UK Property Investment Blog

The phrase ‘you get what you pay for’ no longer applies to the property market according to leading mortgage lenders.

Look back 5 years and £150,000 might have bought you a London Garage or a small 1 bedroom terrace, but in the current financial climate this figure now holds a whole new meaning for investors.

In a report released by Nationwide they reported that the average UK property is now worth £150,501 with the key difference being the types of property investment that are available to you has substantially grown.

For £150,000 you can now invest in a 2 bedroom semi-detached in Cheshire or a 1 bedroom Victorian studio conversion in South London. Essentially, properties that were previously out of reach, are now more widely affordable and easier to attain.

However, this is not the only positive news to come from these price falls. Under the governments new stamp duty scheme, each of the afore mentioned properties require no stamp duty fees:

Up to £175,000: 0%
£175,000 to £250,000: 1%
£250,000 to £500,000: 3%
Over £500,000: 4%

With property prices at their lowest since May 2004, the combination of the above information with these figures means investing in properties has never been more profitable, making now, more than ever is the perfect time to start structuring your property portfolio for success.

Probate properties can soon convert to the driving force of the property market, concording to recent studies.

Reputed for bearing lower cost tags than other properties on the housing market, these hidden property jewels could provide the perfect investment answer for investors seeking continual sources of investment.

HomeTrack’s property analysts explained that while property sales may be cut down by 50-60%, the number of probate properties appearing on the market is still consistent. And part of this reason is due to life expectancy.

Although it may sound morbid, people are still dying at the same rate as they did before. It has not risen or fallen like house prices, but has remained the same.

For this reason, probate properties have become a core part of the economy. Bringing with them 500,000 new properties every year, which families traditionally try to sell fast in order to enable them to sort out their family’s inheritance tax.

Yet the important feature about these types of property has to be their ability to remain flexible and accessible in all financial climates.

Having earned themselves the reputation for being run down, tired and in need of repair. The main reason why probate properties are so cheap is due to their need for renovation. They need more work than the average household.

Now whilst as an investor your sole goal will be to rent out accommodation and not sell it, the easy accessibility of these properties means you can make increased instant profits on top of only investing for 80% of the properties real value.

The Bank of England may have only cut their interest rates down to 1% last week, but the impact of such a change has already been felt by homeowners who have got tracker deals.

With many verging on the edge of falling into negative rates, mortgage lenders have confirmed that whilst they will not pay their customers for their loans, homeowners will not have to pay a single penny of interest on their mortgage. Meaning many homeowners are now looking forward to months of no repayments.

Now whilst not all tracker deals will fall into this category, this interest rate cut can still offer great savings for investors.

Those who were lucky enough to get Cheltenham & Gloucester’s minus 1.01% tracker deal (to the Bank of England’s 1% base rate), on a £100,000 property, can look forward to monthly repayments of only 8p.

8p compared to the £500+ increase in profits they will experience from renting out their properties on the buy-to-let market, if using the tried and tested Property Mentor scheme

Even those with repayment mortgages are now benefiting from lower monthly repayments. An investor who has a property worth £100,000 for example at an interest rate of 0.5% would only have to pay as little as £355 a month to own it. Not bad when most £100,000 properties have repayments of £600 a month.

Now factor into the equation that rental prices have risen by 20% in the last year and these falls in monthly repayments could prove to be a great asset.

The UK may now be in a recession but you don’t have to let this affect your property portfolio.

Instead you can offer your property portfolio more… Insight into which cities will most be affected by the recession.

Let us explain.

According to the BBC News, depending on a cities qualification level, the more qualified they are, the more likely they will be able to cope with the recession.

And this can be more useful to you as an investor than you might think.

By being able to confidently invest in a city where you know your tenancy market will be able to afford to rent your properties, you will be able to invest feeling rest assured that you will always be able to receive a positive monthly cashflow from each of your rental properties.

But there is more…

In this startling report, they split cities into 3 distinct categories: green, amber and red. And their colour schemes simply speak for themselves.

Green: least vulnerable – Oxford, Cambridge and Reading
Amber: medium – Bristol, London and Edinburgh
Red: most vulnerable – Belfast, Liverpool and Hull

*PLEASE NOTE: the cities mentioned are just a sample of the ones offered in the BBC News report, and are put under these categories by their recommendation alone.

And the reason for such key distinction between these cities? Their workforce levels and experience.

Continuing in their report the BBC found that due to Cambridge’s highly qualified workforce, they had experienced a lower increase in people seeking Jobseeker’s Allowance compared to cites like Hull who have more unqualified residents.

Now you are probably wondering what all this information has to do with you as an investor. Well here is the thing… whilst these figures do not affect you directly, they are good indicators on which cities to be careful of investing in.

After all, the higher the unemployment figures, the higher the number of tenants who will be unable to afford your rental properties. A factor you need to take into serious consideration.

I have been considered optimistic for saying for a while that the bottom of the UK buy to let market is far sooner than many commentators are predicting and that we need to make the most of the next 3-6 months.

What have I been basing this on?

Simply how strong the rental yields now are alongside the strong local affordability. With saving rates at less than 1%, many large investors are cash buying to increase cashflow and make the most of the bargain prices.

First time buyers are chomping at the bit to buy as prices are very affordable based on their salaries.

With yields so high even the most conservative lenders are beginning to see the figures work in terms of debt servicability.

With base rate dropping to a new low yesterday of 1%, cashflow for buy to let investors as highlighted in the last newsletter is better than ever making it even more attractive.

With borrowing in December 3 times higher than predicted by many economists and Halifax announcing yesterday that house prices were up in January by 1.9% there are early indications that the market is close to bottoming out.

The key here is to differentiate between the buy to let market, which I would put as properties under £120,000 that cashflow well and the owner occupier market with properties at say over £200,000. The buy to let market will bounce back just as soon as there are more mortgage products on the market because there is huge demand for property that gives a strong yield. Compared to almost all other investmenrt opportunities this oiffers excellent potential and long term security – if you can buy at excellent value today, cashflow your investment well at sensible leverage then will do very well in 5-10 years time.

The bargains right now are incredible, and as long as you can get a mortgage, you are able to pick up some terrific deals! Experienced investors are buying as many as they can just now, and many new investors are entering the market as they can see the strong rental yields and the security of owning property far outweighing many other forms of investment.

Pretty much time to take action! Follow us on Twitter to get the latest updates and attend this free property investment course to get the ball rolling!

Want proof that the news in the media is not all ‘doom and gloom’? That the recession is not biting everywhere?

Well, you can!

The UK may now officially be in a recession, but if you look a little closer you will find an assortment of stories that can each prove to be very beneficial to the economy and to the property market too.

Take the recent revival in sterling.

Just hours after Barclays announced that it will not fail to raise fresh capital, the pound rose in value against the dollar, pushing it to above $1.40. A one-and-half cent increase just a week after it reached a record low of $1.35.

And the reason for this sudden escalation?

Well, alongside Barclays declaration that it will raise fresh capital, they have also revealed that during 2008 they received a record breaking income.

An income that has gone on to inspire investors to increase their shares in Barclay’s by a staggering 60% – a jump of 33.2p to 84.4p

But Barclay’s are not the only bank to bring positive news to the market.

Other banks have also experienced an increase in shares. Lloyd’s TSB for example rose by 23% to 60.8p and RBS by 15% to 14p. And all this took place in just one day!

Then there is the recent coverage on Santender.

Part owners of Bradford & Bingley and Abbey National, Santender is planning to give customers who invested in Mr Madoff’s fund management scheme, a 2% dividend share to compensate them for their losses.

And this is not a small amount either.

It is believed that all these shares combined equate to £1.28bn, essentially £12.8 million each.

With so many promising shares available it cannot be denied that this news should help to increase investors confidence in the market and help them to start rebuilding their investments.

Even you too – as an investor – can benefit from these stories. Why? Well, because each of these stories proves that the recession does not have to spell the end of anything.

If anything they are proof that the market is still filled with possibilities and opportunities. Opportunities that you can turn around to offer your family a more secure future!