it is great to be in the new year! Once December arrives the new year always seems to take an age to arrive. When it does you can wipe the slate clean and the next 12 months stretch out in front of you with all the opportunity a new year brings. Many of you will be considering property matters.
The mortgage market has changed and the affordability criteria mean you will most likely need a 40% deposit to get the best rates. If you are buying a two bedroom property that equates to a substantial £100,000 plus costs including weighted Stamp Duty.
Is it best to sit back and wait for the market prices to ease before committing? Unfortunately this does not look like a good strategy as supply is so weak that the number of buyers still supports current pricing.
What does your £250,000 buy in the current market. As frequent readers know I always suggest buying a two bedroom house if budget allows.
You can buy a two bedroom house in a great location for your money but what will it rent for.
So lets say you buy at the full price of £250,000 and achieve a rent of £900, lower than those shown. That gives you a gross yield of 4.32% still way better than the miserly banks will give you. PLUS you get capital growth! A year ago my sales colleagues were selling similar property around £200,000, so if you had taken this action a year ago you would have around £50,000 plus your monthly return to show for your efforts. Not bad for a pretty safe investment of £100,000.
Obviously there is no guarantee that returns will be as good over the next few years but most of us consider property a long term strategy, for our pension pot or as a legacy for children.
Pension rules have been relaxed and several of my landlords have taken advantage to generate a deposit by drawing down from their pension (not for everybody). Some have had endowment policies mature (remember them!) while others have inherited money. But whatever your situation, YES there are still good returns to be had, but you need to be canny over where you buy and what you pay. You need to take the right legal and financial advice, taking advantage of the best buying methods to ensure maximum returns and tax efficiency.
I can help with many of these areas and put in touch with the right professionals, no obligation, no fuss, just helpful advice.