Young Voters Ranked Housing Costs Higher Than Crime in the 2015 Election

A number of issues ranked as important for UK 2015 voters under age 25. Housing made the “top 4” as affordability is not possible for many of them.

The Labour Party’s Ed Miliband made a strong pitch for more housing in the lead up to the May 2015 election. He proposed various schemes, including a housebuilding programme that would add 200,000 homes in the first year of his government and one million homes by the end of his first term.

As with all election promises, it was a clear play for votes and in particular the support of certain sectors of the electorate. Young people were his targets, as a survey by Radio 1 Newsbeat of 18- to 24-year-old potential voters indicated that housing was high on their list of concerns. While in retrospect this didn’t determine the election outcome ¬– other concerns were more pressing, it seems – it nonetheless brought front and centre the need for both private and public efforts to increase the country’s housing inventory.

What the survey said was that housing was a priority concern for about a quarter (23%) of voters this age, trailing an improvement of the NHS (42%), “keeping down everyday costs” (33%) and education (24%). Housing ranked higher in priority than crime (14%).

While not their top priority, it’s understandable that housing would play an upper-tier role in what’s on younger voters’ minds. Rents are already high and university student housing is so lucrative for owners it now draws financing from the large institutional investors. The number of people receiving housing subsidies is on the rise, a mirroring of the cost of rent and the large numbers of flats now owned and managed by private landlords. Private homebuilders are increasing their output, aided by the investments of strategic land developers, but the increase is not yet sufficient to fully satisfy the growing population of the country.

The net effect of all this is how younger workers - those under the age of 40 - are finding it increasingly difficult to get on the property ladder. They’re working hard, but their slow wage increases, school debts and high rents conspire to make that first home-purchase step out of reach. From that, they fail to begin accumulating that all-important capital asset known as a home. The negative impact of that might be seen forty years hence when renters lack the property equity that their parents enjoyed.

But back to Miliband’s promises and strategy: did the youth vote turn out in his favour? Records show that in 2010 the age 18 to 24 year old cohort had a 44% turnout to cast votes, but in 2015 about 58% of the age cohort turned up. This still compares to a 76% turnout for people aged 65 and older and an across-the-board turnout of 65%. This gap between younger and older voters has grown steadily since 1970. Analysts tie the Government’s absolute protection of the state pension and other seniors-friendly legislation to this imbalance against the slow response to the housing shortage.

The Government has implemented several programs to encourage the building of new homes, including the Help to Buy scheme, which has been partially effective at breaking the house building logjam. This has provided impetus for private investors, such as those who participate in real asset funds, to bring more capital to the sector. The relatively quick returns on investment make this appealing to many with the money to invest.

In 2014, David Cameron also pledged a 20%-below-market rate plan for buyers under age 40, pegged to homes built on brownfield land - indicating a strong interest in avoiding the controversies around greenfield land building. But he then (in 2015) took it to an initiative in what’s called the Starter Homes scheme. The country’s house builders welcomed it as did many local councils which exempted builders and buyers from the average £15,000 per home in Section 106 tariffs and affordable tariff contributions.

So already the elevation of housing in the election to a national discussion seems to have instigated progress for people who want to buy their first homes.

Investing in UK land and the housing sector can yield respectable returns. But investors need to consider such investments in relation to broader financial goals and engagements. Consult an individual financial advisor to consider the investment with objectivity.

What UK Cities Outside of London are Poised for the Most Growth by 2020?

Great Britain is thriving away from the Capital City in places such as Birmingham, Leeds and Manchester, among others. Lower costs of housing certainly help.

Global investors are discovering there is more to Britain than London. Indeed, those who are inclined to alternative investments might find that building commercial and residential properties in the country’s other cities a wise choice.

Consider some of the cities and boroughs around England, Wales and Scotland where healthy growth and an elevated standard of living serve as a draw to disaffected Londoners:

Birmingham - With an active programme to lure London-based high tech firms, Birmingham already has 300 specialist companies in the aerospace industries and one million people with foreign language skills. It also aspires to be a leader in the renewable technologies sector.

Leeds - With a financial services centre second only by London itself, Leeds is projected to experience a 23% growth in GVA over the coming decade. In just the next few years the city is projected to add 44,000 new jobs.

Manchester - England’s “second city,” it boasts a workforce where a quarter of its people hold a degree, many of whom are among the 4,000 graduate engineers coming out of the area’s universities every year. Media and creative industries are robust here, as are the medical research institutes.

Cardiff - With companies in aerospace, automotive and life sciences, a large portion of the 30,000 students who study at the Welsh city’s institutions of higher learning (Cardiff University in particular) remain here after graduation.

Peterborough - Geography and a diverse population make this city more than a bedroom to London. At 70 miles distance from the Capital City, it is a transportation crossroads that provides it with a growing warehousing and distribution industry.

Borough of Allerdale - The west Cumbria economy is growing at 4.2%, compared to London’s 3.7% growth rate and 2.9% for all of the North West. Much growth is centred on the Port of Workington, which received a multimillion-pound investment from the central Government to increase its shipping capabilities.

Bristol - While among the smaller cities in the country, it has an above-average business start-up rate (44 per 10,000 population) and is projected to add 32,000 jobs over the next half decade.

Edinburgh - Life sciences research at the Edinburgh Science Triangle are complemented by informatics, electronics and energy industry clusters. Scotland overall has a quarter of the wind and tidal energy production in all of Europe.

Southampton - While regarded widely for its port, the investment in aerospace, defence, manufacturing, rail and truck transport industries here is fed by spinout firms that originated in research partnerships with local universities.

Liverpool - The city’s world class port is in planning to expand with a container terminal for handling ships that are wider than the Panama Canal locks, while its “Liverpool Waters project will involve £5.5BN investment in its dock system that will add 17,000 jobs. Liverpool has the country’s fastest growing economy outside of London.

Perhaps this is why London is experiencing the migration of some younger workers to these other locales. The 2015 Cities Outlook report from the Centre for Cities found that growth remains strongest in the South, but housing affordability is becoming unbearable for the middle class. A home in London in 2004 cost about nine times average earnings, and ten years later that rose to 15 times average earnings.

Which is why real asset funds focused on real estate development are sorely needed in cities that wish to grow. When housing is affordable, employers can afford to hire good employees who aren’t spending hours in commutes to and from their workplace.

Investments in UK land, businesses, real estate, and other real assets offer advantages and risks. Speak with an independent financial advisor to learn what might be right for you.

What is the Council of Mortgage Lenders’ UK Housing Strategy Recommendation?

Members of the CML want to bring more people into homeownership - for the sake of working people as well as for overall economic stability.

It’s all about the housing supply.

That’s the position of the Council of Mortgage Lenders (CML), an organisation that obviously benefits when more people are able to buy more homes. And in agreement with them are housing advocates, social scientists and just about every national politician. They argue that there are multiple factors that contribute to the UK’s housing supply inadequacies. Investors, too, believe that increasing supply is important to their own returns on assets, such as when they are investing in UK land to be developed into housing.

It might be noted that housing inventories affect British citizens and the economy in a variety of ways. The youngest generation of working adults, those who might be forming households through marriages and children, are either slow to do that or are doing it as renters – with dim hopes for buying homes any time soon. Over time, that might mean inadequate wealth accumulation that will make that generation poorer as they age.

A flipside argument is sometimes made that renters are by nature more geographically flexible, enabling them to more easily move to accommodate job changes and career mobility. Indeed, with the high costs of housing in London more companies are establishing workplaces in cities far away from the capital and successfully luring valuable workers to places as disparate as Peterborough, Bristol, Allerdale, Birmingham, Leeds, Manchester and Southampton.

This is why UK property fund managers endeavour to identify parcels of raw land where homes can be built. The unused land can be turned into productive property and help grow local economies.

At the April 2015 annual lunch of the Council of Mortgage Lenders, Dame Kate Barker continued her advocacy campaign for increasing the housing supply. The renowned economist first sounded the alarm in 2004 when she issued an independent report, “Review of UK Housing Supply,” which argued that the upward trends in house prices were unsustainable and that several key measures by the central Government were needed to bring supply up to meet the demands of a growing population.

Barker’s report (as well as her subsequent book in 2014, “Housing: Where’s the Plan?”) was well regarded and has been effective in many ways. A key resultant initiative was the National Planning Policy Framework, which sought to decentralise planning to allow and encourage local councils to create their development plans. But as Barker told the CML gathering, there needs to be greater efforts from London to achieve national housing goals. “It may depress you to hear a plea for greater reliance on the State to act,” she said. “But the planning system suppresses the market mechanism so much that it is hard to deliver.” In other words, she strongly indicated that to achieve delivery of 200,000 homes per year by 2020, there needs to be a concerted effort to bring forward public land.

The CML also takes a sometimes-unpopular stand in support of buy-to-let ownership. This is not simply to generate more mortgages, as only a third of the approximately 1.3 million properties in the private rented sector (2007-2012) are financed by loans. The CML argues that this is an important source of capital that feeds into homebuilding and thus increases overall inventory.

CML chairman Moray McDonald (Royal Bank of Scotland) emphasized this point at the 2015 meeting. “Dealing with the supply side, in my view, has to be our new "North Star" which everyone aims for,” he said. “To get there, we need a housing strategy that commands all-party support with a three-line whip from national government down to the parish council to ensure it's implemented. That strategy should come from us, the industry, in partnership with government. Fix this, and the market itself will address affordability."

Whether you invest as a buy-to-let landlord, through a REIT or a land fund, speak with an independent financial advisor. Real estate is historically a sound investment but needs to be weighted against other wealth accumulation strategies.

What Are the Generational Implications of the UK Housing Shortage?

Already strapped with education loans and lower wage expectations, the under-35 set of UK workers face difficult economic factors. More houses would help.

It is well understood in the UK that there are too few homes. Also, that this shortage has social and economic implications - for individuals and the country at large. But this housing shortage hits different demographics harder than others. Specifically, it’s the younger people and families who are put at the greatest disadvantage.

Unfortunately the inability of those under the age of 35 to get on the property ladder could affect them for years to come, possibly the rest of their lives. There is no certainty in such predictions, of course. A reordering of how homes are paid for and how many are built could alter the trajectory.

Policy makers and land development investors are working to solve this dilemma. The Government’s Help to Buy scheme, now in its third year, has stimulated progress; and the newer Starter Homes initiative, which provides a 20% discount on new-build homes on brownfield land, shows promise. From the private sector, strategic land partnerships help unlock and develop unused land for large-tract development. When land is made available for building, per local authority approvals, homes can be built by those partnerships where workers want and need to live.

But if these programmes and developments are thwarted, or fall short of their goals, the younger workers and their families could continue to suffer in several ways:

• Home prices will continue to rise steeply, as they did in the 1980s and the 2000s (up until 2008). The longer it takes for someone to buy their first home, the less likely it is they will ever be a homeowner.

• While about two-thirds of working people under age 35 owned their own homes as of 2004, the proportion dropped to just 36 per cent in 2014, according to the English Housing Survey.

• Forced into renting with a dearth of social housing available, working people in the 25- to 34-year-old age group rent from private landlords. In London, the average per-week rent is £281, about half the median take-home pay in that city.

• Wealth distribution is already poor in the UK, but that distribution is even greater in the housing category. The top 10 per cent own 100 times more than the bottom 10 per cent, according to a 2010 study (“Home-ownership and the distribution of personal wealth,” Joseph Rowntree Foundation/Housing Market Taskforce).

• Another indicator of the gap between the “haves” and the “have nots” is widening, is seen in outright ownership, itself probably a function of age / generation. Those owner-occupiers who have a mortgage number 6.9 million households while 7.4 households have no mortgage, either because theirs is paid off or they had enough cash to purchase without a bank loan.

• Homeownership is a primary means of saving for retirement. Particularly with equity release schemes, or outright selling a larger home to ease down to a smaller residence, the pensioner who owns his or her home has additional money that the renter lacks.

Economists project that if these trends continue, it can play out in poverty and social dependence decades down the road.

Social housing and housing subsidies play a role in that they can provide affordable rents while households save money for a first-home deposit. But the price of housing cannot stabilize or drop until the inventory of residences increase. Institutional investors (insurance companies, pension funds and the like) are drawn to housing as an investment, a hopeful sign that has stimulated increased activity among homebuilders. Property fund managers too are increasingly active, scouting locations and engaging with local planning authorities to release land for development.

Individuals who show interest in UK land investment, property development and other real estate ventures generally do so to realize asset growth. But the social consequences can be positive as well. No investor should embark on any programme before discussing it with an independent financial advisor first.

What Are Some of the Negative Impacts of the UK’s Housing Shortage?

The approximately one million households in Britain who wish to buy a home but cannot are adversely affected group. But in fact housing affects everything else.

It’s a well-understood fact that there is a serious housing shortage in the UK. For a generation, building has not kept pace with population growth, and the most critical impact is on rapidly rising costs of homes, both to buy and to rent.

This has several implications for the country and its citizens. For owners of homes, rising prices mean increased net wealth. For those who rent - younger people in particular - a point has been reached for many where owning their homes is not possible. For homebuilders and investors in residential development (such as managers of UK property funds who endeavour to identify land where homes can be built on a large scale), the opportunity to build and profit are strong.

But until supply catches up with demand, which may not happen for 10 to 15 or more years, this shortage will have an effect on the UK economy overall, most of it in a negative way:

• Individuals (most often young families) who are unable to muster a deposit and credit worthiness to buy a home are most likely to rent in the private sector. They clearly accumulate no equity from their monthly rent checks and are subject to rent increases that would not occur with owned property.

• Housing in the private rented sector dominates the rental market, with social housing much smaller than 30 years ago. The quality of private housing varies, but in 2014 more than 80,000 people went to the Citizens Advice Bureau (CAB) to report problems with their rental housing; reportedly, a third of houses in the rented sector fail the Government’s Decent Homes Standard. A frequent complaint is draughtiness in winter and high costs of heating. “Revenge evictions,” in retaliation for complaining about substandard conditions, affected 200,000 renters in 2014, according to the CAB.

• The “housing pinched” are those people for whom housing costs constitute half of their disposable income. According to the Resolution Foundation, this is 1.6 million households, about 63% of which have working members (7% are pensioner households and 30% are workless households of working age).

• The effect of so much working income going to housing is so little is left to spend on other goods. According to the Family Resources Survey conducted by the Office of National Statistics, 830,000 households have an average of just £60 per week left over after paying for accommodations. That means less expenditures are made on durable products, transportation, food, clothing, entertainment and other “discretionary” expenditures, including educational experiences for children. Shareholders in those sectors should think about housing as something that affects them.

• Wealth inequality is growing in the UK, and property ownership is no small part of that. Thomas Picketty’s seminal book on this subject, “Capital in the Twenty-First Century,” strongly argues that returns on property and other capital provides greater returns than natural economic growth, and therefore widens the divide between those who own and those who rent.

Of course, if you’re an investor in home building, you benefit from capital at while helping to alleviate the shortage of residences that makes ownership more accessible to more people. Real asset investing that turns raw UK land into homes has that net effect, even as the investor is able to experience relatively rapid asset growth.

No investor should embark upon property development or other asset growth strategies without guidance. Independent financial advisors can help assess the relative risks and rewards that make for a balanced portfolio.

To What Degree Do Foreign Investors Put Money into UK Housing?

Investors from Russia and China are buying English homes, but are proving to be buyers and not builders. A new tax may quell that - or simply change what they buy.

There is a reason that the British government closed a particularly maddening tax code loophole in early 2015. By imposing as much as a 28% capital gains tax (CGT) on foreign property owners, it levels the playing field (so to speak) between buyers in the UK who are residents and foreign investors, the latter of which have been snapping up huge numbers of residences as investments.

This is the UK, after all, where a housing shortage already has one million British residents waiting for a home and where homebuilding has woefully lagged demand for most of the 21st century. What has been happening is buyers from Russia, China, Singapore and the Middle East are snapping up flats the moment they are available for sale. It is an indicator on the high value of British property, to be sure, but when outsiders treat English homes as investment vehicles, not a place to live, it is cause for resistance. Parliament agreed.

It is also yet another indicator as to why investment is best for the country at the development level, not the home buying end. Investors from abroad as well as in the country have done well with capital growth land opportunities, turning unused UK land into homes. They are increasing supply, not demand, and as such they alleviate a vexing scenario for homebuyers of the kind who actually wish to inhabit the properties.

It is widely understood that foreign buyers, some of whom do spend holidays in their second residences, are largely concentrated in London’s tonier districts. But they’ve been buying properties outside the Capital City as well:

• Homes in South Wales, flats in Manchester, Liverpool and Sheffield, as well as cottages in Weston-Super-Mare were reportedly being sold on websites directed at Chinese and Russian investors (according to reporting in the Daily Mail in late 2014).

• Cheshire-based property firm Assetz says a third of its sales in August 2014 were to Chinese buyers.

• A spokesperson for Sequre Property Investment, which specialises in high-income producing buy-to-let properties in a number of UK cities, told the Daily Mail that foreign investors were “corrupting the market,” as evidenced in exceptional price hikes in two-bedroom Manchester flats.

Will the new CGT dampen down this activity - leaving more homes at affordable prices for middle-income buyers?

A London-based agent with the property firm Druce told The Wall Street Journal it would likely not affect his foreign customers who buy in such places as South Kensington and Chelsea. He said those buying at prices north of £2 million would not worry about the extra tax, that the stability of the UK economy overall still provides a safe haven for those from countries that include Russia and China. Another London-based agent thinks that it might shift investors from single, higher-cost properties to instead buy multiple, lower-price flats.

For managers of UK property funds who develop homes, this isn’t necessarily bad news. But the strong market for homes overall should be incentive enough to build. Their challenge is to achieve council approvals of land use changes, which is more likely to be achieved today than five years ago thanks to the National Planning Policy Framework instituted in 2013.

Investors in any type of real estate should have a broad understanding of the opportunities, risks and rewards. An independent financial advisor is best equipped to provide this with objectivity.

The State of Young Renters in 2015: What Are Their Prospects for Becoming Owners?

Current statistics suggest that fewer and fewer people in the middle class will own their homes, particularly among the young. But several forces defy that trend.

The numbers suggest a downward economic slide: real estate chain Countrywide predicts another 600,000 people will be renters and not owners by the year 2019. This is on top of the million UK residents - concentrated in the 25- to 34-year-old age group - who have become renters since 2010.

What’s going on is fairly easy to understand. As the UK population has grown in the 21st century, house building has failed to keep up. This supply shortage increases the cost of both ownership and renting. Compounding this was the financial crisis of 2008, which was followed by a tightening of credit on all borrowing. Younger workers were being paid less as the price of housing went up. Now with wages rising, the main challenge is mustering an adequate deposit – which more typically comes from the “bank of mum and dad” than what individuals are able to save.

So what do those with money to invest make of this? Is the best option to invest in REITs, which largely concentrate on the rented sector? To be a buy-to-let landlord? Or to join in a UK capital growth fund, which builds homes on scale for that sector of the market of people who can afford to buy?

There are indicators that, despite dim prognostications on the growing renter class, that building for homeowners is still a smart path for all concerned:

• Most people agree, within Government and among economists, that an ownership society is a more economically stable society. Brits who are on the property ladder will accumulate much more wealth over decades that will provide them a more comfortable retirement.

• Shelter, the housing charity, encourages building for all economic strata as it takes a general “rising tide raises all boats” perspective. What the organisation wants is more homes, period, such that those at the lowest levels can find affordable rents.

• Government initiatives that enable buying - Help to Buy, Right to Buy and Starter Homes schemes - have already proven or are likely to prove successful at stimulating both purchase access and increased homebuilding.

• There is a growing consensus that some greenfield and green belt lands might be swapped for brownfield property that would be more appropriately repurposed as urban greenspace (versus residential construction). With more land on the periphery of major cities dedicated to residences, it becomes possible to improve the quality of life nearest centres of work and commercial developments.

• Local planning authorities that are tasked with development goals from the National Planning Policy Framework (NPPF) are reaching for ways to collectively increase the nation’s housing stock, many of which are written with the input of property fund partners whose research show where people want most to locate their homes and where infrastructure will be most cost effective.

• London is no longer the only place to live: anet outflow of 22,000 people in their 30s happened in 2013-2014, a response to soaring house prices there and simply recognising that cities north, west and south have a good quality of living to offer (Birmingham is the favourite, followed by Bristol, Manchester, Nottingham and Oxford).

Investment capital into property generally follows these migrations, and consequently the healthier supply of homes in those cities means that they are becoming more affordable. Particularly in an information-driven economy, this cultural shift is much more likely over time.

Those interested in UK land investment and housing should speak first with an independent financial advisor who can analyse specific investments as well as the general balancing of risk in individual portfolios. There are many variables in real estate and housing investments and as such should they should be considered holistically.

Ten Factors that Favour an Increase in the UK Housing Inventory

Politicians of all stripes made housing promises in the May 2015 election. But what’s already in place or on the drawing boards is helping to add much-needed homes.

With the 2015 election now settled, many Government programmes and policies are a little more certain. The re-election of the incumbent Mr. Cameron suggests a likely continuation of many initiatives, including those affecting the supply of housing. This can be largely reassuring to homebuilding companies and investors, including those who get council approval to use raw UK land to build new homes – UK strategic land developers – and it should at least define the playing field for homebuyers.

In the immediate aftermath of the election, real estate company Savills predicted that prices of homes in prime central London will increase by 22.7% by 2020. The head of residential research also projected that prime properties outside of the capital will increase by a bit more, 23.9%. Lower-priced properties will likely rise more modestly, by 10.4% in London and 19.3% elsewhere.

High prices stimulate increased supply in classic economic theory, however the shortage of housing amidst high prices - unaffordable to many - have confounded theorists with regard to UK housing. It’s clear that inventories need to be increased, building 200,000+ new homes per year simply to meet existing demand; instead, far lower numbers (120,000-140,000 new building homes) have characterised the past decade.

That said, several factors suggest homebuilding will be on the increase, funded by housing associations, REITs, individuals, homebuilders and real asset fund managers. Following is a run-down of ten factors that will and can drive an increase in the number of homes being built - and perhaps which will challenge those price increase projections:

1. Employment - Not only are more people working in the UK today than since the financial crisis of 2008, but employment in Britain is rising at twice the rate as elsewhere in the Eurozone, including Germany. Work and Pensions Secretary Iain Duncan Smith announced in early 2015 that about 11,000 people are returning to work every week in the UK. Figures from Eurostat indicate that 30.8 million people across the continent have returned to work, taking employment throughout Europe to pre-recession levels.

2. Help to Buy - Buyers of homes up to £600,000 value can finance their purchase with just a 5% deposit, while the government will loan the buyer 20% of the value and a mortgage is necessary for the remaining 75%. Fees to the government for the 20% equity loan are not charged for the first five years of ownership. Propertywire.com reported in early 2015, about two years after the scheme’s introduction, that more than 77,000 homes have been purchased under the plan and that “as a result house building levels continue to climb.”

3. Right to Buy - This is the scheme that allows most council tenants to buy their council home. The purchase is at a discount. While it is focused on existing structures, it technically should contribute to new building as council homes are intended to be replaced when sold to private owners. This is a contentious issue, as social housing construction has lagged. The charity Shelter, which advocates for more affordable housing in all forms, notes that the waiting list for social homes has 1.8 million households, up 81% since 1997.

4. Starter Homes Initiative - Aimed to satisfy first-time buyers (under age 40) by eliminating the 20% portion of a new-build price associated with Section 106 affordable housing contributions, this programme involves the construction of quality homes (up to £500,000 value) mostly on brownfield (previous use) land. Much of this is in urban environments and thus makes use of existing infrastructure and does not encroach on greenfield/greenbelt lands.

5. Right to Acquire - Similar to Right to Buy, this enables housing association tenants to buy their homes at a discount (purchase from housing associations, councils, the armed services and NHS trusts and foundation trusts). Discounts range from £9,000 to £16,000, depending on local costs. While this funds purchases of existing structures, the housing associations theoretically (and practically) can use proceeds from those sales to build more, according to Work and Pensions Secretary Iain Duncan Smith.

6. Low interest rates - Political analysts say with the Conservatives’ victory in the May election that interest rates will remain low for longer. Those rates are at historic lows, such as ten-year fixed (<3%), five-year fixed (<2%), and three-year fixed (<2%). First-time buyers have more difficulty finding the standard 20-25% deposits, however the aforementioned programmes help with that when individual thrift or, more likely, the “Bank of Mum and Dad” are unable to assist.

7. NPPF - The National Planning Policy Framework is almost entirely about increasing the supply of housing that is affordable. It places mandates on local councils to establish growth plans, and more than half of the country’s local planning authorities have done so. This replaces a regional system that did unpopular top-down planning and which was bureaucratically unwieldy.

8. Right to Build - Aimed at self-builders and small homebuilding firms, this land release scheme provides access to council-owned land. Would-be builders can challenge local councils to release appropriate land, which also helps satisfy NPPF mandates. There are 11 local councils among a first wave offering Right to Build plots, using a pot of £550,000 to fund “suitable and serviced” plots of land. For example, Cherwell will receive £90,000 to expedite construction of 2,000 custom-build homes.

9. Greenbelt relaxation and adaptation - One of the most contentious issues around housing in the UK is to expand development into the many greenbelt lands surrounding most major cities. Alternatives are to build on urban disused land (brownfields) or to increase the reach of high rises. But the pressure to build out has many proponents and in fact more than 5,600 homes were constructed on these areas in 2013 alone. Some cities do greenbelt swaps, trading disused greenbelt land for urban brownfields, allowing houses on the periphery of the city and installing parkland in the urban core.

10. Greater London Authority interest free credit - Builders who construct affordable homes in the capital are eligible for no-cost credit. This programme is entirely designed to increase the stock of properties that are available to middle income workers. Investors clearly find it appealing because of the reduced development costs of interest-free loans.

What still looms is the slight chance a mansion tax will be imposed, which would affect prime properties valued at £2 million or more in London and the foreign investors who are largely blamed for price run-ups.

Investing in real estate in any form carries risk and reward. Speak with an independent financial advisor (IFA) to discuss what best fits your individual investment goals.

How Are the UK’s Homebuilders Faring in 2015?

After a rocky January, the first quarter of the year showed a rapid uptick in building. General election results also show that confidence in building is up.

Within hours of the close of the 2015 Conservative Party victory in May, UK homebuilder stocks jumped. The Bloomberg EMEA Home Builders index rose the most in five years, by 7.7%, with national firm Berkeley Group Holdings climbing by 14.4%.

Analysts say that is because a Cameron government wouldn’t impose a mansion tax or curbs on rent increases. It makes sense that properties that will net out better will therefore be more valuable. And this comes during what is already a strong quarter (Q1 2015) for homebuilding, which saw 40,281 new homes registered with the National House Building Council – the highest number since 2007 in the comparable quarter.

For investors and workers in the building sector - think strategic land partnerships, which turn empty land into housing developments - this is all good news. Not only is there strong demand for housing, which is well documented and considered to be a crisis - but other factors that drive the market seem to be working to make housing a smart investment.

Those factors are:

• Cameron’s commitment to housing - While the topic of affordable housing was much more in the ownership of the Labour Party, Mr. Cameron campaigned on keeping mortgage rates lower, building more affordable homes (including 200,000 starter homes for under-40 buyers), and new savings initiatives.

• Lending schemes to help buyers - The Government has increased its involvement in the housing market with a clear focus on making it easier for first time buyers to get on the property ladder. They are Help to Buy equity and mortgage guarantees; Help to Buy: Right to Build (specifically geared toward the release of council-owned land for private building); Right to Buy and Right to Acquire (aimed at council and housing association tenants); and the new Starter Home Initiative (elimination of Section 106 charges on homes built on brownfield sites). Notably, all provide stimulus to the homebuilding and construction industries. Further, Mr. Cameron proposed a Help to Buy Isa to encourage younger people to save for their deposits. The initiatives introduced in 2013 have already had a measurable effect within two years.

• Potential homebuyers are working - The UK is enjoying the best employment numbers in years, with a 5.6% unemployment rate for the three months ending in February 2015, as compared to 6.9% in the year-earlier comparable time frame.

It bears noting that with the Conservatives’ victory at the polls, housing price predictions are for a significant rise (10%-20%). This is largely due to foreign buyers’ interest in UK housing as an asset class, sometimes evidenced by unoccupied properties that are merely safe havens for investors from China, Russia, the Middle East and elsewhere. This directly affects higher-cost homes, but also those at lower price points as other buys are pushed down by the premium-price homes.

All of which should indicate the prospects for homebuilders and their investors (e.g., property fund managers) appear to be good. Demand is never a question, given how one million working adults in the UK do not currently have the ability to buy or even rent a home where needed. Investor funds that can bring land into property development can bring a trickle-down benefit to the rest of the market.

Investing in UK land is long considered to be among the smartest places to put money. But the market has many variables (e.g., the recently completed campaign season), which can affect the economics of a home purchase. Speak with an independent financial adviser to consider how to manage the unknowns.

Buy-To-Let Investors: How Are They Faring?

Profits from rental property can be enticing, and current interest in investment homes is up from 2009 levels. But investors should consider alternatives.

The boom-and-bust cycles of real estate investing have affected UK buy-to-let landlords over the past 15 years. So where do things stand in 2015?

With about 14.4% (Q3 2014) of all mortgage lending in the buy-to-let market, it is best characterized as a time of crossroads. While demand for housing is at an all-time high due to a growing population and lagging new home building, the investor interested in renting out residential property has several variables to consider, such as proposed rent caps that were discussed in the 2015 election (not immediately likely given Labour’s defeat, but some ideas resurface over time).

Investing in real assets is not for the faint at heart – it can get messy when dealing with physical properties and the vagaries of tenants who sometimes make poor decisions or who encounter personal financial difficulties. For someone new to real property investing, it might make more sense to invest in a UK joint venture land opportunity, where the involvement ends (and returns on the venture realised) within a few short years.

This is not to say that privately rented properties cannot make money. Indeed they can, just as most investments in real property can be profitable in a country where an estimated one million households await housing and the population is growing. But there are several factors that make buy-to-let a tricky equation:

Property repair costs - Annually, the costs for repairs, refurbishment, cleaning, decoration and exterior maintenance can add up to £1233 per property, according to a February 2015 study by Platinum Property Partners, a specialty firm in the buy-to-let business.

Administrative costs - The same study showed that letting agent management, finder fees, maintenance fees, service charges, mortgage interest (for those who do not own their properties outright), advertising fees to let and miscellaneous costs add up to $6,621 some years. This does not include “void” periods between old and new tenants, which is when repairs and repainting are done.

Threats to cap rental increases - It was a hot political topic in the 2015 election as to what restrictions can be placed on landlords, largely focused on capping rental rate increases and guaranteeing tenancies of up to three years while creating barriers to removing antisocial tenants (so-called “revenge evictions”). Again, these ideas could be brought back.

Required immigration checks - Already, landlords in five council areas (Birmingham, Walsall, Sandwell, Dudley and Wolverhampton) are required under threat of a £3,000 fine to conduct immigration background checks, asking for passports or residence permits (and knowing how to identify fraudulent documents). Resistant landlords complained to the Telegraph that this is an unnecessary burden and it should be the province of immigration control.

As mentioned, other ways of investing are not subject to these particular concerns. With REITs, the liquidity of buying and selling shares under normal income taxation rules is perhaps the polar opposite option. Investors who work with land fund managers might put their assets into a partnership that buys raw land, gets council use permission to build, then makes money in a short term turnaround (1.5 to 5 years). The building and selling of homes to buyers of course serves a different market than renters.

Investments in any form of real property carry the hope of high returns - and yet risk is inherent as well. Contact an independent financial advisor to learn how the different options stack up in relation to your own financial planning strategies.