The Brits can’t stop talking about property. The hot topic
of discussion at the posh dinner parties of Bray, Henley and Burchett’s Green’s
movers and shakers is the subject of the Maidenhead Property market, but in
particular, buy to let. 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, the government gives tax breaks to landlords, as it
allows the mortgage interest payments on a buy to let property to be tax
deductible. Also, 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 re-mortgaging their own home), which for an average Maidenhead
terraced house, would mean finding £94,771 for the deposit (as the average Maidenhead
terraced house is currently worth £379,086) 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 1,093
Maidenhead landlords owing in excess of £204 million in mortgages on those Maidenhead
buy to let properties. An impressive
amount when you consider Maidenhead only has 0.102% 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 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 Maidenhead Property Market without advice?
I will try and give bespoke detailed advice to our landlords to enable them to
spot trends in the Maidenhead Property Market before others, enabling them to buy
better properties at better prices. For example, did you know that flats are
selling for around 26% lower than 12 months ago in Maidenhead yet detached
properties are selling for 22% more (with every other type in between). This
means I can advise on which properties will go up in value better (or lose less
if property prices drop), I 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 I 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”.
No comments:
Post a Comment