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 firstname.lastname@example.org
A good run, fed, watered and hosed down. What next Dad?