4 bedroom detached house in Girton offering a 5.3% Yield and ready to go.

Looking through RightMove today I have stumbled upon this little beaut. This 4 bedroom property is up for sale with Hockeys with a guide price of £450,000. This property looks great inside and out and I know these types of properties rent for around the £2,000pcm mark with ease.

 

Now with added extras like this kitchen and stunning bathrooms this property could even command a slightly higher rent so why not be bold and increase your yield further? If you was to rent this property for the average £2,000pcm it would give you a yield of 5.3%

This property is in pristine condition and would rent with ease so if you are looking for an investment then this is the one for you. You can find more information and pictures on the link below:
http://www.rightmove.co.uk/property-for-sale/property-54210962.html

My concerns about the Cambridge Property market

 

I am genuinely concerned about the Cambridge property market, but in a way that might surprise you.  Rightmove announced that average ‘asking prices’ rose last month by 1.2% in the East, leaving them 7.4% higher than a year ago.  Whilst it could be said that monthly change is very modest, in the same period a year ago, we saw a slight monthly rise of just 0.7% in the East, which is more the norm given the onset of schools breaking up and everyone going on holiday.

Looking at all the data on the Cambridge property market; putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built; my research shows there is a widening gap between what property buyers want and what is available to buy.  In a nutshell, many more buyers are looking for the smaller one and two bed properties (the typical terraced and smaller semi-detached houses/apartments), whilst there are a larger proportion of the four and five properties, which are the typical detached properties available.

Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns.  Also, landlords with larger loans (on those larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments, which start in 2017.

If you recall, a few weeks ago I did some research on how different types of properties had performed in Cambridge since the year 2000.  I revisited those calculations and it hit me how different types of properties had performed over the last 15 years.  In a nutshell, this mismatch of demand and supply isn’t a new phenomenon, it’s been happening under our noses for years!

In the last 15 years, the average terraced house in Cambridge has risen in value from £133,451 to £418,121 whilst the detached house has risen in value from £251,713 to £605,845.  Nothing seems amiss until you look at the percentage growth.  The terraced has grown in value by 213% whilst the detached by only 141% meaning the gap between the inexpensive terrace’s and expensive detached properties has in percentage terms narrowed enormously (this isn’t just a Cambridge thing, it has happened all across the Country).

I am concerned because more houses need to be built, not only in Cambridge, but in the East and the UK as a whole.  In particular, there is specific need for more affordable starter homes for the growing demand from both tenants (and the landlords that will buy them) and first time buyers.  The Tories need to face up to the fact that unless they can get the builders, the planners (to release more building land), the banks (to finance it) and themselves together, to ensure long term plans can be made, and implemented, this issue will continue to worsen.

The country needs 200,000 houses a year to be built to keep up with demand, let alone reverse the imbalance between demand and supply.  Last year, only 141,040 properties were built, the year before 135,510 and 146,850 in the year before that.  This means only one thing for Cambridge landlords.  Unless David Cameron starts to rip up huge swathes of the British countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future.

Therefore, investment in the local Cambridge property market as a buy to let investment could be the best move to make as the stock market investments are possibly on the wane.  Everyone is different and trust me, there are many pitfalls in buy to let.  You must take lots of advice and seek out the best opinion.  One source of opinion, specific to the Cambridge property market is the Cambridge Property Blog  http://cambridgeproperty.blogspot.co.uk/

Chain Free property investment with a 4.5% yield

Not often I put a house with a low yield on here but this this modern detached house benefits from a comprehensive refurbishment programme and presents an ideal opportunity for investment as a house of multiple occupancy which could increase your yield further. This properly would still make a lovely family home with a rental value of £1,500pcm.
For sale with TuckerGardner for £400,000 this property is certainly an investment that will prove to be easily maintainable so if your looking for a hassle free investment then this could be the one for you.

Please see the link below for further information and pictures:
http://www.rightmove.co.uk/property-for-sale/property-36059838.html

Cambridge – More people rent than have a mortgage.

 

Many people think the British obsession with owning your home started with Thatcher in the early 1980’s, when she allowed council tenants to but their council houses, under the right to buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole, in 1951, 30% of residential property were owner occupied, then every ten years that rose incrementally to 39% by 1961, 51% by 1971, 58% by 1981, 68.07% by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop today.

After leaving home, early/mid twenties young adults tend to start to settle down and move out of the family home into their own home.  After a couple of years, they will have a choice of either buying their first house (albeit with mortgage) or decide to privately rent for the long term (because the Council House waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide to what people are doing about their housing needs and what their attitude to renting v's buying is.

This is a really important change in the way we live, as I explained to a local Cambridge landlord the other day, knowing when and where the demand of tenants is going to come from in the coming decade is just as important as the knowing supply side of the buy to let equation, in relation to number of properties built in the city, Cambridge property prices and Cambridge rents.

In the Cambridge City Council area as whole, there are 11,170 households that are privately rented via a landlord or letting agency verses 11,058 households that are owned with a mortgage.  However, when we look deeper (as the devil is always in the detail), 5,253 of those 11,058 households are 35 to 49 year Old's and 3,247 are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s. 

Meanwhile, at the other end, in the 25 to 34 age range (the age most people bought their first home in the 1970’s/80’s/90’s) only 1,855 of the 7,237 households occupied by those 25 and 34 year olds are owner occupiers with mortgages, because 5,382 households are privately rented. This means only 25.6% of 25 to 34 years have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of homeowners (between 75% to 85%).

It can be seen that as the older generation pay their mortgages off as they start to get to retirement and the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago, the private rental sector will take up the slack, as more and more people will want a roof over their head, but won’t buy one but rent one. With Local Authorities and Housing Associations not building houses anywhere near like they the number of houses that they were in the 1950’s, 60’ and 70’s, the private landlord appears to have good demand for their rental properties for many decades to come.

 

 

This will create a polarisation in the housing market between those, mostly older, households who own outright and those, mostly younger, households who rent. Our housing market is very much turning into European model. However, all is not lost, the younger generation will inherit their parents properties, which in turn will enable them to buy, albeit later in life.

If you are a landlord or thinking of become a landlord, and would like to read more articles like this and other information on the Cambridge Property Market, then please visit the Cambridge Property Blog   http://cambridgeproperty.blogspot.co.uk/

How about a brand new investment oppertunity with a 5.5% yield?

So my fellow bloggers here's an interesting one for you;
Situated on the North side of Cambridge, approximately 3 miles from the train station and the centre of Cambridge and easy accessible to Cambridge Science Park and Cambridge Regional College. The Campkin Road development offers a great location for public transport with Bus and Guided Bus a short distance away. This is an exciting new development with both two and three bedroom houses available to buy off plan with TuckerGardner. The one that were considering today is plot 5 which is a 3 bedroom with a suggested price of £350,000.
The site is in the early stage of construction and whilst there is not a marketing suite available at this time, plans can be viewed by appointment at TuckerGardners offices.
This property is perfectly situated to capture the attention of the working professionals at Cambridge's Science park which is within walking distance, not only that Cambridge's new second train station will be scheduled to complete in approximately 12 months time meaning working professionals will be in commutable distance of London too offering a rental yield of a minimum of £550pcm per room, this property would earn you a combined rental income of £1650pcm and a yield of 5.5%
For more details please follow the link below:
http://www.rightmove.co.uk/new-homes-for-sale/property-35866371.html

George Osborne – The Cambridge landlord’s friend?

Well the last few weeks has been rather hectic as Cambridge landlords, some who use us to manage their properties and other landlords who just read our Cambridge Property Blog, have been sending me emails or picking the phone up to me about the new rules on buy to let taxation announced in the recent budget. George Osborne confirmed in the recent summer budget that the tax relief given to landlords on mortgage interest payments, on their buy to let (BTL) properties, would be reduced over the coming years for higher rate income tax payers. The Chancellor said the tax relief that private buy to let landlords (who pay the higher rate of income tax) would change in 2017 from the current 45%/40% and would steadily reduce over the following four years to the existing 20% by 2020.

With 25% of residential property in Cambridge being privately rented (as there are 13,862 privately rented properties in the City), these changes are potentially something that will not only affect most Cambridge landlords, but also the tenants and the wider property market as a whole. The choice of rental properties could drop, especially at the top end of the market which could push up rents.

However, Cambridge landlords could protect themselves by reassigning one or more rental properties into a company structure (e.g., a Limited Company, Partnership or Sole Trader) and by doing so, the total tax paid is greatly reduced, because a company only pays tax on the profit. Nonetheless, before everyone goes off setting up companies for their BTL portfolios, it must also be noted, if a sole trader firm is started, stamp duty needs to be paid, yet if the owner is in business with a partner, they could enjoy some stamp duty relief.  The biggest tax variation is Capital Gains Tax (CGT) where the tax bill will be much higher when you come to sell your portfolio. In essence, by going into business with your BTL properties, you will potentially have a modest stamp duty to pay when you start, but you will have a lot less monthly tax to pay, irrespective of the interest rate, but the CGT bill will be much higher when you come to sell ... as you can see, it is not a ‘get out of jail card’. Now it must be remembered, I am not a tax advisor, so you must take advice from a qualified person (more of that later).

Those planning to purchase a BTL property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make. However, I am not that concerned, as the scaremonger reports fail to see the fact that two out of three BTL properties that have been bought since 2007 have been purchased without the support of BTL mortgage. With those two thirds of landlords paying cash for the purchase of their rental properties, that means two thirds of landlords will be totally unaffected by the changes.

So what of the future? The British love their Bricks and Mortar, it’s an asset that they can touch and feel and has a 70 year track record of capital growth that has out stripped inflation. Buy to let will still be attractive to Cambridge investors and let me explain why. If you invested £40,000 in Cambridge property in September 1987, today it would be worth £145,589. If you had invested the same £40,000 in to the London Stock Market (the FTSE 100 to be exact), it would be only be worth £114,506 today, whilst Inflation would have taken the original £40,000 and pushed it up to £83,127.

It’s true some central London landlords relying solely on the tax breaks rather than high yields may be forced out of the market, but even those landlords could seek to recoup any losses by increasing rents. However, those landlords may leave the market and this could constrict the availability of rented houses even more than it is already, increasing rents and thus pushing yields even higher for landlords and BTL investors still in the market... thus attracting new landlords into the market because of those higher yields.

The reality is, there is too much demand and not enough supply of homes for people to live in in the City. Official figures show the population in Cambridge is rising by 1,500 persons per year (i.e., demand rising), but only 405 properties are being built each year (i.e., supply is low). This sets up the Cambridge (and UK) property market to continue to create strong and steady returns, irrespective of any tax loophole being there (or not as the case maybe).

If the demand is there, I am happy to organise an informal seminar with a local Cambridge accountant one evening, whereby they can show you the options available and what might be best for you. Therefore, if you are interested in attending, please drop me an email to cambridge@northwooduk.com and we will be able to get something organised very soon.

Heres one for the buyer that's looking for somewhere simply great to live.

It's not often I do this but here a property perfect for the landlord that's looking simply for somewhere to live, Of course its an investment as this property will certainly go up in value. For sale with TuckerGardner with a guide price of £375,000 and if you was to rent it out it would rent for £1300pcm offering you a yield of 4.1% but as I stated earlier this rare post is for the landlord that looking for somewhere great to live, settle and enjoy the increase in value.

This charming home has been tastefully renovated throughout by the current owners and includes a newly fitted kitchen and family bathroom. The entrance hall provides access to the two reception rooms. The well proportioned living room benefits from a dual aspect and wood burning stove. The dining room is light and airy, also with a dual aspect overlooking the side and front garden.

The kitchen has been fitted with a contemporary range of units, sympathetically finished with solid oak worktops, engineered oak flooring, and integrated appliances including a fan assisted oven, induction hob with extractor over and space for additional appliances. The bright rear hallway provides shelving, storage and access to the under stair cupboard and rear garden.

For full details on this property and more pictures please see the link below:
http://www.rightmove.co.uk/property-for-sale/property-35859408.html?premiumA=true

4 bedroom detached house for sale offering almost a 5% yield with scope to gain more.

Emove are offering this attractive modern four bedroom detached property for offers in the region of £375,000. Occupying a corner plot in a favourable quiet cul-de-sac location on the southern edge of the town, two minutes walk to a bus stop and convenience store make this property extremely attractive.

The property benefits from a beautifully fitted Kitchen / breakfast with integrated dishwasher, fridge, freezer, oven and grill, utility room, separate dining room, lounge, cloakroom w.c., Master bedroom with en suite shower room and fitted wardrobes, three further good size bedrooms and a modern bathroom. Other benefits include South facing landscaped garden with shed, front garden providing off street parking, garage, Gas central heating, New front and back doors, partial double glazing and a boarded loft, all of this combined make this property extremely lettable without you having to lift a finger? This property would let between £1400pcm and £1500pcm with the current market I would expect you to hit the higher end fast offering you a yield of 4.8%.
Of course if you was to go down the route of splitting the tenancy then you could ask for £500pcm per room taking your income to £2000pcm and raising your yield instantly to 6.4%

For further information and pictures please see the link below:
http://www.rightmove.co.uk/property-for-sale/property-35775714.html

Cambridge Landlord’s mortgages top £777 million!

The Brits can’t stop talking about property. The hot topic of discussion at the posh dinner parties of Fulbourn, Grantchester and Barton’s movers and shakers is the subject of the Cambridge 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? 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 remortgaging their own home) which for an average Cambridge terraced house, would mean finding £104,530 for the deposit (as the average Cambridge terraced house is currently worth £418,121) 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 4,150 Cambridge landlords owing in excess of £777 million in mortgages on those Cambridge buy to let properties.  An impressive amount when you consider Cambridge only has 0.389% 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 remortgage 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 Cambridge Property Market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Cambridge Property Market before others, enabling them to buy better properties at better prices. For example, did you know that detached properties are selling for around 30% lower than 12 months ago in Cambridge yet semis are selling for 21% 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 Cambridge Property Market is the Cambridge Property Blog, where you will find many articles just like this. http://cambridgeproperty.blogspot.co.uk/