We had an interesting chat with a landlord who uses another letting
agent in Cambridge after he popped into our offices for a coffee. We got talking
about the Cambridge market and thought other landlords might be interested. You
see, whilst we said last week property values stopped dropping in June 2009,
since then, it hasn’t all been in an upward direction as around the Winter of
2010/11, property values in Cambridge dropped six months in a row, albeit only by
only 3.5%, but still a drop all the same.
However, for the last 32 months, we have had growth although increases are
beginning to ease for the first time since the middle of 2012. Now it could be
said this easing of the housing market in Cambridge can be attributed partly to
the time of year (in 2013, property values in Cambridge dropped by 0.3% in
November 2013 (but they bounced back the next month with vengeance), but it is
obvious that estate agents we talk to in Cambridge are beginning to be wary
about the direction of the market as a result of the not as strong demand and
fewer house sales.
This is all good news for landlords looking to buy rental property with
the changes in stamp duty and later in 2015, the new rules regarding pensions, where
you will be able to take money out of your pension pot to invest in property.
However, at the same time, we would say don’t just buy any old property in Cambridge.
First time landlords need to be cautious. The doubling of house prices every
seven to ten years which has taken place since WW2 doesn’t seem to have been
seen since the mid 2000’s. The property market is shifting with more properties
being built and restrictions put on mortgage lending, the likelihood of the property
market increasing at the same levels as the past are questionable. But
investing in property is also about receiving the rent.
On the one hand going for high yielding Cambridge
property to rent out seems an obvious choice, but high yielding property often
doesn’t go up in value that well and in some circumstances doesn’t keep up with
inflation, meaning in real terms you have a depreciating asset
So surely you should pick a property that has
great capital growth then, because of the obvious potential to generate long
term capital profit, especially with inflation eating away at our savings.
However, rental yields on high capital growth properties tend to be low meaning
if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage
payments. If you are unsure what to do, be you a first time landlord or a
seasoned pro, feel free to pop your head round our door or email us
Cambridge@northwooduk.com
