You find me in a reflective mood today as I want to talk about the future of investing in property in Bingham. Many people have mistaken the ever rising Bingham (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.
Whilst George Osborne has decided now is the time for changes in taxation of buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You need to study the market, take advice and opinions from many people and then decide what the future demand will be. Remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?
No one could have predicted how the property market has changed in Bingham over the last couple of decades. Looking specifically at the Newark Parliamentary Constituency, twenty years ago, 24,502 households (meaning 67.05% of property) was owned and only 3,138 households were privately rented (meaning 8.59% of property was rented out by private landlords). Roll the clocks on twenty years and the change shows that now 30,268 of properties in the Constituency are home-owners (a drop to only 54.30% being owner occupied) with the jump in private renting increasing as 5,430 properties are now privately rented; proportionally 13.09%. (NB neighbouring constituencies show similar changes as well).
Who would have predicted in 1995 the private rental sector in
Bingham would have grown by 51.57% in the proceeding 20 years?
Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Bingham have increased over the last 20 years (between 1995 and 2015), but by a more modest 126.63% (and most of that can be attributed to house price growth between 2000 and 2006.)
The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten. I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks and / or your approach to financing, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.