574% Return for Cheltenham Buy To Let

      574% Return for Cheltenham Buy To Let landlords since 2000

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 , Stocks and Shares etc) are passive i.e. 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 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 Cheltenham 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 Cheltenham, but the value of property can go down as well as up just like shares. 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 flat in the Tewkesbury Road area of Cheltenham. He bought a very pleasant studio flat in 2000 for £27,500. It sold again in February just gone for £67,000, a rise of 143.63% in just over 14 years – a compound annual return of 6.57%.

However, the real returns are for those Cheltenham 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 £27,500 purchase price of the Tewkesbury Road studio flat on an interest only 75% mortgage, he would have only needed to invest £6,875 (as his 25% deposit... borrowing the remaining £20,625), but his £6,875 would be worth today, £46,375 (£67,000 less £20,625 interest only mortgage)... a rise of 574.54% - a compound annual return of 14.61%... and I haven’t even mentioned the rent he would have received in those 14 years!

This demonstrates how the Cheltenham buy to let market has not only provided very strong returns for average investors since 2000 but how it has permitted a group of motivated buy to let Cheltenham landlords to become particularly wealthy. In fact, if this landlord had continued to re-mortgage 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 Cheltenham 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 (and would not) make a decent property to buy in Cheltenham for buy to let, then please contact me on neil.west@belvoir.co.uk.

2 Bed Gloucester 6.0% Yield

We are marketing this recently redecorated 2 bed flat for sale. It is currently tenanted and managed by us. Its on the market for £105,000 and lets for £525.00 PCM . Thats a yield of 6% ( exl. service charges) . 

                              http://www.zoopla.co.uk/for-sale/details/36969788

The property is in  great location with easy access to the rail station, hospital and city centre.
If you are interested in discussing this or any other propeties you may have seen, please do contact me on neil.west@belvoir.co.uk

General Election - Shock Majority!

What will General Election result do to the Cheltenham and Gloucester Property Market’s?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Cheltenham and Gloucester property market. Talking to other agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Cheltenham and Gloucester property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in property prices in 2014, and political uncertainty ahead of the General Election, slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Cheltenham and Gloucester buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Cheltenham and Gloucester property market? Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Cheltenham and Gloucester landlords have benefited from a booming Cheltenham and Gloucester job market. Unemployment in Cheltenham has dropped to 3.15% and 2.7% in Gloucester, as a year ago,1,599 people in Cheltenham and 2,341 people in Gloucester were claiming unemployment benefit compared to today’s 891 in Cheltenham and 1638 in Gloucester . With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Cheltenham and Gloucester properties.

Some landlords might be nervous about Tory plans for the housing market over the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 50 Cheltenham properties and 318 Gloucester properties since April 2013. Considering 2,899 properties have changed hands in the last year alone in Cheltenham and 2,830 in Gloucester, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Cheltenham and Gloucester, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants. If you are an existing landlord in Cheltenham and Gloucester or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I suggest you seek out specialist advice and opinion. We will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in the Cheltenham and Gloucester property market if you pop into our offices. However, if time is at a premium, you can email me at neil.west@belvoir.co.uk

Are Attitudes to Home Ownership changing in Cheltenham?

Speaking to a Bank Manager the other day in Cheltenham, we got talking about the state of the Cheltenham property market and whether we, as a country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job.

Even though a recent report by the Halifax stated home ownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice. In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the lack of sufficient wages and the high level of deposits. However in Cheltenham, if a couple, one on the average Cheltenham salary of £30,089 pa and the other on the minimum wage, assuming they had a reasonable credit history they would be showered with lenders offering them a 95% mortgage (a reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed just one credit card payment wont mean you have messed up your credit score and your ability to get a mortgage) and they would only need to find £7,300 as a deposit to buy a top of the range one bed apartment in central Cheltenham or a good honest 3 bed ex local authority semi in Whaddon. ..it comes down to the perceived capability to buy nowadays.

Interestingly, when I looked at the Cheltenham figures, the average Cheltenham tenant has a younger profile (especially the sub 24 year olds) than the English and Welsh average, as can be seen from the graph below. What interested me as well was the relatively large number of people renting over the age of 50! I know we have a large number of mature tenants at our agency, but I always thought that was the exception to the rule. Obviously not! (And that is good news for landlords as they make excellent tenants)

So what does all this mean for Cheltenham landlords and future Cheltenham landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although home ownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home.

As the local authority aren’t building any properties in Cheltenham, people still need a roof over the head, and that is why, as I mentioned a few weeks ago that the demand for rental properties will only continue to steadily rise in the coming decade. If you want to know where the Cheltenham Property market is heading and where you should (and shouldn’t) buy, please send me an email to neil.west@belvoirlettings.com

Two Speed Cheltenham Property Market

With the General Election upon us , property values in Cheltenham are still 0.6% 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 Cheltenham landlord’s point of view, the Cheltenham properties favoured by investors are in short supply in many parts of the town because of a number of factors. One of the factors has been that we seen the number of first time buyers coming to buy their first home increase over the last 12 months in Cheltenham.  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 home-owners (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 town houses and semis in Cheltenham.

As I mentioned a few weeks back, the pension rules have changed  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  , 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’ Cheltenham people wanting to become landlords for the first time. In Cheltenham, the highest returns for the lowest investment are at the lower end of the market eg the classic apartment . Unfortunately apartments , with two bedrooms are coming to the market in smaller numbers than the larger four bed’s  in  top end sectors of the Cheltenham property market. When looking at the actual numbers, in the later part of the Summer of 2014 in Cheltenham, in one month alone 338 two bed properties were on the market in Cheltenham. However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 286 two bed properties on the market in Cheltenham to choose from. Today, that figure stands at only 282..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 Cheltenham, (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, we are beginning to see a polarised 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 Cheltenham, thus narrowing the gap for people looking to move up market!

“The way it works in Gloucester is this, you have to rent where you want to live, or buy where you don’t want to live”

I had this really interesting chat with some my tenants the other day, on renewal of their tenancy agreement. They are a great couple in their early thirties and I know they have decent jobs in Gloucester. They have been tenants of ours for quite a while, so I know them quite well. We got talking and I enquired if they ever thought of buying a property for themselves, to which they replied back with the title of this article. It made me think and so I did some more research into the subject which I want to share with you.

After the end of the Second World War, just over a quarter of the UK population owned their own home, the rest rented from private landlords or the local Council. If someone told you in the 1970’s and 1980’s that they rented, they were considered a second class citizen. Everyone wanted to own their own home .. it was the done thing. We think that home ownership will inevitably happen, but it won't.

It all changed in the 1970’s, when two things happened. Firstly, the number of people who owned their own home broke through the 50% barrier in 1971 and by 1981 it was at 57%. Tied in with that, the average house prices in Gloucester were doubling at one point every four years in the 1970’s so property and profit started to feed off each other.

To put that growth in context, if we were to look at the last 85 years in Gloucester, in 1930, the average Gloucester property was worth £397. It took 16 years for Gloucester property values to double, rising to £982 by 1946. Another 15 years and the average Gloucester property doubled again to £1,864 in 1961. The next doubling only took 10 years, as by 1971 the average Gloucester property had reached £3,789 in value.

It was (as mentioned above) the 1970’s when things really took off, as by 1975 (ie only four years) they had doubled to £7,930 and they doubled again to £15,875 by 1980. It took another eight years for values to double again, as an average Gloucester property reached £33,206 in 1988. Twelve years had to pass until the doubled again in 2000 (£68,323) and just six years to double again by 2006, when they reached £137,799. Where are we today? The average property value in Gloucester currently stands at £203,600.

We could blame Maggie Thatcher for making home ownership the ultimate goal, but what we now need to consider is that the country is turning on its head and we need to, as a country, love renting again. Some blame the banks, but obtaining a 95% mortgage is hard work, but nowhere near impossible. A typical Gloucester first time buyer would only need to save £7,500 for a deposit and fees and they could buy a decent property. For example, you could buy a property in Innsworth near Gloucester, and it would be cheaper each month in mortgage payments than renting.

People might say on surveys that they want to buy. If you have been living in a top of the range large property in Churchdown , but the bank will only lend you enough to buy a smaller property in Innsworth, what would you do? Don’t get me wrong, Innsworth has really pulled its socks up over the last ten years, but it isn’t Churchdown, is it? Again, if you were a twenty something, what would you do? Look again at the title of the post ... “The way it works is, you have to rent where you want to live, or buy where you don’t want to live,” - With tenant demand only going in one direction, that is probably why more and more people are getting into buy to let in Gloucester. With the new rules on pensions and the ability to use them to buy residential rental properties this could be the time for you to buy a rental property. You must take advice on your pension from a Independent Financial Advisor (there are plenty in Gloucester) and you must take advice from people who know what to buy (and not to buy) in Gloucester to ensure you get the best from your investment. One place for such advice is me and you can contact me neil.west@belvoir.co.uk

2 Bed flat 6.6% Yield !

This lovely, modern 2 bed apartment is on the market for £99,999 and lets for £550.00 PCM, giving a 6.6% yield. It is actually rented out through us and on the market for sale with us.

          http://www.belvoir.co.uk/flat-2-41-tolsey-gardens-tuffley-gloucester/91932

We have great tenants in there who are looking after the property as you will see from the pictures. This would make a great low maintenance investment. Please contact me if you would like more details on neil.west@belvoir.co.uk

Cheltenham Property Market : Number of Rental properties set to jump to 15,000 by 2021

At the time of the last census in 2011, 3,401,675 properties in England were privately rented, of which it is estimated, over 1.25 million were owned by private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing the younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief which is not available to homeowners.

They may be asset rich thanks to recently rising property values, but let us not make the landlords the bogiemen .Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Cheltenham.

Property values today in Cheltenham are now back to around the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 26% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the town. Interest rates are at an all time low and first time buyers only need to save a £8,000 deposit to secure a 2 bed semi in Wymans Brook with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?

The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Cheltenham will have risen from the 10,260 properties recorded in 2011 to 15,000 by 2021. Sounds fanciful? Well in 2001, there were only 5,811 privately rented properties in Cheltenham.

It is a fact that we as a country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they got a job.

Tenants, in particular, will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner. If you want a chat about what would make the best sort a property that would offer that in Cheltenham, then please email me on neil.west@belvoir.co.uk.

7.3% Yield ! Dont Hang Around

This 3 bedroom terrace is on the market with The Property Centre. They say that it needs some updating. It is on the market for offers over £90k. Say you got it for £95K , spent £20k , thats a total investment of £115K. Not bad for a 3 bed house! 

                            http://www.zoopla.co.uk/for-sale/details/36438851

I agree with the Property Centre that you could let this for £700 PCM , which on an investment of £115K is a yield of 7.3 % . Thats pretty good in anybodys book. Get on to the agent now and check it out as this will not be around long. If you would like advice in this or any other property please do ask me. 

Gloucester Landlords invest £822 million in the Gloucester Property market

South West property asking prices jumped by more than £950 to £268,500 in February according to Rightmove, an increase of 0.4% from January and 5.6% higher than a year ago. After the traditionally quiet months of January and February, the property market has started to warm up, but talking to some Gloucester Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (ie their REAL value). Is the issue a lack of supply?

Putting aside Gloucester’s continual housing supply shortage, (we only built 4,598 properties in the last decade but the population of Gloucester grew by 11,803), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can't find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Gloucester landlords only last week, I said that I believe this is the new norm in the Gloucester property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Gloucester.

When one looks at the historic data, in June 2008, there were 1,758 properties on the market in Gloucester compared to today’s 728. Should we be worried? Well in February 2010 there were only 803 properties for sale in Gloucester but seven months later in September 2010, this had jumped to 1352 properties, for it to drop to 602 properties in December 2013. The number of properties on the market is a cyclical thing in Gloucester, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase .

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep .. and the youngsters of Gloucester still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Gloucester landlords have stepped in and bought property to rent out to them. Gloucester landlords have bought 4,041 properties over the last decade (investing approximately £822million buying those Gloucester rental properties), meaning there were at the last count, 8,012 Gloucester properties being privately rented out to tenants. Gloucester tenants are in fact getting a good deal as well, as average rents in Gloucester are only 4.6% above where they were seven years ago. That sounds like a win-win situation for everyone to me. Stop blaming landlords and start building more properties in Gloucester .. that is the only answer.

In the meantime, the demand from Gloucester tenants for Gloucester property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please email me on neil.west@belvoir.co.uk or call me on 01452 387334

Massive drop in Homeownership in Gloucester

An Englishman’s home is his castle and when it comes to the UK we are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It is interesting to note that up until the mid to late 1960’s, more people rented their home than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied.

It was only after the Second World War, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme.

In 2001, 74.6% of households were owner occupied in Gloucester, but ten years later, that percentage dropped massively to 67.2%. But here is the interesting part, when you look at the actual numbers of households, 34,177 households in Gloucester were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had actually only decreased to 33,858 households.

So why big drop in percentages but not in actual properties? An additional 4,598 properties were built in Gloucester between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Gloucester. In fact, the number of properties in Gloucester, which were privately rented, jumped from 3,971 in 2001 to 8,012 in 2011!

With the council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location and with no more council houses being built and an increasing number of people looking for a roof over their head, private renting is the only option.

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Gloucester, then it is still a good time to consider buying a property for buy to let investment in Gloucester. I am always happy to give you my considered opinion on which property to buy (or not as the case may be).. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Gloucester Property Blog where you will find the best buy to let deals on a day by day basis from all the agents in Gloucester .  

What properties are actually selling in Cheltenham ?

Prices up, prices down, prices stable .. the newspapers are full of good news, bad news and indifferent news about the Brit’s favourite subject after the weather .. the property market. The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way. At one end of scale is London, which has seen average prices grow in the last twelve months by a shade under 19% (and again that is an average because some Borough’s in London have risen by 26%) whilst in the land of Daffodils , by contrast, Wales only saw a 2% increase in property values (although in the Merthyr Valleys they dropped by over 11%).

Well we can’t ignore the rest of the UK, and we can’t forget that the Chancellor’s Stamp Duty reforms have polarised the London property markets above £1,000,000 because at the top end of the market, punitive Stamp Duty charges will dampen demand further. While the Bank of England warned of the growing London property price bubble in the Spring of 2014, even talk of a recovery in some areas was premature. In 2015, irrespective of where you are in the UK, one story will unite the patchwork quilt of markets – really slow property value growth.

But what about Cheltenham? Well, we haven’t had the December figures from the Land Registry yet but the last few months’ activity and prices achieved would suggest neither house price growth nor drops. In fact, most sellers are buyers anyway, so if you need to take less for yours, you won’t have to pay as much for the one you want to buy ... and that is good news for everyone as most move up market when they move. This is even better for landlord investors, as they can bag a bargain as well.

The question you should be asking though is not only is what happening to property prices, but which price band exactly is selling? I like to keep an eye on the property market in Cheltenham on a daily basis because it enables me to give the best advice and opinion on what (or not ) to buy in Cheltenham.

If you look at Cheltenham and split the property market into four equalled sized (into terms of households) price bands. Each price band would have around 25% of the property in Cheltenham, from the lowest in value (the bottom 25% ) all the way through to the highest 25% (in terms of value). Over the last two months (63 days to be precise), in the lowest quartile, (those with asking prices under £145k) 126 properties have come onto the market in Cheltenham and 22.2% of them (28 properties have a buyer and sold stc. The next quartile, between £145k to £215k, of the 195 properties that come on to the market, 34.3% of them (67 properties) have a buyer. The £215k-£340k price range has seen 213 properties come on to the market, and 27.2% of the properties have a buyer (58 properties). The most expensive 25%, the £340k plus range, has seen 44 of the 169properties that came on to the market find buyers (26%). Fascinating don’t you think?

The next three months’ activity will be crucial in understanding which way the market will go this year and I honestly believe we will not see any house price growth or drops this side of the election. Election or no election, people will always need a roof over their head and that is why the property market has rode the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market! 

2 Bed House - Cheltenham - 5.9% Yield

This 2 Bed end terrace property has just come on the market with Taylors of Cheltenham. Two double bedrooms , good location for access to the town centre, this would make a great rental investment. 

                              http://www.zoopla.co.uk/for-sale/details/36205471

On the market at £140,000, this should let for £695 PCM , giving a yields of 5.9%. The property looks well presented and ready to go. This should be a relatively low risk investment with a good yield.  Please call Taylors to view and me for any advice that you may require. 

Neil West 01242 221188   neil.west@belvoir.co.uk

Is the Gloucester Property market holding its breath over the General Election

Has apathy hit the Gloucester housing market as sellers await the outcome of the general election and stricter mortgage regulation suppresses buyer demand? Rightmove reported the number of homes registered for sale per estate agent fell to its lowest level for five years in December, with available stock 10% lower than in the same month a year earlier.

Looking at Gloucester, in the late summer of 2014, each estate agent in Gloucester had on average 32.8 properties on its books (as there were a total of 1,280 properties up for sale in Gloucester at the peak in the late summer just gone). Our research shows that number plummeted to 26.7 per agent in December. While the lack of new properties coming onto the market in the later months of 2014 in Gloucester pushed asking prices up slightly from November to December, traditionally a quiet season for the housing market, property sellers will need to work hard in 2015 to complete a sale.

The length of time a property takes to sell has ever so slightly increased over the last few months. Two bedroom properties in Gloucester are now taking 109 days to sell, three bedroom 66 days, four bedrooms 75 days, but here an interesting figure, one beds are taking on average 151 days to find a buyer

2015 will be the year of the selective mover. With only 459 brand new properties a year being built in Gloucester since the turn of the Millennium, this woefully low and insufficient number of new buildings in the City over the past few decades and a systemic change in the type of properties homeowners want (with families splitting etc so we have too many larger houses and not enough smaller ones), buyers are becoming dissatisfied with, and therefore dismissive of what is up for sale.

The heat has gone out of the Gloucester property market and I anticipate a moderate reduction from the high transaction volumes seen in 2014, but it most certainly isn’t icy cold. That might mean Gloucester landlords could bag a bargain during this period of uncertainty, especially if the financial markets do not like the election outcome. Markets and buyers do not like uncertainty, but savvy Buy to let landlords know buy to let is a long term game, and irrespective of short term apathy, reduction in the quality and quantity of stock for homeowners to buy or the election, if people don’t buy property they rent. The Council aren’t building anymore properties, the council house waiting list is decades, not years for the better type of property .. the only other place to get a roof over your head .. rent a property! Good old Bricks and Mortar! In fact with less properties coming on the market in Gloucester, that will keep prices quite stable.

Therefore, if you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. Email me on neil.west@belvoir.co.uk 

Widden St - Gloucester - 6.0% Yield

This two bedroom terraced house has just come on the market with The Property Centre. This is located in a popular area of Gloucester for rented properties and would let relatively quickly at £550 PCM. 

                        http://www.zoopla.co.uk/for-sale/details/photos/36132947

The property is on the market at £110,000 so that would give a pretty good rental yield of 6.0 %. The property is marketed as a 2/3 bed as the third bedroom can only be accessed through another one. The rental value is based on a 2 bedroom so may be able to achieve a little more on the rental price. If you would like advice on this or any other property, please contact me on neil.west@belvoir.co.uk

Tivoli - Cheltenham 5.0 Yield

One bed flat in the very popular and attractive area of Tivoli. This property in on the market for £130,000 and currently rents for £525 PCM . The current tenant is moing on shortly and we would envisge that a rent of £550 PCM could be achieved on this. 

                       http://www.belvoir.co.uk/2b-tivoli-mews-cheltenham/89096

We actually manage the rental of this property and are handling the sale. Giving a potential yield of 5.0% this is a flat you should consider as an investment. For more details or to arrange a viewing on this flat, please call Belvoir on 01242 221188 or email   neil.west@belvoir.co.uk

What is really happening in the Cheltenham property market?

In Cheltenham, property prices are 3.2% above the level that was achieved in the 2007 property boom (before it went pop in early 2008 with the credit crunch). The cost of living has increased by 19% over the last seven years too, so the money that Cheltenham property owners  would get from the property would actually be 15.8% lower (19% inflation cost of living less 3.2% above the 2007 boom) than if they’d sold in 2007.

Average Cheltenham house prices are in a constant state of microflux. Over the last couple of years, the trend has been in an upward direction. The price of a typical Cheltenham home increased by just 0.3% in November (yet rose 1.5% to 1.6% per month in the Spring of 2014 ). Looking at monthly figures can be dangerous, so looking at the Land Registry figures, the annual rate of Cheltenham house price growth moderated in the latter months of 2014 to leave us 10.1% higher than at the start of 2014.

The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months. Mortgage approvals declined by almost a fifth between January and May, and there has also been some softening in forward looking indicators, such as new buyer enquiries. But on the other side, with the labour market strengthening, landlords are looking for a home for their savings, mortgage rates are expected to remain low and with consumer confidence rising activity is likely to recover in the months ahead.

The interesting thing about the Cheltenham property market over 2014 was the high proportion of terraced houses sold. In fact, more terraced houses sold even though the town itself has a high propensity of flats. The average price a terraced house sold for during 2014 was £235,670, whilst the average price achieved for a flat/apartment was £186,701 and the average price achieved by a semi-detached property was £266,308.

It all comes down to doing your homework, asking questions of the agent and the owners. Find out their motivation for selling and see if you can ‘bag that bargain’. Trust me they are still out there. I can look at the whole of the market and give you an honest opinion on its investment potential.

If you would like any advise on this or any other property please contact me neil.west@belvoir.co.uk

2 Bed Flat Denmark Road 6.3% Yield

We have let quite a few of these flats in Holland Court, over the years and I just spotted this one on the market with Andrews. It is on the market for just short of £100,000 and will let for £525 PCM easy. You will have a service charge but it  wont be much here. The communal areas here are always kept in tip top condition and the flats are always very popular as rentals.

                              http://www.zoopla.co.uk/for-sale/details/17500278

Why not give Andrews a call and take a look. It looks ready to go! If you would like any advice on this or any other property, then please do email me on neil.west@belvoir.co.uk.

One Bed - Hatherley 5.2% Yield

Not many one bed houses become available , so when I spotted this one with Andrews, I thought I would let you know about it. On the market for £134,950, this will let for £575/£595 PCM , which is yield of 5.2%. As I say not many one bed houses around so they always let well, particularly in good areas like this.

                             http://www.zoopla.co.uk/for-sale/details/35935790

This is a great " safe " bet for landlords who don't like taking many risks and I recommend that you take a look ASAP. If you would like advice regarding this or any other property, please do contact me neil.west@belvoir.co.uk

£113 Million – the total rent paid by Cheltenham tenants a year.

In the last few months, politicians in Westminster have decided to step into an area which affects many of us - property. Anyone who rented property in the 1970s and 1980s knows the difficulties of tenancy agreements from that era which allowed the tenant the right to stay in the property for life. In some cases, tenancies could be transferred to their children, rents could not be increased and tenants could not be removed. One of the suggestions by the  one of the parties is rent controls. With more than 4.4 million people renting 3.4 million properties in England alone, it was clear that this could be a policy that was purely playing with the sentiments of these tenant voters.

Under the current legislation, tenants are already in a position to challenge rent increases that are unreasonable and they have the advantage of giving a months’ notice to the landlord (when the tenancy is a rolling agreement ie periodic tenancy) . But do rents need capping? Well in Cheltenham, there are 22,471 people renting 10,260 rental properties. The average rent of a Cheltenham property in 2008 was £883 per month. If Cheltenham landlords had raised the rents in line with inflation, (which sounds a very fair to anyone), as inflation has been a total of 19% since 2008, the average rent in Cheltenham should be today £883 + 19% = £1,050. At this moment in time, the average in Cheltenham is £923.. and those figures are being repeated all around the UK.

However, restricting rent rises in the future could put more properties back on the market for sale as it would destroy the confidence in the housing market. In turn, this would reduce property prices. With less property available to rent, and a lack of interest from potential investors (due to the poor yields) this policy would end up creating a shortage of affordable housing.

Even with the vast increase in renting in Cheltenham over the last ten years, 12.07% of property being rented in 2001 to 20.1% in 2011, the number of homeowners in Cheltenham only dropped by 4.9% (there were 34,201 homeowners in 2001 in Cheltenham, but it only dropped to 32,879 homeowner households by 2011 in Cheltenham). It is clear that the changes to the law of tenancy agreement made in Housing Act 1988 resulted in benefits to both landlords and tenants. The law has made it easier to rent a property and at the same time, the Assured Shorthold Tenancy gives the tenants a right to quiet enjoyment of the property for a period of time. Yes, the total rent paid by Cheltenham tenants is an awful lot of money, £113 million a year in fact, but as rents are free to move up, but just as important down, why fix what isn’t broke?

P.S. For those who are interested the total rent payable by tenants in Gloucester is £75 Million

Don't laugh , a great opportunity!

Ok its not pretty, in fact its pretty grim. However this could be a great investment opportunity. On the market for £60K , spend £30K , who knows ? and then for £90K, you've got a great 2 bed terrace property. Rent it for £525 PCM ( or more ) - 7% yield ! If you don't want to rent it out ,then sell it on.

                              http://www.zoopla.co.uk/for-sale/details/35995713

I think if you are serious about a project, then this is one to look at. Be careful though with the figures. I know a great builder if you want some idea of refurb costs. If you want some advice on this or any other property, then please contact me on neil.west@belvoir.co.uk .

PS  Listed today with The Property Centre  -  I bet its sold within a week!

Gloucester Apartments - 1 beds or 2 beds ?

Last week, I spoke to one of my landlords and she asked me if the number of bedrooms in a property had any relationship to the return she could get. I did some research and followed up her query – I was actually quite surprised with the results.

Currently in Gloucester, the average rent for a one bed property is around £426 per month with an average value of £80,300. This means an approximate return/yield of 6.36% per year. This is of course the average. There are one bed apartments on the market for rent at a higher price than some two bed apartments. In fact, some one bed apartments in Gloucester can attract rents in the early  £700's whilst some converted terraced houses with flats in them can be rented for as little as £300 per month. This means yields on one beds can range between 5% and 7%.

Two bed apartments in Gloucester can be priced anywhere between £190,000 in modern upmarket developments in the Gloucester Docks area and as low as £70,000. Again, rents can be quite varied, ranging from over £800 per month to £400 per month. However, looking at the average rent for a two bed apartment in Gloucester, I calculate it to be £573 per month with the average value being £118,700 which gives a return/yield of 5.79% per year.

Whilst there is a little difference in the yields when it comes to the number of bedrooms, it is only one of many factors you should consider before buying a property. Whilst two bedrooms are more expensive to buy, they will always let better. Do they sell better? Well, 38.3% of the two bed apartments on the market in Gloucester at this moment in time are sold stc compared to 34.7% of 1 bed apartments – so the answer is yes, but not much difference though.

It really comes down to the property and type of tenant. Two beds attract sharers, which brings both advantages and disadvantages to the landlord but one beds have better yields. It depends what you want from your investment. I know the lettings market in Gloucester so I can advise you what you can expect to achieve in rent .I don't make a penny out of you buying something from another agent, I make my money ensuring I can find the best tenants for the best properties. If you would like any advice on choosing properties, come and see us at our office on Worcester Street, Gloucester.

Are yields of 6.48% per year on the Hesters Way area the best Cheltenham has to offer the investor?

Are yields of 6.48% per year on the Hesters Way area the best Cheltenham has to offer the investor?

I regularly talk to landlords about investing in Cheltenham . Following a discussion with one of them last week, he asked me to look into the Hesters Way area, and whether it was a good place for him to invest in.  There was a 3 bed semi up for sale in mid November with Guide Price of £125,000. Average rents in these types of properties have risen by 13.4% since 2008, which is amazing considering average rents in Cheltenham are in fact only 4.5% higher (on average) than those being achieved in 2008.

Let’s say you bought  it for £125,000, the achievable rent can be in the order of £660 to £675, depending how much effort you have put into presenting it; but being sensible, we are still looking at a yield in the region of 6.4% to 6.5% per year ... yields that are only normally achieved in risky HMO’s (Houses of Multiple Occupation ie Student housing .. with the fun and games that brings!). Property values since 2000 have risen, according the Land Registry, in Cheltenham, by 92.5% but looking at the properties that sold in 2000 and again more recently, average increases in property values in the Hesters Way area have been in the region of 109.3% over the same time frame.

So is this an investors paradise – great rental growth, great yield and great capital growth?. Well, all is not as it seems. This is a great example of the headline numbers (yield and capital growth) being not the only factor to consider when choosing an investment property, as you should also consider how long it takes to find a tenant. The average time it takes to find a tenant in the Hesters Way area can be up to six to eight weeks, whereas in most other parts of Cheltenham a tenant is usually found in one or two weeks. If you take into account the extra five or six weeks of void period for your property,  every six to nine months, because tenants in areas in such as the Hesters Way area tend to have a high propensity to move more regularly and the extra fees a landlord has to pay each time a tenant moves in and out, the annual overall return from the property is lower than it seems.

We can help you to find the best investment property with our specialist lettings advice. It is in our interest that you buy a property which will rent well, and for long periods of time. If you would like any advice on choosing properties, come and see us at our office on Bath Road, Cheltenham or email me on neil.west@belvoir.co.uk

Two Bed Cheltenham 5.3% Yield

This 2 bed property is on the market with Andrews at £145k. It looks as if it may need some work , so if you allow £10,000 that would make a total investment of £155K. The property should let for £695 PCM and that would give you a yield of 5.4%

                              http://www.zoopla.co.uk/for-sale/details/35219004

This would make a great buy to let investment. An opportunity to add value and a reasonable yield to boot.
I doubt if this will be around long , so don't delay and contact Andrews for a viewing. If you would like some advise on this or any other property, please contact me on neil.west@belvoir.co.uk

Who owns what property in Gloucester?

Last week, I was talking to a couple from the Maisemore, Gloucester, about them potentially investing in the Gloucester property market for Buy to Let for the first time. As my regular readers will note, the most important consideration you will make before investing in property is the balance between annual return/yield and the annual value increase/capital growth. However, what affects those two things (yield and capital growth) in Gloucester are very varied and complex. The quantity of property and whether property is owner occupied, social housing or private renting has a big difference on yield and capital growth.

The growth in home ownership in Gloucester, which started in the 1950’s, continued through the 1960s and, by 1971, the proportion of owner occupiers was equal to those renting (private and council). By 1981, 62.8% of Gloucester households were owner occupied and, for the first time, the proportion of rentals (private and council) was less than home owners. By 1991, it reached home ownership had risen to 73.5%. Roll into the 21^st Century and in 2001, there was hardly any change in the tenure structure in Gloucester, as owner occupation stayed relatively unchanged at 74.08%. The significant change over the decade (1991 to 2001) was within the rental sector, where the proportion of households privately renting increased for the first time since 1918. In fact, 8.68% of households were privately renting in 2001, while those socially renting (council housing) had decreased to 10.45%.

Between 2001 and 2011, the number of households in Gloucester rose, after over 5,000 houses were built in City, taking the number of households from 45,765 to 50,863, an increase of 10%. Also, the percentage of households that were owner occupiers in Gloucester dropped significantly to 67.2% (from the previously quoted 74.08% in 2001).

However, that doesn’t tell the full story, because whilst there was a significant drop in the percentages (74.08% to 67.2%), the actual numbers tell a completely different tale. Of the 33,903 households in Gloucester that were owner occupied in 2001, that figure had only dropped to 33,858 households being owner occupied .. so with only 45 less owner occupier houses, why the huge drop in percentages? 

In 2001, 3,971 houses were privately rented (8.68%) in Gloucester but roll on another ten years and there are 8,012 households in Gloucester that are privately rented (15.9%). The rapid increase in the number of households privately renting in Gloucester could be linked to the decline in the number of households getting on the housing ladder, usually by way of a mortgage. This is mainly because of the increasing difficulty for first time buyers being able to raise deposits for a mortgage, which haven’t been helped by high property prices. The average Gloucester house price for those who were first time buyers increased by 55.9% between 2001 and 2011. This meant larger deposits which are linked to the house price, were required.

Having this knowledge of the Gloucester property market to hand enables me to give to my landlords the best advice on what (or not) to buy for buy to let. Irrespective of you are a landlord with another agent or someone who is thinking of dipping their toe in the water for the first time as a buy to let landlord, if you want to pick my brains on any matter to do with the Gloucester property market, please feel free to pop through the door of our offices on Worcester Street or send me an email to neil.west@belvoir.co.uk