Crisis in the Hampstead Property Market ..probably?

I don’t know about you, but if you watch Sky News every waking hour or read the newspapers, it always seems we as a Country, Europe or the World seem to lurch from one crisis to another. Another week, another crisis averted. It was only last summer the soothsayers were predicting the end of the world over the supposed house price bubble that many believed was developing in the South. 

Property prices were rising at 20%+ per annum in London, only for things to ease as the property market in the Capital showed a controlled slowdown and cooling in activity with price growth easing to a more realistic 8% to 9% per annum. Interestingly, there was no panic when some modest price drops were seen in some of London’s highest priced suburbs.

However, this month’s crisis is the buy to let boom and as George Osborne always likes to be topical, in the July emergency budget, he declared that he will start to scale back, from 2017, the tax relief that those high income tax rate landlords with a mortgage have benefited from. The Daily Mail ran headlines stating it was the end of the private landlord; predicting many landlords will give up on buy to let altogether and we will be inundated with rental properties up for sale as landlords feel squeezed from the market.

Even Mr Carney, the Governor of the Bank of England, recently cautioned that the buy to let property market could destabilise the whole UK property market. He was concerned landlords who bought with high loan to value mortgages could be spooked if there is a property crash, they would panic because of negative equity, sell cheaply, which would worsen house price falls.

End of the world then?   .. this week, yes probably, but next week .. that’s another story!  Before we all go and live like a hermit in the Scottish highlands, let me explain to you my perspective on the whole subject. As I mentioned a few weeks ago, two thirds of buy to let properties bought in the last eight years have been bought mortgage free – so they won’t be affected by the Chancellors’ tax changes.  Also, something I feel is often overlooked but very important, is the fact that landlords historically have only been able to normally borrow up to 75% of the value of the rental property.  In the last property crash of 2008, property values dropped by the not so insignificant figure of 15.19% in Hampstead, but even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Hampstead.

I believe we have a case of ‘bad news selling newspapers’ and I believe that buy to let, and the property market as a whole, will carry on relatively intact. It’s true reducing tax relief will hit landlords who pay the higher rate of income tax and this may slightly diminish buy to let as an investment vehicle, but I doubt people will sell. Many landlords have been lazy with their investments, buying with their heart, not their head. You would never dream of investing in the stock market without doing your homework and talking to people in the know. If you want to make money in the Hampstead property market as a buy to let landlord, it’s all about having the right property and as you grow, the right portfolio mix to offer a balanced investment that will give you both yield and capital growth.

The Hampstead buy to let market still offers good investment opportunities to new and old alike. Those who have bought in the last twelve to eighteen months have reaped the benefit from buying in Hampstead, because the borough offered a combination of reasonable house prices with subsequently increasing rents. Property values have risen by 13.33% in the last eighteen months in Hampstead, whilst looking at rents, in Q2 2015, average rental values for new tenancies were 10.1% higher than Q2 2014, and they rose by 9.4% between Q2 2013 and Q2 2014.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Hampstead Property Blog where I have similar articles to this about the Hampstead property market and what I consider to be the best buy to let deals around at anyone time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Hampstead .. you are missing out! .......... www.NW3propertyblog.com

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Follow The Buy-To-Let Property Investment Market in Hampstead

Hampstead Property Market LinkedIn Page

Ashmore Residential Hampstead Facebook Page

Ashmore Residential Hampstead Twitter Page

Hampstead Investment Property Specialist Ashmore Residential Website

NW3 Eye Candy- Property of The Week - Westover Hill NW3

This weeks pick is a contemporary house on Westover Hill which is discreetly located off West Heath Road. This house has six bedrooms, a large garage that will accommodate 2 cars, 5 further bathrooms and three bathrooms. At the entrance level , the house has a superb integrated kitchen with all the expected machines and beautifully crafted wall and base units.

The house has a modern feel throughout, though there is great attention to detail here with the materials and colour schemes complementing each other without compromising on quality. On the ground floor there are 4 reception rooms, offering formal dining areas and living/entertaining space. If your feeling sporty, there's an indoor swimming pool and a gym, you can relax with a drink afterwards in the Cinema room and watch your favourite film. With over 5000 sq ft of living space on offer,this house is a wonderful playground with much to enjoy from every room.

This house has a quiet residential location and the amount of space on offer make it ideally suited to the growing family and for those who entertain at home frequently.The superb amenities make it ideal for modern 21st century living offering all all that you would aspire to.On the market with big house brokers Bargets for £5.95 million , click on the link below for more eye candy!

 http://www.zoopla.co.uk/for-sale/details/36430722

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Follow The Buy-To-Let Property Investment Market in Hampstead

Hampstead Property Market LinkedIn Page

Ashmore Residential Hampstead Facebook Page

Ashmore Residential Hampstead Twitter Page

Hampstead Investment Property Specialist Ashmore Residential Website

2 bedroom flat Buy to Let investment- Crayford House , Lawn Road NW3

For today, I've picked out another 2 bedroom flat in this block located on Lawn Road. This flat is in  a well kept ex-local authority block on Lawn Road, close to Hampstead Heath and Belsize Park tube. There are well maintained communal gardens, so the block has kerb appeal when you pull up outside and being on the 11th floor there are some great views on offer too.

Investment opportunity - Agincourt Road NW3

Back to the Mansfield Conservation area today which is just round the corner from The Heath and this two bedroom ion Agincourt Road caught my eye.  Location is pretty handy being a short walk to Hampstead Heath mainline station, The Heath, all the shops on South End Road and just 5 minutes to the tube at Belsize Park.

Buy to let Investment - Provost Court Eton Road NW3

The pocket of roads around Chalk Farm tube are the current buy to let hot spots in the NW3 area. For today, I've picked out this one bedroom flat in Provost Court, Eton Road, just a moments walk to Chalk Farm tube, Primrose Hill Village and local shops on Haverstock Hill.

George Osborne – The Hampstead landlord’s friend?

Well the last few weeks has been rather hectic as Hampstead landlords, some who use us to manage their properties and other landlords who just read our Hampstead 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 36.1% of residential property in the Westminster Parliamentary Constituency of Hampstead and Kilburn being privately rented (as there are 21,066 privately rented properties in the area), these changes are potentially something that will not only affect most Hampstead 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, Hampstead 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 Hampstead investors and let me explain why. If you invested £125,000 in Hampstead property in September 1987, today it would be worth £620,528. If you had invested the same £125,000 in to the London Stock Market (the FTSE 100 to be exact), it would be only be worth £357,831 today, whilst Inflation would have taken the original £125,000 and pushed it up to£259,771.

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 area. Official figures show the population in Hampstead and Kilburn is rising by 1,519 persons per year (i.e., demand rising), but only 432 properties are being built each year (i.e., supply is low). This sets up the Hampstead (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 Hampstead 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 chris@ashmoreresidential.com  and we will be able to get something organised very soon.

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Follow The Buy-To-Let Property Investment Market in Hampstead

Hampstead Property Market LinkedIn Page

Ashmore Residential Hampstead Facebook Page

Ashmore Residential Hampstead Twitter Page

Hampstead Investment Property Specialist Ashmore Residential Website

3 bedroom flat on Maitland Park Villas with 4% net yield

Back to this popular corner of NW3 which has become popular buy to let territory. This three bedroom flat has come to the market and has double glazing, gas central heating and a decent size balcony off the living room.