A good time to buy property in MK?

I recently had an interesting chat with a couple who live on the western edge of Milton Keynes. They are thinking of buying their first buy to let property and they wanted my opinion on the state of the market and whether it was a good time to invest.
 

They were particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable a property is.

 

When we put this to the test, we found that Milton Keynes currently has an average property value of around £235,400 with the average salary being £29,399 per year. This is a ratio of 1 to 8. (as a comparison, Luton’s is 1 to 7.19 and Aylesbury is an eye popping 1 to 11.23 ). Milton Keynes’ level of ratio is very fair, compared with other parts of the UK (the UK average is nearer 1 to 9.5), but even with such reasonable ratios (meaning property is relatively affordable) that doesn’t tell the whole story. On these sorts of figures, that would mean a first time buyer would need to have a salary of £47,080 to buy an average property in MK, and that is a lot of money in anyone’s terms, especially young MK first time buyers in the their early 20’s.

 

 

 

However, even worse than the issue of affordability, is the raising of the 5% deposit, you then need to add in buying fees and costs which will be in the order of between £13,500 and £14,500. Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the MK rental market, please email me on stephen.tunney@belvoirlettings.com

Bargain 4 bed on Oldbrook, deal of the day

OK it won't win any beauty contests, but look at the size of property to be had here. Get yourself down to the open day on Saturday 28th June and get the inside track on this little gem offered for sale by Haart. Update the kitchen, tidy up the bathroom, plant up the garden and you're done. This could rent for around £925 giving a good return of around 5.5%. Close to CMK,  the train station and the Hospital, it must be worth a look....

http://www.zoopla.co.uk/for-sale/details/33504243?search_identifier=cfc9759e3d3b778898f97f5928cc5402

Stantonbury - 6.6% yield - BTL deal of day!

Whilst not the prettiest of houses, this came on the market this morning at £135,000 for a 2 bed house with garage, itwill rent day in day out at £750 per month, giving a yield of 6.6%. On the market with Elevation Estate Agents in Knowlhill, this will be snapped up any day now.

http://www.rightmove.co.uk/property-for-sale/property-44950111.html

 

Walnut Tree studio + garden, a great entry into BTL

This entry level property in Walnut Tree is on the market with Alan Francis for £124,995 and would make a great little BTL for any portfolio, giving you a 5.2% return on a rental of £540. Properties with 1 bedroom are highly sought after in this area from employees of the Open University and Red Bull Racing, with a garden as well it's got to be a contender.

 

 

http://www.zoopla.co.uk/for-sale/details/33608694

 

 

The grass is not always greener....or cheaper

We have had a number of landlords come to us in recent weeks after having experienced poor service at the hands of other letting agents, and in one case they had even suffered financial loss amounting to £9000 due to inaction and poor management by the agent. Why would we be seeing an increase in this type of scenario at this time, and what can be done about it? 

First of all, what they all have in common is that the landlords all took the cheapest deal available, from agents who promised to cut their management fees to the bone in order to win the business. The other thing that happened in each case was that the agent took the first applicant that walked through his door and placed them in the property within a matter of days, in some cases with just the most cursory of background checks. On the face of it, this was a win/win scenario for the landlord – a low cost deal and super fast service. Of course, by doing this, the agents did not provide such basic services as thorough applicant vetting & background checks, site inspections & property visits, or producing an accurate schedule of condition report before the tenancy began

But the bargain deal was not as it seemed, because the cracks took virtually no time to appear......suddenly landlords had tenants who were smoking within the property, damage was being caused and not reported or repaired, and tenants not looking after the garden (remember the warm & wet start to the summer – ideal conditions for any garden to become a jungle within a matter of a few weeks). In one case, the property was subsequently (and illegally) sub-let to 12 other people! And where was the managing agent in all of this – nowhere to be seen, that’s where! They had taken on so much new (and cut price) business that they could not cope, and in fact were never fully equipped to cope in the first place – because they were an estate agent who had branched into lettings when the sales market quietened down during the credit crunch years, and now that buyers had returned in greater numbers, the first thing to suffer was lettings. Here is why – an estate agent makes the bulk of their income from all of the add-ons they can sell, such as mortgages, life insurance, buildings & contents insurance and conveyancing, and their attention is now turning back to this highly profitable market as volume starts to return.

 

Through the poor service offered by other agents, we now have landlords saying to us “I wish I had just used you to start with”. We tell them that they can come to our office at any time and meet the team who will be looking after one of their most expensive assets for them – we are here in person, we are not a remote call centre, and we offer what the big corporates cannot – a personal level of service, tailored to meet any landlords individual needs.

 

If the above sounds familiar to you, or you know someone going through the same scenario, why not talk to us on (01908) 562582 or pop in for a coffee and some free advice at our offices in Stony Stratford.

Great Holm ... BTL deal of the day

This lovely 3 bed semi will rent day in day out at £900 per month in this condition, so if you could buy her for £190,000 (its on the market with Connells for £195,000), you will get a tasty yield of 5.7% a year. When you consider values in Great Holm have increased by 159% (on average) in the last 15 years .. a decent potential investment .. wont be on the market long ... click on the link to look at the nice internals

http://www.rightmove.co.uk/property-for-sale/property-39605527.html?premiumA=true

Willen Park 2 bed, £190k deal of the day

This has just come on the market with Visum (based in Wellingborough of all places) for £190,000 and would be a great property to let in this market for around £795. This won't be around long, so don't miss this opportunity to earn a 5% yield from this 2 double bedroom house. Follow the link below for internal photos of this deceptively spacious little property.

 

http://www.zoopla.co.uk/for-sale/details/33512378

 

 

 

 

 

Immigration checks could be legal nightmare for agents & landlords

Immigration lawyers have warned that a legal minefield awaits landlords and letting agents, as there are still far too many unanswered questions posed by the Immigration Act, which will introduce a duty to perform checks on the immigration status of tenants from this October.

 

According to our sources, landlords (and by implication, their agents) will effectively have a duty to check immigration status, yet many landlords and agents seem totally unaware of this new legal requirement and could be badly caught out. However, the detail of what actually will be required is not yet clear, but initially it is likely to involve obtaining copies of currently valid visas and maintaining a database of expiry dates, which would necessitate further checking upon their expiry.

 

The new requirement is to be implemented this October and there will be a code of practice issued. However, this has not yet been published and it is long overdue. We also understand that there will be a pilot area before the requirement is rolled out, but we do not know where this will be or how long the trial period will last, however we at Belvoir are already integrating these checks into our referencing procedure in order to ensure compliance and develop best practice throughout this year while we await further direction from the Home Office.

A 3 bed terrace in Bletchley that's ready to go, BTL yield 6.2%

How about this really tidy 3 bed mid-terrace in Bletchley, it's on the market with Elevation for £165k and has to be worth anyone's investment. It has all the right things going for it - decent bathroom & kitchen, tidy gardens, laminate floors and a generally neutral palette of colours with just the odd colourful embellishment. This could easily rent for £850 in the current market, returning a yield of  6.2%. The best thing about it is that your tenant could just move right in and you would have nothing to do, so a nice easy starter for a novice investor.

http://www.zoopla.co.uk/for-sale/details/28273696

 

 

Monkston 2 bed BTL deal £180k

Todays property is a charming little 2 bed terrace that will let over and over again with no trouble. Your £179,995 (or less - haggle hard!) will buy this tidy property in Monkston from Michael Anthony in Central Milton Keynes, and your yield would be 5.3% on a rental income of £799. Could be an interesting proposition...

 

http://www.zoopla.co.uk/for-sale/details/33351206

Increased landlord investment predicted for 2014 as rental market continues to grow

The UK continues to edge ever closer to its European neighbours by becoming a nation of ‘renters’. There has been rapid growth in residential lettings, with over 15 per cent of all UK homes (3.2m) now in the private rented sector. Some Government estimates expect a further rise of 33 per cent in the residential rental market over the next eight years – taking private rented property to 20 per cent of all UK homes by 2021.

“Over the past year the private rented sector has remained on a firm footing and despite Government ‘pump priming’ initiatives such as the ‘Help To Buy’ scheme there has been no real impact on the continued demand for rental property,” says Dorian Gonsalves, Chief Executive Officer of nationwide lettings experts, Belvoir.

“All of our predictions are that in 2014, the number of people choosing to rent will continue to drive up demand. There are real indications of a recovery in the housing market with property prices predicted to rise, along with a projected 25 per cent increase in buy to let mortgage lending. With this we expect to see the re-emergence of more and more investment minded landlords looking to capitalize on this trend.”

A considerable number of landlords entering the sector over the last five years have been ‘accidental landlords’ – people who, for one reason or another, couldn’t sell, so decided to rent out their properties instead. In 2014 some of these are expected to take advantage of rising prices in order to make modest gains and exit the market.

“What we now anticipate is that over the next few years, new rented housing stock will come from different directions, partially from institutional investors returning to the market to provide much needed funding. It is pre-2008 since landlords sought out an increase in capital growth, on top of rental returns and this strategy is likely to be adopted again next year as more landlords look for real capital gains over the next 3 to 5 years, or even longer.”

With bank and building society interest rates still currently at a very low level we are also dealing with more and more enquiries from first time ‘novice’ investors looking for a better return on cash. We predict that buy to let will become increasingly attractive and accessible for these  smaller investors wanting to add another asset class alongside their existing savings and pension portfolios. Whilst landlords always need to ensure they invest in the right property and be aware of local market rents, they must also remember that a good tenant who looks after a property well will actually be worth more to them, by taking out longer tenancies and reducing potential ‘void’ periods. It’s a win, win situation.

Although increasing property prices will be good news for existing landlords, for those new to buy to let investment, or looking to expand their current portfolio, it could be tough to find the right deals in 2014. Most areas across the UK are reporting a lack of property for sale, making it increasingly difficult to find a property that ‘stacks up’ financially. If anyone is looking at buy to let this year it is essential to seek independent advice, not just from lettings professionals such as Belvoir, but also from financial advisors and tax experts who can assess the impact of adding property investment to individual investment plans.

2 bed apartment in Middleton, £169k, 6.7% yield

How about this beauty then - a 2 bedroom 2nd floor apartment with en-suite and stylish interior, in a superb block in Middleton. This sold for £169,995 and was up for sale with Christopher Francis. Of course, this was snapped up by a savvy investor and is about to go on the rental market, fully furnished, for £950 PCM offering a return on investment of 6.7%. Close to the Open University, great local shopping at Kingston and great schools, check it out here...

http://www.rightmove.co.uk/property-for-sale/property-29151321.html