If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, new legislation on checking tenants and the general uncertainty in the world economic situation.
I will admit there are certain landlords in Rutland who have over
exposed themselves in the last few years with high percentage loan to value
mortgages. Those mortgages, with their current (yet artificially low) interest
rates, will start to suffer, as their modest monthly positive cash flow/profit,
i.e. income (rent) less costs (mortgage, fees, tax) will become negative when
the tax and mortgage rates rise throughout 2017 and beyond.
It appears to me these landlords seem to have treated the Oakham
Buy-to-Let market as a ‘sure bet’ and have not approached this as a business
and, as a result, they will suffer as they thought, "Buy a property, rent
it out so it covers the mortgage and make a few quid on top".
These are just the types of people will now be thinking twice. I see opportunities everywhere in the Buy-to-Let marketplace and will not be stopping. I am here to stay. It is going to be an exciting year ahead.
Gone are the days when you could buy any old
house in Oakham and it would make money.
Yes, in the past, anything in Oakham with four walls and a roof would
make you money because since WW2, property prices doubled every seven years …
it was like printing money – but not anymore.
True, since February 1997, the average price paid for an Oakham
flat/apartment has risen from £41,750 to today’s current average of £115,000 in
the town. An impressive rise of 175% and
terraced/town houses have risen in the same time frame, from £40,990 to £148,083,
an even better rise of 261%.
However, look back to 2005, and in that year, the average flat was
selling for £129,995, meaning our Oakham landlord would have seen a modest drop
of 12% and the terraced owner would have seen an increase of 86%, as they were
selling for on average £79,617. Not bad,
until you consider inflation.
Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to
retain its value, an Oakham terraced property bought for £79,617 in 2005 needs
to be worth £106,184 today. Therefore, our landlord has seen the ‘real’ value
of his property increase by 52.6% (i.e. 86% less 33.4% inflation).
The reality is, since around the early 2000’s we haven’t seen anything
like the capital growth in property we have seen in the past and it’s not
predicted to grow at the rates it has previously done either.
Therefore, it is high time anyone considering investing in property
stopped believing the hype and did some serious research using independent
investment expertise.
You can still make money buying the right Oakham property at the right
price and finding the right tenant. Properties in real terms are 52.6% higher
than ten years ago, so investing in Oakham property is not only about capital
growth and yield (the return from the rent), it’s also about having a balanced
property portfolio that will match what you want from your investment – and
what is a ‘balanced property portfolio’?
Well, we discuss such matters in other articles on the Oakham Property Blog ... check them out in the archive section now.
If you wish to discuss any properties you are considering purchasing, or would like to discuss one you already own, please contact me via david@upp-property.co.uk or call me on 01780 484 554 and I would be happy to help.
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