Monday, September 28, 2015

Oak Avenue just under £100,000 could be a great start for a buy to let investor!

This apartment is on the market for sale with Richard Watkinson and looks in great condition. It is spacious and well presented and should let easily for £550 pcm. And it has a garage!

Even after taking into consideration the annual service charge this could see a return of 5.6% .

With a 20% deposit the mortgage repayments would be around £450 per month, this apartment could be a great investment for someone starting a property portfolio. It is very hard to find anything worth investing in under £100,000.

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Thursday, September 24, 2015

Crisis in the Bingham Property Market ..probably?

I don’t know about you, but if you watch Sky News every waking hour or read the newspapers, it always seems we as a Country, Europe or the World seem to lurch from one crisis to another.

However, this month’s crisis is the buy to let boom and as George Osborne always likes to be topical, in the July emergency budget, he declared that he will start to scale back, from 2017, the tax relief that those high income tax rate landlords with a mortgage have benefited from. The Daily Mail ran headlines stating it was the end of the private landlord; predicting many landlords will give up on buy to let altogether and we will be inundated with rental properties up for sale as landlords feel squeezed from the market.

End of the world then?   .. this week, yes probably, but next week .. that’s another story!  As I mentioned a few weeks ago, two thirds of buy to let properties bought in the last eight years have been bought mortgage free – so they won’t be affected by the Chancellors’ tax changes.  Also, something I feel is often overlooked but very important, is the fact that landlords historically have only been able to normally borrow up to 75% of the value of the rental property.  In the last property crash of 2008, property values dropped by the not so insignificant figure of 16.59% in Bingham, but even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Bingham.

I believe we have a case of ‘bad news selling newspapers’ and I believe that buy to let, and the property market as a whole, will carry on relatively intact. It’s true reducing tax relief will hit landlords who pay the higher rate of income tax and this may slightly diminish buy to let as an investment vehicle, but I doubt people will sell. Many landlords have been lazy with their investments, buying with their heart, not their head. You would never dream of investing in the stock market without doing your homework and talking to people in the know. If you want to make money in the Bingham property market as a buy to let landlord, it’s all about having the right property and as you grow, the right portfolio mix to offer a balanced investment that will give you both yield and capital growth.

The Bingham buy to let market still offers good investment opportunities to new and old alike. Those who have bought in the last twelve to eighteen months have reaped the benefit from buying in Bingham, because the town offered a combination of reasonable house prices with subsequently increasing rents.  Property values have risen by 6.1% in the last eighteen months in Bingham, whilst looking at rents, in Q2 2015, average rental values for new tenancies were 3% higher than Q2 2014, which is particularly interesting as they only rose by 1% between Q2 2013 and Q2 2014.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Bingham Property Blog where I have similar articles to this about the Bingham property market and what I consider to be the best buy to let deals around at anyone time in the City, irrespective of which agent it is on the market with. Please give me a call or pop into see me at our office on The Market Place in Bingham.

Thursday, September 17, 2015

Interest rates set to rise – How will that affect the Bingham property market?

A couple of weeks ago, I mentioned in this blog about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 1,612 homeowners in Bingham, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 381 rental properties in the town, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of.

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Bingham would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.

Those Bingham landlords, who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It’s easy to say you will look at your mortgage next month, then before you know it, Christmas will be here!  Don’t forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Bingham and seriously consider fixing your mortgage rate now.  You didn’t buy your Bingham buy to let property for it to become a millstone around your neck. It’s all about mitigating your costs and maximising your income to make your Bingham buy to let property the investment you want it to be.

However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I’ll explain why. Bingham landlords have see their return on investment for their Bingham buy to let property, over the last couple of years, perform very well indeed with Bingham property values rising by 10.44% since the Spring of 2009. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Bingham!

In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla and another OnThe Market. However, sometimes, you can’t see the wood for the trees. At the time of writing, Rightmove had 47 properties for sale in Bingham, Zoopla 22 properties for sale in the town and OnTheMarket 23 properties ... where do you start? A lot of savvy Bingham landlords like to visit this blog, where, irrespective of which agent is selling it, I regularly post what I consider out of the many properties on the market, to be the best buy to let deal in Bingham.   

Monday, September 14, 2015

Spacious 2 bed in Newton - great investment and on the market for £119,000

Ok so it doesn't look much from the outside but this 2 bed semi is on the market for £119,950 with Hammonds and its a really nice size inside and in great condition. 

It has great appeal for tenants as it has an easily maintained garden and a dining kitchen. Its in the catchment for the Outstanding rated Primary School in East Bridgford and is ideally located for commuting into Nottingham. This would definitely let for £550 pcm, possibly £575 pcm in the current rental market.

Friday, September 11, 2015

Brendan Grove in Bingham - 5.2% return

Richard Watkinson have this 2 bed on the market for £124,950 and it looks to be in good order. Properties like this can make great buy to let investments and it should let for £550 pcm easily. 

If it's purchased at the asking price you would be looking at a potential return of 5.2%. Click on the link for more details..

Thursday, September 10, 2015

Bingham – The 10 year Time Bomb on Home Ownership

Looking at the country as a whole, in 1951 30% of residential property was owner occupied, then, every ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07% by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop today.

Young adults tend to start to think about settling down and moving out of the family home in their early-mid twenties.  After a couple of years, they will have a choice of either buying their first house (albeit with a mortgage) or decide to privately rent for the long term (because the council house waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide to what people are doing about their housing needs and what their attitude to renting vs buying is.  

With that in mind, within the next ten years, I am predicting there will be more people renting privately in Bingham than owning a property with a mortgage and that the British love affair of property ownership will fade as the decades roll on.

This is a really important change in the way we live, as I explained to a local Bingham landlord the other day, knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in the town; Bingham property prices and Bingham rents.

In the Rushcliffe Borough Council area as a whole there are 5,595 households that are privately rented via a landlord or letting agency verses 17,502 households that are owned with a mortgage, so my prediction appears to be outrageous. However, when we look deeper (as the devil is always in the detail), 8,946 of those 17,502 households are 35 to 49 year olds and 5,256 are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s. 

Meanwhile, at the other end, in the 25 to 34 age range (the age most people bought their first home in the 1970’s/80’s/90’s) only 2,292 of the 3,993 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, because 1,701 households are privately rented. This means only 57.4% of 25 to 34 year olds have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of homeowners (between 75% to 85%).

It can be seen that as the older generation pay their mortgages off as they start to get to retirement and the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago.  The private rental sector will take up the slack as more and more people will want a roof over their head, but they will rent rather than buy. With local authorities and housing associations not building houses anywhere near like the number of houses they were building in the 1950’s, 60’ and 70’s, the private landlord appears to have good demand for their rental properties for many decades to come.

This will create a polarisation in the housing market between those, mostly older, households who own outright and those, mostly younger, households who rent. Our housing market is very much turning into the European model. However, all is not lost, the younger generation will inherit their parents properties, which in turn will enable them to buy, albeit later in life.

If you are a landlord or thinking of become a landlord, and would like honest advice on what to buy or not to buy please pop in and see me in our Market Place office.

Wednesday, September 9, 2015

Easy Buy to Let Investment - Rockingham Grove, Bingham

This property will not be around for long, and it looks to be a great buy to let investment.  In good order, it could achieve a return on your investment in the region of 5%.  But one of the main benefits of buying this property to let, is it will require little / no maintenance to get it ready to let.

See for yourself here:

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Monday, September 7, 2015

My concerns about the Bingham Property market

I am genuinely concerned about the Bingham property market, but in a way that might surprise you.  

Rightmove announced that average ‘asking prices’ rose in July by 0.7% in the East Midlands, leaving them 4.2% higher than a year ago.  Whilst it could be said that monthly change is very modest, in the same period a year ago, we saw a monthly fall of 1.9% in the East Midlands, which is more the norm given the onset of  schools breaking up and everyone going on holiday.

Looking at all the data on the Bingham property market; putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built; my research shows there is a widening gap between what property buyers want and what is available to buy.  In a nutshell, many more buyers are looking for the smaller one and two bed properties (the typical semi detached and smaller terraced houses/apartments), whilst there is an oversupply of the four and five bed properties, which are the typical large detached properties available.

Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns.  Also, landlords with larger loans (on those larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments, which start in 2017.

If you recall, a few weeks ago I did some research on how different types of properties had performed in Bingham since the year 2000.  I revisited those calculations and it hit me how different types of properties had performed over the last 15 years. This mismatch of demand and supply isn’t a new phenomenon, it’s been happening under our noses for years!

In the last 15 years, the average terraced house in Bingham has risen in value from £52,719 to £142,363 whilst the detached house has risen in value from £114,738 to £279,625.  Nothing seems amiss until you look at the percentage growth.  The terraced has grown in value by 170% whilst the detached by only 144% meaning the gap between the inexpensive terraces and expensive detached properties has in percentage terms narrowed enormously (this isn’t just a Bingham thing, it has happened all across the country).

I am concerned because more houses need to be built, not only in Bingham, but in the East Midlands and the UK as a whole.  In particular, there is specific need for more affordable starter homes for the growing demand from both tenants (and the landlords that will buy them) and first time buyers.  The government needs to face up to the fact that unless they can get the builders, the planners (to release more building land), the banks (to finance it) and themselves together, to ensure long term plans can be made, and implemented, this issue will continue to worsen.

The country needs 200,000 houses a year to be built to keep up with demand, let alone reverse the imbalance between demand and supply.  Last year, only 141,040 properties were built, the year before 135,510 and 146,850 in the year before that.  This means only one thing for Bingham landlords.  Unless David Cameron starts to rip up huge swathes of the British countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future.

Therefore, investment in the local Bingham property market as a buy to let investment could be the best move to make as the stock market investments are possibly on the wane.  Everyone is different and trust me, there are many pitfalls in buy to let.  You must take lots of advice and seek out the best opinion.  One source of opinion, specific to the Bingham property market is to pop into our office on the Market Place in Bingham or call us on 01949 714101.