Monday, 8 August 2022

BUY-TO-LET DEAL OF THE WEEK:  2 bed house in Chichester, £260,000, 4.6% yield

Summary
2 bed house in Chichester
Listed for sale on 26/07/22 @ £260,000
Rent = £1,000pcm
Yield = 4.6%
Last sold for £59,950 in 1998 (+334% in 24 years)

The property is on the market with Stride & Son and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/125371211







Thursday, 4 August 2022

UK house prices are DOWN 11% since the credit crunch


With all the headlines about house prices being out of control as they continue to increase to ever higher record highs, you may think I’ve gone a little mad to even suggest property prices in the UK today are lower than they were 15 years ago (when the credit crunch kicked off in mid-2007).

Well, it is in fact true….sort of….

The average UK house price today according to Land Registry data is £283,496. This is indeed some 50% higher than the £188,691 the average UK home was worth in July 2007. However, that is when measuring it in Great British Pounds. Whilst that is certainly the logical thing to do when that is the currency we get paid in and use to pay our mortgages, it doesn’t tell the whole story.

Digging a little deeper shows that house prices have not risen at all….our ‘Great’ British Pound has merely become worth less….a lot less in fact when compared to the US Dollar - the ‘reserve’ currency that is widely used as the benchmark for trade around the world.

You see, in July 2007 when us Brits were paying £188,691 for the average home, we were also able to jet off to the US and exchange one of our pound coins for two US Dollars. That means we were effectively paying $377,382 for that ‘average’ UK home. As anyone who is currently wanting to exchange their pounds for dollars knows, you’ll get far fewer of them now when handing over the same amount of your hard earnt Sterling…with each pound currently being worth just 1.20 dollars. That means the current average UK property (costing £283,496) is actually worth just $340,195….11% less than 15 years ago.

Using the same formulae, the housing crisis in the US appears to be far more extreme than in the UK. The average US property currently costs $381,750, which is a 75% increase compared to their $217,839 peak in June 2007. Already then, our American cousins have seen prices rise far more in their native currency than we have in ours. But it gets worse for them when you consider the strength of the US Dollar. 

Had you emigrated to the US in the middle of 2007 you would have needed £108,920 to buy the average US home (for $217,839). If you now chose to come back to Britain, you could sell your average US home (for $381,750) and convert the sale proceeds back into £318,125….192% more than you started with 15 years ago!

It’s also interesting to look at median salaries both here in the UK and over the pond. Whilst the media shares stories of strikes and people bemoaning pay not keeping up with inflation (especially when it comes to house prices), between 2007 and now the UK median salary has increased by 30% (£24,043 in 2007 to £31,285 now). In the US that figure is a mere 13% ($59,534 in 2007 to $67,521 now). Of course, you now know that’s not the whole story as our pay in dollars has effectively dropped by 22%, whilst the American worker’s median pay has increased by 89% in pounds!


Coming back to the earlier point I made though; it is logical to simply focus on the currency we get paid in and use to pay for our housing. On that score this all adds up to the UK having seen house prices increase 50% since 2007, whilst wages have only increased by 30%. Clearly that’s not a good place to be, but it beats our American friends who have seen house prices increase 75% in the same timeframe, compared to receiving just a 13% rise in their incomes.

Even so, when it comes to affordability, property simply remains expensive in the UK for us Brits - the average home costing 9 times our median salary, whereas in the US, despite a sharper increase in house prices and a slower rise in salaries, they still ‘only’ require 5.7 times the median annual income to afford the average home.

Whilst you may think much of this is irrelevant, the fact is that the world is more inter-connected than ever before, so currency fluctuations distort our wealth on a global scale. We have largely been on the wrong side of this trade for the past 15 years, which is why we have seen a growing number of foreign individuals and companies purchasing property in the UK as it has become ‘cheaper’ in their native currencies.


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Monday, 25 July 2022

BUY-TO-LET DEAL OF THE WEEK: 2 bed flat in Chichester, £210,000, 5.6% yield


Summary:
2 bed flat in Chichester
Listed for sale on 14/07/22 @ £210,000
Rent = £975pcm
Yield = 5.6%
Last sold for £157,000 in 2004 (+34% in 18 years)

The property is on the market with PMS and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/124988273







Thursday, 21 July 2022

Is it time to turn the heating on?



With temperatures soaring outside you may think this article has been posted at the wrong time of year. Bear with me though, as it could pay to turn your heating on now despite the logical preference for some air conditioning!

You see, much like a car needs to be run every so often, so should a boiler. If it’s not there are several things that might happen, all of which could lead to a breakdown when you actually need it the most. 

The obvious one would be if the boiler or heating system has developed a fault, for which you’ll only find out when you turn it on (presumably because you are cold). Whereas checking it periodically should mean when the time comes you’ll remain nice and toasty (although perhaps not quite as much as we are now!).

‘Combi’ boilers, which provide both the heating and hot water, may still be ‘on’ during the warm weather (to supply the hot water) but they aren’t fool proof either. They contain a valve that shifts the demand between the heating and hot water, depending on what the control unit is requesting. These valves can get stuck if they aren’t moved for a long period of time (say, the six months of the year you don’t need the heating so have it constantly in hot water mode). Selecting the heating function instead of the hot water every so often can therefore aid the smooth motion of the valve.

Be aware that heating engineers are more in demand come the colder weather too. You can guarantee when the cold weather comes and everyone starts turning their heating on (many for the first time in months), they will be rushed off their feet with repairs. If you’re amongst this crowd you may have to wait (or pay more), whereas keeping on top of it could help identify and rectify any issues before the rush. It’s for this reason that it can also pay to service or replace your boiler during this quieter time, if that’s on the cards for you. 

So, whilst it may seem counter intuitive, turning up the thermostat (briefly) once a month or so can help keep your boiler running, ensuring it is ready for when you need it whilst avoiding niggly breakdowns caused by lack of use. 


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Monday, 11 July 2022

BUY-TO-LET DEAL OF THE WEEK: 1 bed flat in Chichester, £190,000, 5.0% yield

1 bed flat, Canal Place, Chichester
kitchenlounge

Summary:
1 bed flat in Chichester
Listed for sale on 22/04/22 @ £205,000
Now = £190,000
Rent = £795pcm
Yield = 5.0%
Last sold for £130,000 in 2012 (+46% in 10 years)

The property is on the market with Sims Williams and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/122700695







Thursday, 7 July 2022

Buy-to-let: home or away


Opinions are divided over whether you should invest in buy-to-let locally or venture further afield in an attempt to achieve better returns.

The area you invest in should be considered alongside your strategy and goals. Certainly if you’re looking to invest in student lets you’ll want to buy near a large, vibrant and growing University. Budget may also be a factor, whereby local house prices are simply too high for you to buy an appropriate property. Many Londoners have to buy outside the city because of this, although many will now rue missing out on the spectacular capital growth London property has seen.

When I began investing in property I spent a long time deliberating on where I should buy. Trying to find the next up and coming area to invest in that offered the holy grail of high yields and strong future capital growth appeared elusive. In the property boom years I researched city centre apartments up North as well as foreign property in Bulgaria, Cyprus, Florida and Las Vegas.

Whilst the glossy brochures promised quick riches, ultimately I decided that the grass wasn’t actually greener elsewhere. There are in fact many reasons why I believe you should keep it simple and invest close to home.

Familiarity is often the biggest reason why many landlords buy locally. You’ll know where the best areas are, which are the decent schools and the good transport links, along with a knowledge of the upcoming developments that will impact the area. 


You could spend time walking the streets and meeting with local agents. Nothing beats face-to-face contact and building rapport with people who can advise and support you. It’s easier to spend more time in a local area so you can work out the facts as opposed to relying on third party information.

It is obviously far more convenient to manage a buy-to-let close to home. Whether that be overseeing a refurbishment, the on-going maintenance or managing tenants. Having a property nearby saves a lot of time and this is perhaps why over 50% of landlords choose to buy within 10 miles of where they live.

Buying locally might mean you decide to self-manage the property and therefore save yourself the letting agent’s management fees. Even if you do hand the keys over to an agent, there’s certainly some peace of mind knowing the property is within easy reach should something go wrong or you simply want to keep an eye on things.

If you’re thinking of investing in buy-to-let and would like some free advice about whether your local area can meet your needs, please get in touch.



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Monday, 27 June 2022

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £375,000, 4.5% yield


Summary:
3 bed house in Chichester
Listed for sale on 27/05/22 @ £375,000
Rent = £1,400pcm
Yield = 4.5%

The property is on the market with Linden Homes and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/123735716