Friday 26 September 2014

Should you be buying in Heanor?


 
A number of landlords, first time buyers and investors have approached me recently, asking about the Heanor property market. With all these headlines of massive increases in property values in the UK, should we be worried we are about to have a price crash? We are at the early stages but the economy is now actually looking a lot healthier and there are signs we are seeing an actual recovery after several false starts.

I am of the opinion that over the last few years, whilst mortgages have been a little more difficult to obtain than the last decade of the 2000’s, this lack of mortgages has produced some pent up demand for property. Now we appear to be on the other side of the financial crisis, and the banks are more willing to lend, this is why sales, prices and first-time buyer numbers have improved so rapidly. It has been like opening a shaken can of fizzy pop. You get the initial fizz of activity, and then it flattens. What we're seeing is a relatively normal market correction, not a quick transition from a recession to a boom.

Property values in Heanor have risen, on average by only 7.39% in the last 12 months. When I look at the East Midlands as a whole, prices have risen by 7.9% and nationally by around 8.7%. Compared to the boom years of 2001 to 2004, when property values increased by 20% in 2001, 33.9% in 2002 and 8.4% in 2003 in Heanor, I cannot see why some are concerned about an unsustainable price boom. I believe house prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone. We are seeing continued exceptional property price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery, and I expect prices to continue to rise in the short term.

Speaking to others in Heanor the issue isn’t house price inflation, but a lack of realistically priced properties coming onto the market for sale, a lack of supply. So should you be buying a property in Heanor?  Now is a good time to buy, provided you accept prices may fall again in a few years. It depends on how long you plan to own the property (whether as a home or investment), whether it personally suits you and most importantly whether you can afford it. Heanor first time buyers preparing to take the plunge should bear these factors in mind. The biggest issue must be that buyers ensure they can take the hit of future interest rate rises and therefore, I ask the first time buyers of Heanor to make sure you'd be happy in your new home, because you could be stuck there in five years' time.

Landlords tend to buy for the long term, so these short term movements don’t tend to affect them as much. The lack of supply in Heanor of new properties coming onto the market indicates people wanting to buy have to move quickly, and don’t have the luxury of a few weeks to decide to view the property. However, my findings show that first time buyers and landlords in Heanor aren’t prepared to pay over the odds for a property to secure it. Maybe, just maybe, the memory of the 2008 price crash has given a dose of realism to the optimistic Heanor property market?

Thursday 25 September 2014

What has the Help to Buy scheme done to the Ilkeston property market?


 

The Conservative’s and Liberal Democrats launched Help to Buy last year to give a boost to the housing market. The Help to Buy scheme involves the Government guaranteeing up to 15 per cent of a mortgage, acting as an indemnity for the banks and building societies who sign up (so far only three banks have done so). This means lenders can provide mortgages more confidently to borrowers with a 5 per cent deposit. It will apply to all types of properties, first-time buyers, home movers and re-mortgagers.

 Quite interestingly, first timer buyers have had access to 95% mortgages since 2010 so I am not sure what it will do to the market, except highlight that property can be bought with a 5% deposit. Scheme or no scheme, Ilkeston continues to have a buoyant property market. Prices are rising, but not at the double digit level that was experienced in the early to mid 2000’s. If the scheme enables those who want to buy, to buy, then that can only be good for everyone in the town.

Over the last 2 or 3 years, it has mostly been landlords that have been buying property in Ilkeston to let out. Carrying out a quick search on one of the price comparison websites, I was able to find in seconds that landlords can get fixed rate buy to let mortgages from as low as 2.99% until the end of 2016. With rental yields in Ilkeston of around 4% to 7% per year and the values increasing by 10.55% in Ilkeston, and the overall yearly return is the region of 14% per year.  Of course these are averages and some landlords will get lower (or higher) figures.
However, buying a buy to let property is full of pitfalls. If you have a good tenant, in a good property and a good relationship between tenant and agent, then not much can go wrong, as long as the relationship between the landlord and agent is exceptional. I pride myself on exceptional relationships with my landlords and their continued business speaks for itself.

If you are considering becoming a new buy to let landlord, feel free to pop your head through the door of our agency in the Denby House Business Centre (just off Taylor Lane in Heanor) or email me on lettings@sprucetree.co.uk for some advice and opinion on what (or not) to buy. It is true the property market is showing signs of good improvement, but, if you know where to look, and more importantly, what to look for, there are still bargains in Amber Valley and Erewash to be had.

Monday 22 September 2014

Ilkeston Property Market – should you be buying?


 
A number of landlords, first time buyers and investors have approached me recently, asking about the Ilkeston property market. With all these headlines of massive increases in property values in the UK, should we be worried we are about to have a price crash? We are at the early stages but the economy is now actually looking a lot healthier and there are signs we are seeing an actual recovery after several false starts.

I am of the opinion that over the last few years, whilst mortgages have been a little more difficult to obtain than the last decade of the 2000’s, this lack of mortgages has produced some pent up demand for property. Now we appear to be on the other side of the financial crisis, and the banks are more willing to lend, this is why sales, prices and first-time buyer numbers have improved so rapidly. It has been like opening a shaken can of fizzy pop. You get the initial fizz of activity, and then it flattens. What we're seeing is a relatively normal market correction, not a quick transition from a recession to a boom.

Property values in Ilkeston have risen, on average by only 10.55% in the last 12 months. When I look at the East Midlands as a whole, prices have risen by 7.9% and nationally by around 8.7%. Compared to the boom years of 2001 to 2004, when property values increased by 20% in 2001, 33.9% in 2002 and 8.4% in 2003 in Ilkeston, I cannot see why some are concerned about an unsustainable price boom. I believe house prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone. We are seeing continued exceptional property price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery, and I expect prices to continue to rise in the short term.

Speaking to others in Ilkeston, the issue isn’t house price inflation, but a lack of realistically priced properties coming onto the market for sale, a lack of supply. So should you be buying a property in Ilkeston?  Now is a good time to buy, provided you accept prices may fall again in a few years. It depends on how long you plan to own the property (whether as a home or investment), whether it personally suits you and most importantly whether you can afford it. Ilkeston first time buyers preparing to take the plunge should bear these factors in mind. The biggest issue must be that buyers ensure they can take the hit of future interest rate rises and therefore, I ask the first time buyers of Ilkeston to make sure you'd be happy in your new home, because you could be stuck there in five years' time.

Landlords tend to buy for the long term, so these short term movements don’t tend to affect them as much. The lack of supply in Ilkeston of new properties coming onto the market indicates people wanting to buy have to move quickly, and don’t have the luxury of a few weeks to decide to view the property. However, my findings show that first time buyers and landlords in Ilkeston aren’t prepared to pay over the odds for a property to secure it. Maybe, just maybe, the memory of the 2008 price crash has given a dose of realism to the optimistic Ilkeston property market?

Thursday 11 September 2014

Why don’t people buy instead of renting in Mid Derbyshire?


 

Quite often, when talking about the rental market, we talk about property and seem to forget the other party in the equation, the tenant. Without tenants, there is no demand for the rental property. The profile of the  Ilkeston, Heanor, Eastwood or Belper tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position when they could have bought a property.

Since the credit crunch, rents have been good value for money for most tenants outside London. Few rents outside London have kept pace with inflation as they tend to track wage inflation. In 2008, the average median gross wage according to Office of National Statistics in Erewash was £23,733 whilst in Amber Valley it was £21,439. Latest figures for Erewash in 2014 show average salaries in the area  have risen to £26,819 whilst in Amber Valley they have risen to £24,227, an increase of around 13 %. I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £119 in 2014, making inflation 19% over those seven years.

Amber Valley and Erewash tenants are paying less than both wage and goods inflation. Amber Valley and Erewash rents are in fact still around 4.1 % below the level being achieved in 2008 but the tenants are being paid 13% more. That is why we have seen a greater demand for Ilkeston, Eastwood and Belper rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.

Overall, considering the recent rises in property prices over the last 12 months, we are still 6% below the 2007 boom prices. With reasonable rents, many would-be first time buyers in Erewash and Amber Valley have been wise to remain in the private rental sector. Rents tend to move in line with wages as opposed  to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren’t hit with awful expenditure surprises as a normal homeowner would be. In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move.

From the landlords point of view, the consequence of this steady / solid market throughout the Erewash and Amber Valley area, with good tenant demand, decent long term capital growth (as mentioned in last week's article) and average yields between 3% and 6%, with home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy, hold, buy, hold. If you would like to discuss my thoughts on the rental markets in Ilkeston, Heanor, Eastwood and Belper, feel free to ring me at my office on 01332 910499, or email me on lettings@sprucetree.co.uk

 

Thursday 4 September 2014

Are the Heanor and Eastwood Property markets a runaway train?




 

Some of my landlords invest for yield, some invest for capital growth (however, it’s very difficult to get both in this market). Everyone is different; if you are a landlord in Erewash and Amber Valley, who invests for capital growth as opposed to yield, it is crucial to build in capital growth in a property by getting a property at a discount or by finding a way to add value.
So, how can you get a discount in this property market, with Erewash and Amber Valley property values alight and property being snapped up over night? Achieving capital growth in the area is going to be tough over the coming few years isn’t it? Well yes and no, looking at the headline figures, of the 231 properties available for sale today in Eastwood, 56 of them are sold subject to contract, an impressive 24.2% which is obviously a sign of a decent Eastwood property market (I can remember when less than 1 in 20 houses were sold at any one time a few years ago). Looking at Heanor the figures are very similar with an identical number of properties on the market with an impressive 70 sold, subject to contract.  This means that 30.1% of houses have a buyer. 



We asked Rightmove for all of the properties that had come on to the market in Eastwood in the last 28 days (51 to be precise), and after one month, how many of those 51 had found buyers? ... Well only 2 properties!  Looking at Heanor and of the 46 properties that have come on to the market in the last 28 days only 6 are sold, subject to contract.. this indicates the property market is good but it’s not a runaway train, is it?

The main thing is that landlords must take as much advice as possible. They will need to take a long and serious look at any existing properties or new ones to make sure they can achieve capital growth and that this increases in line with inflation.  I have a great technique for finding properties that have been on the market for sale over three months or more. You don’t need any special software. All you need to do is ask Rightmove to list your search results (when searching), with the most recent first. The ones on the last few pages are by definition, the ones that have been on the market longest and potentially ready to do a deal .. simple but effective.

As we don't sell property, we are able to look at the whole of the Ilkeston, Heanor, Eastwood and Belper property market.  In all four towns, there are good agents and bad ones, but one thing is always the same,  they are all paid by a vendor to sell you a property, not paid by you to help you buy. Therefore, when they show you that bargain, don’t get pressured into buying a property until you have a good feel for the market. We have many landlords who send me a web link of any Erewash and the Amber Valley properties they are interested in and I always give my honest opinion. (It might not be what you want to hear, but it will always what you need to hear!).

So why do we do that? Well, we are a Lettings Agency. Once you’ve bought the property, we would very much like to manage it for you or help with just finding you a tenant. If we give our opinion, at no cost or obligation, then we start to build a relationship, you may just start to trust us and as we will be giving you great customer service, which at the end of the day, is what landlords want from their letting agent and you might end up asking us to be your agent in the future (but of course there is no obligation to do so). With that considered, it’s very much in our interests that you buy something that’s sensible and lettable – we don’t want you buying a dud, or something where the figures don’t stack up! 

If you would like to discuss my thoughts on the rental markets in Ilkeston, Heanor, Eastwood and Belper feel free to email me on lettings@sprucetree.co.uk or pick up the phone on 01332 910499

Wednesday 3 September 2014

Eastwood Offering up 7.7% Yield


This great find in Eastwood might seem unusual at first when looking at the sales particulars but it offers masses of space for a potential yield of 7.7%.  We think that this property represents a great opportunity, there’s little to do in order to rent the property out.  We’d suggest a good jet washing of the rear yard, but otherwise it seems clean to us!  With 2 bedrooms and a great fitted dining kitchen this is a nice family home.  I’m at the other end of the phone ready to help you after your viewing.

 

Tuesday 2 September 2014

8.3% Yield in Heanor?


This 3 bedroom terraced home in Heanor is a good opportunity for our discerning buy to let investor.  We believe a reasonable yield of 8.3% could be achieved if an asking rent of £485 per calendar month is achieved.  This property is bound to be popular with families as it has bags of space internally.  A lick of paint wouldn’t go amiss to make the property more appealing to a wider range of people, but overall it looks pretty clean. 
 
This property is bound to be snapped up quickly.  Get a viewing in your diary and contact me after so we can help you rent it out.