Tuesday, 9 February 2016

Aylesbury Buy to Let sees returns of 13.03% in 2015

As the New Year celebrations fade as a distant memory and we all struggle to stay on track with those resolutions made it is  frightening to realise that we are already well in to February. Scary! At the weekend I met up with an old school friend I had not seen for 30 years. We both still live in Aylesbury but our paths have not crossed until recently. Turns out he has built a small property portfolio locally and is considering another purchase so it was not long before we found ourselves discussing the local market. His goals are similar to myself and most of my landlords…enhance retirement income, hope to have a strong enough portfolio to help the children get on the ladder when the time comes and see a small monthly return in the meantime.

 Before I could advise him, I reminded him that the most important thing when considering investing in property is finding Aylesbury property with good rental yields for income return, yet at the same time, it must have the potential for capital growth from rising house prices over time. Going further into 2016, Aylesbury landlords will be under more pressure to find the best combination of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.
Before we look at yield and capital growth, one important consideration that landlords tend to overlook, is the possibility of future rent increases. Interestingly, the average rent of an Aylesbury property currently stands at £919 per month, which is a rise of 6.0% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants).
Anyway, back to yield and capital growth, the average value of an Aylesbury property currently stands at £305,100, meaning the average yield stands at 3.15% per annum, which on the face of it, many landlords would find disappointing.  That is the problem with averages. If I were to look at say 2 bed houses in Aylesbury which are the sort of properties a lot of landlords buy, in Aylesbury, the average value of a 2 bed house is £239,700. The average rent for a 2 bed house is £865 per month, giving a yield of 4.33%. However, if that is not high enough for you, there are landlords in Aylesbury who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward (give me a tinkle if you wanted a chat about those sorts of properties – although they can be fun and games!).
Ultimately most investors want to be making gains from both rent and house price growth. When combined, the rental yield and capital growth gives you the return on investment, and that is what I told my old school friend. Return on investment is everything (ROI). Property values in Aylesbury have risen in the last year by 8.7% …. which means the current annual ROI in Aylesbury for a typical 2 bed house is 13.03% a year .... not bad.
Whether you are a soon to be new landlord or existing seasoned landlord in Aylesbury, you might be interested in a blog about the Aylesbury Property market, where you will find similar articles to this one about what is happening in the Aylesbury Property market http://theaylesburypropertyblog.blogspot.co.uk/
See, I can be well behaved!
I will soon be running a drop in clinic for landlords giving you access to a wide range of property advice from accountants and other property professionals and exclusive packages, details to appear here on the blog soon. Held at our office space will be limited.