Friday, 20 November 2015

And the 3 BEST Buy-2-Lets this week are...

i) 3 Bed Semi-Detached - On the market for £165,000 with UPP Property Agents


http://www.rightmove.co.uk/property-for-sale/property-37085196.html
 
Tremendous rental investment. Currently let out to the same tenant for the last 8 years!! No rent increase over this period and is achieving £525pcm. However, on the market I would expect the rent to increase by £100pcm to £625pcm.
 
 
Offered in good decorative order and offers the full package.  Drive, Garage, 3 bedrooms, front and rear gardens.
 
 
UPP Property Agents
Call Adrian McCarthy on 01572 725 825 to discuss further
 
 
 
 
ii)  2 Bed Terraced home - On the market for £149,950 with Goodwins
http://www.rightmove.co.uk/property-for-sale/property-51988051.html.
 
Northumberland Ave rentals are fantastic for many reasons. The location of the property is great for town and access and this particular property is immaculate. Whilst only offering two bedrooms the property offers fantastic internal size rooms and large gardens.
 
Great starter home for a young couple and the rental income at £575pcm isn’t a bad return for Stamford.

 
 
iii)  2 Bed Terraced home - On the market for £142,500 with Murrays Estate Agents
http://www.rightmove.co.uk/property-for-sale/property-55889402.html
 
Ladywell in Oakham is a rental investment haven. Having circa 12 fully managed properties on this development, rarely does a 2 bed terrace home become available.
 
Capable of fetching in the region of £475pcm - £495pcm, the property is a great starter property for any first time investment.

 
If you would like to discuss the above properties in more detail, or would like my opinion on any other strong buy-to-let properties you have seen, please contact me via David@upp-property.co.uk and I would be glad to talk to you.










Values of Stamford Terraced Houses smash through the £250/sq ft barrier


The Council of Mortgage Lenders latest snapshot of the Buy-to-Let (B2L) mortgage market shows us that Buy-to-Let landlords haven’t been put off by the Chancellor's announcements on the way Buy-To-Lets are taxed.
Last month, the Council of Mortgage Lenders stated £1.4billion was borrowed by UK landlords to purchase 10,500 B2L properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a B2L mortgage.
Go back two years and the number of B2L 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 B2L mortgage last month was £133,330, up from £128,480 a year ago.
In Stamford, I am speaking to more and more landlords, be they seasoned professional landlords or first time landlords, as they read reports that the Stamford rental market is doing reasonably 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).
The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Stamford have risen by 137.2%, compared to Greater London’s 436.2%.
This has proved that capital growth increases faster in the more expensive South, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% pa at best with a fair wind) as a 2 bed semi in Stamford.
However, whilst the figure of 137.2% is an average for the area, certain areas of Stamford have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).
If you recall in an earlier article, my research reveals that Stamford apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.
So what should you be buying in Stamford, and more importantly, for how much?
·    Average apartments in the town are currently selling for approx. £278 / square foot.
·   Terraced houses in Stamford are currently obtaining, on average, £237,000 or £254 / square foot.
·   An average semi in Stamford is selling for £218,600 (and achieving £229 / square foot). 
Now these are of course averages, but it gives you a good place to start from.
In the coming weeks, I will look at rents being achieved on Stamford houses and apartments, and the yields that can be obtained, depending how many bedrooms there are.
 

Friday, 13 November 2015

How EU Migration has changed the Rutland 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 my article today, I want to talk about what it has done for the Rutland Property market.

Before we look at Rutland 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 the 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).

Interestingly, in Rutland, migration has fallen slightly over the last few years. For example, in 2006 there were 116 migrant National Insurance Cards (NIC) issued and the year after, in 2007, 119 NIC cards were issued.

However, in 2014, this had slipped to 106 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 Rutland property market; it couldn’t fail to because of the additional 969 working age migrants that have moved into the Rutland area since 2005.

However, it has not been the main influence on the market. Property values in Rutland today are 9.32% higher than they were in 2005.

According to the Office of National Statistics, rents by tenants in the East Midlands have only grown on average by 0.66% 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 Rutland 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 Rutland property market, and for more articles like this, please visit the Rutland Property Blog www.rutlandandstamfordpropertyblog.co.uk

Friday, 6 November 2015

Stamford Tenants Pay 28.0% of their Salary in rent


 
I had the most interesting chat with a local Stamford landlord the other day about my thoughts on the Stamford property market. The subject of the affordability of renting in Stamford came up in conversation and how that would affect tenant demand.

Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  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.

Therefore, I thought I would do some research into the Stamford property market and share with you my findings.  Stamford tenants spend on average just under 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 Stamford is £778 per month. 
When the average annual salary of a Stamford worker, stands at £33,268 per year, that means the average Stamford tenant is paying 28.0% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Stamford Property Blog reading friends is such a shame for the youngsters of Stamford.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Stamford.  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, Stamfordians 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 Autumn 2007, there were over 540 properties for sale in Stamford and since then this has steadily declined year on year, so now there are only 111 for sale in the town.

So, the planners in Stamford haven’t allowed enough properties to be built in the town and existing Stamford 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 Stamford to match demand, these are the reasons houses prices in Stamford 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 East Midlands 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 were 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 Stamford and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Stamford tenants as wages will start to rise and good news for Stamford landlords, especially as property values in Stamford are now 5.4% higher than year ago!

Wednesday, 28 October 2015

My choice of the best Buy-To-Let deals on the market this week...



UNWIN ROAD, South Witham - PRICE £85,500
UPP Property Agents Tel: 01572 725 825
Two bed mid terrace close to centre of South Witham village with good connections. 
 
A cracking yield on this one, with an approximate rental of £450pcm.
http://www.rightmove.co.uk/property-for-sale/property-37043265.html

2 Bedrooms
Mid-terraced home
Re-fitted kitchen
Re-fitted bathroom
Gas central heating
Double glazing
Front garden

 

SISKIN ROAD, Uppingham - PRICE £136,500
UPP Property Agents Tel: 01572 725 825
Two bed coach house located within walking distance of the town centre.  Allocated parking and close to main road links.

Rental amount of approximately £450pcm.
 
 

2 double bedrooms
Coach house style apartment
Off road parking
Large living room
Bathroom with shower
Gas central heating







RYHALL ROAD, Stamford - PRICE OIEO £185,000
Murrays Estate Agents
Three bed terrace located close to local amenities and within a short walk to the centre of Stamford, complete with OSP.

3 bedrooms
2 reception rooms
Re-fitted kitchen and bathroom
Garden
Off-road parking
Gas central heating

Rental amount approximately £625pcm

 

Monday, 26 October 2015

Rutland and Stamford house owners desert the housing market with an 8 year low


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 & regarded as ‘unattainable’ by some. However, that goal has become even worse recently in Rutland & Stamford as the number of houses available to buy is at an 8 year all-time low.

Back in spring 2008, there were over 776 properties for sale in Rutland & Stamford, and since then this has steadily declined year on year, so now there are only 233 for sale in these areas. This continuing diminishing supply of housing has been happening over those years for a while & there simply aren’t enough properties around here to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.   What that means is Rutland & Stamford 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, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors & solicitors in the towns, all of whom have extensive dealings in the Rutland & Stamford property market like myself, most of us agree the movement in our marketplace 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 & 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 some of the individual areas of the towns, it paints an interesting picture.

  • PE9 - Stamford, Ashton, Aunby, Bainton, Barholm, Barnack, Braceborough, Careby, Carlby, Collyweston, Duddington, Essendine, Easton-on-the-Hill, Great Casterton, Greatford, Ketton, Little Casterton, Newstead, Pickworth, Pilsgate, Ryhall, Southorpe, Tallington, Tickencote, Tinwell, Tixover, Uffington, Ufford, Wilsthorpe, Wothorpe 62 properties sold in May 2015 (with an average value of £238,132), whilst over the Autumn months of 2014, the number of properties selling in this postcode reached into the 70’s.
  • LE15 - Oakham, Cold Overton, Empingham, Knossington, Langham, Manton, Owston & Newbold, Thistleton, Uppingham, Whissendine 52 properties sold in May 2015 (with an average value of £251,720), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the 80’s.

So what does this all mean for our local homeowners and landlords?  Demand property in our area is good, especially at the lower end of the market.  But, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.

I believe a more stable, consistent property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying & selling every other minute), but a local property market that has a steady growth of property values, year on year, without the massive peaks & troughs we saw in the late 1980’s & mid/late 2000’s might just be the thing that Rutland & Stamford needs in the long term.

For more insights, comments & facts on our local property market please visit the Rutland and Stamford Property Blog www.rutlandandstamfordpropertyblog.co.uk where you will find many similar articles to this.
 

Friday, 16 October 2015

Oakham tenants feel the squeeze as rents continue to rise


As my regular readers know, my passion is talking about Oakham property. As a property agent I like to comment on the Oakham 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 Oakham as bit by bit their wages are being taken up by ever increasing rents.  The cost of renting a home in Oakham has broken through the £700 a month barrier as the average rent for a property in the town, now stands at £710 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 Oakham 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 a bigger slice of their wage packets, leaving nothing to save for a deposit. That means, progressively 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 Oakham rents are a sign that the Oakham economy is picking up. 

This means Oakham landlords are continuing to capitalise on the Oakham 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 4.85% 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 Chancellor’s 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 and different types of properties are experiencing quite different changes.

For example, the average length of time the 7 Oakham properties up for rent between £250 to £500 per month is 26 days, whilst the average length of time the 21 properties at £500 to £1000 per month is 30 days and 7 properties that fall into the £1000 to £2000 per month price bracket is 26 days. When you start comparing different parts of Oakham, the numbers are even stranger!  The bottom line is that you must take advice and opinion.

To discuss any potential buy-to-let properties currently on the market that have caught my eye, or if you have your own property to discuss, please contact me to arrange a suitable time for us to meet.  
I look forward to hearing from you.
Email me: David@upp-property.co.uk  or call me on 01572 725 825 / 01780 484 554

Friday, 9 October 2015

Could your Stamford property save you from PENSION OBLIVION?


If you were born in the early 1970’s or late 1960’s, and 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’ or as we now call it ‘National Insurance’ (although there are certain ‘get out of jail’ cards if they haven’t). 
As a household, could you live on just over £12k a year?

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

If you are in your 30’s, instead of saddling yourself with rising mortgages, going from your ‘first time buyer’ flat, to a terrace, to the semi and then the large detached house, you could instead keep your terrace 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 Stamford house in the spring of 1983 for £35,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £8,750). Today, that Stamford property would have risen in value to £224,641, 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.  In retirement, income is more important than capital growth, as monthly rent is the key to a steady income.

So surely the best strategy is to buy those Stamford 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 Stamford? Possibly, but the properties that offer these higher yields (in the order of 6% to 9% per year) tend to be in places such as the Essex Road area in Stamford.  Historically they haven’t offered such good capital growth when compared to the town average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, 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 Tinwell Road / Roman Bank area. 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 Stamford property market; high yields, high capital growth, what to buy, what not to buy and where to buy in the Stamford Property market.

Please contact me via david@upp-property.co.uk or call me on 01780 484 554, and I will be happy to chat it all through with you.

Tuesday, 6 October 2015

This week's B2L deals...


Here are 3 more B2L properties on the market this week that look very interesting.  All very different in their offering, and indeed their price, but there are tenants out there for all 3 genres of property. 

1) King Edwards Way, Edith Weston-  £385,000 (UPP Property Agents)

http://www.rightmove.co.uk/property-for-sale/property-36057582.html  

Currently let at £1,200pcm

Detached 3 bedroom cottage, close to Rutland Water.

Spacious family accommodation with no upwards chain.

This would make a cracking investment especially with the long term in mind as it would add capital value, give you the option to extend (stlpp) and would be a great family home should you want it back in a few years to live in yourself.

  • Detached Cottage

  • Three Bedrooms

  • Three Bath/Shower Rooms

  • Large Living Room

  • Spacious Kitchen/Breakfast Room

  •  


    Contact Adrian McCarthy, UPP Property Agents
    Tel:      01572 725 825
    Email: Adrian.mccarthy@upp-property.co.uk





    2) Hectors Way, Oakham - offers over £189,995 (Moores Estate Agents)
    End terraced 3 bedroom town house style property, garage, garden, gas central heating.

    A wonderful rental investment.  We manage a number of similar properties on the same development; they are always sought after by young families wanting a long term let and achieve £695pcm



    3) Tods Terrace, Uppingham - £129,950 (Gilbert & Thomas)
    Mid terraced 2 double bedroom home with garden and outbuilding.

    Literally a minutes walk from Uppingham town centre. Income c£500 - £525pcm, perfect for the young professional.

    http://www.rightmove.co.uk/property-for-sale/property-52725926.html

    Or if you're interested in purchasing a different property in Rutland and Stamford, and would like my opinion on it, and a realistic rental valuation, please contact me on 01780 484 554 or email me: david@upp-property.co.uk

    Friday, 2 October 2015

    Langham Residents can thank the school for an average £6,400 windfall


    I was having a chat with an Oakham 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 asked my colleagues on the front line, who take 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 of Oakham 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, Langham Primary School is one of the best primary schools in Rutland. Its figures are certainly impressive. Their last Ofsted Report classified it as Outstanding, 72% of 11 year pupils achieving Level 4 or above in maths, reading and writing whilst 31% of them achieved level 5. There is also an excellent pupil/teacher ratio of 24:1. Finally, the schools’ KS2 rating was classed as good.
    Looking at property sales within the catchment area of the school, property values have risen in value since 2002 by 35.2% whilst according the Land Registry, the Oakham average as a whole has risen in the same time frame by 33.4%.

    That doesn’t sound a lot of difference, but when you apply that difference to the value of an average property in Langham, those extra few percentage points make over £6,400 difference in property price growth in Langham, when compared to the Rutland County 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 school. 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% is, according to the London School of Economics, is considerably and significantly more.

    Many other Oakham landlords, both who are with us and many who are with other  Oakham agents, like to pop in for a coffee or ring/email us to  discuss the Oakham property market, to consider how Oakham 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. 

    If you have any questions, please contact me and I will be glad to offer you my honest, straight talking opinion.  I don't bite and I don't hard sell.

    Email: david@upp-property.co.uk or call me on 01572 725 825
     
     

    Friday, 25 September 2015

    George Osborne – The Oakham landlords’ friend?

    Well, the last few weeks has been rather hectic as Oakham landlords, some who use us to manage their properties and other landlords who just read our Oakham Property Blog, have been sending me emails or picking up the phone to ask me about the new rules on buy-to-let taxation announced in the recent budget. George Osborne confirmed in the recent summer budget that the tax relief given to landlords on mortgage interest payments, on their buy-to-let (B2L) properties, would be reduced over the coming years for higher rate income tax payers. The Chancellor said the tax relief for private buy-to-let landlords (who pay the higher rate of income tax) would change in 2017 from the current 45% / 40% and would steadily reduce over the following 4 years to the existing 20% by 2020.

    With 14.1% of residential property in the Parish of Oakham being privately rented (as there are 659 privately rented properties in the town), these changes are potentially something that will not only affect most Oakham landlords, but also the tenants and the wider property market as a whole. The choice of rental properties could drop, especially at the top end of the market which could push up rents.

    However, Oakham landlords could protect themselves by reassigning 1 or more rental properties into a company structure (e.g., a Limited Company, Partnership or Sole Trader) and by doing so, the total tax paid is greatly reduced, because a company only pays tax on the profit. Nonetheless, before everyone goes off setting up companies for their B2L portfolios, it must also be noted, if a sole trader firm is started, stamp duty needs to be paid, yet if the owner is in business with a partner, they could enjoy some stamp duty relief.  The biggest tax variation is Capital Gains Tax (CGT) where the tax bill will be much higher when you come to sell your portfolio. In essence, by going into business with your B2L properties, you will potentially have a modest stamp duty to pay when you start, but you will have a lot less monthly tax to pay, irrespective of the interest rate, but the CGT bill will be much higher when you come to sell ... as you can see, it is not a ‘get out of jail card’. Now it must be remembered, I am not a tax advisor, so you must take advice from a qualified person.

    Those planning to purchase a B2L property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make. However, I am not that concerned, as the scaremonger reports fail to see the fact that two out of three B2L properties that have been bought since 2007 have been purchased without the support of B2L mortgage. With those two thirds of landlords paying cash for the purchase of their rental properties, that means two thirds of landlords will be totally unaffected by the changes.

    So what of the future? The British love their 'Bricks and Mortar', it’s an asset that they can touch and feel and has a 70 year track record of capital growth that has out-stripped inflation. Buy-to-let will still be attractive to Oakham investors and let me explain why. If you invested £30,000 in Oakham property in September 1987, today it would be worth £132,797. If you had invested the same £30,000 in to the London Stock Market (the FTSE 100 to be exact), it would be only be worth £85,879 today, whilst Inflation would have taken the original £30,000 and pushed it up to £62,345.

    It’s true some central London landlords relying solely on the tax breaks rather than high yields may be forced out of the market, but even those landlords could seek to recoup any losses by increasing rents. However, those landlords may leave the market and this could constrict the availability of rented houses even more than it is already, increasing rents and thus pushing yields even higher for landlords and B2L investors still in the market... thus attracting new landlords into the market because of those higher yields.

    The reality is, there is too much demand and not enough supply of homes for people to live in in the town. Official figures show the population in Oakham is rising by 94 persons per year (i.e., demand rising), but only 58 properties are being built each year (i.e., supply is low). This sets up the Oakham (and UK) property market to continue to create strong and steady returns, irrespective of any tax loophole being there (or not as the case maybe).

    To see the 3 interesting B2L properties currently for sale that I’ve got my eye on, please read my post from earlier this week.

    Thursday, 24 September 2015

    Latest B2L's I have my eye on...

    There are 3 properties I have my B2L eye on this week...

    1) Firstly, a great family house on Willougby Road in Stamford.  3 bedroom semi-detached.  Would be a great rental property for a young family looking to put down roots and some security for a few years, would achieve circa £695pcm.  On the market with Nest Estates for £185,000 - click on this link for its on-line property listing...
     
    2) Secondly, a charming 2 bedroom end terraced home on West Road in Oakham. On the market with Gilbert and Thomas for £160,000. It's close to the town centre, train station etc.,  and you could expect this property to receive in the region of £625pcm, and would be ideal for a young professional couple, divorcee or retiree.  Again, click on this link to see its full details:-
    http://www.rightmove.co.uk/property-for-sale/property-36281997.html

    3) And lastly, this property on Willow Close, Uppingham has been successfully 'tried and tested' as a great rental home for a number of years, now achieving £525pcm.  It is well maintained, already in good decorative order, situated close to the town centre and has the added benefit of a parking space and rear garden.  Everything a savvy landlord, or indeed a tenant, is after. 
     
    Brand new to the sales market, it is encouragingly priced at £137,500.  Remember, this property would achieve you a rental income of £525pcm

     
    For more details, please call:-
     
    Call Adrian McCarthy
     
     UPP Property Agents on 01572 725 825
     

    Thursday, 17 September 2015

    Stamford Landlords' mortgages top £83million!


    The Brits can’t stop talking about property. The hot topic of discussion at the dinner parties of Wothorpe, Barnack, Uffington and Great Casterton’s movers and shakers is the subject of the Stamford property market, but in particular, buy-to-let (B2L). These people are buying up buy-to-let properties quicker than an ace Monopoly player... or so it would seem if you read the Sunday papers. So is the buy-to-let market a sure fire way to make money?  Is it something everyone should be jumping into? Is it a sure fire way to make money? The answer is Yes and No to all those questions!
    Firstly, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which, for an average Stamford terraced house, would mean finding £50,852 for the deposit (as the average Stamford terraced house is currently worth £203,409) and borrow the rest with a low interest rate buy-to-let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it???

    Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent.

    Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees...all things that eat into that profit.

    Interestingly, by my calculations, there are approximately 448 Stamford landlords owing in excess of £83 million in mortgages on those Stamford buy-to-let properties.  An impressive amount when you consider Stamford only has 0.042% of all the rental properties in the country. It really does come down to a number of important factors going forward to ensure you are water tight for the future.

    A lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a 5 year fixed B2L re-mortgage rate at 3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor - but that sounds very fair!

    However, one thing I do know is that buy-to-let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Stamford property market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Stamford property market before others, enabling them to buy better properties at better prices.

    For example, did you know that flats are selling for around 35% lower than 12 months ago in Stamford, yet detached properties are selling for 41% more (with every other type in between). This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues.  

    Information on the local property market and ability to process it is the strongest asset we can give you.

    As Lois Horowitz, the famous author says, ”Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”.

    If you are also considering purchasing a property for Buy-to-Let purposes, then why not run the property details past me?  I'd be happy to discuss it with you in confidence.

    Friday, 11 September 2015

    The "Liquorice Allsorts" Oakham property market


    Despite the UK economy heading in the right direction with record low mortgage rates and unemployment  figures dropping,  the rate of property prices rising in Oakham have tempered since the start of the year. This slow, but sure, downward trend in the rate of growth has been in evidence since mid-2014.  The increase in property values continue to outpace the growth in salaries.  However, the gap is closing, helped by a lift in salaries over the last 6 months.  Property values in the East Midlands region as a whole are 2.9% higher than a year ago.  Compare this to the neighbouring regions of the West Midlands at 3.5% higher and Yorkshire at 1.1%, the majority of the country continue to see annual house price gains - the exception being Wales which recorded a slight  decline of -0.6%.

    Even with the tempering in house price inflation, it does not necessarily change my outlook that property prices are likely to be firmer over the second half of 2015 amid heightening activity in the Oakham property market.  As stated in a previous article, there is a current shortage of properties on the market, restricting supply, which in turn will provide stability and support to Oakham property prices. Therefore, my overall opinion is that Oakham property prices will rise by 5% over 2015 and roughly the same in 2016.

    Property investment is a long term business.  Buying the right sort of property is vital. I have recently been speaking with a number of Oakham landlords about the importance of a balanced portfolio, when buying and renting out property. The balance between buying properties that offer good monthly returns (high yields) but quite often offer poor capital growth (i.e. they don't increase in value that much over the years compared with the average) versus properties that do go up in value quicker but often offer a lower yield.  So, what type of properties have performed best over the last few years in Oakham, especially in terms of their capital growth?

    When comparing what the average price of detached, semi-detached, terraced and flats were selling for back at the start of the Millennium to the present day, the results are quite remarkably different, almost like a bag of “Liquorice Allsorts”, as the different types of property have performed poles apart over the last 15 years:

    ·         Detached Houses in 2000 were selling on average for £107,115 and so far in 2015, they have been selling on average in Oakham for £320,707 a rise of 199%

    ·         Semi-Detached Houses in 2000 were selling on average for £62,328 and so far in 2015, they have been selling on average in Oakham for £176,488 a rise of 183%

    ·         Terraced Houses in 2000 were selling on average for £51,750 and so far in 2015, they have been selling on average in Oakham for £170,180 a rise of 229%

    ·         Flats and Apartments in 2000 were selling on average for £53,950 and so far in 2015, they have been selling on average in Oakham for £96,500 a rise of 79%

    Moving forward, what should new and existing buy-to-let landlords do with this information?  Well, the questions I seem to be asked on an almost daily basis by landlords are:

    ·         “Should I sell my property in Oakham?”

    ·         “Is the time right to buy another buy to let property in Oakham and if not Oakham, where?”

    ·         “Are there any property bargains out there in Oakham to be had?”

    Many other Oakham landlords, who are with both us and other Oakham letting agents, like to pop in for a coffee,  pick up the phone or email us to  discuss the Oakham property market, how Oakham compares with its closest rivals (Stamford, Melton Mowbray, Peterborough and Grantham), and hopefully answer the three questions above.

    I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion and look forward to hearing from you.

    Friday, 4 September 2015

    This week's BEST Buy-To-Let options...

    Firstly, let's look at the tidy 3 bed mid-terrace on Edinburgh Road, Stamford.  Currently on the market with Sowden Wallis with a guide price of £160,000

    • It's a good size with 3 bedrooms
    • Situated in a popular Stamford location, close to town and easy access for A1 commuters
    • Well presented throughout to maximise on your rental income.  No need to renovate first.
    • Sitting room with modern open plan kitchen / diner.  It's light and airy.
    • Bathroom with shower - a bit dated, but the shower is the important factor here.
    • Enclosed low maintenance rear garden.
    • Gas central heating.  uPVC double glazing.
    This will appeal to a broad spectrum of tenants such as young families, young professionals and retirees.

    Would achieve in the region of £595pcm - -£625pcm.


    My second (and much cheaper) option already has happy respectful tenants in place wishing to stay long term.  Currently on the market with UPP Property Agents, with a guide price of just £125,000Call Adrian McCarthy on 01572 725 825.

    It's well located on Queens Road, Uppingham.

    http://www.rightmove.co.uk/property-for-sale/property-36068631.html


    Very spacious, good proportioned home with 2 bedrooms.
    Immaculate order. Well presented and maintained. Happy tenants in place.  IMMEDIATE income. Win win!
    Great central town location.
    Bathroom a bit dated, but don't forget the tenants have made this their home and are keen to stay put.
    Fabulous, established rear garden.  Well stocked.  Huge appeal.
    Gas central heating.  uPVC double glazing.

    This little gem will be achieving you an instant rental income of £450pcm (and we understand they are due a rent increase soon too) from the date of completion.  They don't build 'em like this these days, do they?

    If you would like to discuss either of the above in more detail with me, in confidence, please contact me.   Alternatively, if  another Buy-to-Let property has caught your eye and you would like to chat it through, again, please call me.  I'd be delighted to talk to you about it.

    david@upp-property.co.uk /TEL:  01780 484 554