The Colchester Property Market and £1,300,000,000,000,000,000 in loose change

The 5^th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8^th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Colchester, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Colchester friends and Colchester landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Colchester landlords have been investing some of that cash into Colchester bricks and mortar, as they search for a low risk investment opportunity.

Buying a Colchester buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Colchester house prices have been extraordinarily robust, increasing by over 2148% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

..  but before you go out and buy any old Colchester property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.

Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Colchester and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in one of those apartments on Grosvenor Place situated within short walking distance to Colchester’s historic town centre, River Colne and the grounds of Castle Park, as well as local schools, shops and amenities .. an immaculately presented two bed apartment with access to a communal swimming pool, 63 sq metres inside (678 sq ft in old money) sold in December 2006 for £219,995. In the summer, it only obtained £144,000, a drop of 34.54% or 4.82% a year - a very disappointing result.

Investment opportunity with Boydens

This two bedroom ground floor flat has come to market with Boydens priced at £127,500. Situated on Nicholson Grove it is within walking distance to the town centre and town station. The property benefits from its own garage and parking and is also being sold with no onward chain. 

This apartment would let for £625pcm in the current market and even if purchased at the current asking price would still achieve a return of 5.8%. This is a great return and in a rising market would provide a great long term investment especially due to its ideal location. 

For more information please follow the link below.

http://www.rightmove.co.uk/property-for-sale/property-55491014.html

Great investment from Gallant Richardson!

This 2 bedroom apartment has come to market with Gallant Richardson situated on Maldon Road in the Town centre of Colchester. An easy walk into the town centre it is also a reasonable commute to the Mainline train station. 

The property is currently let at £550pcm, this achieves a return of 5.28% as the property is on the market for £125,000. However the property would easily achieve £625pcm and the rent could be increased when the current tenancy is up in April 2016. At £625pcm this would mean a return of 6%.

For more information please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-38035443.html

Values of Colchester Terraced Houses smash through the £250/sqft barrier

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 Colchester, 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 Colchester 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 Colchester have risen by 236.74%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive South, 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 Colchester. However, whilst the figure of 236.74% is an average for the area, certain areas of Colchester 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 Colchester 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 Colchester, and more importantly, how much?

• ·        The average apartments in the town are currently selling for approximately £245 per square foot.

• ·        Terraced houses in Colchester are currently obtaining, on average, £211,300 or £251 per square foot,

• ·        An average semi in Colchester is selling for £244,500 (and achieving £250 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 Colchester houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. 

1 bedroom maisonette .. 5.8% Return!

This 1 bedroom maisonette on the market with both Michaels and William H Brown was reduced to £117,500. The property is in a fantastic location situated in the popular development of mile end. This property has been looked after to an extremely high standard and benefits from modern decor, and is also being sold with no onward chain. The location is ideal as it is a short commute to the A12 and also not far from the Colchester Mainline station. 

The property would achieve £575pcm and if purchased at the reduced asking price would achieve a return of 5.8%. This is a great return and the property would offer a great long term investment. 

For more information please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-54317966.html

Tenant in Situ ...7.3% Return

This one bedroom apartment has come to market with Jackson and Co bing sold with a tenant in situ already paying a rent of £715pcm. This is a fantastic location as it is within walking distance to the university. It is well presented throughout and also benefits from an allocated parking space. 

With a rental of £715pcm and a purchase price of £117,500 this would achieve a return of 7.3%. This is a fantastic return and is a great opportunity to get onto the property ladder. 

For more information and internal photos please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-37981782.html

Abbotts ... 6.25% Return!

This 2 bedroom apartment has come to market with Abbotts with a purchase price of £120,000. Located close to the Town Centre and North Station this property makes for a fantastic investment appealing to town workers and commuters. 

The property benefits from an onsite gym and allocated parking and 2 double bedrooms. In the current market this would rent for £625pcm and if purchased at the asking price would achieve a return of 6.25%. This is a great return and offers an ideal long term investment. 

For more information please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-51780454.html

6.8% Yield .. Abbeyfields with tenant in Situ!|

This 2 bedroom apartment has come to market with Jackson and Co for £134,995. Being sold as an investment only with tenants already in situ paying a rental of £762pcm this makes for an ideal ready made investment with a return of 6.8%. 

The property benefits from allocated parking and is being sold with no onward chain. It is situated on the popular development of Abbeyfields, an ideal spot for people that work in the town looking to walk to work, it is also close to the Colchester town station which offers interlinking trains to Colchester Mainline. 

For more information on this property and to see the internal photos please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-37948359.html

Colchester Buy To let –Freehold House or Leasehold Flat?

Well my Colchester Property Blog reading friends, as seems to be all the rage with Jeremy Corben asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Colchester landlord last week. Nice chap, lives in Crockleford Heath, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Colchester?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what Colchester tenants want in the area of Colchester they want! The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Colchester are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Colchester leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Colchester apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.

So what do the numbers look like? Well since 2003, the average freehold property in Colchester (detached, semis and terraced) has risen from £149,807 to £273,319, a rise of 82% whilst the average Colchester leasehold property (flats and apartments) has gone up in value from £92,387 to £137,203, a more mediocre rise of 49%. 

I was really interested to note that of the 11,689 rental properties in the Colchester Borough Council area that the Office of National Statistics believe are either let privately or through a letting agency, 5,351 of them (or 45.8%) are apartments. However, there are only 14,200 apartments in the whole council area (be they owned, council rented or privately rented), which represents 19.8% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Colchester’s leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Colchester apartment block, every terraced house or semi is different. Like I said at the start, the definitive answer though is to research what Colchester tenants want in the area of Colchester they want. Demand for town centre apartments, near the nightlife and transport links can be popular and can offer the Colchester landlord very good yields with minimal voids. However, Colchester terraced houses and semis, whilst not always offering the best yields (although sometimes they can), they do offer the Colchester landlord decent capital growth.

My advice to the prospective landlord as it is to you is do your homework.  One such website, which only talks about the Colchester buy to let Property Market, is the Colchester Property Blog. Another source of info many Colchester landlords use is me! What many Colchester landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Colchester, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)

Two bedroom apartment with Haart 6.25% Return!

This two bedroom first floor apartment has come to market with Haart. Situated on the popular area of Abbotts Heath on Mountbatten drive this well maintained property would make an ideal investment. It benefits from allocated parking, double glazing and has a 189 year lease left.

The property would let for £625pcm and of purchased at the guide price of £120,000 would achieve a 6.25% Yield. This is a great return and a fantastic opportunity to get on to the property ladder as it is also being sold with no onward chain.

For more information please follow the link below.

http://www.rightmove.co.uk/property-for-sale/property-36972333.html

Brook street from Boydens ...6.24% Return

This 2 bedroom terrace house has come to market with Boydens for £125,000. Situated on Brook street, it is a short walk from the town centre, it is also within easy reach to the Town train station which offers interlinking lines to the mainline station. 

The property benefits from 2 good sized bedrooms, an upstairs shower room and a courtyard style garden at the rear of the property. It is also being sold with no chain making it ready for tenants as soon as possible. The property would rent for £650pcm and if purchased at the asking price it would achieve a yield of 6.24%. 

This is a great investment so don't miss out, follow the link below for more information. 

http://www.rightmove.co.uk/property-for-sale/property-55971353.html

Colchester Tenants Pay 36.9% of their Salary in rent

I had the most interesting chat with a local Colchester landlord the other day about my thoughts on the Colchester property market. The subject of the affordability of renting in Colchester came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Colchester property market and share with you my findings.  Colchester tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Colchester is £785 per month.  When the average annual salary of a Colchester worker, in the lower quartile, stands at £25,501 per year, that means the average Colchester tenant is paying 36.9% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Colchester Property Blog reading friends is such a shame for the youngsters of Colchester.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Colchester.  It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Colchester people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Winter 2007, there were over 2,900 properties for sale in Colchester and since then this has steadily declined year on year, so now there are only 776 for sale in the town.

So, the planners in Colchester haven’t allowed enough properties to be built in the town and existing Colchester homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Colchester to match demand, these are the reasons houses prices in Colchester have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the East region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested  more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties .

 It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted,  is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Colchester and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Colchester tenants as wages will start to rise and good news for Colchester landlords, especially as property values in Colchester are now 8.2% higher than year ago!

6% return from Palmers!

This one bedroom corner house has come to market with Palmer and Partners situated North Colchester in the popular area of Highwoods. Within close proximity to the local shcools and shops it also has excellent access to the A12. The property benefits from allocated parking and also a private rear garden.

In the current market this property would let for £575pcm and is on the market for offers in excess of £115,000. If purchased at that price it would achieve a 6% return. The property is also being sold with no onward chain making it ready for tenants as soon as possible. 

Have a look at the internal photos by following the link below. 

http://www.rightmove.co.uk/property-for-sale/property-37618206.html?premiumA=true

over a 6% Yield from Palmer and Partners!!

Palmer and Partners have this 2 bedroom apartment for sale located north Colchester situated on the popular development of Mortimer Gardens. The purchase price is £129,995 and benefits from an allocated parking space and is also being sold with no chain. The property is in a fantastic location a short distance to the A12, local schools and the Colchester mainline train station. 

This apartment is the perfect opportunity to get onto the property ladder and would let for £695pcm and if purchased at the asking price would achieve a return of 6.42%.  For more information please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-37609041.html?premiumA=true

Jackson & Co ... 6% Yield!!

This 2 bedroom apartment has come to market with Jackson & Co for £159,995. It is situated on Caelum Drive which is located to the East of Colchester, this is within close proximity to the university and local shops. It is also near to the Hythe train station which offers regular interlinking trains to the town centre and Colchester mainline.

It is a well presented and well looked after apartment which is currently tenanted by students achieving a rental of £800pcm, this will obtain a 6% yield which is a fantastic return. So don't miss out on this opportunity and follow the link below for more information.

http://www.rightmove.co.uk/property-for-sale/property-55848662.html?premiumA=true

William H Brown 6.14% Yield!

This 1 bedroom flat on Enville Way in Highwoods has just been reduced to £97,500. The property is on the market with William H Brown and benefits from easy access to the A12, an allocated parking space and is within close proximity to the local shops and amenities. This property is also being sold with no onward chain therefore making this the perfect investment opportunity to get tenants in as soon as possible. 

The property would let for £500pcm and if purchased at the asking price would achieve a return of 6.14%. This would provide a great long term investment so don't miss out! 

Follow the link below for more information on this property. 

http://www.rightmove.co.uk/property-for-sale/property-36573915.html

Cheap Estate Agents May Cost You Your Wealth

I was sitting at home the other evening and I decided to watch an episode I had recorded of watchdog, it was a choice of that or one of my wife’s strictly or X factor episodes. One of the stories was about a Letting agent or “Rogue” as they called him who in simple terms seemingly received rent payments and failed to pass them on to the Landlord claiming they had “defaulted”.

Now this is by no means a new story to hit Watchdog or the headlines for that matter, but it struck a chord with me because so many people are quick to judge Sales & Letting agents and beat them down on their fees. In writing this blog I always try to maintain an impartial balance with my articles and Buy to let information.

What’s the point I hear you ask? The point is this and it’s nothing new you quite simply “You get what you pay for”. You can find many examples in all walks of life that prove this very argument, as an example I bought a pair of £250.00 Oliver Sweeney shoes and some years later they still look as good today as they did when I bought them, yet the shoes I brought as an impulse buy from Next, cost me £85.00 and did not fare so well lasting only 6 months.

Have you ever wondered why some agents will reduce their fees to such a point to undercut everyone else! Desperation perhaps? You have to ask yourself if an agent is so quick to slash their fees why? Equally are you truly going to receive the service that you are being promised. Will you deal with a dedicated department? Are they actually local and know where Colchester is?

My advice is simple hunt out a couple of good local agents, recommendation is always the best way, alternatively if you do not know the local area you can always look at boards the agents reviews on sites like google. Ask specific questions about how they manage a property, how many staff are in that department? Are you allocated an individual account or property manager? Where are they based? Do they guarantee the rent? And if so how does it work? Can they guarantee the condition of the property?  How do they deal with rent arrears? what are their referencing procedures ? What regulations do you need to conform to? Are they a member of The Property Ombudsman for Lettings or an ARLA registered agent? In addition can they give you details or a landlord that you can call to speak to about their experience? Or can they supply testimonials?

Whilst fees do come into play they should not be the main reason when choosing an agent, may I suggest that if you can’t afford to pay an agent their worth perhaps you should consider carefully about investing in property as ultimately choosing a good agent will save you in the long run and equally they are likely to be looking after one of your biggest assets.

Ask yourself this, can you afford to allow your home to be vacant or have a tenant residing in it without receiving income. More importantly why should you!

For more insights, comments and facts on the Colchester Property Market please visit the Colchester Property Blog www.colchesterproperty.blogspot.co.uk or email me personally at robertchamberlain@moreestateagents.co.uk

How EU Migration has changed the Colchester Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Colchester Property market.

Before we look at Colchester though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Colchester, migration has risen over the last few years. For example, in 2007 there were 1,715 migrant national Insurance cards (NIC) issued and the year after in 2008, 1,304 NIC cards were issued. However, in 2014, this had increased to 2,006 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Colchester property market; it couldn’t fail to because of the additional 14,962 working age migrants that have moved into the Colchester area since 2005. However, it has not been the main influence on the market. Property values in Colchester today are 22.37% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the East have only grown on average by 1.03% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Colchester property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period. 

If you want to know more about the Colchester property market, then for more articles like this, please visit the Colchester Property Blog www.colchesterproperty.blogspot.co.uk