Monday, 29 June 2015

Aylesbury Buy To Let – Should you look further afield?

I was at a recent business networking event in Aylesbury, when a landlord (who it transpired had a couple of Buy to let properties) bent my ear on where the next hot spot town or city is to invest his money in and where the best rental yields are. Now it can be tempting to just look at Aylesbury when growing a buy to let property portfolio, but there can be big differences in the amount of rental income you receive and how much your property will appreciate by considering other locations in the country.

Now regular readers of my articles of the Aylesbury Property Blog know of my love of the ‘buy to let seesaw’. On one side of the seesaw is yield and the other capital growth. Landlords should be looking for a high rental yield so that they can comfortably cover any mortgage payments and make some profit from the income return, but you also want the property to rise in value over time so you can get some capital growth when you come to sell. However, high yielding property in say such areas as Walton Court in Aylesbury, (so the seesaw arm with yield on it goes up on one side), will suffer from low capital growth (so the other arm with capital growth on the seesaw goes down).  The relationship works in reverse as well, so in upmarket areas such as Camborne Avenue, properties offer good capital growth, but at the expense of a decent yield.  

The North East and North West of the UK are landlord magnets for great yields. The average yield in Aylesbury today is 4.47%, which when you compare with say Hartlepool in the North East, which achieves 7.73% or  9.43% in the Anfield area of Liverpool, doesn’t look too healthy. Now of course, these are only averages and some of my Aylesbury landlords are achieving 6% to 7% on some of their Aylesbury properties, but at the expense of capital growth. Anyway, after wasting a tank full of petrol up the A1 to Teeside or the M1 to the Home of the ‘The Reds’,  that Liverpool property, would have dropped in value by 2.2% in the last 12 months and the Hartlepool property would have dropped by 1.4%.

When you compare the long term house price growth, it gets even worse. Since 1995, property values in Aylesbury have risen by 210%,compared with Hartlepool at 21.02% and Liverpool  at 90.11% – it demonstrates you shouldn’t always chase the yield because of the poor increases in property values in those two places. As I always explain to a decent yield is important, but when you come to sell your buy to let property it would also be nice to make a meaty profit. Any profit you can make when you come to sell it, on a buy to let property is known as the ‘capital gain’ i.e. capital growth.

As an Aylesbury landlord, you want to be making gains from both your rent and house price growth, particularly when you sell, because when combined it is the rental yield and capital growth, that give you the real return on your investment.

Finally though, do you know Hartlepool and Liverpool as well you know Aylesbury? Do you know where the good and bad areas are in both those places? Are you happy that it would require you to take a day out of work if there was an issue with your property in the North?  If you can’t answer yes to all three questions, then maybe you should be considering closer to home?
Want high yield? High capital growth? Where are they to be found in Aylesbury? Pop in and discuss your requirements when you are passing our Temple Street office or email me 

A good run, fed, watered and hosed down. What next Dad?

Wednesday, 17 June 2015

The Aylesbury property market - Post election blues?

With the election now over and the stability of Downing Street secure, with David Cameron and his Blue Tories as the largest party in Westminster, in Aylesbury (as in the rest of the UK) average wages are beginning to grow faster than inflation. This is good news for the Aylesbury housing market, as some buyers may be willing or able to pay higher prices given the more certain political outlook and attractive inexpensive mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that we should start to see an increase in the number of people putting their properties on to the market in Aylesbury giving buyers some extra negotiating power.

At the last election in May 2010, there were 728 properties for sale in Aylesbury and by October 2010, this had risen to 865, an impressive rise of 19% in five months. An increase in the supply of properties coming on to the market could tip the balance in the demand and supply economics seesaw, thus potentially denting prices. However, as most sellers are buyers and confidence is high, this means there will be good levels of property and buyers, well into the summer, as demand will continue to slightly outstrip supply.

Just before we leave the run up to the election, it is important to consider what the uncertainty in April did to the Aylesbury property market. I mentioned a few weeks ago that property values (i.e. what properties were actually selling for) had risen by 0.1% in March 2015. Now new data has been released from Rightmove about April’s asking prices of property in Aylesbury. It shows that pre-election nerves finally came home to roost in the final weeks of electioneering, with the average price of property coming to market only increasing by a very modest 1.1% (April is normally one of the best months of the year for house price growth).

I am sure our local MP, David Liddington, would agree that the biggest issue is the lack of new properties being built in Aylesbury. The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers in the next five years. For Aylesbury to gets its share, that would mean only 42 such properties being built in Aylesbury each year for the next five years, not much when you consider there are 23,236 properties in Aylesbury.

Nothing is about to  seismically change in the property market, thus demand for housing will continue to outstrip supply, meaning property values will increase (good news for landlords). However, as rents tend to go up and down with tenant wages, in the long term, rents are still only 7.4% higher than they were in 2008 (good news for tenants)... with renting everyone wins!
If you want to discuss the local market please feel free to drop in to our office or email me