Values of Hampstead Terraced Houses smash through the £1,470/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords have exercised greater caution further to the Chancellor’s announcements on the way buy to lets are taxed and the revisions in Stamp Duty on second homes and or investment property.

Last month, the CML stated just over £1 billion was borrowed by UK landlords to purchase 7,700 buy to let properties, down 26.5% from the same month in 2015, when 8,300 properties were bought with a buy to let mortgage. Much of this activity was in the first quarter of 2016 with purchases brought forward of the Stamp Duty rises from April.  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 £138,180, up from £133,330 a year ago. The CML’s report also emphasises that Stamp Duty rise and new taxation rules will cause lending volumes to ease back. Buy to let activity has accounted for 9% of all property transactions this year, much lower than in the 2006-2008 periods, it has fallen below 2015 levels with activity in 2017 to fall below the level in 2014. 

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 has a been a mixed bag with rents flat lining in the last quarter with only slight rises in values. Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a moment).

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, for how much?

1.  Apartments in the area have an average value of £1,093, 289 approximately £1,303  per square foot.
2.   Terraced houses in Hampstead are currently obtaining, on average, £2,090, 579 or       £1,475 per square foot.
3.   An average semi in Hampstead is selling for £2,804,725 and achieving £1,495 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. 

If you have an investment in mind I can help with a range of things such as advise on properties that will get you the best returns whilst complying with all current regulations or on how to maximise the income potential of your current asset(s). I can also introduce investment/refurbishment opportunities that will enable you to create value and give you decent returns. If you are interested to work with me then get in touch chris@ashmoreresidential.com  or pop in to the office for a chat, I’m just on Heath Street, 50 meters from Hampstead Tube.

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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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