735% Return for Flitwick and Ampthill Buy To Let landlords since 1999?

735% Return for Flitwick and Ampthill Buy To Let landlords since 1999?

Buy to let is essentially different from investing in stocks and shares or putting money in the Building Society. Whilst these other investments (Building Society Passbooks, Stocks and Shares etc) are passive ie once the money has been invested it you leave it alone, with buy to let, things are more hands on, in fact it’s almost a business. One thing the landlords I speak to say is the fact that they like buy to let because it is both an investment as well as a business. It is this factor that attracts many of my Ampthill landlords – they are making their own decisions rather than entrusting them to others (such as City Whiz Kids in London playing roulette with their Pension Pot).

So if you are investing in the Ampthill property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, this has been strong in recent times in Ampthill, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you - hopefully this will grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

I was talking to a landlord who bought a terraced house in the Morris Gardens area of Ampthill. He bought a very pleasant 3 bed terraced house in 1999 for £77,500. It sold again in December just gone for £219,995 a rise of 183.86% in just over 15 years – a compound annual return of 7.20%

However, the real returns are for those Ampthill landlords who borrowed money to purchase their buy to let property. They have made significantly higher returns than those who paid 100% cash. If the landlord had borrowed 75% of the £77,500 purchase price of the Morris Gardens terraced house on an interest only 75% mortgage, he would have only needed to invest £19,375 (as his 25% deposit... borrowing the remaining £58,125), but his £19,375 would be worth today, £161,870  (£219,995 less £258,125 interest only mortgage)... a rise of 735.45% - a compound annual return of 15.20%... and I haven’t even mentioned the rent he would have received in those 15 years!

This demonstrates how the Ampthill buy to let market has not only provided very strong returns for average investors since 1999 but how it has permitted a group of motivated buy to let Ampthill landlords to become particularly wealthy. In fact, if this landlord had continued to remortgage the property as it went up in value, he could by our reckoning have had an additional two or three properties (albeit with larger mortgages but greater future potential).

As my article mentioned a few weeks ago, more and more Ampthill people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what would (and would not) make a decent property to buy in Ampthill for buy to let, then give me a call or email and arrange to come in for a coffee at 1st House Lettings, 21 The Rufus Centre, Steppingley Road, Flitwick, MK45 1AH - Just by the new leisure centre that currently being built.

Auction Result - £135,000 for Two Bed Cottage in Houghton Conquest

http://www.rightmove.co.uk/property-for-sale/property-52541852.html

On 4th June I posted about the property above going for auction, so I went along yesterday to see how much interest there was and what it sold for. There were quite a few in the auction room, around 100 people i'd guess, going after 10 Lots. One was withdrawn prior due to a planning issue, and another didn't meet the reserve, but all others sold. The room nearly emptied after Lot 9 sold - a plot of land in Stanbridge, guided at £30k. This eventually sold for £131k! 

The cottage in Houghton Conquest was the last lot of the day, and hardly anyone was left in the room. Bidding started around the guide of £120k and slowly increased in £1k bids between two people, then £500 bids to reach £131,500 - then a new bidder behind me came straight in at £135,000 and got it! Good work.

Considering another two bed house in the same village is showing as sold on Rightmove for £174,995, this seems like a very nice little investment!

Two Bedroom Detached Bungalow in Ampthill With 5.48% Gross Yield

http://www.rightmove.co.uk/property-for-sale/property-43334516.html

I posted about this back in February this year, but it's still available now - is there something I'm missing here....?

Apart from the disadvantage of looking like an old toilet block this 2 bedroom detached bungalow is set in The Ceders, Ampthill, a lovely private gated development and a highly desirable place to live. It's up for sale at £179,995 and it's been on for a few weeks (months!) now, so there's potential to make an offer...?                                                                

We've just let a similar sized 2 bedroom detached bungalow for £795 per month (Feb 2015), and it went within two days of coming on the market. I'd expect this to achieve the same, or even more. This would mean a minimum 5.48% yield if bought for £175,000 - thats pretty good!

Note this a leasehold property with the following charges: Agents Note
The owner of this property informs us that the Ground rent is £100 per year. and the management charge is £1776.00 per year, this can be paid monthly.

Still looks like a good investment, with a decent yield and good capital growth! 

If you'd like a chat about property investment around Flitwick and Ampthill then please send me an email to graham@1st-house-lettings.co.uk or get a free coffee from me at 21 The Rufus Centre, Steppingley Road, Flitwick - just past the fantastic new sports centre that's currently under construction - or call me on 01525 838848.

Flitwick and Ampthill Property Market – What is really happening?

Flitwick and Ampthill Property Market – What is really happening?

I had an interesting conversation with a local Ampthill accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be to be an accountant!). Anyway, he mentioned a few things he had noticed recently in the local property market, that both Ampthill and Flitwick property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Ampthill and Flitwick (and more importantly ones with sold slips on them) had increased over the last couple of years.

The rate of house price inflation in Ampthill and Flitwick continues to slightly slow with growth of 10.6% in the 12 months to February compared to 11.5% just under six months ago, according to the latest Land Registry data. However, there is considerable local variation with house price growth ranging from 9.8% in Bedford  to 14% in Hertfordshire over the last 12 months.

Whilst Ampthill and Flitwick hasn’t seen the 20%+ per year in house price growth of London over the last couple of years, Flitwick and Ampthill has seen base line demand for housing grow, which suggests there is substance to the recent pick-up in house price growth in the two towns. Since the Second World War in the UK, when the number of properties sold has grown, property values grew soon after. Interestingly, in the last twelve months, 201 properties in Flitwick and 175 properties in Ampthill have sold. In the twelve months before that, 224 properties sold in Flitwick and 184 in Ampthill. Interesting don’t you think?

When you compare Flitwick and Ampthill with London, you could be looking at two different countries. In London, its mid/late teens house price to earnings ratios are impacting demand (ie the average property value is often 15 or 17 times the average wage in London .. in fact in Knightsbridge the ratio can be 30 to 1).  However, the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election are resulting in lower mortgage approvals for home purchase.

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the Ampthill and Flitwick area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

But before you get the Champagne out, while the uplift in activity is welcome news, the number of Ampthill and Flitwick property sales in 2014 are still 10.7% lower than the level seen in 2007 and property values are 1.8% above the 2007 levels. The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Ampthill and Flitwick where households have equity and find it easier to access mortgage finance. If you want to know more about the Ampthill and Flitwick Property Market, please subscribe to this blog for any future stories that may interest you.

If you’re a new or experienced investor and are considering buying in the local area then please feel free to get in touch with me if you’d like a chat. You can reach me on 01525 838848 or email graham@1st-house-lettings.co.uk and I’ll get back to you personally. Our office is in The Rufus Centre, Flitwick.

Negotiating for a better deal

I've been chatting to a landlord who's currently buying a couple of properties to rent out, and she's very hesitant about one of them. The property isn't in a great condition and could do with a new kitchen, bathroom, rewire, new storage heaters, new flooring and total redec - judging from the photo's and size, I estimated around £8-£10k. 

However without seeing the property for myself I recommended that she has a surveyor carry out some sort of survey. Depending on how detailed a report you'd like (and how much money you have to spend), you can highlight any defects found to the seller or their agent and hopefully negotiate a better price to reflect any improvement costs. Using a qualified surveyors report definitely adds more weight to your argument, and it can be shown to the seller themselves, in black and white.

House survey costs

How much a property survey will cost will vary a lot depending on the location, size and type of your property. Different surveyors will also charge varying amounts, so make sure you get several quotes before choosing who to use. 

The figures below should give you a rough idea of what to expect.

House survey costs
Survey type	Typical cost
Condition report	£150 - £300
Homebuyer's report	£250 - £600
Buildings survey	£500 - £1,000

The above table is taken from: http://www.which.co.uk/money/mortgages-and-property/guides/buying-a-house/house-surveys-explained/

Click on the link for more info on each type of survey.

Two Bed House in Houghton Conquest for £120,000 - Already Tenanted for £600pm

57 Bedford Road, Houghton Conquest, Bedfordshire, MK45 3NA

This one in Houghton Conquest is up for auction on June 17th, so you need to act quick if it tickles your fancy. There's always good demand for 2 bed houses in this village, so it should be a good long term investment for someone.

The particulars say its already tenanted for £600 per month, and is now on a periodic (rolling) tenancy. I think the rent could easily be raised to £650 - £675 per month depending on condition. Bearing in mind the photo's show the property as vacant, so they can't be very recent unless the current tenant has vacated in a hurry or doesn't have any furniture! There's parking for up to 4 cars included as well.

It's also Band F on the EPC, so it may need some money spending to bring it up to Band E by April 2016. Download the EPC from www.epcregister.com for full details.

This house last sold in May 2005 for £135,500 so I'll be checking how much this sold for after the auction!

If you'd like a chat about investing in Buy-to-let properties around the Ampthill & Flitwick area, then drop an email to me graham@1st-house-lettings.co.uk and we can meet for a coffee at my office in The Rufus Centre, Steppingley Road, Flitwick (by the sports centre).

Two Speed Flitwick and Ampthill Property Market?

Flitwick Manor

Even right after the General Election, property values in Flitwick and Ampthill are still 1.49%  higher than they were 3 months ago, the diversion and ambiguity of an election typically makes house sellers who need to sell, price their property more realistically (although this only lasts a couple of months). Looking specifically at it from a Flitwick and Ampthill landlord’s point of view, the Flitwick and Ampthill properties favoured by investors are in short supply in both of the towns because of a number of factors. One of the factors has been that we’ve seen the number of first time buyers coming to buy their first home increase over the last 12 months in Flitwick and Ampthill.  Another factor has been the fact that the banks have been pushing ‘let to buy’ (yes ‘let to buy’ is different to ’buy to let’) to homeowners (more of ‘let to buy’ in an up and coming article). Next, because of the banks, who are chasing low risk landlords with high deposits with very low mortgage rates- and the low risk landlords with high deposits tend to be attracted to the safer modern two and three bed terrace houses and semis in Flitwick and Ampthill.

As I mentioned a few weeks back, the pension rules changed in April this year which means buy to let landlords can use some, or all, of their pension pot to buy a property.  It shouldn’t be forgotten there are tax implications taking more than a quarter of your pension pot out (see the article from a couple of weeks ago) , so whilst many pension pots may not be able fund a suitably big enough tax free lump sum to buy the property outright, for most it will provide enough for the 25% deposit (required by most BTL mortgage providers). It shouldn’t be forgotten landlords, that the interest paid on the mortgage is tax deductible against the rent, thus lowering your income tax paid.

In the last 12 months, I have noticed a particular uplift in interest from ‘50 something’ Flitwick and Ampthill people wanting to become landlords for the first time. In Flitwick and Ampthill, the highest returns for the lowest investment are at the lower end of the market, eg the two bed terrace, flat and cluster homes . Unfortunately these two bedroom properties are coming to the market in smaller numbers than the larger four beds in the top end sectors of the Flitwick and Ampthill property market. When looking at the actual numbers, in the later part of the Summer of 2014 in Flitwick and Ampthill, in one month alone 24 two bed properties were on the market in Flitwick and Ampthill. However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 9 two bed properties on the market in Flitwick and Ampthill to choose from. Today (at the time of writing this article) that figure stands at only 11 ..whilst the number of four and five beds has increased significantly ...  interesting don’t you think?

At that lower end of the property market in Flitwick and Ampthill, (ie where first time buyers and landlord investors compete with each other to buy those smaller properties), I believe throughout 2015, there will be a slow and steady tipping of the scales between supply and demand. In fact, from what I am seeing and hearing, early anecdotal evidence has suggested over the last few months (although we will need to look at figures later in the Spring once we have the data from The Land Registry), we are beginning to see a polarised Flitwick and Ampthill property market, where we have high demand but low supply at the bottom end of the property market, yet high supply but lower demand at the top of market .. and that can only mean one thing ... prices will go up quicker on the smaller properties than the larger ones in Flitwick and Ampthill, thus narrowing the gap for people looking to move up market!

If you’re a new or experienced investor and are considering buying in the local area then please feel free to get in touch with me if you’d like a second opinion. You can reach me on 01525 838848 or email graham@1st-house-lettings.co.uk and I’ll get back to you personally. Our office is in The Rufus Centre, Steppingley Road, Flitwick.