One of my landlords from The Drum rang me last week,
after he had spoken to a friend of his. They were discussing the Bo’ness
property market and both could not make their mind up if it was time to either
sell or buy property. If you read the newspapers and the landlord forums on the
internet, there is a good slice of doom and gloom, especially with Brexit, the
general uncertainty in the world economic situation, changes in the taxation
towards landlords, the increasing legislation affecting the sector etc.
I would admit, there are certain landlords in Bo’ness who
have over exposed themselves in the last few years with high percentage loan to
value mortgages. Those mortgages, with their current (yet artificially) low
interest rates, will start to suffer, as their modest monthly positive cash
flow/profit (ie income (rent) less costs (mortgage, fees, tax)) will become
negative when the tax and mortgage rates rise.
It appears to me these landlords seem to have treated the
Bo’ness Buy to Let market as a sure bet and have not approached this as a
business and, as a result, they will suffer as they thought "Buy a house -
rent it out so it covers the mortgage and make a few quid on top". These
are the people who will be thinking twice. I see opportunity everywhere and
won't be stopping, I am here to stay. It’s going to be an exciting year.
Gone are the days when you could buy any old house in Bo’ness
and it would make money. Yes, in the past, anything in Bo’ness that had
four walls and a roof would make you money because since WW2, property
prices doubled every seven years years… it was like printing money – but not
anymore.
True, since September 1998, the average price paid for a Bo’ness
terraced house has risen from £32,646 to today’s current average of £114,759 in
the town, an impressive rise of 251.5% and semi-detached houses have risen
in the same time frame, from £40,260 to £146,145, an even better rise of 268.0%.
However, look back to 2008, and in that year, the average
terraced house was selling for £92,685 meaning our Bo’ness landlord would have
seen a 23.4% rise and the semi-detached house owner would have seen an increase
of 32.3% as they were selling for on average £110,505 .... not bad
until you consider inflation.
Since 2008, inflation, ie the cost of living, has
increased by 32%. That means to retain its value, a Bo’ness semi-detached
house bought for £110,505 in 2008 would need to be worth £145,867 today to counter
the impact of inflation. Therefore, our average semi-detached house landlord
has only seen a marginal increase of 0.3% (ie 32.3% less 32% inflation) over
these 10 years ie 0.03% per annum.
The reality is that in the period since around 2008 we
haven’t seen anything like the average capital growth in property we have seen
in the past largely as a result of the ongoing effects of the economic crash in
2008 and it’s not predicted to grow at the rates it has previously done either.
So it is high time anyone considering investing in property stopped believing
the hype and did some serious research using independent investment
expertise. You can still make money by buying the right Bo’ness property
at the right price and finding the right tenant. However, remember, investing
in Bo’ness property is not only about capital growth, but also about the yield
(the return from the rent). It’s also about having a balanced property
portfolio that will match what you want from your investment – and what is a
‘balanced property portfolio’?
If you would like to talk to me about your balanced
property portfolio, please call me on 01506 828096, email me at robert@thekeyplace.co.uk or
pop into the office for a chat – the coffee is always on.
#bo’ness #boness #property #buytolet #realestate
#ownermanagedbusiness #retirement #retirementplanning #privaterentedsector #prs
#firsttimebuyers #lettingagents
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