Buy-to-Let Deal of the Day - 4% Gross Yield Close To High Schools

I was interested to hear last week that the average first time buyer now earns over £50,000 per year and has to provide a deposit in the region of £30,000 to get onto the housing ladder.

It is no surprise then that many people are now considering renting as a long term alternative to buying. This maturing tenant market means that good quality family homes to close to local schools are always in demand. 

Looking on Rightmove this morning I noticed this charming three bedroom cottage on Grove Road (just off Kingsham Road, near the High Schools).

http://www.rightmove.co.uk/property-for-sale/property-39400887.html 

On the market with Cubitt & West estate agents at offers over £300,000, the property has been extended into the loft space to create three decent sized bedrooms, ideal for a growing family and looks in lovely condition judging by the photographs.

Rental values for three bedroom houses in Grove Road have been known to reach £1125pcm however I feel a more conservative £995pcm is reasonable for this particular property.

A purchase at the £300k mark with a rent of £995pcm would return a healthy 4% yield. Sale prices in Grove Road are also rising at an encouraging rate of over 18% over the last 5 years, meaning that a property of this ilk could make a savvy buy-to-let investment.

Rush to purchase buy-to-lets keeping housing market buoyant says RICS

Landlords trying to beat Chancellor George Osborne’s stamp duty surcharge deadline are behind the latest upbeat assessment of the housing market from the Royal Institution of Chartered Surveyors. 

In its latest survey of residential members it says demand in December flouted the usual seasonal slowdown and rose to a three-month high after the government announcement that a three per cent duty surcharge would be imposed on April 1. 

In one region, the north west, 40 per cent of chartered surveyors reported a rise in new buyer enquiries in December, up from 19 per cent in November.

RICS says high prices across most market sectors continues to be fuelled by a relative shortage of properties but new instructions to sell homes rose for the first time since January last year.

Simon Rubinsohn, chief economist at the RICS, says a further increase in activity is likely before the April stamp duty deadline. 

In the longer term, he believes prices in London, the South East and East Anglia would rise by a further five per cent over each of the next five years.

Article courtesy of Estate Agent Today

What can we expect from the Property Market in 2016?

Firstly, Happy New Year to you all. I hope that you had an enjoyable Christmas.

One question I was asked a few times over the festive period was whether the property market will continue to grow in 2016. In my opinion, the signs are good.

Halifax forecasts that house prices will grow between 4% to 6% this year, which is slightly slower than 2015, which saw a 9.7% annual growth. This steady and continued growth is fueled by lack of supply, shortage of new build developments, and indeed a homeowners fear that they may not be able to secure, or indeed afford, upgraded accommodation.

Buy-to-let continues to go from strength to strength, with lending in this market at a post-recession high. The main drivers for growth in the sector remain in place; restricted housing supply, high net migration, limited affordability and restrictions on lending.

In November, The Chancellor announced in his Autumn Statement that buy-to-let purchasers would face an additional 3% surcharge on each band of their stamp duty land tax bill, beginning in April this year. Some within the property industry have described this as a “catastrophe”, however in reality, I believe that landlords will simply factorise their additional costs into their offer price. Buy-to-let purchaser’s ability to complete quick transactions, with typically larger cash injections, and less lending restrictions, means that there is a better chance of a sale completing, thus always making this profile of buyer more attractive to a seller.

With these stamp duty changes on the horizon, we expect to see short-term benefits to the buy-to-let market, as prospective investors look to bring forward their purchases to beat the April deadline.

As a company, Martin & Co have quickly established themselves as the lettings specialist in the Chichester area, and we are proud to announce that we have now entered the property sales market. The reason for this recent addition is largely down to area demand and repeated requests from our current landlords to offer this service to either sell their rental properties and/or re-invest or expand their portfolios locally.

If you are considering selling your property this year, please come and talk to us in the first instance, as we have an active ever-growing database of landlords actively looking to invest.

Wishing you a very happy and prosperous New Year.

Merry Christmas!

I would like to take this opportunity to wish everyone a very Merry Christmas.

Thank you for taking the time to read my blog this year, I really hope that you have found the articles informative. 

Enjoy the festive season and have a Happy New Year!

Matthew

Martin & Co Chichester - Launch of Residential Sales Department

We are pleased to announce that we will be launching our residential sales department in January 2016 to complement our established lettings service, with a vision-plan to offer landlords in the Chichester area a ‘one stop shop’ for their buy-to-let investments.

Since the Chancellor announced a rise in Stamp Duty Land Tax in his Autumn statement we have seen an increase in enquiries from landlords, both existing and new, keen to expand their portfolios and invest before the changes take effect in April next year.

Martin & Co believe that there is likely to be a flurry of activity before the Spring of 2016, however as long as careful and considered investment advice is sought, any initial increase in financial outlay will be recouped by purchasing the right property and maximising the rental return of the investment.

As a property industry expert, with many years’ experience working within the local marketplace, we firmly believe that we are best-placed to listen to your aspirations from your investment - from initial purchase right through to exit strategy - to ensure that we guide you towards a successful and prosperous buy-to-let experience.

Similarly, if you are considering selling your investment property, who better to manage the process from start to finish, than a company you can trust and who know your property inside-and-out to provide a prospective purchaser with detailed answers to all of their questions from initial point of enquiry. 

Buy-To-Let Deal of the Day - 17% Capital Growth Over 8 Years PLUS 4.8% Gross Yield!

Looking through Rightmove this morning I noticed a property that I feel is worth serious consideration if you considering entering the buy-to-let investment market, or indeed looking to expand your current property portfolio.

St Georges Court on Cleveland Road (just off Whyke Lane) is a modern, niche development of ten apartments which have a successful track record of renting extremely well over the years to both single professionals and working couples, and in my opinion would make a safe BTL investment.

http://www.rightmove.co.uk/property-for-sale/property-38444121.html 

Rental values in the block have risen by around 4% over the last three years, with sales values also on the up, from circa £150,000 for a one bedroom ground floor unit back in 2007, to around £175,000 this year - a growth of over 17%.

Void periods are also very low, with one of our landlords in the development only experiencing a total of 13 days without rent in the 5 years we have managed his property. 

The above price rises, minimal voids, and the curb appeal of modern apartment living, are all big factors in what makes a successful BTL venture.

If you are considering investing in the Chichester property market, whether this be for investment or for a house to make a home, please come and speak to us first for free, impartial, and honest property advice.

Changes to Buy to Let Stamp Duty - Statement from MartinCo PLC

In Wednesday’s Autumn Statement (25/11/2015), the Chancellor announced that buy-to-let landlords and people buying second homes will face an additional 3% surcharge on each band of their stamp duty land tax bill, commencing from April 2016. The rate of duty will be as follows: 

Property value	Standard rate(currently)	Buy-to-let/second home rate (from April 2016)
0 -£125,000	0%	3%
£125 – £250,000	2%	5%
£250 – £925,000	5%	8%
£925 – £1.5m	10%	13%
over £1.5m	12%	15%

This surprise intervention comes at a time when the buy-to-let market is working extremely efficiently and we believe this move has been announced for political, rather than economic, reasons. Lending in this market is at record post-credit crisis levels with over 1,000 BTL products available and c.20% of the population is now housed in the private rental market in the UK. The day after the Chancellor’s announcement, it was revealed that the Government had once again missed its target to reduce net migration into the UK, and the latest figures were at a new high, with 330,000 people added to the UK population over the year.

MartinCo Plc continues to believe that all of the drivers for further growth in buy-to-let remain in place; restricted housing supply, high net migration, limited affordability and restrictions on lending. The management believe that total returns from buy-to-let will continue to outpace other investments including traditional pensions, and have the psychological and emotional advantage of being an easily understood, tangible asset.

Martin & Co Plc believe a principal effect of these changes will be for prospective buy-to-let purchasers to factor this into the price they are willing to pay for a property, and this will have a dampening effect on appreciating house prices in some sections of the market. One may argue as a consequence, that buy-to-let purchasers could be out bid by purchasers for owner occupation (e.g. first time buyers); however we believe buy-to-let purchasers will continue to be better placed to bid/complete on these properties given that they typicallyhave more cash to inject and less restrictive buy-to-let mortgage conditions meaning that there is greater certainty of the sale completing.

It should also be noted that buy-to-let purchasers  generally have long term time horizons for investment e.g. to provide supplementary income to employment income over a number of years. The effect of an uplift of 3% on the initial transaction cost is therefore unwelcome, but does not significantly affect total returns over the long term,  especially if factored into the purchase price.

Further, we believe this move is the lesser of two evils; given the Government’s new found desire to promote home ownership, we believe that higher transaction costs are significantly less severe than other potential regulatory levers, such as restrictions on buy-to let lending or rent controls.

In the short term, we would actually expect some benefit to the buy-to-let market, as we would expect prospective investors to bring forward purchases to before the April 2016 deadline for these changes.

There is also the interesting possibility of tax engineering by creating corporate vehicles such as Real Estate Investment Trusts to own larger numbers of properties and escape both the extra stamp duty and the taper reductions in mortgage interest relief.

Therefore, we believe initial reactions, including that of the Association of Residential Letting Agents (ARLA) who described the announcement as a “catastrophe” in mainstream press, to be significantly overblown. While admittedly an unwelcome move for letting agents, we believe current thoughts as to the severity have been greatly over exaggerated.

We do think any effects these changes may have on buy-to-let investment will be felt most in the prime London market given the higher transaction values.