The Brits can’t stop
talking about property. The hot topic of discussion at the posh dinner
parties of Woughton on the Green, Loughton and Woolstone’s movers and shakers
is the subject of the Milton Keynes Property market, but in particular, buy to
let. These people are buying up buy to let properties quicker than an ace Monopoly
player .... or so it would seem if you read the Sunday papers. So is the buy to
let market a sure fire way to make money?
Is it something everyone should be jumping into? Is it a sure fire way
to make money? The answer is Yes and No to all those questions!
Firstly, the government gives tax breaks to landlords, as it
allows the mortgage interest payments on a buy to let property to be tax
deductible. Also, a landlord only has to flick through Rightmove or Zoopla,
pick any property at random and agree a price. Then, find a modest deposit of
25% (often by re-mortgaging their own home) which, for an average Milton Keynes
terraced house, would mean finding £47,449 for the deposit (as the average Milton
Keynes terraced house is currently worth £189,797) and borrow the rest with a
low interest rate buy to let mortgage.
Finally, the landlord would rent out the property in a matter of hours
for top dollar and live happily ever after, with the rent then covering the
mortgage payments, with loads of money to spare and come retirement have a
portfolio of property that would have quadrupled in value in fifteen years.
Sounds wonderful – doesn’t it? Or does it???
Let us not forgot that the half of one per cent Bank of
England base rate is artificially low. The international money markets can be
fickle and if interest rates do rise quicker and higher than expected because
of some unforeseen global economic situation, that monthly profit will soon
turn into a loss as the mortgage will be more than the rent. Even though
tenants are staying longer in their rental property, tenants still come and go
and my guidance to landlords is they should allow for void periods, plus the maintenance
costs of a rental property and of course, agents fees. .. all things that eat
into that profit.
Interestingly, by my calculations, there are approximately 3,802
Milton Keynes landlords owing in excess of £712million in mortgages on those Milton
Keynes buy to let properties. An
impressive amount when you consider Milton Keynes only has 0.356% of all the
rental properties in the Country. It really does come down to a number of
important factors going forward to ensure you are water tight for the future. A
lot of my existing landlords are fixing their mortgage rates. One told me that
the Metro Bank are currently offering a 5 year fixed BTL re-mortgage rate at
3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you
must speak with a qualified mortgage advisor.. but that sounds very fair!
However, one thing I do know is that buy to let is a long
term investment, it’s a ten, fifteen, twenty year plan and property prices will
go down as well as up. You wouldn’t dream of investing in the stock market
without advice, so why invest in the Milton Keynes Property Market without
advice? We give bespoke detailed advice to our landlords to enable them to spot
trends in the Milton Keynes Property Market before others, enabling them to buy
better properties at better prices. For example, did you know that semis are
selling for around 1% lower than 12 months ago in Milton Keynes yet terraced
properties are selling for 9% more (with every other type in between). This
means we can advise on which properties will go up in value better (or lose
less if property prices drop), we can also advise which have lower voids and
which properties have higher maintenance issues.
Information on the local property market and ability to
process it is the strongest asset we can give you. As Lois Horowitz, the famous
author says, ”Not having the information
you need when you need it leaves you wanting. Not knowing where to look for
that information leaves you powerless. In a society where information is king,
none of us can afford that”. One place to find information on the Milton
Keynes Property Market is the Milton
Keynes Property Blog, where you will find many articles just like this.
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