Latest News For Investors

Month: October 2016

Ideal First Time Investment Property Exeter

Are you looking to invest in buy to let in EXETER but not sure where to start? Look no further as this property could be a possibility!

An opportunity to acquire a modern 2 bedroom ground floor flat in a popular and sought after area of Exeter. The accommodation comprises of an open plan lounge and dining area with a modern fitted kitchen, 2 double bedrooms and a fully fitted bathroom. The property has the benefit of gas central heating and double glazing, it also has a private balcony and an allocated parking space. The property is currently let and is receiving £710PCM .

This is a SUPERB investment opportunity. Based on a purchase price of £172,500 and a rent of £710 pcm, you would be looking at a 4.9% RETURN.

As this is a leasehold property however you would need to consider the terms of the Lease.  Please call Northwood Exeter for further details.

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What will the 0.25% Interest Rate do to the Exeter Property Market?

I had an interesting chat with a St Leonards landlord who owns a few properties in the city. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Exeter Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the city to manage his Exeter properties) yet after reading my blog on the Exeter Property Market for a while, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Exeter property market and I would also like to share these thoughts with you……

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Exeter, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Exeter, of the 55,149 people who have a job, 2,666 are in the manufacturing industry and 3,821 in Construction meaning

4.8% of Exeter workers are employed in the Manufacturing

sector and 6.9% of Exeter workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Exeter economy, is the Financial Services industry. Financial Services in Exeter employ 1,382 people, making up 2.5% of the Exeter working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Exeter property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages.. which will have a huge effect on the Exeter property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Exeter property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific effect on Exeter). The severe undersupply means that Exeter property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades.. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.

For more thoughts on the Exeter Property Market, please visit the Exeter Property Market

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The 10,750 Exeter Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Exeter savers to do with the Exeter Property Market … everything in fact. Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

… And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would loose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Exeter house prices and princely buy to let yields have made property investment in Exeter an appealing option for many. According to my research, the…

Average Yield over the last five years for Exeter Buy to let property has been 4.4% a year… and average Property Values in over the same period have risen by 13.65%.

Using these averages, the Exeter landlord’s property would be worth £227,300 and they would have received a total of £44,000 in rent – making the total return £270,300. Meanwhile, whilst our 10,750 Exeter Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.

There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want … but one last thought…

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar … and that is why my fellow Exeter homeowners and Exeter landlords is why the love affair of the British and Property will continue.

If you are considering becoming a new buy to let landlord in Exeter, what do you know about the Exeter property market? Do what many established landlords do and visit the Exeter Property Blog where there is a catalogue of articles like this and where the best buy to lets deals are in Exeter

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