Are Attitudes to Home Ownership changing in Cambridge?

Speaking to a Bank Manager the other day in Cambridge, we got talking about the state of the Cambridge property market and whether we, as a Country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job etc.

Even though a recent report by the Halifax stated homeownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice.  In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the claim that they are not buying property at the moment because of a lack of sufficient wages and by the high level of deposits in Cambridge, if a couple, both on the average Cambridge salary of £31,036 pa, assuming they had a reasonable credit history they would be showered with lenders offering them a 95% mortgage (a reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed just one credit card payment won’t mean you have messed up your credit score and your ability to get a mortgage) and they would need to find a sizeable, but nothing stratospheric, £12,800 as a deposit to buy a decent two bed town house or a very nice modern two bed apartment...  it comes down to the perceived capability of the youngsters in Cambridge to buy nowadays.

Interestingly, when I looked at the Cambridge figures, the average Cambridge tenant has a much younger profile than the English and Welsh average (the sub 24 year old can be partly explained by University, but it is the 25 to 34 year olds that are the surprise), as can be seen from the graph below.

So what does all this mean for Cambridge landlords and future Cambridge landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although homeownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home

As the local authority aren’t building any properties in Cambridge, people still need a roof over the head, and that is why, as I mentioned a few weeks ago in the Cambridge Property Blog, the demand for rental properties will only continue to steadily rise in the coming decade. If want to know where the Cambridge Property market is heading and where you should (and shouldn’t buy), maybe the one place you should visit is the Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/or send me an email to cambridge@northwooduk.com

  

4 bedroom detached house for sale with a yield of over 5%

This perfect investment property is up for sale with Haart for £450,000 and boasts 4 large bedrooms which are perfect for letting to working professionals, sharers or a family making this property great for capturing tenants.

This property also boasts location being situated close to Cambridge's main and extremely popular Addenbrookes Hospital and has a low maintenance garden making this the perfect let. Being decorated to a great standard and having large rooms all round this property would let for around the £2,000pcm mark with a potential to reach higher giving you a minimum yield of 5.3%

To see more images of this great property investment please see:
http://www.rightmove.co.uk/property-for-sale/property-45250654.html

Your Pension could now buy you a Buy to Let property in Cambridge

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Cambridge property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions unprecedented access to their pension pot and the freedom to look for alternatives.
In a nutshell, after the 6^th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year) .
.. and now the good news!

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Cambridge are in the order of 3% to 5.5%.
The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Cambridge is 18 years and 9 months (its only 18 years 1 months in Peterborough). If we roll the clock back 18 years 9 months to June 1996, property values in Cambridge have risen by 209.5% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).

So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (ie low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce a high returns (ie high yields) but low capital growth (ie how much the value of the property goes up). Now, I am not financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Cambridge property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Cambridge Property market can always be found on the Cambridge Property Blog  http://cambridgeproperty.blogspot.co.uk/