Milton Keynes tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is talking about Milton Keynes property. As a property agent I like to comment on the Milton Keynes property market, which I hope will be of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Milton Keynes as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Milton Keynes has broken through the £1000 a month barrier as the average rent for a property in the town, now stands at £1087 per month, and whilst this was a drop of 0.6% last month, rents for new lets are 7% higher than they were 12 months ago.

House price inflation has certainly eased in Milton Keynes from the heady days of 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and therefore the desire for decent high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are an ideal barometer to the state of the local economy as a whole and strongly believe that the recent increase in Milton Keynes rents are a sign that the Milton Keynes economy is picking up. 

This means Milton Keynes landlords are continuing to capitalise on the Milton Keynes property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values 9.13% higher than 12 months ago, so as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10  and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.

You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates so low and returns still extraordinarily attractive, there’s rarely been a better time to invest in rental properties.

However,  (you knew there would be a however!),  it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents and capital growth.  Different parts of the town, different types of properties are experiencing quite different changes.  For example, the average length of time the 31 Milton Keynes properties up for rent between £250 to £500 per month is an eye watering 259 days, whilst the average length of time the 194 properties at £500 to £1000 per month is 38 days and 158 properties that fall into the £1000 to £2000 per month price bracket is 74 days.

When you start comparing different parts of Milton Keynes, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Milton Keynes Property Blog. In the Milton Keynes Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Milton Keynes property Blog

Milton Keynes Property Market - Asking Prices Drop But Values Rise

Those of you who regularly read my weekly articles in the Milton Keynes Property Blog will know I like to keep abreast of the Milton Keynes property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.

Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the town have dropped, yet property values have increased.  The average asking price of a Milton Keynes property, according to Rightmove, fell 1.2% this month yet the average value of a Milton Keynes property rose by 0.9%.

So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Milton Keynes property down slightly to £283,600 whilst the average value is now £260,600.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore, in a nutshell, Milton Keynes property values are continuing to rise and those homeowners in Milton Keynes who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!

In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location.  I can appreciate Milton Keynes home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.

Most homeowners don’t want to sell and have nothing to buy.

But that’s the beauty of the much maligned English and Welsh house buying process. You can find a purchaser for your property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you cannot find the right home for you, you can slow the deal with your purchaser until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for now and as long as you mention this at the start they must not commit to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are over 240 flats for sale, 244 terraced houses and 160 semis for sale in Milton Keynes.  Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.

The types of houses a Milton Keynes landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale .. just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Milton Keynes Property Market together with regular postings on what I consider the best buy to let deals in Milton Keynes, out of the hundreds of properties on the market,  irrespective of which agent is selling it, then you might like to visit the Milton Keynes Property Blog.

Interest rates set to rise – How will that affect the Milton Keynes property market?

A couple of weeks ago, I mentioned in this blog about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 23,945 homeowners in Milton Keynes, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 11,899 rental properties in the town, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of.

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Milton Keynes would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.

Those Milton Keynes landlords, who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It’s easy to say you will look at your mortgage next month, then before you know it, Christmas will be here!  Don’t forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Milton Keynes and seriously consider fixing your mortgage rate now.  You didn’t buy your Milton Keynes buy to let property for it to become a millstone around your neck. It’s all about mitigating your costs and maximising your income to make your Milton Keynes buy to let property the investment you want it to be.

However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I’ll explain why. Milton Keynes landlords have see their return on investment for their Milton Keynes buy to let property, over the last couple of years, perform very well indeed with Milton Keynes property values rising by 36.58% since the Spring of 2009. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Milton Keynes!

Finally though, can I ask all Milton Keynes homeowners and Milton Keynes landlords, who have a mortgage that isn’t fixed, they need to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels.  I am not qualified to give that advice and this is my personal opinion, so please speak to a qualified mortgage arranger and, if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!

In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla and another OnTheMarket. However, sometimes, you can’t see the wood for the trees. At the time of writing, Rightmove had 1,082 properties for sale in Milton Keynes, Zoopla 785 properties for sale in the town and OnTheMarket 148 properties ... where do you start? A lot of savvy Milton Keynes landlords like to visit the Milton Keynes Property Blog , where, irrespective of which agent is selling it, I regularly post what I consider out of the hundreds of properties on the market, to be the best buy to let deal in Milton Keynes.