The Council of Mortgage Lenders (CML) latest snapshot of the
buy to let mortgage market shows us that buy to let landlords haven’t been put
off by the Chancellors announcements on the way buy to lets are taxed.
Last month, the CML stated £1.4billion was borrowed by UK
landlords to purchase 10,500 buy to let properties, up 26.5% from the same
month in 2014, when only 8,300 properties were bought with a buy to let
mortgage. Go back two years and the number of buy to let mortgages used for
purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has
been the fact that the average amount borrowed has risen as well. The average
buy to let mortgage last month was £133,330, up from £128,480 a year ago.
In Hampstead, I am speaking to more and more landlords, be
they seasoned professionals or FTL’s (first time landlords), as they read reports
that the Hampstead rental market is doing reasonably well, with rents and
property values rising. Interestingly, one landlord recently asked how much he
should be paying per square foot (more of that in a second).
The first thing you have to decide is whether you want great
capital growth or great rental yield, as every knowledgeable landlord knows,
you can’t have both. Over the last twenty years, property values in Hampstead
have risen by 582.81%, compared to Kensington and Chelsea’s 606.08%. This has proved
that capital growth increases faster in more expensive central London, but your
investment money doesn’t go very far, meaning there won’t be as much rental
yield from a 1 bed apartment in Chelsea (2% per year at best with a fair wind)
compared with a 2 bed apartment in Hampstead. However, whilst the figure of 582.81%
is an average for the area, certain parts of Hampstead have seen capital growth
much higher than that and other pockets much worse (we have talked about those
in previous articles).
If you recall in an earlier article, my research reveals that
Hampstead apartments tend to generate a better yield than houses, probably
because several sharers can afford to pay more than a single family. But houses
tend to appreciate in value more rapidly and may well be easier to sell, simply
because there are fewer being built.
So what should you be buying in Hampstead, and more
importantly, how much?
- · The average apartments in the area are currently selling for approximately £1,204 per square foot.
- · Terraced houses in Hampstead are currently obtaining, on average, £2,294,100 or £1,267 per square foot.
- · An average semi in Hampstead is selling for £3,583,900 and achieving £1,424 per square foot.
Now these are of course averages, but it gives you a good
place to start from. In the coming weeks, I will look at rents being achieved
on Hampstead houses and apartments, and the yields that can be obtained,
depending how many bedrooms there are. In the meantime, if you would like to
read more articles like this, then can I suggest you visit the Hampstead Property
Blog 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.
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