Friday, 22 May 2015

677% Return for Aylesbury Buy To Let landlords since 1999

Buy to let is essentially different from investing in stocks and shares or putting money in the Building Society. Whilst these other investments (Building Society Passbooks, Stocks and Shares etc.) are passive i.e. once the money has been invested you leave it alone, with buy to let, things are more hands on, in fact it’s almost a business. One thing the landlords I speak to say is that they like buy to let because it is both an investment as well as a business. It is this factor that attracts many of my Aylesbury landlords – they are making their own decisions rather than entrusting them to others (such as City Whiz Kids in London playing roulette with their Pension Pot).

So if you are investing in the Aylesbury property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Aylesbury, but the value of property does go up as well as down just like shares can do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you - hopefully this will grow over time . If you decide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

I was talking to a landlord who bought a semi-detached house in the Winterton Drive area of Aylesbury. He bought a very pleasant 3 bed semi-detached in 1999 for £98,000. It sold again in December just gone for £263,950, a rise of 169.33% in just under 16 years - a compound annual return of 6.39%. 
However, the real returns are for those Aylesbury landlords who borrowed money to purchase their buy to let property. They have made significantly higher returns than those who paid 100% cash. If the landlord had borrowed 75% of the £98,000 purchase price of the Winterton Drive semi-detached house on an interest only 75% mortgage, he would have only needed to invest £24,500 (as his 25% deposit.. borrowing the remaining £73,500), but his £24,500 would be worth today, £190,450  (£263,950 less £73,500 interest only mortgage) ... a rise of 677.3% - a compound annual return of 13.67%...and I haven't even mentioned the rent he would of received in those 16 years!

This demonstrates how the Aylesbury buy to let market has not only provided very strong returns for average investors since 1999 but how it has permitted a group of motivated buy to let Aylesbury landlords to benefit particularly. In fact, if this landlord had continued to remortgage the property as it went up in value, he could by our reckoning have had an additional two or three properties (albeit with larger mortgages but greater future potential).

As my article mentioned a few weeks ago, more and more Aylesbury people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what would and would not make a good property to buy in Aylesbury for buy to let, then one place for such information would be the Aylesbury Property Blog. Contact me to discuss your needs or plans

Attitudes to homeownership and renting in Aylesbury

Speaking to a Bank Manager the other day in Aylesbury, we got talking about the state of the Aylesbury property market and whether we, as a Country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job etc.

Even though a recent report by the Halifax stated homeownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice.  In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the claim that they are not buying property at the moment because of a lack of sufficient wages and by the high level of deposits required. But like we said a few weeks ago, in Aylesbury, if a couple, one  on the average Aylesbury salary of £26,789pa and the other on the Minimum wage, with a reasonable credit history would be showered with lenders offering them a 95% mortgage. (A reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed one credit card payment won’t mean you have messed up your credit score and your ability to get a mortgage).They would only need to find £7,500 as a deposit to buy a decent apartment in an up market area of comes down to the perceived capability of the youngsters in Aylesbury to buy nowadays.

Interestingly, when I looked at the Aylesbury figures, the average Aylesbury tenant has an older profile (especially the 35 to 64 year olds) than the English and Welsh average. What interested me as well was the relatively large number of people renting over the age of 65! I know we have a large number of mature tenants at our agency, but I always thought that was the exception to the rule. Obviously not!  (And that is good news for landlords as they make excellent tenants)

So what does all this mean for Aylesbury landlords and future Aylesbury landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although homeownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home.

As the local authority aren’t building any properties in Aylesbury, people still need a roof over their head, and that is why, as I mentioned a few weeks ago in the Aylesbury Property Blog, the demand for rental properties will only continue to steadily rise in the coming decade. If want to know where the Aylesbury Property market is heading and where you should (and shouldn’t buy), maybe the one place you should visit is the Aylesbury Property Blog or send me an email to

Thursday, 14 May 2015

What does the General Election result mean for the Aylesbury Property Market?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Aylesbury property market.  Talking to other Aylesbury agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Aylesbury property market after the last six months, when an amalgamation of tougher lending conditions and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Aylesbury buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property to increase their portfolio. Further many potential landlords taking advantage of the new pension regulations in April have held back from the market. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Aylesbury property market?  Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

Over the past couple of years, Aylesbury landlords have benefitted from a booming Aylesbury job market. Unemployment in the town has dropped to1.3%, as a year ago 1,103 people were claiming unemployment benefit compared to today’s 753. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Aylesbury properties.

Some landlords might be nervous about Tory’s plans for the housing market in the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 285 Aylesbury properties since April 2013. Considering 1,504 properties have changed hands in the last year alone in Aylesbury, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Aylesbury, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Aylesbury or thinking of becoming one, then you must out seek specialist advice and opinion. Like many agents in Aylesbury, I will happily give you my opinion on the current state of the market and the advantages/disadvantages of investing in the Aylesbury property market if you pop into our offices. However, if time is at a premium, another source of information on the Aylesbury Property Market is the Aylesbury Property Blog

Monday, 11 May 2015

What does the future hold for the Aylesbury rental market?

Since the 1960’s more people have owned their own home than rented but, for many young Aylesbury people, the dream of buying their own home is dying...or is it? Since the turn of the Millennium, in Aylesbury (as in the rest of the Country) there has been a significant change in the proportion of people who own their own home. In 2001, 75.72% of homes in Aylesbury were owner occupied, today the figure is 71.61%, a significant decline in such a short time.  Buy to let landlords can find tenants because young people say they cannot afford a deposit to buy unless they inherit money or are given a loan from the Bank of Mum and Dad

In Aylesbury, only 49.37% of 25 to 34 year olds have a mortgage. When you compare Aylesbury against the national average of 35.93%, it just shows how different parts of the country have different housing markets. However, the really interesting fact is this  ...Roll the clock back to 1991 and nationally, 67% of 25 to 34 year olds had a mortgage. After WW2, the supply of properties being built kept up with demand as millions of council homes were built (the most being built in 1950s, surprisingly under Tory Governments). Also private house building increased in the 1950’s, but especially in the 1960’s and 1970’s, and as the Country  got more prosperous it meant that by 1971, there were more home owners than renters.

However, since the 1970’s, the population has grown but the number of new properties being built hasn’t kept up at the same rate, the result is that there have been huge rises of property prices in the early ‘70s, the late 80s and more recently between 1999 and 2004. Interestingly, since the early 1970’s, out of the 34 richest countries in the world, the UK has seen highest property prices rises.

95% mortgages have been available to first time buyers since late 2009, but with property prices rising by 253% since the spring of 1996 in Aylesbury, property prices have been rising and first time buyers have been saving, the amount they have to save is continually rising at the same time. The stress on saving for a deposit, coupled with the new stricter mortgage rules introduced in 2014, means that most 20/30 something’s in Aylesbury are renting instead of buying.

The issue quite simply comes back down to a lack of new homes being built. In Aylesbury, only 488 properties a year are being built whilst the population is rising by 828 a year. The supply of new homes has been limited by planning laws, local councils not having the money to build council houses, hard hitting green belt limitations, and our old friend NIMBY’ism.  With a rising population and net migration, especially from the EU, the mismatch between demand and supply is why we have the problem. Until Politian’s accept the Country needs a lot more decent homes built and take action, the problem will just get worse.

In the meantime, demand for rental property will continue to grow because people need a roof over their head at the end of the day.
If you would like to discuss your portfolio or your requirements for property please feel free to contact me for an informal chat