You find me in a reflective mood today,
as I would like to talk about the future of investing in property in
Nottingham. The truth is that we have become lethargic, with many people having
mistaken the ever rising Nottingham (and for that matter, the whole of the UK)
property market as the eternal gift that kept giving since the 1960’s, as
property prices constantly rose and doubled every five to seven years. Whilst
George Osborne has decided that now is the time to milk the ‘Golden Cow’ of
UK’s private landlords, with changes in taxation for buy to let property, many
pundits are predicting the end of buy to let as we know it. However, it is
still possible to make a reasonable, profitable and safe return on property
with these changes. I have always seen investing in the buy to let market as
one might view Mother Nature. It has the capacity to create truly wonderful
warm weather and balmy summer climates, yet still holds the potential to
unleash catastrophic storms and hurricanes in the blink of an eye. You need to
take the time to study the market, obtain advice and opinions from knowledgeable
people and then decide what the proverbial property weather forecast will be…
remember, tenants will always need a roof over their head and I don’t see the
government building the millions of houses required to house them.
Nobody knows the future, and while
people may predict what is yet to happen, I wouldn't be afraid of this change …
because as the French proverb says (or Jon Bon Jovi sang…), ‘The more things
change, the more they stay the same’. No one could have predicted how the
property market has changed in Nottingham over the last couple of decades.
Twenty years ago, in 1995, 18,619 households (meaning 47.61% of property) were
owned and only 1,238 households were privately rented (meaning 3.17% of
property was rented out by private landlords). Roll the clocks on to 2016 and
16,820 of properties in the city are owner-occupied (a slight drop to only
39.98%) and the jump in private renting has been out of this world, as 12,479
properties are now privately rented (29.66% proportionally) with neighboring
cities showing similar changes. Who would have predicted in 1995 that the
private rental sector in Nottingham would have grown by 835% over
the proceeding 20 years?
Also, if you had asked someone in 1995
to predict what would happen to property values over the next 20 years, they
might have predicted similar growth to that experienced over the previous 20
years (between 1975 and 1995), which was a very impressive 351.55%. Yes,
property values have of course increased in Nottingham between 1995 and 2015
but by a more modest 88.82% (and most of that can be attributed to house price
growth between 2000 and 2006.)
The property market is constantly
evolving and the buy to let market has for too long been solely and heavily
dependent on house price growth, whilst yield has been almost forgotten. I see
the changes in taxes, landlord and tenant law as opportunities, contrary to the
doom-mongers out there. You may need to change your benchmarks, your approach
to financing, or even consider different types of property in which to invest
your money, but this will shine a light on investing in properties with
healthier yields and will create more realistic long term buy to let
opportunities, instead of relying on short term growth bets and wagers.
The advice I give to my landlords is
this: these changes will panic or scare some landlords, but this also means
that competition for decent Nottingham buy to let bargains will reduce, as fear
of change kicks in and amateur investors choose alternative investments. These opportunities
will provide a more stable platform for knowledgeable and experienced
Nottingham landlords to thrive. If you would like to learn more about the
Nottingham Property Market, feel free to pop into our property lounge for a
drink and chat with me.
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