Tuesday 4 August 2015

Aylesbury Landlord’s mortgages top £263 million!


We can’t stop talking about property. The hot topic of discussion at the  dinner parties of Aylesbury’s movers and shakers is the subject of the local property market, but in particular, buy to let property. These investors are buying up buy to let properties quicker than an ace Monopoly player. So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into? The answer is Yes and No!

Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which for an average Aylesbury terraced house, would mean finding £54,735 for the deposit (as the average Aylesbury terraced house is currently worth £218,941) and borrow the rest with a low interest rate interest only buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after. With the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it???

Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees. .. All things that eat into that profit.

Interestingly, by my calculations, there are approximately 1,407 Aylesbury landlords owing in excess of £263 million in mortgages on those Aylesbury buy to let properties.  An impressive amount when you consider Aylesbury only has 0.132% of all the rental properties in the country. It really does come down to a number of important factors to ensure you are water tight for the future. A lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a 5 year fixed BTL remortgage rate at 3.79% (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor... but that sounds pretty good to me!

However, one thing I do know is that buy to let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Aylesbury property market without advice? I give bespoke detailed advice to landlords to enable them to spot trends in the Aylesbury property market before others, enabling them to buy better properties at better prices. I can advise on which properties will go up in value better (or lose less if property prices drop), I can also advise which have lower voids and which properties have higher maintenance issues.  

Information on the local property market and ability to process it is the strongest asset I can give you. As Lois Horowitz, the famous author says, ”Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”. One place to find information on the Aylesbury Property Market is the Aylesbury Property Blog, where you will find many articles just like this. Alternatively you can stop by my office in Temple Street when you are next in town for an informal chat without any obligation at all.

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