A Great Spring Offer for Buy-to-Let Landlords

A Great Spring Offer for Buy-to-Let Landlords

I always like to give my readers the best information about the Rotherham property market and here’s my latest top tip: from April through to June, Bricknells Rentals have reduced the set up costs to £50 + VAT with no hidden extra set up fees.

If you are a prospective buy-to-let landlord this could be the deal for you to reduce your costs as you look to rent your property to tenants in Rotherham. Check out the full details in the promotional image below. You can get in touch with Bricknells Rentals directly or contact me for more information.

Bricknells Rentals Promo Apr 17

Buy-to-let Update: Rotherham rents rise by 16.7% since 2005

Buy-to-let Update: Rotherham rents rise by 16.7% since 2005

The property market here in Rotherham is a very interesting animal and has been particularly fascinating over the last 12 years in the case of Rotherham rents and house prices.

There’s currently much talk of what will happen to the rental property market post-Brexit. To judge that, we must remain rational and methodical by looking what happened in the 2008/9 credit crunch (and what has happened since). From there we can see the possible ramifications for long-term investors in the local property market.

An important yet overlooked measure is the performance of rental income vs house prices (i.e. the resultant yields over time). In Rotherham (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years.

Today rents are 16.7% higher than they were at the beginning of 2005.

In fact, over the last five years, the average growth has been 0.9% per annum. From a landlord’s point of view, this increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – inflation.

Turn the clock back to 2005, and we have a property being rented for say £900 a month and that is still being rented at £900 a month today, in spring of 2017. While the landlord is not getting any less income, this £900 is no longer worth as much due to a bigger rise in inflation during the same period. Total inflation since 2005 has been 38.5%. This means when we compare rents in Rotherham to inflation since 2005, Rotherham landlords are worse off today from their monthly rental income than they were in 2005 by 21.8% in real terms.

Don’t forget property values!

However, rental income is not the only way to generate money from property – property values can also increase.

Although in the short term, cash flows are diminishing, many Rotherham landlords may be content to accept that for a colossal increase in capital value. For example, in Rotherham:

Property values have risen by 23.1% since 2005

This equates to a reasonably salubrious 1.92% per annum increase over the last 12 years. Even more interesting is that this includes the 2008/9 property crash – a fact that will make landlords and investors feel a little better about the information regarding rents after inflation.

Rotherham-property-rent-rise-2005

Moving forward, the prospects of making easy money on buy-to-let in Rotherham have diminished compared to the previous decade. In 2005, making money from buy-to-let was as easy as falling off a log… this is just not the case anymore.

I am often asked to look at my landlord’s rental portfolios so studying and comparing rental prices and house prices is valuable. To ascertain the spread of your investment across multiple properties it’s important to judge whether what you currently have will meet the needs of the investment in the future. It’s the balance of capital growth and yield, whilst diversifying this risk.

If you are investing in the Rotherham property market, do your homework and do it well.

While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice and even ask your agent for a portfolio analysis. The majority of agents in Rotherham will be able to give a detailed analysis of past and anticipated investment opportunity (especially the awful effect of inflation) on your portfolio. However, if they can’t help – well, you know where I am! The kettle is on so please get in touch.

You can also follow me on Facebook or Twitter for the latest news about the Rotherham property market and further afield.

Rotherham Rents To Rise More Quickly Than Property Prices In Next 5 Years

Rotherham Rents To Rise More Quickly Than Property Prices In Next 5 Years

The next five years will see an interesting change in the Rotherham property market.

My recent research has concluded that the rent private tenants pay here will rise faster than the property prices over the next five years. This will create further issues for Rotherham’s growing multitude of renters.

My examination of statistics forecasts that:

By 2022, Rotherham rents will increase by 22%,
whereas Rotherham property values will only grow by 16%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Rotherham have risen by 12.4%, whilst rents have only risen by 7.8%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up. The press have predicted some landlords will reduce their portfolios in the next couple of years but this means Rotherham tenants will have fewer properties to choose from. The result is that rents will be pushed higher. In fact, talking to fellow property professionals in our town, there appears to be a shortage of new rental properties coming on to the Rotherham lettings market.

Property-values-vs-rents-5-years

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Conservative government has changed the way landlords are to be taxed for buy-to-let properties. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector.

They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords… if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the council houses were sold off in the 1980s!)

With the challenges ahead, house price inflation will be tempered over the coming five years in Rotherham.

As I have discussed recently, the number of properties on the market in Rotherham remains close to the historic low, which is both good and bad – it keeps house prices relatively stable, yet it impedes choice for buyers.

As a result, I believe property values in Rotherham will only be 16% higher in five years time.

On the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Rotherham people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses (because they have no money), the average rent will rise.

The current the average rent for a Rotherham rental property currently stands at £471 per month.

Over the next five years, I predict the average rent
in Rotherham will rise to £575 per month.

These are interesting times.

There is still money to be made in buy-to-let in Rotherham. Rotherham landlords will just need to be smarter and more savvy with their investments. To help, I’ve put together information on some of the best properties on the local market that could prove to be shrewd investments for buy-to-let landlords – check them out! I’ll be updating this regularly. In addition, free to follow me on Twitter and on Facebook for my latest insights and opinions. Finally, if you would like my personal advice please get in touch. I am always happy to help.

Only 768 Properties For Sale in Rotherham

Only 768 Properties For Sale in Rotherham

2017 has started with some positive interest in the Rotherham property market. Taking a snap shot of the property market during the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to 12 months ago:

number-properties-for-sale

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 768 properties for sale today compared with 853 a year ago, a drop of 10%.

Rotherham asking prices are 6% lower compared to a year ago

With that in mind, I wanted to look at what property was actually selling for in Rotherham.

Taking my information from the Land Registry, the last available six months property transactions for S60 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

Screen Shot 2017-03-23 at 15.33.54

So what does all this mean for the property owning folk of Rotherham?

Well, with less property on the market than a year ago and asking prices 6% lower, those trying to sell their property need to be mindful that buyers have much more price information about the Rotherham property market at their fingertips than ever before.

Those in the area who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market.

Over the last 12 months, I have noticed the approach of a few Rotherham estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books.

The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer.

When the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the property market here in Rotherham has an unassailable demand for property there is one saying that always rings true…

…as long as the property is being marketed at the right price it will sell.

If you want to know if your Rotherham property is being marketed at the right price, send me a link and I will give you my honest opinion.

How you could make Money by Investing in the Rotherham Property Market

How you could make Money by Investing in the Rotherham Property Market

Investing in Rotherham buy-to-let property is different from investing in the stock market or depositing your hard-earned cash in a building society.

Investing in a building society is considered by many to be a safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!)

Another investment is the stock market, which can give good returns, but unless you are on the phone every day to your stockbroker, most people invest in stock market funds. As a result, the investment is quite hands off and one always has the feeling of not being in control.

However, with buy-to-let, things can be more hands on.

One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar.

It is this factor that attracts many of Rotherham’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game.

When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Rotherham. The value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.

Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

So, over the last five years, an average Rotherham property has risen by £22,950 (equivalent to £12.58 a day), taking it to a current average value of £141,900.

Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

Flipping property – a different way to make money?

flipping-property

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping – buying a property, carrying out some minor cosmetics and reselling it quickly).

I have seen several investors recently who have made decent returns from this strategy. For example …

This demonstrates how the Rotherham property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy-to-let Rotherham landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Rotherham people may be giving up on owning their own home and are instead accepting long term renting. Buy-to-let lending continues to grow from strength to strength.

If you want to know what (and what would not) make a decent buy-to-let property in Rotherham, then please get in touch with me. I am happy to give advice. More in-depth insight and knowledge is of course available within this blog and on my Twitter and Facebook pages.

Rotherham’s ‘Generation Trapped’ and the £3.64bn legacy

Rotherham’s ‘Generation Trapped’ and the £3.64bn legacy

My concern for the Rotherham landlords and homeowners is the older members of the population in our town.

I recently wrote an article about the plight of those in their 20s who are often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent.

In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament.

The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Rotherham homeowners and landlords, as I discussed a couple of months ago, is our mature members of our population. In that previous article, I stated that the current OAPs (65+ yrs in age) in Rotherham were sitting on £1.59bn of residential property.

However, I didn’t talk in depth about the ‘Baby Boomers’ in the 50-64 age bracket.

Baby Boomers: what are their properties are worth – and more importantly, how is this current state of affairs holding back the younger ‘Generation Rent’?

In Rotherham, there are 6,664 households whose owners are aged between 50 and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £947.2m.

There are an additional 8,110 mortgage free Rotherham households, owned by Baby Boomers which is worth £1.15bn in today’s prices.

This means that, in total…

Rotherham Baby Boomers and Rotherham OAPs are sitting
on £3.64bn worth of Rotherham Property

total-value-property-oap-babyboomers

These Rotherham Baby Boomers and OAPs have 25,626 Rotherham properties. Many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’ in the title to this article.

Recently, the English Housing Survey stated 49% of the properties owned by the Generation Trapped are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed).

These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize. Compare this with the USA where one in five downsize.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving.

The United for all Ages charity suggested recently that people are put off by

  1. the lack of housing option
  2. the hassle and cost of moving
  3. having to declutter their possessions
  4. family reasons such as staying close to children and grandchildren.

Helping mature Rotherham homeowners to downsize at the right time will also enable younger Rotherham people to find the homes that they need.

This would mean that every generation wins, both young and old.

However, to ensure downsizing works across the country we need to provide more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers. Additionally, our local Council and the Planning Dept. should play their part, as should landlords and property investors to ensure Rotherham’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.

If you need advice about downsizing I would be happy to help. Please get in touch with me.

Please follow me on Twitter or Facebook to hear about the latest goings on in the Rotherham property market. Let me know what you think of the blog and my thoughts about ‘Generation Trapped’

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