The 5th of March 2009 was the date Mervyn King,
the then Bank of England Governor, slashed UK interest rates to the unparalleled
figure of 0.5%. In just under five months, starting on 8th October
2008, the rate had come down from 4.5% to that low figure, all in an attempt to
ensure the British economy survived the worldwide credit crunch. Now as we deck
the halls with bows of holly nobody expected that, over six years later, rates
would still be at that low level.
In the summer, people were predicting a rise in the New
Year, yet now, some forecast it may remain the same for years to come the due
to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr
Carney at Threadneedle Street, but merely a humble letting agent from Hampstead,
so I can not profess to know what will happen to interest rates. However, what
I do know, speaking to my Hampstead friends and Hampstead landlords is that
these low interest rates have hit savers really hard.
If you added up everyone’s bank and building society savings
in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3
trillion), most of which is earning a pittance in interest. That is why
more and more 40 and 50 year old Hampstead landlords have been investing some
of that cash into bricks and mortar, as they search for a low risk investment
opportunity.
Buying a Hampstead buy to let property isn’t risk free, but
there are certainly things you can do to mitigate and lower one’s exposure to
risk. You see by buying a rental property, it potentially offers an enigmatically
decent proposition in terms of being able to obtain attractive returns that beat
inflation and savings accounts, yet without taking the levels of risk
associated with stock markets.
The UK residential property market has long been the safest
form of collateral for lenders of all varieties. Against a backdrop of a
greatly changing economic environment, Hampstead house prices have been extraordinarily
robust, increasing by over 3313.9% between 1974 and today. Some will say there
have been significant property price falls, namely in 1975, 1988 and 2008, yet
each time after this has been followed by an upturn in property values. For the
record, the stock markets in the same time frame only rose by 432.5%!
.. and that is the best thing about buy to let property. Unlike
the stock market, with its unfathomable equities, shares and bonds, that nobody
really understands (as they are controlled by some faceless whizzkid in Canary
Wharf!) with a buy to let property, landlords can take control and
understand their investment .. in fact you can touch and feel the bricks and
mortar investment.
.. but before you go
out and buy any old Hampstead property, plenty of landlords still get it wrong.
You have to be aware of your legal responsibilities when it comes to tenant
safety, tenants deposits, energy certificates and in the new year, landlords will
have the added responsibility of checking the immigration status of prospective
tenants. Get it wrong and big fines and even prison is an option – but that’s
why many agents use a letting agent to manage their property for them.
Next, you have to buy the right property at the right price.
Recently I have seen some really heart breaking situations in Hampstead and the
immediate area, of people paying way too much for a property, only to lose out
when they came to sell. One example that comes to mind is that of a property
owner in one of those apartments in De Laslo House on Fitzjohns Avenue,
conveniently located for Swiss Cottage Underground station and a short walk
from Hampstead Underground station and Hampstead Village .. a stunning three bed apartment, 145 sq
metres inside (1560 sq ft in old money) sold in October 2012 for £2,000,000. In
the summer, it only obtained £1,950,000, a drop of 2.5% or 0.93% a year - a
very disappointing result.
www.NW3propertyblog.com
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.
No comments:
Post a Comment