The Brits can’t stop
talking about property. The hot topic of discussion at the posh dinner
parties of Grange Gardens, Hampstead Heath and Frognal’s movers and shakers is
the subject of the Hampstead Property market, but in particular, buy to let.
These people are buying up buy to let properties quicker than an ace Monopoly
player .. or so it would seem if you read the Sunday papers. So is the buy to
let market a sure fire way to make money?
Is it something everyone should be jumping into? The answer is Yes and
No to all those questions!
Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which for an average Hampstead terraced house, would mean finding £527,083 for the deposit (as the average Hampstead terraced house is currently worth £2,108,333) and borrow the rest with a low interest rate buy to let mortgage. Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it??
Let us not forgot that the half of one per cent Bank of
England base rate is artificially low. The international money markets can be
fickle and if interest rates do rise quicker and higher than expected because
of some unforeseen global economic situation, that monthly profit will soon
turn into a loss as the mortgage will be more than the rent. Even though
tenants are staying longer in their rental property, tenants still come and go
and my guidance to landlords is they should allow for void periods, plus the maintenance
costs of a rental property and of course, agents fees. .. all things that eat
into that profit.
Interestingly, by my calculations, there are approximately 519
Hampstead landlords owing in excess of £97 million in mortgages on those Hampstead
buy to let properties. An impressive amount
when you consider Hampstead only has 0.049% of all the rental properties in the
Country. It really does come down to a number of important factors going
forward to ensure you are water tight for the future. A lot of my existing
landlords are fixing their mortgage rates. One told me that the Metro Bank are
currently offering a 5 year fixed BTL remortgage rate at 3.79% for 5 years
(based on a 75% loan). I don’t give financial advice, so you must speak with a
qualified mortgage advisor.. but that sounds very fair!
However, one thing I do know is that buy to let is a long
term investment, it’s a ten, fifteen, twenty year plan and property prices will
go down as well as up. You wouldn’t dream of investing in the stock market
without advice, so why invest in the Hampstead Property Market without advice?
We give bespoke detailed advice to our landlords to enable them to spot trends
in the Hampstead Property Market before others, enabling them to buy better
properties at better prices. For example, did you know that flats are selling
for around 3% lower than 12 months ago in Hampstead yet terraced properties are
selling for 53% more (with every other type in between). This means we can
advise on which properties will go up in value better (or lose less if property
prices drop), we can also advise which have lower voids and which properties
have higher maintenance issues.
Information on the local property market and ability to
process it is the strongest asset we can give you. As Lois Horowitz, the famous
author says,”Not having the information
you need when you need it leaves you wanting. Not knowing where to look for
that information leaves you powerless. In a society where information is king,
none of us can afford that”. One place to find information on the Hampstead
Property Market is the Hampstead
Property Blog, www.NW3propertyblog.com
where you will find many articles
just like this
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.
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