A couple of weeks ago, I mentioned in this blog about how
the Bank of England has been indicating recently that UK interest rates will be
going up in the not too distant future. Therefore, if you are one of the 10,836
homeowners in Hampstead, who own your own home with a mortgage,
then you need to consider your options and start to budget for an interest rate
rise. However, if you are a landlord, who owns one of the 21,066 rental
properties in the area, whilst your exposure to interest rate rises is lower, it
is most certainly something you should be aware of.
Since the spring of 2009, British interest rates have been at
a record low of 0.5% since they were first introduced some 400 years ago. It’s not a case of if, but when, they will
rise. Some people think it will be before Christmas, although I am of the
opinion, it will be early in the New Year around Easter time, when they do rise.
I also expect those rises will be slow, steady and limited. It depends on what happens to UK wage rises, UK inflation and the
general state of the British economy. Nevertheless, as much most of us in Hampstead
would love to pull the shutters and stick two fingers up to the world, we have
to recognise we are part of a global economy and global economic worries still
exist to prevent an abrupt and instantaneous rate rise.
Those Hampstead landlords, who do have a mortgage, need to
realise that as interest rates rise, their monthly mortgage costs rise. It’s
easy to say you will look at your mortgage next month, then before you know it,
Christmas will be here! Don’t forget,
mortgage lenders have always removed the juicy low rate mortgage deals a few
months before interest rate rise. Speak to a qualified mortgage arranger, there
are lots of them in Hampstead and seriously consider fixing your mortgage rate
now. You didn’t buy your Hampstead buy
to let property for it to become a millstone around your neck. It’s all about
mitigating your costs and maximising your income to make your Hampstead buy to
let property the investment you want it to be.
However, on the other side of the coin, two in three
landlords who have bought property since 2007, have done so without a mortgage.
A rise in interest rates might be a good thing. Let me give you some background
first, then I’ll explain why. Hampstead landlords have see their return on
investment for their Hampstead buy to let property, over the last couple of
years, perform very well indeed with Hampstead property values rising by 80.18%
since the Spring of 2009. However, when rates do rise, whilst more expensive
mortgage rates will ease the demand for borrowing, on the other hand, it may temper
house price growth, making the property market more competitive... and
therefore, we should see the return of some bargain property buys in Hampstead!
Finally though, can I ask all Hampstead homeowners and Hampstead landlords, who have a mortgage that isn’t fixed, they need to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels. I am not qualified to give that advice and this is my personal opinion, so please speak to a qualified mortgage arranger and, if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!
In the meantime, if you are a landlord looking for a bargain
now, don’t despair ... there are plenty out there, if you know where to look!
One place is Rightmove, another Zoopla and another OnTheMarket. However,
sometimes, you can’t see the wood for the trees. At the time of writing,
Rightmove had 438 properties for sale in Hampstead, Zoopla 535 properties for
sale in the area and OnTheMarket 399 properties ... where do you start? A lot
of savvy Hampstead landlords like to visit the Hampstead Property Blog www.NW3propertyblog.com where, irrespective of which agent is selling it,
I regularly post what I consider out of the hundreds of properties on the
market, to be the best buy to let deal in Hampstead.
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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