Should you invest in the villages? Rental returns in Repton are awful!

I have recently been speaking with a number of landlords about the importance of a balanced portfolio when buying and renting out property. We discussed the balance between buying properties that offer good monthly returns but quite often offer poor capital growth and properties that do go up in value quicker but often offer a lower yield.

Another consideration has to be the mix of town properties and village properties. Choosing the right village though is very important. Living in villages often has higher costs, especially transport and petrol costs. Some tenants don't buy because they can't afford the mortgage, so if you buy in the wrong village, you could limit yourself to the type of tenant who can afford those extra transport
costs.

However, one village that has a high demand with tenants is Repton. The village consists of some 1,036 dwellings of different housing types and a population of 2,867 people. With an average property value of £301,200 and average rents in the order of £789 per month, the average yield achieved in Repton are a miserable 3.14% a year .. you might as well put it in the bank!

So, does that mean you should stay clear of buying a property in Repton as a buy to let investment?
Before we can answer that, you must really consider the capital growth vs rental return question. Some Burton buy to let investors often make the mistake of chasing yield over capital growth and believe that by chasing high yielding properties, in say the ‘poorer’areas of Burton, they will make a faster profit than waiting for capital growth.

The problem with this is that to achieve high yield you usually have to compromise on capital growth. Therefore it would seem the most logical solution is to find a high yielding property in a strong capital growth area but, these simply don't exist and in actual fact, most of the time, lower yielding properties have a better capital growth. This is because there is generally a contrary relationship between yield and capital growth so the higher the yield, the lower the capital growth and the higher the capital growth, the lower the yield. Property investment in Burton is about balancing the two.

A few weeks ago, I said property values in Burton were 6.5% below the 2007 property boom, but here is the interesting news, in Repton they are 7.3% above the 2007 boom prices.. this means if you had bought an ‘average’ property in Repton as opposed to Burton back in 2007, whilst your yields would have been low, in terms of the value of the property, you would be £36,600 better off.

It just shows you need to look at the bigger picture when deciding what and where to buy your next buy to let property and I hope I have made all the property owners in Repton very happy after reading this!

I will always give all landlords my unbiased opinion on what to buy and not buy. I pride myself by knowing the market with all its ups and downs, so I can give some great advice and opinion. It might not be what you want to hear but, I can assure you, it is what you need to hear!

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

      

Click HERE to arrange you FREE RENTAL VALUATION.
Click HERE to ASK AN EXPERT anything to do with residential lettings.
Click HERE to visit Professional Properties WEBSITE.

People more relaxed about moving as Burton town centre stops bubbling!

As we recover from the bubbling cauldrons of Halloween and the raging inferno’s of Bonfire Night, the temperatures have started to drop and, over the last month or so, the Burton Town centre property market has lost some of the momentum that was seen in the first half of the year. Prices rose by just 0.5% to leave annual price growth at 4.5%, on average, in the town centre (compared to nearer 5.5% for the neighbouring villages).

It was interesting to see The Nationwide Building Society House Price Index showed its first monthly price fall for 18 months in September 2014 and three-month on three month price growth fell by more than half the levels seen in March 2014.

So, what factors have caused this change? It could be down to an increase in supply. Looking at the Burton and immediate surrounding villages, during the first 3 months of 2014, on average 131 properties were coming on to the market each month and for anyone potentially looking for a new
property had, on average, 673 properties to choose from.

In September, there were sixth more properties for a buyer to choose from (781 to be exact) and the number of new properties coming onto the market also increased to 183 per month. Greater supply with tempered demand has eased the market and this can be seen as good news as we would not want a repeat of the overheating in the mid 2000’s where property values in Burton were increasing by over 20% a year between 2001 and 2004. Other factors that are driving the town centre market slowdown – namely the emerging impact of mortgage regulation and threat of interest rate rises are having an influence on buyer (mainly landlord) sentiment. When it comes to mortgages and
finance, people are certainly a lot more cautious than they used to be!

However, the some of the surrounding market villages of Burton have benefitted from a delayed ripple effect from the South and saw their strongest quarterly price growth for four and half years.
It now seems certain that the spectre of interest rate rises and the uncertainty around the General Election will suppress the short term potential for further price growth in Burton as a whole, but, considering we have a couple of years of decent growth, great demand for rental properties with little or no voids on most properties, this easing could be a blessing is disguise, as I don’t know about you, I wouldn’t want to see a repeat of the boom and bust property market of the last decade.

I will always give all landlords my unbiased opinion on what to buy and not buy. I pride myself by knowing the market with all its ups and downs, so I can give some great advice and opinion. It might not be what you want to hear but, I can assure you, it is what you need to hear!

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

      

Click HERE to arrange you FREE RENTAL VALUATION.
Click HERE to ASK AN EXPERT anything to do with residential lettings.
Click HERE to visit Professional Properties WEBSITE.

A European mindset in Burton. Piggy bank or iPhone?

Following my article last month on property values up to July, I am pleased to say that Burton house prices edged up by a further 0.5% in August. As a result, the annual pace of house price growth is Burton down to  4.1% from 4.3% in July. When you consider house prices were stagnant a few years ago in Burton, as house price growth continues to outpace earnings by a wide margin, with average wage growth running at less than 1% in recent months.

I am not an estate agent, but know most of the estate agents in town well and they say new buyer enquiries have moderated somewhat in recent months, and the prospect of interest rate increases together with subdued wage growth may temper demand in the year to come. The demand should be there as the brightening economic outlook and consumer sentiment remains buoyant thanks to        declining inflation and sustained decreases in unemployment down in Burton to one of its lowest rates of 1.5%. (or 1705 people)

Nevertheless, Burton housing affordability does not appear stretched by historic standards, in part due to the low level of mortgage rates. The cost of servicing a typical mortgage remains close to the long run average of 30% of take home pay and it has been proved time and time again to be cheaper than renting.
A lovely three bed semi can be yours in Burton in one of the top areas for £130,000, meaning if you could save the £6,500 deposit, it would be cheaper to rent than buy. So why are first time buyers buying their first house instead of renting?

It comes down choice and lifestyle of the tenants. In many cases renting provides the flexibility some people, especially young people, want and need. For others home  ownership is top priority but when there is no social pressure to buy and you can ring the landlord and sort out any issue , why would someone want to buy. Youngsters find it harder to save for the deposit when Apple launch their latest iPhone each six months or the next 50 inch LCD TV needs buying. Renting is a choice and we are developing a more  European mindset it would seem.

Therefore, my message to Burton landlords is renting is here to stay for the long term, but the short term outlook for the Burton and East Midlands housing market remains uncertain. The number of mortgage approvals fell by  almost 20% between January and May, suggesting that activity was cooling.

However, there was a modest rebound in June and it is unclear how much of the slowdown was due to the introduction of Mortgage
Market Review  rather than an underlying loss of momentum.

It’s all about buying a property that will attract the right sort of tenants, a good balance of yield and capital growth and when you do come to sell it in ten or twenty years, it will sell whatever the market is doing at the time. As I don’t sell property, I can give you my honest opinion on any property.

Many landlords send me Rightmove links to property, asking my advice. You can to if you want .. its no trouble at, but i will warn you, I will always tell you what you need to hear, not what you want to hear.

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

      

Click HERE to arrange you FREE RENTAL VALUATION.
Click HERE to ASK AN EXPERT anything to do with residential lettings.
Click HERE to visit Professional Properties WEBSITE.

In Burton, building properties is not like making Mars bars!

My friends often call me an estate agent, but then I remind them that whilst a lot of estate agents do both sales of property and letting of property, we are a letting agent only and  always plan to be!

By specialising in lettings, it enables me and the team to get the job done right. In a recent article, when we spoke about the difference between Burton and Nottingham property markets and their prices, one landlord who popped his head round our door on the High Street to chat about the Burton property market got talking about how he thought there were less for sale boards in Burton than there were ten, even fifteen years ago.

All the newspapers talk about is a crisis of a lack of properties. Building new property is not like the Mars bar factory that can keep the machines going an extra couple of hours to make more Mars bars. The Government says 200,000 properties need to be built each year for the next ten years. For Burton to take its share of that would mean we would have to build 610 properties each year for the next ten years.. yet in the last ten years, in Burton, we have only built on average 315 properties per year.

People in popular areas say they want more properties for their children and are usually in favour of more homes being built, as long as they are not in their local area. Increasing  supply of houses leads to more congestion, crowded amenities and loss of greenbelt. Then, and here is the big reason, those homeowners have a vested interest to keep the building low because an increased supply  reduces the value of their existing home. Therefore, existing homeowners have a vested interest in keeping the supply as low as possible in their area.

Finally, a lack of council houses since Mrs T. encouraged the sale of council housing after she was elected in 1979, the number of new social housing to replace them, has been very low.

However, getting back to the point, it’s a simple fact that since the 2007 crash, the number of properties that are selling in Burton has dramatically reduced. Look at the graph and you will see in the late 1990’s (what most say was a normal market), around 100 properties a month were selling each month in Burton. In the first half of the 2000’s decade, when we had a rising market, around 120 properties were changing hands each month in Burton. In 2008, the year of the property crash that dropped to 60 per month and hasn’t grown that much since, although we started to see a rise in 2014. Hence those poor old estate agents aren’t selling as many properties.. it must be tough for the little dears!

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

      

Click HERE to arrange you FREE RENTAL VALUATION.
Click HERE to ASK AN EXPERT anything to do with residential lettings.
Click HERE to visit Professional Properties WEBSITE.

In Burton, find out which properties are top of the league for sales!

Burton attracts property hunters seeking a home in our town that strikes a wonderful balance between old and new. Luckily, just about every accommodation preference can be catered for here, from highly desirable detached houses in Stapenhill, which are perfect for families, popular 1930’s bay front semi's houses in the Rolleston Road area plus imposing late Victorian terraced houses and modern town houses dotted around the town.

But with newspapers giving mixed messages on what is exactly happening in the town, let us have a look at what has happened over the last 12 months, in particular, what type of property is actually selling.

Between August 2013 and August 2014, 936 of the 31,802 properties were sold in Burton and immediate villages. The best performing type of property was, surprisingly, the terraced house. With an average sale price of £100,462; over 352 of them sold, representing 37.7% of the property sold in Burton (which when you consider only 33.7% of Burton property is terraced (that includes those modern town hosues), this means terraced houses have done well). 

In very close second are apartments. They represented 5.7% of the sales but flats make up 5.5% of the property .. again good news for all flat owners (compared to Derby where the flat market is on its knees).

Of the 9,645 semi detached houses in Burton, 283 changed hands in the year, showing that whilst 30.3% of property in Burton is semi, they respectably represented 30.2% of the sales. However, it is the detached property market, that seem to have performed not as well. Whilst there are 9,618 detached properties in Burton and the immediate villages (representing 30.2% of the housing stock), only 246 changed hands in the year, representing only, but still a very respectful 26.2% of the sales.

What does this mean for the property owners of Burton? 

Most homeowners start with an apartment, then a terraced, aspire to move to semi detached houses, then as finances allow, they move to a detached property. The majority of terraced houses, especially near the Town Centre, were purchased by landlords to rent out to tenants, so they have no need/want to trade up on the property ladder. There are a small number of homeowners who are still in negative equity, which in some cases, property values of some Burton apartments sold at the height of the boom are still 6.5% lower than what was paid for them in that 2007 boom, but whilst bad news for those homeowners, I would estimate this only affects between 2% and 3% of homeowners in Burton. 

We are seeing some good sales and if you look hard enough, you may chance upon a "hidden property gem" in the most unlikely of places of Burton.

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

Click HERE to arrange you FREE RENTAL VALUATION.

Do your homework and bag a Burton bargain!

It finally happened! I was asked to speak to a group of landlords and property investors at a networking event in Hilton so I thought I would briefly share my topic with you.

In Burton, property prices are still 6.5% below the level that was achieved in the Spring 2007 property boom (before it went pop in early 2008 with the credit crunch).

The cost of living has increased by 18% over the last seven years so if Burton people sold their properties today, the money they would get from the property would actually be 24.5% lower ( 18% inflation/cost of living  +  6.5% below the 2007 boom)  than if they’d sold in Spring 2008!

Average Burton house prices are in a constant state of microflux. Over the last seventeen months, the trend has been in an upward  direction. The price of a typical Burton home remained stagnant  in July (yet increased 0.5% in June and even increased in May by 0.4%). Looking at monthly figures in isolation can be dangerous, so I also looked at the Land Registry figures which showed that the annual rate of Burton house price growth moderated in July to 4.3%from 5.4% in June.

The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months.  Mortgage approvals declined by almost a fifth between January and May, and there has also been some softening in forward looking indicators, such as new buyer enquiries. But on the other side, with the labour market strengthening, landlords are looking for a home for their savings, mortgage rates are expected to remain low and with consumer confidence rising activity is likely to recover in the months ahead.

Rightmove have recently released some data on Burton and the immediate area, and they make fascinating reading. The peak of the property market last decade in Burton is recognised as Spring 2008. Whilst property values are still 6.5% lower than that boom, homeowner’s asking prices are 0.2% higher than the 2007 boom. Therefore, there is an argument to say, some (not all) Burton asking prices are a little high but the price the properties are actually selling for, is a decent and reasonable figure.

It all comes down to doing your homework, asking questions of the agent and the owners. Find out their motivation for selling and see if you can ‘bag that bargain’!

Trust me they are still out there. As we don’t sell property, I can look at the whole of the market and give you an honest opinion on its investment potential. In fact very soon, I will be starting to put on what I consider the best buy to let deals there are on to the ‘Burton Property Blog’.

If you would like to discuss my thoughts on the rental market, feel free to pop through the door of our offices on the High Street, call me on 07973 666229 or send me an email to: davidm@professionalproperties.co.uk

Click HERE to arrange you FREE RENTAL VALUATION.

Top dog in Burton!

Time to blow ones own trumpet..

Professional Properties are, again, leading the way as the go to letting agent in the area!
In the four weeks to 27th September, 43 landlords decided that it was in their best interests to let their property with the letting experts.

Look at the stats from Rightmove..

I am very pleased that my business is leading the way in the Burton area. It is a great boost for our lettings team to know that we are the number one choice for landlords when they want a quality letting and management service!


That's why we do what we do!

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