Assetz® News - Investors are Returning to the UK Market as Exchange Deposits Shrink to 5%

Investors are Returning to the UK Market as Exchange Deposits Shrink to 5%

1st November 2005 |

With house prices back on the rise, deposit upon exchange falling back to just 5% and excellent developer discounts, the UK buy to let market is attracting British investors back from abroad reports Assetz, the UK’s leading property investment specialist.

Over the period August 2004 – August 2005 the UK buy to let market was over inflated with developers asking prices that were often too high, even after off-plan discounts. Following the recent downwards trend in interest rates in addition to bank pressure on developers to achieve sales targets, prices have become more realistic and opportunities in the buy to let market have returned once more.

Investors are currently enjoying good discounts on new properties and are usually only required to put in a total deposit on completion of between 5% and 10% rather than the 15% historically. The balance of the deposit is contributed by the developer in the form of a subsidised deposit, like those given to first time buyers, or a cash-back rent guarantee. Not all lenders accept these types of incentives but those that do are reaping the rewards.

The deposit required on exchange is back to 5% in many cases, instead of the 10% developers were achieving last year. This means that investors have less cash tied up in investments on exchange and less cash required to complete too, leading to greater returns if prices rise. The built in equity through the discounts on purchase price also provide a safety net for any price falls.

Stuart Law, Managing Director of Assetz comments:

“There has been a noticeable surge in UK investment purchases over the last month as UK investors realise there is money to be made on home shores again, without the hassle of overseas investments. According to Paragon, rents are rising at 10.5% per annum, suggesting that rental incomes will soon well exceed the cost of a buy to let mortgage and become profitable again. We expect to see house prices rising at 5 – 7% next year, offering the potential for vast returns on minimal initial investments.”

Case study
At Maritime Quay, a collection of 32 one and two-bedroom apartments in Runcorn, near Liverpool, investors are only required to pay a 5% deposit on exchange which amounts to just 1% after cashback from the developer on completion.

Price for one-bedroom apartment £91,000
Developer’s deposit (14%) £12,740
Investor’s deposit (1%) £ 910
Annual rental return £ 5,700

The total return before tax with a 15% deposit is 11.34%, comprising 4.84% net rental income and 6.5% likely capital appreciation.

-ENDS-

Notes to Editors

For further information please contact:
Sarah Randle or Katie White, The Wriglesworth Consultancy:
020 7845 7900 s.randle@wriglesworth.com
Assetz: 0161 456 4000 or visit www.assetz.co.uk

About Assetz
Assetz™ is a group of well known and successful property investment companies offering selected UK and overseas property, education, buying assistance, finance and after-sales service. Assetz offers expertise whether seeking an investment, holiday-home or both, specialising in France, Spain, Cyprus and Bulgaria.

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