 2018, [Online]. Available at: http://www.cityam.com/278972/stamp-duty-cut-first-time-buyers-having-minimal-impact (Accessed: 19 January 2018)
  3. Collinson, P. ‘Six factors influencing the UK property market in 2018’, The Guardian, 26 December 2017, [Online]. Available at: https://www.theguardian.com/business/2017/dec/26/six-factors-influencing-the-property-market-in-2018 (Accessed 19 January 2018)
  4. Full Fact, ‘House building in England’, Full Fact, 16 November 2017, [Online]. Available at: https://fullfact.org/economy/house-building-england/ (Accessed: 19 January 2018)
  5. Help to Buy, ‘Help to Buy is here to help’, HM Government, [Online]. Available at: https://www.helptobuy.gov.uk/equity-loan/eligibility/ (Accessed 19 January 2018)
  6. Unbiased, ‘Buy to Let Tax 2018 – 3 Ways to Cope with Losing Tax Relief’, Unbiased, [Online]. Available at: https://www.unbiased.co.uk/news/tax/three-ways-to-cope-with-losing-buy-to-let-tax-relief (Accessed: 19 January 2018)
  7. UK,‘Government action to end letting agent fees’, UK Government, 1 November 2017, [Online]. Available at: https://www.gov.uk/government/news/government-action-to-end-letting-agent-fees (Accessed: 19 January 2018)

Always seek independent advice. This blog has not been approved as a financial promotion by Cogress Limited. We are not responsible for the content of external websites. Potential investors must rely on their own due diligence prior to investing.

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2018-01-29T18:07:04+00:00