Welcome to 2015!

Well hello again and welcome to 2015!

As an addition to my own blog this year, I will be posting any newsworthy items that I believe offer useful information to landlords and homeowners from the lettings industry.

The first of these is an article I spotted regarding the level of buy to let mortgages..

Over one million landlords have buy to let mortgages and last year repaid £21.9 billion - a sign of their commitment to the sector, claims the National Landlords Association.

It says the average cost of landlords’ mortgage repayments in the last year has been £20,950, which excludes up-front deposits of typically 25 per cent of property value.

The NLA’s findings show that landlords with one-to-four properties spent an average of £10,335 on repayments last year, compared to £55,285 spent by those with larger portfolios of 11 or more properties.

“These figures really hammer home just how much money private landlords put into providing homes for the UK’s estimated nine million renters, especially if we consider that such a large proportion are single-property or smaller portfolio landlords” says NLA chairman Carolyn Uphill. 

“The majority of private individual investors are keeping a supply of well-maintained homes on the market when previous governments have failed to incentivise or stimulate more housing and social housing has been in long term decline. There’s no sign of either of these issues letting up anytime soon so is it any wonder that buy to let lending is at an all-time high?” 

Well Carolyn, buy to let lending continues to grow and a lot of mortgage brokers that I speak to in the area tell me that the percentage of buy to let mortgages that they are doing now is higher than ever and is a massive part of their overall business. The rates are still good and the uptake is increasing. So, if you wish to take advantage of the buy to let mortgage market, give me a call and I will point you in the direction of the best mortgage advisers around!

Another article that caught my eye was on the subject of rent arrears. An article based on data from Your Move and Reed Rains - not specialist letting agents I hasten to add! - says...

Arrears by tenants in the private rental sector have increased for the first time since 2012 according to data from lettings agencies Your Move and Reeds Rains. 

In the final quarter of 2014 there were 68,100 tenants in severe rent arrears of more than two months. This represents an increase of 4,600 such tenancies compared to the same quarter one year earlier - the equivalent of a 7.2 per cent annual increase. 

On a quarterly basis the setback is less sharp, with 1,700 more cases of severe arrears in quarter four 2014 than in quarter three, representing a quarterly increase of 2.6 per cent.

  

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “Escaping the worst deprivations of the financial crisis has taken half a decade. And even now, for many households every month is still a difficult month. 

“Stretching to include even a little festivity often makes December particularly hard.  But just as the occasional setback is inevitable, the long-term trend is increasingly clear. Since the sharpest pinnacle of tenant difficulties in 2010 the number in serious rent arrears has practically halved.”

The statistics on the properties that we manage do not reflect these figures, however, we do have a great selection of Rent Guarantee products, including Rent on Time which guarantees that rent is paid every month. However, the article still shows a worrying trend and reminds both landlords and agents to be very vigilant when it comes to making sure that your tenant pays the rent.

What's in store next year for the Burton property market?

A number of landlords, who own property in Burton, have made contact with me recently asking for my thoughts on the future of the buy to let market in Burton. In previous articles, we have talked about Burton’s history of rents, property values, tenant demand and yields; all important matters for a landlord, but we haven’t discussed the future.

Property values rose by 4.2% (Oct 13 to Oct 14) in Burton. Good news all round, but when you consider property values in the town have previously dropped by 14.91% between November 2007 and June  2013, this is not as good as the media would have you believe.  It should be no great surprise to hear that Burton property values are starting slow up as we head in to the New Year.  Property values in the town were growing at 0.7% a month in the summer this year, but in October they dropped by 0.1%.

The reality is we have had a year and a half of decent market conditions in Burton, but now all that pent up demand is starting to fade. The big question moving forward is whether the Burton market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Burton property market.

Looking at the UK as a whole, because we can’t look at Burton in just its little own bubble, the recent rapid rise in house values in some parts of the UK in the early part of the year (especially in London), along with earnings growth that remain below inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand. This weakening in demand has led to a modest easing in both property price growth and sales. A moderation in growth looks likely into next year as supply and demand become increasingly better balanced.

Now with the General Election on the horizon, whichever Government takes power, they, along with the Bank of England, have a thorny job to do in balancing the expected rise in interest rates with the continued resurgence of the housing market, to ensure the property market doesn’t drop and drag down the economic recovery forcing people into selling their property at a loss.

However, back to Burton, long term property values which track peaks and troughs are more helpful to landlord investors. The questions I seem to be asked on an almost daily basis by landlords are:-

“Should I sell my property in Burton, or even buy another?”

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

“Are there any property bargains out there in Burton?” 

Many other Burton landlords, both who are with us and many who are with other  Burton letting agents, like to pop in for a coffee to  discuss the Burton property market, how Burton compares with its closest rivals (Nottingham, Lichfield, Derby, Loughborough and Swadlincote), 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.

In the meantime may I take this opportunity to wish you all a very Merry Christmas and a prosperous 2015.

Put the party poppers away. The Burton property market is kaput…

OK, I know it’s party season and all that but, as far as the local property market is concerned, you can put the streamers and silly hats away, the party that is ‘The Burton Property Boom’ is over! The balloon has burst. It is kaput.

During the last 3 months, property values have only risen by 0.1%. So surely this is doom and gloom time isn’t it?

Well, no actually because the Burton housing marketing is entering a new phase. It has been through the 2001 to 2007 boom, a bust in 2008 and 2009 and a recovery cycle since 2012, and as we head into 2015, a year that will see the formation of a new Government, we are now entering a more stable, yet still challenging era.

As I said to a landlord from Repton, who has recently changed agents to us, in the Midlands, (especially the big towns and cities like Nottingham, Derby, Loughborough and our own Burton) we are all facing a housing crisis, because in the Midlands – with its high employment rates, excellent quality of life, and rapidly growing strengths in a range of sectors, it is becoming a victim of its own success.

People want to live here but nobody wants to build on greenbelt. With planners not willing to give planning permissions for thousands of new properties that are required for our ever growing Burton population, accommodation in the town is in ever greater demand whilst supply remains worryingly slow to come through.

Just because property prices have levelled off in Burton, doesn’t mean the housing market is ready to jump off a cliff. I actually see this as a good thing, in fact, for the savvy landlord, a blessing in disguise. If you think the housing market is done and dusted for 2014, think again. This is the perfect time to snap up a bargain.

Despite recent mild weather, chill winds are hitting parts of the market now. This means every seller has three strong reasons to get their business done this side of Christmas. You see, as a landlord with cash in your pocket, ready to buy the next buy to let investment, you can get a bit of a bargain at the moment. We have seen it in Burton as a seller’s market for 12 months, but as the pressure mounts for property sellers to sell, the market has tipped.

Another reason sellers want to do a deal as soon as possible is the uncertainty surrounding the general election in the coming Spring. In the past, the prospect of an election means buyers hold back until they know how their income and tax might be affected. But for the brave landlord, it’s a chance to look at properties with fewer rival landlord purchasers waiting in the wings.

As we approach the end of 2014 - which, personally, has been a great year for me and for Professional Properties - I would like to say thank you to all the landlords and tenants who have popped into the office or have rang and emailed me their queries and questions regarding the residential rental market. I hope I have given you some valuable information to help make more informed decisions.

I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. Email me if you want a chat and i can call you back or call me on 07973 666229!

In the meantime may I take this opportunity to wish you all a very Merry Christmas and a  prosperous 2015.

Poor rental returns normally means good capital growth. What about Repton?

Hello again readers!

Well, there are only 28 sleeps until Christmas (sorry to remind you!). Over the festive period, many landlords make their investment plans for the new year so it may well be a good opportunity to look back over my past articles as they might give you some ideas and some invaluable information.

Well, last week’s article about rental returns in Repton made the phone ring!

The subject of investing in villages for buy to let is an interesting one. In fact it can be as risky as investing in student lettings or HMO’s (Houses of Multiple Occupation where everyone has a bedroom with a  shared kitchen and bathroom).

As I keep saying in these articles, investing in the Burton property market is something that shouldn’t been done lightly. For those new to the buy to let investment game, the rental return is the yearly rent from a property reflected as a percentage of the value of the property (one might consider it in the same light as the interest rate from your savings account) whilst the 'capital growth' is the amount the property goes up in value each year reflected as a percentage of the value of the property.

Last week we said Repton property values were 7.3% above the 2007 peak of property prices (before average UK property prices slumped 15% in 2008). However, property investment cannot be judged over short time frames and most certainly not by averages.

Often, when looking at a market for a landlord, I like to take a longer look at the market, and consider 10 to 15 years a more suitable time frame for capital growth. After doing my research, looking at every Repton property that sold in 1999 (and there were quite a few!) and the very same property selling again recently, average property values had risen on average by 227.5% in Repton, whilst in Burton they had only risen by 185.3%.

That's not to say everything in Repton turns to gold! One property in Brook House on the High Street of Repton, sold recently for a matter of a few thousand pounds above the price paid in 2008, the year of the slump.

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!

We are currently undertaking a mini office refurbishment at the moment so, 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 and see what we are doing.

You can also 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.

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.