To Buy or Not to Buy (To Let)

- Mon 06 Oct 2014

The property market has been the subject of much discussion in the past year and is seen to be an integral part of economic recovery. This renewed confidence has indeed brought more buyers and sellers to the market, but there is still an erring of caution, despite more attractive rates for borrowing. The reality is that correct pricing and modest capital growth remains key to maintaining the momentum for the longer term.

All of this also applies to the Letting market. It is fair to say that there has not been too much movement in rental returns in our region this year as the market can only sustain so much growth to attract quality tenants. This creates a quandary for Buy to Let Investors looking to buy in the current market, as their yields are being squeezed by modest house price increases. However, with my 37 years in the property industry, I see this as an opportunity, especially for those with a longer term view.

A recent report in the trade press suggested that rental yields had a North/South divide across the country, with the North outstripping performance. So that means we should all go and acquire our Buy to Lets in the North doesn’t it? Well No!

As Investors we always maintain a degree of emotion in our purchase of properties and by retaining an emotional and practical connection with our beloved West Country works in our favour over the longer term. We have capital growth running at a higher rate than the North, so over a year typically properties in the likes of Taunton, Exeter and Plymouth are producing a better than 5% yield as in addition could also see a 3-5% growth in capital value, thus outstripping capital growth in the North.

Of course, it is imperative that when buying for investment, emotions don’t override a business mind set when making a purchase. I always feel that when buying a property for your own occupation you will make a decision on a ratio of 80% emotion and with 20% business in mind. In making an investment purchase this should be completely reversed. I recently spoke to an investor with a substantial sum of money to invest who was considering a fabulous house with all bells and whistles in a highly sought after part of Exeter, a very nice place to own a property. The reality is that for a similar spend, he could purchase 3 properties with a better overall yield and a chance to reduce this risk of void periods impacting on monthly income and a potentially better prospect for saleability and capital growth. Not all eggs in one basket then.

It is for this reason you should seek professional advice from Bradleys, so we can help you avoid being distracted by your own emotions and point you directly to the properties with the best possible returns. Add to this the complete end to end service that we can provide, such as access to excellent BTL Mortgage deals often not found on the high street lenders, to a structured and dedicated property management service.

Visit www.bradleys-estate-agents.co.uk or call 03330 146140 for the region’s best help and advice on the Buy to Let market.

Lyndon Bent - Bradleys Commercial Director

Lyndon Bent
Bradleys Commercial Director

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