As my regular readers know, my passion is talking about Hampstead
property. As a property agent I like to comment on the Hampstead property
market, which I hope will be of interest to both homeowners and buy to let
landlords alike. However, this week, I want to highlight the plight of the tenants
of Hampstead as more and more of their wages are being taken up by ever
increasing rents.
The cost of renting a home in Hampstead has broken through
the £2,000 a month barrier as the average rent for a property in the suburb,
now stands at £2,150 per month, a rise of 1.4% last month, leaving rents for
new lets 3.2% higher than they were 12 months ago. See the graph below.
House price inflation has certainly eased in Hampstead from
the heady days of 2014. The Governor of the Bank of England, Mark Carney, introduced
another round of quantitative easing just after Brexit bringing retail price
inflation (for goods and services) on the rise to 1% compared to October 2015 when it stood at zero. Any increase in
property values, no matter how small, means in real terms property is still
getting more expensive. Meanwhile, many tenants have given up saving for a
mortgage deposit as rents continue to take more and more of their wage packets
leaving nothing to save for a deposit. That means, more and more tenants are
deciding to rent for the long term and therefore the desire for decent high
quality rental properties continues to exceed the available rental stock.
I would go as far as to suggest that rents are an ideal
barometer to the state of the local economy as a whole and strongly believe that
the steady increase in rents over the
past year are a sign that the Hampstead economy
is stable despite the adverse press commentary post Brexit.
This means Hampstead landlords are continuing to capitalise
on the local property market. The most recent Land Registry data suggests the
annual property price rises in the suburb have eased over 2016, leaving
property values only 4.2% higher than 12 months ago, so as property price
growth is easing off, with the increased rents, rental yields are strengthening
for the first time in years to compensate. The mortgage market has been awash
with a range of products, further to the 0.25% cut in interest rates. This has
been of great help to those landlords and homeowners that are now looking to
take advantage of the recent cut in interest rates and consolidate their
finances for the next 3-5 years. Everything is set to be good news for
landlords; even with the Chancellors change of tax rules starting in April 2017
for buy to let mortgages.
You can get some amazingly low mortgage rate deals at the
moment, so with mortgage rates so low and returns still extraordinarily attractive,
there’s rarely been a better time to invest in rental properties.
However, (you knew there would be a however!), it’s all
about buying the right property at the right price. Not all property types are
seeing equal rises in rents and capital growth.
Different parts of the area and types of properties are experiencing
quite different changes. For example,
the average length of time the 728 Hampstead properties up for rent between £1000
to £2000 per month is 26 days, whilst the average length of time the 794
properties at £2000 to £5000 per month is 58 days and 318 properties that fall
into the over £5000 per month price bracket is an eye watering 153 days. When you compare different parts of the Hampstead area the numbers are even stranger ! See the graph below that illustrates the general trends.
The bottom
line is that you must take advice and opinion. One source of advice and opinion
is the Hampstead Property Blog. In the Hampstead Property Blog, you will see
many more articles like this, discussions and even what I consider to be the
best buy to let deals around, irrespective of which agent is selling it
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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