5.3% gross return for this cracking Watermead apartment in Aylesbury

The property is situated on the sought after Watermead development which can be found on the northern outskirts of Aylesbury.  The development is based around two picturesque lakes and a central piazza which offers a range of individual shops and a public house/restaurant.  The development is served by a regular bus service providing quick links into Aylesbury town centre.

 

 

Dove House, Watermead, Aylesbury.

 

A rarely available two bedroom apartment which has been tastefully refurbished and is presented to a very high standard.  The property benefits from entrance hallway, refitted kitchen and combination boiler, lounge/dining room, two bedrooms, bathroom, security entry system, allocated parking.  The property, in the valuers opinion, is an ideal opportunity for first time buyers and investors.  Viewing is highly recommended.

Full details available here http://www.rightmove.co.uk/property-for-sale/property-51120076.html 

 

This excellent property should let readily at around £800pcm which at asking price £179,950 will give a return of 5.3% gross.

If you would like to discuss this property or others that you may be interested, need to know the property types that give the best return or anything else lettings related please give me a call Ian Davies 01296 398555 or pop in to see me in our Temple Street office when you are passing. My coffee is not great but I will be able to give you sound local advice .

 

UPDATE

An asking price sale has been agreed 17/08/2015

George Osborne – The Aylesbury landlord’s friend?

Well the last few weeks have been rather hectic as Aylesbury landlords, some who manage their properties via us and other landlords who just read our Aylesbury Property Blog, have been sending me emails or picking the phone up to me about the new rules on buy to let taxation announced in the recent budget. George Osborne confirmed in the recent summer budget that the tax relief given to landlords on mortgage interest payments, on their buy to let (BTL) properties, would be reduced over the coming years for higher rate income tax payers. The Chancellor said the tax relief that private buy to let landlords (who pay the higher rate of income tax) would change in 2017 from the current 45%/40% and would steadily reduce over the following four years to the existing 20% by 2020.

With 16.3% of residential property in Aylesbury being privately rented (as there are 4,701 privately rented properties in the town), these changes are potentially something that will not only affect most Aylesbury landlords, but also the tenants and the wider property market as a whole. The choice of rental properties could drop, especially at the top end of the market, which could push up rents.

However, Aylesbury landlords could protect themselves by reassigning one or more rental properties into a company structure (e.g., a Limited Company, Partnership or Sole Trader) and by doing so, the total tax paid is greatly reduced, because a company only pays tax on the profit. Nonetheless, before everyone goes off setting up companies for their BTL portfolios, it must also be noted, if a sole trader firm is started, stamp duty needs to be paid, yet if the owner is in business with a partner, they could enjoy some stamp duty relief.  The biggest tax variation is Capital Gains Tax (CGT) where the tax bill will be much higher when you come to sell your portfolio. In essence, by going into business with your BTL properties, you will potentially have a modest stamp duty to pay when you start, but you will have a lot less monthly tax to pay, irrespective of the interest rate, but the CGT bill will be much higher when you come to sell ... as you can see, it is not a ‘get out of jail card’. Now it must be remembered, I am not a tax advisor, so you must take advice from a qualified person .

Those planning to purchase a BTL property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make. However, I am not that concerned, as the scaremonger reports fail to see the fact that two out of three BTL properties that have been bought since 2007 have been purchased without the support of BTL mortgage. With those two thirds of landlords paying cash for the purchase of their rental properties, that means two thirds of landlords will be totally unaffected by the changes.

So what of the future? The British love their Bricks and Mortar; it’s an asset that they can touch and feel and has a 70 year track record of capital growth that has out stripped inflation. Buy to let will still be attractive to Aylesbury investors and let me explain why. If you invested £80,000 in Aylesbury property in September 1987, today it would be worth £314,836. If you had invested the same £80,000 in to the London Stock Market (the FTSE 100 to be exact), it would be only be worth £229,012 today, whilst Inflation would have taken the original £80,000 and pushed it up to £166,254.

It’s true some central London landlords relying solely on the tax breaks rather than high yields may be forced out of the market, but even those landlords could seek to recoup any losses by increasing rents. However, those landlords may leave the market and this could constrict the availability of rented houses even more than it is already, increasing rents and thus pushing yields even higher for landlords and BTL investors still in the market... thus attracting new landlords into the market because of those higher yields.

The reality is, there is too much demand and not enough supply of homes for people to live in in the town. Official figures show the population in the Vale of Aylesbury is rising by 838 persons per year (i.e., demand rising), but only 488 properties are being built each year (i.e., supply is low). This sets up the Aylesbury (and UK) property market to continue to create strong and steady returns, irrespective of any tax loophole being there (or not as the case maybe).

Nala was pretty keen to hear all about the new tax rules

I have had so many calls from landlords that I am likely to organise an informal seminar with a local Aylesbury accountant, whereby they can show you the options available and what might be best for you. I am sure many of you are of the same opinion as me…pay my taxes fine but not a penny more than I have to! If you are interested in attending, please drop me an email ian@mortimersaylesbury.co.uk  and I will be able to get something organised.

Great buy to let oppurtunity in Aylesbury

Tolman Court is a two bedroom cluster house on the Willows off Oxford Road and has the benefit of being offered with no upper chain.  Downstairs there is a good sized lounge with wood laminate flooring as well as a modern fitted kitchen.  On the first floor there is one double and one single bedroom as well as a bathroom with white suite.  The property benefits from double glazed windows throughout, enclosed gardens which extend to the front and side of the property and allocated parking for one vehicle.
Full details are available here http://www.rightmove.co.uk/property-for-sale/property-35749125.html

Two bedroom cluster in Tolman Court

Used to own one here myself many years ago. There are pylons nearby but I don't see this as a problem...it does not stop tenants letting and these always resell as they represent good value. So long as you are not over paying when you buy ( others are on the market at £180,000 and more ), you can afford to sell at the right price when you come to sell in later years, as I did.
Rent would be around £725 giving a gross return just shy of 5% better than the Aylesbury average of 4%.
Usually when you are seeing a stronger monthly return the capital growth suffers downwards. Not so with this. Sales in early 2010 were around £110,000 for similar properties nearby so they have seen pretty good growth of £65,000!. A strong argument says I should have kept hold of the one I owned...

If you want to discuss the market and where to invest your money in buy to let property please give me a call 01296 398555 or email me ian@mortimersaylesbury.co.uk

 

 



 

 

 

 

 

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.

Aylesbury Property Market – Bricks and Mortar!

The Land Registry have just released their latest set of figures for the Aylesbury Property market. It makes interesting reading, as average property values in Aylesbury rose by 0.8% in May. This leaves average property values 9.7% higher than 12 months ago, meaning the annual rate of growth in the town fell to its lowest level since July 2014. When we compare Aylesbury against the regional picture, South East property values rose by 0.9%, leaving them 9.1% higher than a year ago.

At one point (November 2014 to be exact) property values were rising by 11.6% a year. This is good news for local homeowners who had been affected by the downturn after 2007 and still find themselves in negative equity.

However, the thing that concerns me is that the average number of properties changing hands (i.e. selling) has dropped substantially over the last 12 months in the town. In March 2014, 127 properties sold in Aylesbury but in March 2015, that figure dropped to 112.  I have been in the Aylesbury property market for quite a while now and the one thing I have noticed over the last few years has been the subtle change in the traditional seasonality of the Aylesbury property market. It has been particularly noticeable this year in that the normal post Easter flood of properties coming onto the market was not seen. This has made an imbalance between supply and demand, with fewer houses coming onto the market there is simply not as much choice of properties to buy in Aylesbury. With the population of Aylesbury ever increasing, this will generally strengthen house price growth for the foreseeable future.

So what does all this mean for Aylesbury landlords or those considering dipping their toe into the buy to let market for the first time? For many people, buy to let looks a good investment, providing landlords with a sensible income at a time of low interest rates and stock market unpredictability.

However, if you are thinking of investing in bricks and mortar in Aylesbury, it is important to do things correctly. As an investment to provide you with income, for those with enough savings to raise a big deposit, buy to let looks particularly good, especially compared to low savings rates and stock market yo-yo’s. I must also remind readers, landlords have two opportunities to make money from property, not only is there the rent (income), but with the property market bouncing back  property value increases have spurred on more investors to buy property in the hope of its value continuing to rise.

Savvy landlords with decent deposits can fix their mortgages at just over 3% for five years, making many deals stack up. Nevertheless, low rates cannot stay low forever, because one day they must rise and you need to know your property can stand that test. I saw some Aylesbury landlords struggling in the mid noughties, when interest rates rose from 3.5% in July 2003 to 5.75% in July 2007. That might not sound a lot, but that was the difference of making a £100 a month profit in 2003 to having to make up a shortfall in the mortgage payments of £100 per month in 2007.

Many landlords were thrown a life raft when the base rate dropped to 0.5% in March 2009. Whilst interest rates have remained there since but they will rise again in the future. However, even with the potential for costs to rise, demand for good rental properties remains high as there are ever more tenants in the market, driving up demand and thus rents. The British love of bricks and mortar plus improving mortgage deals also add fuel to the buoyant Aylesbury property market.

If you are planning on investing in the Aylesbury property market, or just want to know more things to consider for a successful buy to let investment, one source of information is the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

Nala in full posing mode.

 

Are ‘would be’ Aylesbury homeowners warming to the idea of renting?

I was reading a report the other day produced by the Halifax, about the UK property market and why more and more of the younger generation are renting rather than buying. I find it fascinating that over the last ten years, the British obsession of buying a house almost as soon as you left school, has turned on its head to a point where the hopes and dreams to own a nice home will be replaced by the ambition simply to live in one.

In the latter half of the 20th Century, you left school, got a job, bought a small house and kept buying and selling property, constantly upgrading until eventually they carried you out in a box. However it seems that the British are now beginning to accept a lifetime of renting. This is a very important consideration for both Aylesbury homeowners and Aylesbury landlords as it will transform the way the Aylesbury property ladder looks in the future and I might ask whether or not it will exist at all for some people? The make up of households is one important factor, especially in the Aylesbury property market. The normal stereotypical married couple, two kids and dog of the 1970’s and 80’s has changed. More and more we have the need for larger houses where two families come together after divorces (+ kids) and they need a property to house everyone, through to an increase in the number of one person households.

Looking at the data for Aylesbury, of the 8,096 private rental properties in the Aylesbury Vale District Council area, 27.37% of those rented properties are one person households (2,216 properties). However, when we compare the number of one person Aylesbury households who have bought their own property with a mortgage (i.e. therefore they are still in work), of the 49,702 owner occupied households in the area, only 4,254 of those properties are a one person household (i.e. 8.56%). Compared to a decade ago, this explosion in demand for decent high quality rental properties that one person households require has not been met with an increase in supply of such properties.  More and more Aylesbury landlords need to consider this change in the make up of Aylesbury households, as I believe this could be an opportunity. As an aside, another interesting stat that raised an eyebrow was that 12.44% of those 8,096 rental properties (1,007 properties) are lone parents households as well. Again, another possible opportunity that Aylesbury landlords might want to consider in their future investment plans.

It is true that the Governments introduction in 2013 of the Help to Buy scheme, where first time buyers only needed a 5% deposit, changed the perception of peoples’ ability to buy without having to save ten’s of thousands of pounds for a deposit. However, 95% mortgages were re-introduced within six months of the Credit Crunch in late 2009, so again it comes down to people’s own perception. Many youngsters think they won’t get a mortgage, so don’t even bother trying.

Coming back to the deposit, it’s still a fact that once you start renting it becomes that much harder to save for a deposit, regardless of the size. 7 out of 8 renters polled by the Halifax (86% to be exact) refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit.  This is the crux and the real reason why people aren’t buying but renting... and why demand for renting will continue to grow in the future (i.e. good news for landlords). Aylesbury tenants can upgrade the quality and size of the property they live in for a minimal rent increase. The average rent of a two bed property in Aylesbury is £806pm, a three bed is £287pm more at £1,093pm, whilst the average four bed rent is £1,337pm. If you had to make that jump when buying, the monthly mortgage payments would be stratospherically more than that!  Without any social pressure and better quality rental properties compared to a decade ago, we will become a nation of renters within the next generation, as the UK is becoming more like Europe, where renting is ‘the norm’. Who is going to supply all these properties to rent? Landlords! Whether you are an existing landlord looking to grow your portfolio or looking to become a ‘first time landlord’, take advice from as many people as possible. However, as the majority of landlords buy their buy to let properties in the same town they live, you will need specific advice about Aylesbury itself. One place for such advice and opinion is the Aylesbury Property Blog, or pop in to my temple Street office for a chat when you are passing. 01296 398555

Aylesbury Buy To let – Bedrooms?

Last week, a landlord from Aylesbury emailed me to ask, after reading the Aylesbury Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought it a good way would be get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property.  Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at semi detached properties, and turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.

However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord.  What would be the cost of making that extra bedroom? The average value of a terraced house in Aylesbury is currently £226,000 whilst the average value of a semi detached house is £281,900, meaning to make money the cost of the extension would need to be less than £21,470 on the terraced property and £29,599 on the semi detached house. Talking to a number of trades people in the town, most are booking up into the New Year. Also, no matter how good a friend he was, I know of no builders that would charge as little as that. Maybe the builder was just thinking of a bit of pointing work on the chimney!

Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well.   Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending.

·         23.2% of the one bed properties on the market to rent in Aylesbury have a tenant with an average rent of £653 per month

·         38.9% of the two bed properties on the market to rent in Aylesbury have a tenant with an average rent of £805 per month

·         54.2% of the three bed properties on the market to rent in Aylesbury have a tenant with an average rent of £1,038 per month

·         30% of the four bed properties on the market to rent in Aylesbury have a tenant with an average rent of £1,459 per month

No, if you want to increase the value of your property, be you an Aylesbury landlord or homeowner, there are things that cost a lot less than building extra bedrooms. Spruce up the exterior, emulsion all the rooms, install fresh carpets and curtains. For homeowners, a matter of a few hundred pounds will add thousands whilst for landlords, these things can add an extra 10% to the rent that you can achieve. I can help point you in the right direction if you are thinking of updating or making improvements. For more advice and opinion on the Aylesbury Property Market, visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

C'mon tell me where the treats are!

 

Why are fewer Aylesbury people moving house?

During my earlier years, people seemed to move every other year (or it seemed that way). However, whilst many people used to keep the removal van folks in business , from research I have carried out it shows things have changed considerably in Aylesbury over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!

In Aylesbury, there are 28,877 properties. However, after we remove the 4,562 council houses, 4,701 privately rented houses and 256 houses where the occupants live rent free, that leaves us with 19,358 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 67% of the properties in Aylesbury are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Aylesbury, over the last 12 months, has only been 2,292. This means on these figures, the homeowners of Aylesbury are only moving on average every 8.44 years. (Part of the reason we have so little sales stock at present!)

These are the reasons. Firstly, the cost of moving house has risen over the last twenty years. Secondly, with many owners remortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors driving fewer moves by existing homeowners.

However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2002 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Aylesbury property market (i.e. Aylesbury property values not rising quickly) is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Aylesbury homeowners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Aylesbury buy to let landlords? Well for the same reasons existing Aylesbury homeowners aren’t moving, fewer ‘twenty something’s’ are buying their first home as well. Aylesbury youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their first property as soon as they reach their early 20’s, the memory of the 2008 housing crisis and the belief that hard times either aren't over or the worst is yet to come (think Grexit), current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngster’s wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. This is often coupled with little knowledge of the costs of home ownership as we parents have shielded them from the costs of the real world! As a society, we expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit? Why go without holidays, the newest iPhone, socialising four times a week and the fancy satellite package for a couple of years, to save for that deposit if there is no longer a social stigma in renting or pressure to buy as there was... say... a generation ago?

Even though, in real terms, property prices are 5% lower than they were ten years ago (when adjusted by inflation), 16.3% of Aylesbury properties are privately rented (nearly double the level of twenty years ago). As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing?

 For advice and opinion on the Aylesbury Buy To let property market, one source of information is The Aylesbury Property Blog but you could pop in to my office in Temple Street, I am not known for my coffee making skills but I will make you welcome and try to help. 01296 398555

I am shortly away on my hols , Nala and her sitter are on guard duty in my absence.

Affordability of housing in Aylesbury

Talking to an elderly relative recently, he reminded me that in his day, you could have bought a property for the same price of that a decent second hand car would sell for today and that his father was buying property for the same price as a decent 50 inch LCD TV!  Now of course, these are only headline prices and we have had wage growth and inflation.  Interestingly, since the Second World War, property values in Aylesbury doubled in 1961, 1971, 1975, 1980, 1988, 2000 and 2006.

Looking at more recent times, since the start of the Millennium, these increases in property values have generated large increases in equity for many homeowners but on the other side of the coin have also made housing unaffordable for others.  It might interest readers to note that most of Europe experienced sharp increases in property values in the early years of 2000’s, with only Spain beating  us (although we know what has happened to the Spanish property market over the last few years!).  In the 2000’s, the British situation was different in two regards.  First the property value boom started earlier here and saw more sustained increases, second, the regional pattern was fairly uniform.

However, since 2010, the regional pattern has been completely different in the UK.  Compared with  2007 (the last property boom), average property values today in England and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher, and in Aylesbury they are 13.21% higher. The London property market has been like a different country.  Looking specifically at Aylesbury though, it has continued to be difficult for first time buyers to get on the housing ladder.  The best measure of the affordability of housing is the ratio of Aylesbury Property Prices to Aylesbury Average Wages, (the higher the ratio, the less affordable properties are). 

·         1997       4.48 to 1   (i.e. the average value of a Aylesbury property was 4.48 times higher than the average annual wage in Aylesbury)

·         2000       5.57 to 1

·         2002       6.60 to 1

·         2003       7.50 to 1

·         2007       8.48 to 1

·         2009       7.63 to 1

·         2012       8.38 to 1

·         Today    9.35 to 1

You  can see quite clearly, even though we had an improvement just after the 2007 property crash (i.e. the ratio dropped), in following subsequent years with Aylesbury house price’s rising but wages not keeping up with them,  the ratio started rise.  This has meant there has been a deterioration in affordability of property in Aylesbury over the last couple of years.  This is one of the (many) reasons why the younger generation is deciding more and more to rent instead of buy their own house.  The local Council sold off council houses in the Thatcher years and for many on low incomes or with little capital, owning a home has simply never been an option.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are looking to rent, this has also resulted in a change in attitudes towards renting over the last decade. We are increasingly shifting to the European model of renting rather than owning our homes.  This has driven rents up in Aylesbury over the last few years, as more people are seeking properties to rent.  All these things have combined to make the demand for rental property in Aylesbury rise.

  If you are an existing landlord or someone thinking of becoming a first time landlord looking for advice and opinion on what (or not) to buy in Aylesbury, one source of information is the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

 

 

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 ian@mortimersaylesbury.co.uk 

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

 

 

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 ian@mortimersaylesbury.co.uk