Buy-to-Let in Burton puts Building Society Interest to shame.

In recent article, we spoke about the difference between Burton and Derby property markets. This produced a number emails and couple of people popping into my offices for a chat about investing in buy to let.
Many people in our part of Staffordshire, over the last few years, have seen the buy to let market become all about nest egg investment. It is fuelled by pitiful interest rates on building society savings. It reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.

So what can you expect from your rental property investment? In the short term, rental yields are important, and in Burton, the average annual yield is in the order of 3.79% per year. However, that is based on averages and most landlords in Burton tend to buy starter homes, apartments and terraced houses the majority of which are achieving 4.3% to 6.5% per year depending on location and price in the town.

In the long term though, the question of capital growth is as important, if not more important because if you have great short term yields but the value of the property doesn't keep up with the rest of market you will have an asset that in real terms is    dropping in value. As we mentioned in a  previous article, average property values in Burton currently stand at £171,600.
      
Property values in Burton have risen by 10.3% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Burton landlords.

Roll the clock back 10 years to 2004, the average value of a property in Burton was £146,700. 15 years to 1999 makes interesting reading, as the average Burton property value was only £66,100, 30 years makes it £28,400 and just for a bit of fun, we looked at 1974 and it was £10,075!
However, if one looks at say a 30 year investment period, if you had put £28,400 into the stock market in 1984 instead of buying a house in Burton, your shares today would be worth £134,690. Put the same £28,400 money in a Building Society account and you reinvested the interest back into the account, your Building Society passbook would read £158,240. Compare that the property market in Burton, and the property would be worth £171,600 today.
Not much difference to the building society until you realise that with the rental property you would have received in excess of £113,000 in rent over those 30 years, which wouldn’t have received with the Building Society account!

If you would like to have a chat about any matter relating to property in Burton, pop in and see me, or my team, in our  offices on the High Street.

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE