Has 2015 been a good year for Aylesbury landlords?

This is a question I have been asked often over the last few weeks by landlords.

I think most of you will give a resounding yes to this question!

Substantial property value increases have given good capital growth to most landlords, by tens of thousands of pounds in many cases.

 Improved income through increased rents and reduced void periods has benefitted most.

Further, many landlords have been able to reduce costs by re mortgaging and taking advantage of the many low fixed rates available in the mortgage market, protecting their cost base for the future against an impending rate rise.

Some landlords have taken advantage of the above positive factors and added to their portfolio through 2015.

However there are a few clouds on the horizon. Extra Stamp Duty for second home purchases, changes to tax relief for buy to let landlords, extra costs for landlords to meet the raft of new and pending legislation.

Many of these factors are not news… we are all aware and they have been much reported in the media. But what we are not sure of is the impact they will have on the market.

Miles Shipside Rightmove Director ‘this is December’s best post-financial crash performance, signalling another round of price rises in 2016. Despite the shortage of suitable stock in many parts of the market, demand for housing is on the up. Although the average price of property coming to the market is already up by a hefty 7.4% compared to a year ago, Rightmove forecasts that prices will reach and breach new records next year’.

Rightmove’s 2016 forecast is for new seller prices to rise by 6%.

Will there be an assault on the market from landlords trying to buy before the new Stamp Duty regime applies in April?

Will first time buyers hold back from buying until after April in the hope prices will reduce once the new Stamp Duty puts landlords at a financial disadvantage and the competition for stock is reduced?

Will there be a rush of landlords through 2016 trying to sell and reduce their gearing in light of pending tax changes? Will this new stock be in sufficient volume to drive down prices as supply outstrips demand?

Will America put up interest rates and will we follow? Or will Janet Yellen back off at the last minute as previously?

I imagine we each have our own views. What we do about it will depend on our own prevailing circumstances and financial situation…I would love to hear from you with your opinions.

Some landlords I have spoken to recently have some interesting thoughts. One landlord intends to invest money into his existing portfolio by moving kitchens into the lounge and where possible turn the kitchen in to a bedroom making one bedroom units into two bedroom units and enhancing the rent (reflecting many of the new builds/conversions that have a similar layout).

Another is remortgaging his whole portfolio to fixed rate schemes with a view to driving his expenses down to offset any increase in his tax bill.

Interestingly I have not spoken to any landlord that intends to sell his portfolio, after all most of us bought a buy to let for the long haul…either to help our retirement income in years to come or in many cases to help  our children when the time comes.

Whatever your view as always it is essential to buy right. There are very few bargains to be had but buying a property that will let well and have a good chance of sensible value growth is essential. There are many new flats on the market and many more waiting to come to market, all at high prices. Whilst these will let well I struggle to see the option for capital growth being as good as a freehold house where supply is much more limited.

As always the Aylesbury Property Blog will keep you touch with market trends, http://theaylesburypropertyblog.blogspot.co.uk/   or pop in to see me in my Temple Street office when you are passing. Enjoy the festive season.

Please feel free to comment below.

 

The Aylesbury Property Market and £1,300,000,000,000,000,000 in loose change

The 5^th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8^th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Aylesbury, so I cannot profess to know what will happen to interest rates. However, what I do know, speaking to my Aylesbury friends and Aylesbury landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Aylesbury landlords have been investing some of that cash into Aylesbury bricks and mortar, as they search for a low risk investment opportunity.

Buying an Aylesbury buy to let property is not risk free, but there are certainly things you can do to mitigate and lower exposure to risk. Buying a rental property potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Aylesbury house prices have been extraordinarily robust, increasing by over 2148% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

... and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (apart from some faceless whizzkids in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

...  but before you go out and buy any old Aylesbury property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that is why many agents use a letting agent to manage their property for them. Even then you need to be careful with your choice of agent!

Next, you have to buy the right property at the right price. Recently I have seen some situations in Aylesbury and the immediate area, where people pay way too much for a property, only to lose out when they come to sell.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Aylesbury Property Blog where I have similar articles to this about the Aylesbury property market. If you have not visited and you are interested in the local property market in Aylesbury ... you are missing out! .. http://theaylesburypropertyblog.blogspot.co.uk/

Nala waiting for dad to come home and play with her new toy.

The Aylesbury market in 2015

Many landlords have been asking me my thoughts on the Aylesbury property market recently, and in particular, what is happening to property values. Property values in Aylesbury grew in the month of September by 0.4%. When one looks at the annual growth, Aylesbury values are 8.4% higher (when comparing Sept 14 to Sept 15).  However, there are signs that the fundamental growth of property values in Aylesbury has now peaked, despite those average property values being above levels recorded in 2007 (just before the 2008 crash).

Even though prices are higher this month, this impressive rise of Aylesbury property values masks the underlying truth in what is really happening to local property values in the town. Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,

·         September 2015               0.4% rise

·         August 2015                       1.4% rise

·         July 2015                              1.3% rise

·         June 2015                            0.9% rise

·         May 2015                             0.2% rise

This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Aylesbury property market remains positive against the foundations of low mortgage rates and growing consumer confidence. Aylesbury property values are still running ahead of salaries and average property values are 13.2% above the levels recorded in 2007.

Talking to fellow property professionals in the town, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.

Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Aylesbury Synchronised Swimming team.  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s.

Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Aylesbury property values are 8.4% higher than a year ago (as mentioned above), Milton Keynes property values are 9.1% higher than a year ago.

If you are considering buying to let in the area I cannot stress enough the importance of doing your homework.  One source of information and advice is the Aylesbury Property Blog where I have similar articles to this about the Aylesbury property market and what I consider.  If you have not visited and you are interested in the local property market in Aylesbury….. you are missing out! http://theaylesburypropertyblog.blogspot.co.uk/

The Buy to Let market continues to grow!

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let properties are taxed.

Last month, the CML stated £1.4 billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Aylesbury, I am speaking to more and more landlords, be they seasoned professional landlords or first time landlords, as they read reports that the Aylesbury rental market is doing well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

However, the first thing you have to decide is whether you want great capital growth or great rental yield, as every landlord knows, you cannot have both. Over the last twenty years, property values in Aylesbury have risen by 256.69%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive Capital, but your investment money does not go very far, meaning there will not be as much rental yield from a one bed flat in Chelsea (2% per year at best) as there would be with a two bed semi in Aylesbury. However, whilst the figure of 256.69% is an average for the area, certain areas of Aylesbury have seen capital growth much higher than that and others areas not so well (we have talked about those in previous articles).

Clearly there are still many landlords coming into the market, regardless of potential tax changes in the future. There are various ways in which you can mitigate the potential tax changes and I would be happy to discuss some of these if you have any questions.

In the meantime if you are looking to buy, I will keep you in touch via this blog with the changes to the Aylesbury market place. As always consider very carefully your objective and whether or not the property and location you are buying meets the criteria needed to achieve your goals.

If you would like to discuss your investment plans or a proposed purchase, please don’t hesitate to get in touch. Pop into my office in Temple Street or email me at Ian@mortimersaylesbury.co.uk

You can find similar articles and information at http://theaylesburypropertyblog.blogspot.co.uk/

Aylesbury Buy To let –Freehold House or Leasehold Flat?

I wish to answer a question emailed into me from a potential Aylesbury landlord last week. Nice chap ... lives in Broughton, and it turns out, after having a coffee with him, he works in IT, has some available capital (now the kids have flown the nest) and wants to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Aylesbury?

This is the most frequently asked question from those landlords and potential landlords I talk to. Most people will say freehold every time, because you own the land. However, it is not as simple as that. The definitive answer though is to research what Aylesbury tenants want in the area of Aylesbury they want to live in! The tenant is ultimately your customer, if they don't want to rent what you decide is best to buy, then you are not going to have a successful Buy to Let investment. So start with the tenant in mind and work backwards from there, you won’t go far wrong. In short, find the demand before you think about creating the supply.

Leasehold flats and apartments in Aylesbury are excellent in some respects as they offer the landlord certain advantages, including the fact a flat will generally be less expensive to buy. Yields can be good, offering sensible cash flow. The building will already be insured and yes there is a service charge, but it is for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites - there is often no garden to maintain or blown down fences to replace!

However, some Aylesbury leasehold flats can suffer from poor capital growth particularly if they are affected by any of the below mentioned points; Some leasehold properties, in particular the more modern developments will have higher levels of service charges while they are building up a ‘sinking fund’. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there are not many, but some Aylesbury apartments have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out. You need to research your potential purchase thoroughly!

So what do the numbers look like? Since 2003, the average freehold property in Aylesbury (detached, semis and terraced) has risen from £180,346 to £297,342 in value, a rise of 65% whilst the average Aylesbury leasehold property (flats and apartments) has gone up in value from £91,735 to £148,044, a similar rise of 61%. 

It may be interesting to note that of the 8,096 rental properties in the Aylesbury District Council area that the Office of National Statistics state that 32.9% (2,662) of all rental properties are apartments. However, there are only 8,098 apartments in the whole council area (be they owned, council rented or privately rented), which represents 11.7% of the whole housing stock in the area. There is a high proportion of Aylesbury’s leasehold apartments rented to tenants compared to freehold detached, semi’s or terraced.  

My advice to any prospective landlord as it is to you is to do your homework.  I am pleased to say that the potential landlord from Broughton has now agreed a purchase for a freehold property and is very happy with the advice and support he has received. If you would like to discuss your investment plans or a proposed purchase, please don’t hesitate to get in touch. Pop into my office in Temple Street or email me at Ian@mortimersaylesbury.co.uk

You can find similar articles and information at http://theaylesburypropertyblog.blogspot.co.uk/

 

Aylesbury Tenants Pay 34.6% of their Salary in rent

I had an interesting chat with a local Aylesbury landlord yesterday about my thoughts on the Aylesbury property market. The subject of the affordability of renting in Aylesbury came up in conversation (there’s a surprise) and how that would affect tenant demand. Everyone wants a roof over their head, and since the 1940s, owning your own home has been an aspiration of many of us.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

I thought I would do some research into the Aylesbury property market and share with you my findings.  Aylesbury tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Aylesbury is £763 per month.  When the average annual salary of an Aylesbury worker stands at £26,466 per year, that means the average Aylesbury tenant is paying 34.6% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Aylesbury Property Blog reading friends is such a shame for the youngsters of Aylesbury.

You see one of the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a lack of new properties being built   It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Aylesbury people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Winter 2007, there were over 1,600 properties for sale in Aylesbury and since then this has steadily declined year on year, so now there are only 354 for sale in the town.

So, the planners in Aylesbury haven’t allowed enough properties to be built in the town and existing Aylesbury homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Aylesbury to match demand. These are the reasons houses prices in Aylesbury have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the South East region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested  more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people are seeking rental properties.

 It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted,  is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.

Therefore, if we are turning into a more European model and the youngsters of Aylesbury and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Aylesbury tenants as wages will start to rise and good news for Aylesbury landlords, especially as property values in Aylesbury are now 8.8% higher than a year ago!

To discuss this or any other article in my blog please email  ian@mortimersaylesbury.co.,uk or pop in to my Temple Street office when you are passing.

How EU Migration has changed the Aylesbury Property market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In this article I talk about what it has done for the Aylesbury Property market.

Before we look at Aylesbury though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Aylesbury Vale, migration has risen over the last few years. For example, in 2007 there were 1,237 migrant national Insurance cards (NIC) issued and the year after in 2008, 1,094 NIC cards were issued. However, in 2014, this increased slightly to 1,423 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Aylesbury property market; it couldn’t fail to because of the additional 9,353 working age migrants that have moved into the Aylesbury area since 2005. However, it has not been the main influence on the market. Property values in Aylesbury today are 34.49% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Aylesbury property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period. 

If you want to know more about the Aylesbury property market, then for more articles like this, please visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/ or pop in to my Temple Street office when you are passing.

Aylesbury Property Market Crisis as New House Building drops by 10%

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years to plan and ultimately build new properties, thus increasing the supply.

The Conservatives have pledged to build over 1 million homes by 2020. We have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. It is past the time for another grand statement of ambition by another Housing Minister. Surely it is right to give normal Aylesbury families back the hope of a secure home, be that rented or owned? As a town, we need to exert pressure to ensure Westminster is held accountable, so we can have confidence there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Aylesbury Vale District Council area in 2008, 670 properties were built and four years later in 2012, it peaked at 1100. By 2014, that figure had dropped by 10% to 990 properties built.

The outcome of too few homes being built in Aylesbury means the working people of the town are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority is not building estates like they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Aylesbury youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Aylesbury business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Aylesbury businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Aylesbury landlords, who own the 4,701 rental properties in the town. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Aylesbury!

Moving forward, those Aylesbury landlords have many pitfalls, both in the short term and medium term. For instance the way income from rented property is taxed is likely to change soon, landlords now need to carry out Legionella Testing and the requirements for information that a landlord needs to supply a tenant have changed. All these changes cost time and money.  

The days of buying any property in Aylesbury and letting it out meaning you are set for life are gone.  There are more than ever a host of things to consider. It’s all about ensuring you stay the right side of the law, buy the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. Have a working knowledge of the tax implications in all you are doing is essential. If you are not using an agent to manage your property make sure you are able to stay up to date with legislation changes…if you are using an agent make sure they do!! One source of information on all of these issues, where you will find other articles on the Aylesbury property market, is the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

Or just pop in to my Temple Street office when you are next in town.

Nala helping me negotiate the Wendover Woods fitness trail.

 

Aylesbury home sellers desert the housing market.

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Aylesbury as the number of houses available to buy is at an 8 year all-time low.

Back in winter 2007, there were over 1,600 properties for sale in Aylesbury and since then this has steadily declined year on year, so now there are only around 350 for sale in the town.  This continuing diminishing supply of housing has been happening over those years for a while and there simply are not enough properties in Aylesbury to match demand.

A recent report by the National Association of Estate Agents said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Aylesbury youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties. This means landlords have a greater demand for more rental properties and so are buying more. This is resulting in even fewer smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the town, all of whom have extensive dealings in the Aylesbury property market like myself, most of us agree the movement in the Aylesbury market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the town, it paints an interesting picture.

• HP 19 - Fairford Leys, Prebendal Farm, Quarrendon, Watermead 58 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Autumn  months of 2013, the number of properties selling in this postcode reached an average of 66  per month.
• HP20 - Aylesbury Town Centre, Broughton, Elmhurst 17 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Spring months of 2014, the number of properties selling in this postcode reached into the late 20’s per month.
• HP22  - Aston Abbotts, Aston Clinton, Bierton, Buckland, Drayton Beauchamp, Dunsmore, Halton, Hardwick, Hulcott, North Lee, Nup End, Oving, Pitchcott, Quainton, Rowsham, Stoke Mandeville, Weedon, Wendover, Weston Turville, Whitchurch, Wingrave Hill 34 properties sold in May 2015, whilst over the Summer months of 2014, the number of properties selling in this postcode was always in the late 50’s to early 60’s.

So what does this all mean for homeowners and landlords alike in Aylesbury?  Demand for Aylesbury property is strong, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving very strong too.

But is that strength in prices supported by a high demand or by a lack of supply? I will leave you to debate this with those around you!!

A more stable, consistent Aylesbury property market that has a steady growth of property values  year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s, might just be what the Aylesbury property market needs in the long term.

For more insights, comments and facts on the Aylesbury Property market please visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

 

 

Could your Aylesbury property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get out of jail cards if they have not). 

As a household, could you live on just over £12k a year?

However, could the property you are living in in Aylesbury save you from a life of financial difficulty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Aylesbury could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into a buy to let property. Let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment. Equally if prices did fall you would choose not to sell ( so would not make a loss ) and continue instead to benefit from the monthly gain made from rent.

Let me explain how leverage could work for you. If you had bought an Aylesbury house in Spring of 1983 for £75,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £18,750). Today, that Aylesbury property would have risen in value to £542,842, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Aylesbury properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Aylesbury? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in areas that are not particularly desirable to live in. Historically these areas have not offered such good capital growth when compared to the town average and have a higher tendency for void periods. 

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up desirable area. Properties such as these tend to suffer from fewer void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the town average.

Every landlord is different and every property is different. All I suggest to you is do your homework. It is essential that you are buying property in areas that suit your needs, goals and desires. Talk to someone who knows the patch. This really is a key point…even as I am typing this I have broken off to speak to a local landlord who has been given advice by an agent who does not live locally and only recently has worked the Aylesbury market. Frankly the advice on achievable rents in certain locations he had been given were laughable!

As regular readers will know, I am happy to share my knowledge and experience of the Aylesbury property market, high yields, high capital growth, what to buy, what not to buy and where to buy. News and views on the Aylesbury Property market can always be found on the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/ or you can email ian@mortimersaylesbury.co.uk

Nala had great fun on her first visit to the Wendover woods fitness trail this weekend

 

Aylesbury tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is the Aylesbury property. As a property agent I like to comment on the Aylesbury property market, which I hope will be of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Aylesbury as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Aylesbury has nearly broken through the £750 a month barrier as the average rent for a property in the town, now stands at £749 per month, and whilst this was a drop of 0.6 % last month, rents for new lets are 7% higher than they were 12 months ago.

House price inflation has eased a little in Aylesbury from 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and the desire for good high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are an ideal barometer to the state of the local economy as a whole and strongly believe that the recent increases in Aylesbury rents are a sign that the Aylesbury economy is picking up. 

This means Aylesbury landlords are continuing to benefit from the Aylesbury property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values 9.76% higher than 12 months ago. So as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10, and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.

You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates low and returns still very attractive, there has rarely been a better time to invest in rental properties.

However, (you knew there would be a however!), it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents and capital growth.  Different parts of the town, different types of properties are experiencing quite different changes.  For example, the average length of time on the market the 59 Aylesbury properties up for rent between £250 to £500 per month is 194 days, whilst the average length of time for the 108 properties at £500 to £1000 per month is 52 days and 22 properties that fall into the £1000 to £2000 per month price bracket is 47 days.

When you start comparing different parts of Aylesbury, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Aylesbury Property Blog. In the Aylesbury Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/