The Council of Mortgage Lenders (CML) latest snapshot of the
buy to let mortgage market shows us that buy to let landlords haven’t been put
off by the Chancellors announcements on the way buy to let’s are taxed.
Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.
In Plymouth, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Plymouth rental market is doing reasonably well, with rents and property values rising. Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).
Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.
In Plymouth, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Plymouth rental market is doing reasonably well, with rents and property values rising. Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).
The first thing you have to decide is whether you want great
capital growth or great rental yield, as every knowledgeable landlord knows,
you can’t have both. Over the last twenty years, property values in Plymouth
have risen by 168.08%, compared to Greater London’s 436.2%. This has proved
that capital growth increases faster in the more expensive Capital, but your
investment money doesn’t go very far, meaning there won’t be as much rental
yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a
2 bed semi in Plymouth. However, whilst the figure of 168.08% is an average for
the area, certain areas of Plymouth have seen capital growth much higher than
that and others areas much worse (we have talked about those in previous
articles).
If you recall in an earlier article, my research reveals
that Plymouth apartments tend to generate a better yield than houses, probably
because several sharers can afford to pay more than a single family. But houses
tend to appreciate in value more rapidly and may well be easier to sell, simply
because there are fewer being built.
So what should you be buying in Plymouth, and more
importantly, how much?
· The average apartments in the City are currently
selling for approximately £218 per square foot.
·
Terraced houses in Plymouth are currently
obtaining, on average, £166,900 or £174 per square foot.
·
An average semi in Plymouth is selling for £194,000
(and achieving £197 per square foot).
Now these are of course averages, but it gives you a good
place to start from. In the coming weeks, I will look at rents being achieved
on Plymouth houses and apartments, and the yields that can be obtained,
depending how many bedrooms there are. In the meantime, if you would like to
read more articles like this, then can I suggest you visit the Plymouth Property
Blog www.plymouthpropertyinsight.co.uk
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