Project property for sale at offers over £80,000

Ok so this house is not a looker but it has potential! Its on the market with Springbok Properties for offers over £80,000 and could be a good option for someone looking to take on a project. 

As long as no more that £20,000 was spent on the kitchen and bathroom then when it achieves £475 pcm in rent you will see a 5.7% return. We have a few of the two beds in this row and they let easily at £475 pcm.

http://www.rightmove.co.uk/property-for-sale/property-37277991.html

Could your Melton Mowbray 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 Melton Mowbray 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 Melton Mowbray 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 Melton Mowbray house in Spring of 1983 for £25,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £6,250). Today, that Melton Mowbray property would have risen in value to £168,458, 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 Melton Mowbray 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 Melton Mowbray? 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 Asfordby in Melton Mowbray, 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 Burton Lazars. 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 Melton Mowbray property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Melton Mowbray Property market can always be found on the Melton Mowbray Property Blog or pop in and see me at our Burton Street office.

Brand new buy to let opportunity on Scholar's Grange, Melton Mowbray

New builds are forever popular with tenants, and make a wise choice for investors too. Benefiting from a 2 year warranty on most items inside the property, plus the 10 year NHBC warranty, buying a new build ensures a pretty maintenance free investment opportunity.

Situated on a popular, quiet development by Persimmon Homes, this plot is on the market for £175,995.  As it is one of the last plots available of this phase, I suspect there are bargains to be had!  It should see a return of over 5%.

Full details can be found here:

http://www.persimmonhomes.com/scholars-grange/3-bed-semi-detached-house-227756

Melton Mowbray tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is talking about Melton Mowbray property. This week, I want to highlight the plight of the tenants of Melton Mowbray as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Melton Mowbray has nearly broken through the £600 a month barrier as the average rent for a property in the town, now stands at £594 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 Melton Mowbray 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 Melton Mowbray rents are a sign that the Melton Mowbray economy is picking up. 

This means Melton Mowbray landlords are continuing to capitalise on the Melton Mowbray 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 3.89% 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 Conservatives got back into No.10, 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.  For example, the average length of time the 17 Melton Mowbray properties up for rent between £250 to £500 per month is an eye watering 272 days, whilst the average length of time the 25 properties at £500 to £1000 per month is 37 days and 4 properties that fall into the £1000 to £2000 per month price bracket just 23 days.

When you start comparing different parts of Melton Mowbray, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Melton Mowbray Property Blog. In the Melton Mowbray 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. www.meltonmowbrayproperty.com

Melton Mowbray Property Market - Asking Prices Drop but Values remain the same

Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the town have dropped, and property values have remained the same.  The average asking price of a Melton Mowbray property, according to Rightmove, fell 1.4% this month yet the average value of a Melton Mowbray property stayed the same.

So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Melton Mowbray property down slightly to £205,900 whilst the average value is now £230,100.

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, Melton Mowbray property values are continuing to rise and those homeowners in Melton Mowbray 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 Melton Mowbray 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 18 flats for sale, 41 terraced houses and over 28 semis for sale in Melton Mowbray.  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 Melton Mowbray landlord typically buys, are not the same types as the homeowners. 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 Melton Mowbray Property Market together with regular postings on what I consider the best buy to let deals in Melton Mowbray, out of the many of properties on the market,  irrespective of which agent is selling it, then keep an eye on this property Blog. 

Robin Crescent, on the market for £89,950

These quarter houses are a great investment for someone. This one is listed with Moores and is on the market for £89,950. 

We let these for £450 - £475 pcm and this one looks to be ready to let, no work needed and low maintenance.

http://www.rightmove.co.uk/property-for-sale/property-51577918.html

Wren Close - 3 bed semi potential 5.2% return

This property is for sale with Melton Premier and is for sale at £136,950. It is a nice size property that would easily let for £600 pcm.

Definitely worth considering as a buy to let investment as it looks to be in good condition from the pictures. 


http://www.rightmove.co.uk/property-for-sale/property-55185734.html

Swallowdale catchment area properties outperform Melton Mowbray average by 36.11%

I was having a chat with a Melton Mowbray 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, we 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 of Melton Mowbray and the close proximity to a good primary school.  Not just families either. An area will appeal to couples setting up home who want to live in an area that has benefitted from the popularity a good primary school provides.

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, Swallowdale Primary School is one of the best primary schools in Melton Mowbray.  Its figures are certainly impressive. Their last Ofsted Report classified it as Outstanding, 90% of 11-year 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 half a mile of Swallowdale, property values have risen in value since 1999 by 168.11%, whilst according to recent figures, the Melton Mowbray average as a whole has risen in the same time frame by 123.51%.

That means the parents of Swallowdale have seen the values of their properties rise proportionally 36.11% more than the Melton Mowbray 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 Melton Mowbray landlords, both who are with us and many who are with other Melton Mowbray agents, like to pop in, ring or email us to discuss the Melton Mowbray property market, to consider how Melton Mowbray 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. One good source of opinion, specific to the Melton Mowbray property market is the Melton Mowbray Property Blog www.meltonmowbrayproperty.com I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion.

Crisis in the Melton Mowbray 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.

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.

Even Mr Carney, the Governor of the Bank of England, recently cautioned that the buy to let property market could destabilise the whole UK property market. He was concerned landlords who bought with high loan to value mortgages could be spooked if there is a property crash, they would panic because of negative equity, sell cheaply, which would worsen house price falls.

End of the world then?   .. this week, yes probably, but next week .. that’s another story!  Before we all go and live like a hermit in the Scottish highlands, let me explain to you my perspective on the whole subject. 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 16.9% in Melton Mowbray, 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 Melton Mowbray.

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 Melton Mowbray 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 Melton Mowbray 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 Melton Mowbray, because the town offered a combination of reasonable house prices with subsequently increasing rents.  Property values have risen by 7.8% in the last eighteen months in Melton Mowbray, 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 Melton Mowbray Property Blog. If you haven’t visited and you are interested in the local property market in Melton Mowbray .. you are missing out! .. 

3 bed on West Avenue £120,000

This property for sale with Connells on West avenue, it has been let in the past for £535 pcm but would go on the rental market today for at least £550 pcm, possibly £575. 

It has large bedrooms and open views at the back so it has been a popular rental property. At £120,000 and letting for £550 pcm would see a potential return of 5.5%.

http://www.rightmove.co.uk/property-for-sale/property-54208091.html

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

Previously, 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 4,249 homeowners in Melton Mowbray, 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 1,378 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 Melton Mowbray 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 Melton Mowbray 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 Melton Mowbray and seriously consider fixing your mortgage rate now.  You didn’t buy your Melton Mowbray 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 Melton Mowbray 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. Melton Mowbray landlords have see their return on investment for their Melton Mowbray buy to let property, over the last couple of years, perform very well indeed with Melton Mowbray property values rising by 13.83% 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 Melton Mowbray!

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 OnTheMarket. However, sometimes, you can’t see the wood for the trees. At the time of writing, Rightmove had 168 properties for sale in Melton Mowbray, Zoopla 79 properties for sale in the town and OnTheMarket 46 properties ... where do you start? A lot of savvy Melton Mowbray 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 Melton Mowbray.   

At last! some new builds for sale in Melton Mowbray!!

Bentons have just listed this new development with an open house on the Saturday 3rd October. 

They are priced from £132,500 and would let for at least £550 pcm, depending on the plot and parking they could achieve £595 pcm. 

They have a layout that suits the modern tenant and have been built by builders with a good reputation. I know these would let really quickly...

http://www.rightmove.co.uk/new-homes-for-sale/property-54860210.html

Duke street, for sale at £125,000

This is a nice 2 bed semi just off Belvoir Street is for sale with Shoulers and on the market for £125,000. These let for £550 pcm commonly and are great homes for couples starting out. This would have the potential to be a return of over 5%.

http://www.rightmove.co.uk/property-for-sale/property-54821222.html

Thorpe Road with 4.6% return and a tenant from day 1

This large three bed end terrace property is on for sale with Moores Estate Agents for £155,000. The current tenant is paying £595 pcm and I believe would like to stay in the property. It let really quickly and has undergone considerable investment since the current owner purchased it. 
Although it is on a busy road it has a lot of character and an enclosed private garden at the back. 

http://www.rightmove.co.uk/property-for-sale/property-51577921.html

Melton Mowbray £563 million Mortgage Powder Keg

The credit crunch started to hit the Melton Mowbray   Property market, in November / December 2007, and for the following seventeen months, Melton Mowbray   property values dropped each and every month like the proverbial stone. The Bank of England soon realised in the late summer of 2008 that the British economy was stalling under the continued pressure of the Credit Crunch. Therefore, 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 Melton Mowbray   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 Melton Mowbray   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 Melton Mowbray?  In Melton Mowbray, if you added up everyone’s mortgage, it would total £563.2 million.  Even more interesting is when we look at Melton Mowbray   and split it down into the individual areas of the town,

• LE13 - Melton Mowbray centre £279.3m
• LE14 - Brooksby, Harby, Hickling, Hoby, Ragdale, Rotherby, Scalford, Somerby, Stonesby, Waltham on the Wolds, Wymondham £283.8m

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 2,422 Melton Mowbray   homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £6,418,200 a year in mortgage payments.  

That means every Melton Mowbray   homeowner with a variable rate mortgage, will on average have to pay an additional £2,650 a year or £221 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 Melton Mowbray   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 in our office on Burton Street or give me a call on 01664 569700.

My concerns about the Melton Mowbray Property market

I am genuinely concerned about the Melton Mowbray 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 Melton Mowbray 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.  Many more buyers are looking for the smaller one and two bed properties (the typical terraced and smaller semi detached houses/apartments), whilst there are a larger proportion of the four and five properties, which are the typical semi detached /detached properties available.

If you recall, a few weeks ago I did some research on how different types of properties had performed in Melton Mowbray 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 Melton Mowbray has risen in value from £42,164 to £118,129 whilst the detached house has risen in value from £107,862 to £264,500.  Nothing seems amiss until you look at the percentage growth.  The terraced has grown in value by 180% whilst the detached by only 145% meaning the gap between the inexpensive terrace’s and expensive detached properties has in percentage terms narrowed enormously (this isn’t just a Melton Mowbray thing, it has happened all across the Country).

I am concerned because more houses need to be built, not only in Melton Mowbray, 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 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 Melton Mowbray 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 Melton Mowbray 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 Melton Mowbray property market is to pop into our office on Burton Street or give me a call on 01664 569700.

Asfordby Hill - Good 2 bed investment property

This property is for sale with Bentons and is a large 2 bed on Asfordby Hill. We recently let a smaller one around the corner for £525 pcm and I was surprised we had so much interest from potential tenants. I could have let it 5 times over!

I think this property could do with a new bathroom (looking at the pictures) but it would then easily let for £550 pcm. This would give a potential return of 5.5% and increase the capital value. 

http://www.rightmove.co.uk/property-for-sale/property-54450065.html

Nice 2 bed in Asfordby with a garage £119,950

This 2 bed property has just been listed with Harrison Murray for £119,950 and has a garage. These let easily for £525 pcm giving a potential return of 5.2%.

Asfordby house values are always a little lower than Melton Mowbray but the village has good primary schools and is well serviced. It provides a good base for anyone commuting to Leicester or Nottingham - avoiding Melton's traffic. 

http://www.rightmove.co.uk/property-for-sale/property-51521887.html

Melton Mowbray Landlord’s mortgages top £85 million!

The Brits can’t stop talking about property. The hot topic of discussion at the posh dinner parties of Kirby Bellars, Burton Lazars and Thorpe Arnold’s movers and shakers is the subject of the Melton Mowbray Property market, but in particular, buy to let. 

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?  The answer is Yes and No to all those questions!

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 Melton Mowbray terraced house, would mean finding £27,032 for the deposit (as the average Melton Mowbray terraced house is currently worth £108,129) 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 459 Melton Mowbray landlords owing in excess of £85 million in mortgages on those Melton Mowbray buy to let properties.  An impressive amount when you consider Melton Mowbray only has 0.043% 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 BTL remortgage 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 Melton Mowbray Property Market without advice?  

For example, did you know that detached properties are selling for around 19% lower than 12 months ago in Melton Mowbray yet semis are selling for 22% 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 considering investing in a buy to let property please give me a call for honest, impartial advice on the potential rental returns for properties. 

Melton Mowbray – The 10 year Time Bomb on Home Ownership

The British obsession with owning your own home started just after the Second World War.

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 Melton Mowbray than own 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 Melton Mowbray 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; Melton Mowbray property prices and Melton Mowbray rents.

In the Melton District Council area as a whole there are 2,738 households that are privately rented via a landlord or letting agency verses 7,968 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), 3,956 of those 7,968 households are 35 to 49 year olds and 2,491 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 1,017 of the 1,720 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, because 703 households are privately rented. This means only 59.1% 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 won’t buy one but rent one. 

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, please come and see me at my office on Burton Street for honest advice on the Melton property market.