Why this might not be good time to get into the Cambridge Buy to let market

 

The buy to let sector in Cambridge, in fact the whole of the East Anglia buy to let sector is doing very well at the moment, but it can be a minefield. I could regale you with many stories where investors have got it tremendously wrong in Cambridge, like those charming and well presented 1930's town houses on Brampton Road in Cambridge. One sold in 2007 for £234,000 in 2007, just before the crash. It sold again in November 2014 for £234,000. It is interesting to note that house prices in Cambridge are on average are 25.8% higher today than the 2007 peak (someone got a bargain!).  The thing is, I still see mistakes being made on a  day by day basis in Cambridge, such as some modern one bed apartments  in the City on the market for the price of a decent  two bed apartments (and in my opinion) much more desirable areas. If you make even a small mistake, it could still prove to be very costly.

Mortgage rates on buy to let are really low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40% deposit and, as I type this, you can get a 5 year fixed rate buy to let mortgage from the Post Office for 3.65%.  Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield that lets easily.

Finally though, if you are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it.  Do not forget, if you spend years building a successful property empire in Cambridge, when you pop your clogs, your family could face an inheritance tax bill of 40 %, which they would have to pay within six months of the death.  In a buoyant market, selling in six months is not an issue, but what if the market was like it was in Cambridge between 2008 and 2012, when things took seasons to sell, not weeks.  Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio, possibly at a discount because the taxman wanted his money so quick, it might be wise to consider some life insurance that will offer protection against inheritance tax.

There are plenty of good advisors in Cambridge that can help you with the mortgages and life insurance.  However, we are a letting agent, so what we can help with is choosing the right Cambridge property to buy.  It’s in our interest to do so, because if we offer the best advice and opinion, without any conflict of trying to sell you anything, you might consider (although there is no obligation) to trust us to manage the property.  If you want to know what the best deals are in Cambridge, then visit the Cambridge Property Blog www.cambridgepropertyblog.com.