Fund Performance Factsheet – August 2019
We’ve published the latest factsheets for the fund, and they can be downloaded from the link below.
As the Brexit stalemate continues, transactions in the owner-occupier housing market remained subdued over the past month with many people who it is thought would like to move, deciding to stay put for a little longer. In contrast to the owner-occupier market, demand for good quality rented housing continues to strengthen, and rental growth continues alongside modest inflation and growth in average real earnings.
The LSL Acadata House Price Index, Hearthstone’s preferred housing barometer, shows a slight drop in transactions for the month, but this is part of the ‘bigger’ picture that most prospective buyers are waiting for things to settle down politically before they make a decision. As for prices, these remained relatively flat across the country, with Wales, the North West and East Midlands having the highest levels of growth, but in reality the regional differences are quite small. The independent valuation of the Fund’s properties showed a very slight (-0.03%) drop in August, but this was more than offset by the rental income from the portfolio.
However, as an indication of a more active future, mortgage approvals have increased slightly with new/first time buyer enquiries tickling up also. Adjusted for inflation (CPIH 2.0% at July 2019), house prices in most regions are now more affordable than they were twelve months ago. With continued wage growth, we expect a resurgence in market activity when the political climate stabilises.
The homes in the portfolio are almost fully occupied with eight being vacant at the month end (4% of the units), but with five of those having new tenancies agreed at an average 3.3% increase on previous rents, and on the point of moving in. The remaining three are being sold as part of the Fund’s ongoing asset management activity. Offers have been accepted on each of them at or slightly above the current valuation, and these will progress to completed sales in the near future.
Our experience of strong rental demand is echoed by the Royal Institution of Chartered Surveyors (RICS), whose latest Housing Market Survey noted “In the lettings market, the August results show tenant demand increased for an eighth month in succession, as a net balance of +23% of contributors cited a pickup (non-seasonally adjusted figures). Set against this, landlord instructions remain in decline, an ongoing trend stretching all the way back to 2016. Given the consistent imbalance between rising demand and falling supply, rents are seen being squeezed higher over the next three months. In fact, near term rental expectations are now positive, to a greater or lesser degree, across all parts of the UK.”
Third-party platforms will have different classes available. A selection of platforms and the available classes are shown below, but please contact us if the online platform you use is not shown.
Please note that Hearthstone is not able to provide financial advice, and the information on this page should not be taken as advice to invest in the fund, or as to the suitability of the fund, a specific share class, or platform for your personal circumstances.
Halifax Share Dealing, Tilney Bestinvest, Charles Stanley Direct, iWeb:
Hargreaves Lansdown (telephone/postal dealing only), Interactive Investor, Alliance Trust Savings, AJ Bell Youinvest:
> For General Investment Account, pension/SIPP or ISA: Class D (ISIN code GB00B9608795)
Investing involves risk. Investors should be aware that the value of an investment and the income from it can fall as well as rise, and they may not receive back the full amount they invest. Past performance is not a reliable indicator of future results.
The Authorised Fund Manager is Thesis Unit Trust Management Limited, Exchange Building, St John’s Street, Chichester, West Sussex, PO19 1UP. Authorised and regulated by the Financial Conduct Authority.
Hearthstone Investments PLC is the parent company of the Hearthstone Investments Group. Regulated business is carried out by Hearthstone Asset Management Limited. Hearthstone Asset Management Limited is an appointed representative of Thesis Asset Management Limited which is authorised and regulated by the Financial Conduct Authority (114354).