Tuesday, 31 March 2015

Aylesbury Landlords invest £1.28 bn in the Aylesbury Property market

South East property asking prices jumped by more than £6,400 to £363,992 in February according to Rightmove, an increase of 1.8% from January and 8.1% higher than a year ago. The property market has really warmed up, but talking to some Aylesbury Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (i.e. their REAL value), is the issue a lack of supply?

Putting aside Aylesbury’s continual housing supply shortage, (we only built 4,880 properties in the last decade but the population of Aylesbury grew by 8,389), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Aylesbury landlords only last week, I said that I believe this is the new norm in the Aylesbury property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Aylesbury.

When one looks at the historic data, in February 2008, there were 1,653 properties on the market in Aylesbury compared to today’s 396. Should we be worried?  Well in March 2010, there were only 582 properties for sale in Aylesbury but eight months later in November 2010, this had jumped to 916 properties, for it to drop to 343 properties in December 2013. The number of properties on the market is a cyclical thing in Aylesbury, it always has been. As we go into the Spring of 2015, the number of new properties coming onto the market will increase ... just as the daffodils will flower.

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep ... the youngsters of Aylesbury still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Aylesbury landlords have stepped in and bought property to rent out to them. Aylesbury landlords have bought 3,971 properties over the last decade (investing approximately £1.281bn buying those Aylesbury rental properties), meaning there were at the last count, 8,096 Aylesbury properties being privately rented out to tenants. Aylesbury tenants are in fact getting a good deal as well, as average rents in Aylesbury are 5.9% above they were seven years ago. That sounds like a win-win situation for everyone to me. Don’t blame landlords and start building more properties in Aylesbury ... that is the only answer.

In the meantime, the demand from Aylesbury tenants for Aylesbury property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please visit the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/

Tuesday, 24 March 2015

Your Pension could now buy a Buy to Let property in Aylesbury

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Aylesbury property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year) .

.. and now the good news!

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Aylesbury are in the order of 3% to 7%.

The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Aylesbury is 19 years and 1 month (although interestingly, its 20 years 2 months in High Wycombe). If we roll the clock back 19 years 1 month to February 1996, property values in Aylesbury have risen by 253.3% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).
So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (ie low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce high returns (ie high yields) but low capital growth (ie how much the value of the property goes up). Now, I am not a financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Aylesbury property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Aylesbury Property market can always be found on the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/

Nala has not been well but hopefully now fully recovered. I think she qualifies as having the longest Husky tongue in the world when she yawns.

Tuesday, 10 March 2015

Prospects for the Aylesbury lettings market

I was discussing the local Aylesbury lettings market and all things lettings with a landlord this morning. We had both seen the following BBC article 'The disappearing property ladder' ...  http://www.bbc.co.uk/news/magazine-31762127
Forgive me for taking advantage of a BBC link but the full article is an interesting read.
The main points we both took from the article were some of the startlingly good figures for landlords.
In the last decade there have been substantial changes in the property market, as the article says, ten years ago 59% of 25 to 34 year olds owned their own home in England_ now it is 36%. Those buyers are now renting instead from landlords like you and me- 21% were doing that 10 years ago now its 46%! a huge shift in the market.
There is no sign of this trend changing. The ability of first time buyers to acquire a deposit is not about to change, they will continue to be a rare breed. Sale prices are strong and look set to continue being so, driven by investment buyers and the lack of supply. The younger generation no longer aspire to be homeowners in the same way we did, many see it as an unrealistic goal to achieve in the current climate.
Buying to let continues to look like a good retirement or investment plan. A good example of the right thing to buy has just come on to the market with us this morning.

Holly drive, Aylesbury. £215,000.

Rental demand for two bedroom houses is strong and you should see rent achievable around £800pcm, 4.4% gross yield.
If you are considering buying to let and want some straightforward advice please feel free to contact me at any time.
Ian Davies 01296 398555        



Thursday, 5 March 2015

A great buy in Aylesbury for those of you chasing yield rather than capital growth.

A studio apartment built in the 1960s but in one of Aylesbury's most popular locations, Bedgrove. Close to shops, good school catchment and great road access in to town or out of town.
Rental demand for this location is strong and you can expect to achieve around £450.00 pcm in good order. That's a gross yield of more than 5.6%...a higher yield than for most property types in Aylesbury
If you need further details or wish to talk through your investment needs please give me a call or drop in to our Temple Street offices to have an informal chat . 01296 398555

Tuesday, 3 March 2015

Fairford Leys Aylesbury is the place to be!

This is an excellent example of the ideal buy to let. On a great popular estate. By popular I mean popular with tenants across all sectors so maximum demand for you the landlord. The price is strong but that is where the market is...full asking price already achieved on this one. Came to market Sunday sale agreed Tuesday.
Achievable rent around £800 giving a gross return of 4.3%, achieving £825 would take this to 4.5% so quite respectable. Modern house so low maintenance and will likely still be in good order whenever you come to sell with minimum outlay. A good investment for those trying to achieve a sensible yield and good capital growth prospects.


If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, do what a number of other Aylesbury landlords do and visit the Aylesbury Property Blog where I discuss the Aylesbury property market, how Aylesbury compares with its neighbouring towns/ rivals, and at the same time, I can hopefully answer questions you may have . I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. If you are ever passing, do pop in and see me at our office on Temple Street, Aylesbury or email me at ian@mortimersaylesbury.co.uk or telephone me on 01296 39 85 55.

What properties are actually selling in Aylesbury?

Prices up, prices down, prices stable... the newspapers are full of good news, bad news and indifferent news about the Brit’s favourite subject after the weather... the property market. The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way.  At one end of scale is London, which has seen average prices grow in the last twelve months by a shade under 19% (and again that is an average because some Borough’s in London have risen by 26%) whilst in the land of Daffodils, by contrast, Wales only saw a 2% increase in property values (although in the Merthyr Valleys they dropped by over 11%).

Well we can’t ignore the rest of the UK, and we can’t forget that the Chancellor’s Stamp Duty reforms have polarised the London property markets above £1,000,000 because at the top end of the market, punitive Stamp Duty charges will dampen demand further. While the Bank of England warned of the growing London property price bubble in the Spring of 2014, talk of a recovery in some areas was premature. In 2015, irrespective of where you are in the UK, one story will unite the patchwork quilt of markets – really low levels of property coming on to the market.
The question you should be asking though is not only what is happening to property prices, but which price band exactly is selling? I like to keep an eye on the property market in Aylesbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Aylesbury. 
If you look at Aylesbury and split the property market into four equal sized price bands (in terms of households), each price band would have around 25% of the property in Aylesbury, from the lowest in value (the bottom 25%) all the way through to the highest 25% (in terms of value).  Over the last two months (63 days to be precise), in the lowest quartile, (those with prices under £165k) 85 properties have come on to the market in Aylesbury and 44.7% of them are sold stc (38 properties have a buyer).The next quartile, between £165k-£220k, of the 140 properties that came on to the market, 45% of them (63 properties) have a buyer. The £220k-£310k price range has seen 136 properties come on to the market, and 46.3% of the properties have a buyer (63 properties). The most expensive 25%, the £310k plus range, has seen 34 of the 116 properties that came on to the market find buyers (29.3%).   Fascinating don’t you think?
The next three months’ activity will be crucial in understanding which way the market will go this year and I honestly believe we will not see any increase in the levels of stock this side of the election. Election or no election, people will always need a roof over their head and that is why the property market has rode the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. And why? Because Britain’s chronic lack of housing will continue to prop up house prices and prevent a post spike crash... there is always a silver lining when it comes to the property market! 
If you are considering buying a property for investment in the near future in Aylesbury, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. You may be seeking capital growth, monthly yield or a measure of both, it is important to purchase the right product to suit your needs. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone (01296 398555), pop in to see me in temple Street or visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/