The Brits can’t stop talking about property. The hot topic of discussion at dinner
parties of Nottingham’s movers and shakers is the subject of the Nottingham property
market but in particular, buy to let. These people are snapping 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!
A landlord has to flick through Rightmove or Zoopla, pick
the property of their choice and agree a price. Then find a modest deposit of
25% (often by remortgaging their own home) which for an average Nottingham
terraced house, would mean finding £26,825 for the deposit (as the average Nottingham
terraced house is currently worth £107,301) and borrow the rest with a low
interest rate buy to let mortgage. Then
the final step, rent out the property in a matter of hours for a high price,
sit back and live comfortably. The rent will cover the mortgage payments, with
an amount 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 8,532
landlords owing in excess of £1.5 billion in mortgages on those Nottingham buy
to let properties. An impressive amount
when you consider Nottingham only has 0.799% 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 five 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 Nottingham Property Market without advice?
We give bespoke detailed advice to our landlords to enable them to spot trends
in the Nottingham Property Market before others, enabling them to buy better
properties at better prices. For example, did you know that semidetached houses
are selling for around 16% lower than 12 months ago in Nottingham yet detached
properties are selling for 3% 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 planning on investing in the Nottingham property
market, or just want to know more, things to consider for a successful buy to let
investment, please email me on Jaclyn.bartlett@centrickproperty.co.uk
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