Thursday, October 29, 2015

Bingham tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is talking about Bingham property. As a property agent I like to comment on the Bingham 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 Bingham as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Bingham has broken through the £550 a month barrier as the average rent for a property in the town, now stands at £572 per month, a rise of 1.6 % last month, leaving rents for new lets 6.6% higher than they were 12 months ago.

House price inflation has certainly eased in Bingham from the heady days of 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 therefore the desire for decent 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 increase in Bingham rents are a sign that the Bingham economy is picking up. 

This means Bingham landlords are continuing to capitalise on the Bingham property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values only 4.48% 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 election, 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 so low and returns still extraordinarily attractive, there’s 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.  

When you start comparing different parts of Bingham, the numbers are even stranger!  The bottom line is that you must take advice and opinion. In the Bingham 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. Please feel free to give me a call on 01949 714101 or pop into see me at our offices on the Market Place in Bingham.

Wednesday, October 28, 2015

Potential Buy to Let - No Upward Chain - Brendan Grove, Bingham - 6% yield

This property looks like a bargain to me!  Just on the market today and with no upward chain it could be a quick and easy buy to let investment.  

On the market for £127,950, with our friends at Richard Watkinson Partners it could see a healthy return of around 6%.

See the full details here:

Image 1 of 10: Dsc 0837.jpg

Image 2 of 10: Lounge

 Image 3 of 10: Kitchen

Friday, October 23, 2015

Potential buy to let investment: Oak Avenue Vs Wharf Gardens

I have recently been asked to look at a couple of properties in Bingham to get to the bottom of their potential as an investment opportunity. Both these properties are currently listed for sale with two Bingham agents. So I looked at what each had to offer and came to a surprising conclusion.

Oak Avenue a 2 bedroom apartment with a large kitchen and separate lounge, finished to a modern standard with a garage for sale at £94,950. I think this should achieve £525 pcm.

Image 3 of 13: Kitchen.JPG Image 10 of 13: Csc 0392.jpg

Wharf Gardens, 2 bed apartment with allocated parking in a newly built development. This in on for sale at £125,000 and these let for £550 pcm. 

 Image 1 of 11: NEW exterior main.JPG

When calculating rental return on these types of properties you must consider service charges and ground rent costs as these would need to be paid by the landlord. 

                                               Oak Avenue                 Wharf Gardens
Asking Price:                              £94,950                         £125,000
Rental income per annum:           £6300                             £6600
Less approx service charges:        £1250                             £1150   
Potential Yield per annum:            5.3%                               4.3%    

Looking at the costs of securing a buy to let mortgage on these properties (using a very useful mortgage calculator ) 

Available today 22.10.15 with Monmouthshire - 2 yrs fixed at 2.79, subsequent rate 4.99%

                                      Oak Avenue                            Wharf Gardens 

30% deposit                         £29,000                               £37,500

Mortgage repayment           £296 pcm                             £393 pcm

Rental income                     £420 pcm                            £454 pcm
(after deducting service charges) 

Demonstrating the rent covering the costs of the service charges and mortgage repayments and leaving spare to save up for any potential repairs required, agents fees and void periods. 

The figures above show how Oak Avenue can produce a greater surplus income each month and requires a lower deposit to reach the 70% Loan to value level that is required to get access to a good selection of mortgage products.    

Both properties are going to perform well but as an investor it is so important do your research and not to be afraid of considering a range of properties. 

If you would like an honest opinion do not hesitate to give me a call or pop into our office on The Market Place in Bingham.

Thursday, October 22, 2015

Carnarvon Primary catchment area properties outperform Bingham average by 23.83%

I was having a chat with a Bingham property investor the other day, when he asked if schools, especially primary schools, affected the local property market in terms of demand from buyers and tenants to a property.  

Anecdotally, I have always known this to be true; a good school creates good demand and good demand does affect house prices.  So, I looked at the phone calls from people putting themselves on our mailing list and they confirmed that most people cite location as their number one factor.

After looking through our mailing list, it confirms there is a close correlation between the high demand areas in Bingham and the close proximity to a good primary school.  Talking to my team in a recent morning meeting, they agreed many people would look to increase their budget quite significantly, whilst others would consider downgrading their property requirements to be close to a good primary school.

Those of you who regularly read this blog will know I like a challenge, so I decided to look at the science behind these assumptions. According to the SchoolGuide website, Carnarvon Primary School is one of the best primary schools in Bingham.  Its figures are certainly impressive. Their last Ofsted Report classified it as Outstanding, 97% of 11 year old pupils achieving Level 4 or above in maths, reading and writing whilst 25% of them achieved level 5. Finally, the schools’ KS2 rating was classed as Good.

Looking at property sales within a mile of Carnarvon Primary, property values have risen in value since 1999 by 144.04%, whilst according to recent figures, the Bingham average as a whole has risen in the same time frame by 116.32%.  

That means the parents of Carnarvon Primary have seen the values of their properties rise proportionally 23.83% more than the Bingham average ... interesting don’t you think?

However, whilst a good primary school significantly contributes more to house prices, the same can’t be said for secondary schools. There are two reasons for this, firstly, as secondary schools are much larger, so their catchment areas are correspondingly much larger, meaning parents don’t need to live so close to the school. Secondly, in the UK, whilst the difference between the top 25% and bottom 25% of secondary schools is not insignificant, in the primary school sector, the difference between the top 25% and bottom 25%, according to the London School of Economics, is considerably and significantly more.

Many other Bingham landlords, both who are with us and many who are with other Bingham agents, like to pop in, ring or email us to discuss the Bingham property market, to consider how Bingham compares with its closest rivals and hopefully we can answer all their questions. You must take lots of advice and seek out the best opinion and I will just give you my honest and straight talking opinion.

Thursday, October 15, 2015

Could your Bingham 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 of jail cards if they haven’t). 

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

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

If you are in your 30’s, you could keep your terraced or small semi, turning it into buy 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.

Let me explain how leverage could work for you. If you had bought a Bingham house in Spring of 1983 for £30,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £7,500). Today, that Bingham property would have risen in value to £192,549, a rise of 541.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 541.8%, we see a rise of 2467% (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 Bingham 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 Bingham? Possibly, but the properties that offer these higher yields (in the order of 6% to 9% per year) tend to be in such areas as Langdale Grove in Bingham, historically they haven’t offered such good capital growth when compared to the town average.

Another strategy could be buy a property with relatively smaller rental returns of 4% to 5% per year (i.e. lower yields), but in a more up market area such as Mallow Way. Properties such as these tend to suffer from less 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.

As regular readers will know, I am happy to share my knowledge and experience of the Bingham property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Bingham Property market can always be found on this blog or pop into our office on the Market Place in Bingham.

Langdale Grove - a great Buy to Let investement

Just added to Rightmove by Purple Bricks .com this 2 bed semi looks to be in excellent condition inside and has off road parking and a lovely garden. It would easily let for at least £595 pcm which if purchased for £140,000 would give a potential return of 5.1%. 

Properties in good condition let quickly and we have tenants registered with us waiting for this type of house. Click on the link to see the full listing...

Thursday, October 8, 2015

Bingham Property Market - Asking Prices Drop but Values rise

Those of you who regularly read my weekly articles in the Bingham Property Blog will know I like to keep abreast of the Bingham property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.

 Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the town have dropped, yet property values have increased.  The average asking price of a Bingham property, according to Rightmove, fell 1.4% this month yet the average value of a Bingham property rose by 0.8%.

So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Bingham property down slightly to £213,000 whilst the average value is now £219,500.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore, in a nutshell, Bingham property values are continuing to rise and those homeowners in Bingham who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!

In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location.  I can appreciate Bingham home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are 7 flats for sale, 10 terraced houses and 6 semis for sale in Bingham.  Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.

The types of houses a Bingham landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Bingham Property Market together with regular postings on what I consider the best buy to let deals in Bingham, out of the properties on the market,  irrespective of which agent is selling it, then you keep an eye on this property blog. 

Wednesday, October 7, 2015

Modern Apartment in Calverton with a return of 6.6%

A fab, modern apartment in popular Calverton, with 2 double bedrooms and 2 bathrooms. Relatively new and so still benefiting from its 10 year NHBC guarantee. 

Low maintenance, easy let, high return with a guide price of £100,000.

This is perfect for a new landlord taking their first tentative step into the buy to let market.

Monday, October 5, 2015

Milburn Grove, great 2 bed potential investment

Frank Innes are selling this 2 bedroom property with a garage for £155,000. 

It looks to be in good condition and properties in this area regularly let for £600 pcm. This one has a really nice kitchen and a garage.

Thursday, October 1, 2015

Bingham’s £361 million Mortgage Powder Keg

The credit crunch started to hit the Bingham Property market, and in November / December 2007, and for the following seventeen months, Bingham property values dropped each and every month. Between October 2008 and March 2009, interest rates dropped six times in six months from 5% to 0.5% to try and stimulate the British economy. 

Thankfully, after a period of stagnation, the Bingham property market started to recover slowly in 2012, but really took off strongly in late 2013 / early 2014 as property prices started to rocket. However, the heat was taken out of the market in late 2014/early 2015, with the new mortgage lending rules and some uncertainty, when some people had a dose of pre–election nerves.  

Here is the good news for Bingham homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  I read that the well respected UK financial website Moneyfacts said only a couple of weeks ago, the average two year fixed rate mortgage has fallen from 3.6% twelve months ago to just under 2.8%.

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to a seven year high in the UK.  So what about Bingham?  In Bingham, if you added up everyone’s mortgage, it would total £361.3 million.  Even more interesting is when we look at Bingham and split it down into the individual areas of the area:

  • NG13 0 – mainly Bottesford, Langer, Plungar and Barkestone £69.1m
  • NG13 8 – Bingham, East Bridgford £212.8m
  • NG13 9 – Langar, Orston, Whatton, Aslockton £79.4m

Since 1971, the average interest rate has been 7.93%, making the current 0.5% very low.  So, if interest rates were to rise by only 2%, according to my research, the 919 Bingham homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £4,115,400 a year in mortgage payments. 

That means every Bingham homeowner with a variable rate mortgage, will on average have to pay an additional £4,479 a year or £373 a month in interest payments.

I know over the last couple of posts, I have talked about mortgages a lot however, I am not a mortgage arranger but a letting agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Bingham Property market and at the moment, in my humble opinion, this is the most important thing!

Buy to let is all about maximising your investment, increasing income and reducing costs.  Please pop into see me at my office on the Market Place or call me on 01949 714101.