William H Brown Buy To Let 5.9% Return

This freehold period terrace home is situated within a popular residential location offering good access to the Town centre and benefits from no upward chain.

In the current market this property could achieve between £675 - £695 PCM and if purchased at the asking price would offer a gross yield up to 5.9%, which is well above the Colchester average.

For further details see the link below

http://www.rightmove.co.uk/property-for-sale/property-57477170.html

Boydens Buy To Let 5.7% Return

This period two bedroom home has recently been reduced and is offered with no upward chain and is situated in the popular New Town area offering good access to the Town and Railway station.

In the current market the property would let between £595 - £625 PCM and if purchased at the asking price would achieve a gross yield of 5.5% - 5.7%. This not only offers a strong rent return but also a long term investment.

For further details see the link below

http://www.rightmove.co.uk/property-for-sale/property-40137309.html

Private Renting in Colchester increases by 340.72% in 20 years

You find me in a reflective mood today as I want to talk about the future of investing in property in Colchester. The truth is that we have got fat and lethargic, with many people having mistaken the ever rising Colchester (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.

The days of making money from property as easy 
as falling off a log, like taking candy from a baby are sadly 
over my Colchester Property Blog reading friends

Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You see, I have always seen investing in the Colchester buy to let market (as I would anywhere in the UK), as I might see mother nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.  You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be … remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?

Nobody knows the future, and yes people can predict but I wouldn’t be afraid of this change .. because as a famous French proverb says, (I told you I was a reflective mood today), ‘the more things change, the more they stay the same’.  I mean, no one could have predicted how the property market has changed in Colchester over the last couple of decades? Looking specifically at the Colchester Parliamentary Constituency, twenty years ago, 25,502 households (meaning 65.65% of property) was owned and only 2,033 households were privately rented (meaning 5.23% of property was rented out by private landlords). Roll the clocks on twenty years and the change has been seismic …. Now 26,723 of properties in the Constituency are home-owners (a drop to only 58.74% being owner occupied) and the jump in private renting has been out of this world, as 10,487 properties are now privately rented proportionally 23.05%). (NB Neighbouring Constituencies show similar changes as well).

Who would have predicted in 1995 the private rental sector in 

Colchester would have grown by 340.72% in the proceeding 20 years?

Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Colchester have increased over the last 20 years (between 1995 and 2015), but by a more modest 246.45% (and most of that can be attributed to house price growth between 2000 and 2006.) 

The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Colchester in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

The advice I give to my landlords, and you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Colchester buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more stable platform for knowledgeable and wise Colchester buy to let landlords to thrive in. If you want to learn more about the Colchester Property Market, feel free to pop in for a coffee at our office for a chat with me.

Fenn Wright Buy To Let 6.2% Return

This modern two bedroom top floor apartment has recently come to market with Fenn Wright, situated within immediate walking distance of the Town Centre and North Railway Station.

In the current market this property would let for £675 pcm and if purchased at the asking price would achieve a gross yield of 6.2%. This is a fantastic return and the property would also offer a great long term investment.

For more information and to see the internal photo please follow the link below.

http://www.rightmove.co.uk/property-for-sale/property-50316575.html

Colchester Buy to Let sees returns of 13.18% in 2015

Well, as Spring is upon us I remembered that a few days after New Year, I got chatting with one of my out of town landlords who was back in Colchester visiting his family.  Brought up in Colchester, he went to the Colchester Royal Grammar School for Boys back in the 1970’s and is now a University Lecturer in central London.  To enhance his retirement, he has a small portfolio of four properties in the town and wanted my advice on where to buy the next property in Colchester (as he lives in a college owned flat and anyway, would never dream of buying where he lives in Kensington (where the average value of a flat is £1.62m and a town house £4.1m.    Eye-watering to say the least!!).

Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a Colchester property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth from rising house prices over time. Going into 2016, Colchester landlords will be under more pressure to find the best permutation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.

However, (you knew there would be a however) before we look at yield and capital growth, one important consideration that often many landlords tend to overlook, is the propensity of how likely the rent will increase.  Interestingly, the average rent of a Colchester property currently stands at £945 per month, which is a rise of 1.4% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants).

Anyway, back to yield and capital growth, the average value of a Colchester property currently stands at £290,400, meaning the average yield stands at 3.90% per annum, which on the face of it, many landlords would find disappointing.  That is the problem with averages, so if I were to look at say 2 bed houses in Colchester which are the sort of properties a lot of landlords buy, in Colchester, the average value of a 2 bed house is £192,200, whilst the average rent for a 2 bed house is £758 per month, giving a yield of 4.78%.   However, if that wasn’t high enough, there are landlords in Colchester who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward (give me a tinkle if you wanted a chat about those sorts of properties – although they can be fun and games!).

Ultimately investors want to be making gains from both rent and house price growth.   When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our University friend from Kensington.   Return on investment is everything.   So, looking at property values in Colchester have risen in the last year by 8.4% …. which means the current annual return on investment in Colchester for a typical 2 bed house is 13.18% a year .... not bad.

Doom and Gloom for Colchester Property Market?

One of my landlords rang me last week from Beacon End, after he had spoken to a friend of his. Over Christmas, they were discussing the Colchester property market and neither of them could make their mind up if it was time to either sell or buy property. If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, new legislation on checking tenants and the general uncertainty in the world economic situation.

I would admit, there are certain landlords in Colchester who have over exposed themselves in the last few years with high percentage loan to value mortgages. Those mortgages, with their current (yet artificially low) interest rates, will start to suffer, as their modest monthly positive cash flow/profit, i.e. income (rent) less costs (mortgage, fees, tax), will become negative when the tax and mortgage rates rise throughout 2017 and beyond.

It appears to me these landlords seem to have treated the Colchester Buy to Let market as a sure bet and have not approached this as a business and, as a result, they will suffer as they thought "Buy a house - rent it out so it covers the mortgage and make a few quid on top".  These are the people who will be thinking twice. I see opportunity everywhere and won't be stopping, I’m here to stay. It’s going to be an exciting new year.

Gone are the days when you could buy any old house in Colchester and it would make money.  Yes, in the past, anything in Colchester that had four walls and a roof would make you money because since WW2, property prices doubled every seven years … it was like printing money – but not anymore.

True, since January 1997, the average price paid for a Colchester flat/apartment has risen from £35,309 to today’s current average of £128,832 in the town, an impressive rise of 265% and terraced/town house have risen in the same time frame, from £45,454 to £199,361, an even better rise of 339%. However, look back to 2005, and in that year, the average flat was selling for £115,844, meaning our Colchester landlord would have seen a modest rise of 11% and the terraced owner would have seen an increase of 32%, as they were selling for on average £150,911 ... not bad until you consider inflation.

Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to retain its value, Colchester terraced property bought for £150,911 in 2005 needs to be worth £201,267 today. Therefore, our landlord has seen the ‘real’ value of his property drop slightly by 1.4% (i.e. 32% less 33.4% inflation).

The reality is, since around 2004/2005 we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So it is high time anyone considering investing in property stopped believing the hype and did some serious research using independent investment expertise. You can still make money by buying the right Colchester property at the right price and finding the right tenant. However, remember, investing in Colchester property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on the Colchester Property Blog ... if you haven’t been, then it might be worth a few minutes of your time? 

33.1% of Colchester tenants in the private rented sector are on Housing Benefit

“What does the ideal Colchester tenant look like?”, asked one of my landlords from Lexden the other day, to which he carried on before I could reply, “Let me guess, a professional couple, both in their 30’s, flawlessly tidy, pays their rent early, doesn’t complain or fuss, who has no plans to move and cheerfully accepts annual rent rises”.

Before I can answer that question properly, I have always believed all a landlord wants (and expects) of their tenants is to pay their rent on time and look after the property as if it were their own. In return, the landlord should provide a property that is warm, clean, modern and damp free and sort any issues (such as repairs) quickly and without fuss. 

Back to the tenants – tenants tend to fall into several groups ... 20 something professionals; young and middle aged families; corporate tenants (ie their employer finds their employee a house to live in); students; older singles/couples and housing benefit claimants – and they come with different needs and wants. So choosing who best suits your Colchester property – and steering clear of bad tenants – is a big factor in making property investment a success.

One topic that I am often asked is should they, as a landlord, accept tenants on housing benefit?

It might interest the landlords of Colchester that of the 11,689 private rented properties in the local council area, 33.1% of the tenants of those properties are on some form of housing benefit.

(3,875 properties to be exact). I know many landlords have suffered late rent payments with tenants on benefit, especially since 2008, when local authorities started paying housing benefit to tenants rather than directly to the landlords, but you can’t ignore the fact that housing benefit tenants make up a significant proportion of the Colchester rental population. My opinion is that the final choice of accepting such tenants has to be the landlords but you can’t tar every tenant with the same brush (I will always give you a balanced opinion if ever asked).

Interestingly, it might surprise some readers of the Colchester Property Blog, when we compare Colchester to the national picture, Colchester’s Housing benefit claimants are lower, as nationally a higher proportion of private tenants claim the benefit. Nationally, 39.2% of the tenants of the 3,891,467 rental properties in Great Britain claim some form of housing benefit (ie 1,526,915 properties).

Now, let us look at the occupations of Colchester tenants, which makes even more fascinating reading. Of the 11,689 privately rented properties in the Colchester area, 8,921 head tenants (the head tenant being classified as the head of the household) are in employment (the other 2,768 rental property head tenants either being retired, long term sick, students or job seekers).

Splitting those 8,921 head tenants down into their relevant professions, 3,690 of them are Managers, Directors, Senior Officials, Professional or Technical Professions, 780 in Administrative and secretarial occupations, 993 in Skilled Trades, 995 in the Caring, Leisure and other service occupations, 773 Sales and Customer Service Occupations, 682 Process, Plant and Machine Operatives and finally, 1,008 in Elementary Occupations.


The one thing I have always known anecdotally, but until I did my research, never had anything to back it up with, was the high proportion of professionals and skilled trades renting property in Colchester – intriguing! Maybe in future articles, I will look deeper into the corporate tenant market, young and middle aged families, students and older persons rental markets.

What does 2016 have in store for the Colchester Property Market?

Colchester house prices up or Colchester house prices down? ... and if so, by how much? Those of you who read the Colchester Property Blog will know I am not the sort of person who pulls punches nor someone who ever fails to give a forthright and straight talking opinion – so here are my thoughts for the 30,255 Colchester homeowners and landlords.

The average Colchester property is 7.9% higher today than it was a year ago, which doesn’t sound a lot, but when you consider inflation is currently running at -0.1% (ie consumer/retail prices are dropping) and average salary growth is only around 2.5% pa, this is bad news for first time buyers as property affordability continues to decrease (although I was reading in The Times the other day that wage inflation (ie salary growth) is showing signs of weakening).

Some commentators have said the higher stamp duty taxes announced a few weeks ago in the Autumn Statement for buy to let landlords, concerns over first time buyer affordability and the outlook of UK interest rate rises in 2016 will really dampen the property market. I hope you all read my previous article about what the new stamp duty rule changes would REALLY mean for Colchester landlords in my blog, but I believe the real issue in the Colchester property market is the shortage of property to buy, as people either worry there will be no suitable house to move to, or cannot afford to upgrade. However, on the supply side, Mr Osborne said in his Autumn Statement that he will change the planning laws to ensure the government meets the pledge made at the General Election (back in May) of 200,000 new homes a year.  All I can say is .. good luck George hitting those numbers!

Why? Because houses take years to build .. not months .. so George and his fabled house building aside .... where does that leave us in Colchester in 2016?

Well, talking of supply ... whilst Mr Osborne builds his properties (and let’s be honest - a week doesn’t go by without him being filmed on a building site with a high viz jacket and hard hat building a house here and there!), let us look at the shortage of properties for sale. Back in December 2011, 1,433 properties were for sale in Colchester .. today that figure is 707. On the face of it, this means there is less choice for Colchester buyers – but it also means with a restricted supply of properties for sale .. it keeps property prices high for Colchester house sellers.

Everything isn’t all doom and gloom though ... again back in December 2011, the average property in Colchester took 103 days to find a buyer .. latest figures state this has dropped to 60 days .. a drop of 42% in how long it takes to find a buyer. However, when you delve even deeper, the best performing type of property today in Colchester is the 3 bed, which only takes 56 days to find a buyer (on average) compared to the 1 bed, which takes 75 days. It just goes to show, even though the average has dropped since 2011, how varied that change has been!

So, back to the question everyone is asking .... What will happen to property values in Colchester in 2016?  I am going to suggest they will rise between 6.5% and 7.5% ... nothing out of the ordinary, but unless something cataclysmic happens in the world, 2016 will be like 2015!

Colchester Landlords could be fined £708,000 per year

“Who would want to move to Colchester in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Ipswich and this was the earliest he could do. 

 

It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.

For those Colchester landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.

Our landlord from Ipswich wanted to know how much of a real issue was ‘Right to Rent’ in Colchester. I was able to tell him, the last available figures (from a couple of years ago) show that 236 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Colchester Borough Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £708,000 to the landlords of the town.

It doesn’t sound a lot when you think there are 119,441 residents in Colchester Borough Council area, and of those, 104,271 people (or 87.30%) were born in the UK. But Colchester is a cosmopolitan town as the country of birth of the residents in the Colchester Borough Council area can be split down as follows:

·        UK                                                                   87.30%

·        Ireland                                                             0.52%

·        Europe                                                             4.94%

·        Africa                                                              1.87%

·        Middle East and Asia                                      4.18%

·        Americas and Caribbean                                 0.88%

·        Australia and Pacific region                            0.29% 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 5,896 Europeans in the area necessarily have the right to live in the UK either.

In a nutshell, Colchester landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....

·        UK Passport

·        EEA Passport/Identity card

·        Travel document or Permanent Residence Card showing indefinite leave to remain

·        Paperwork from Home Office stating their Immigration status

·        Certificate of registration or naturalisation as a British citizen.

I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.

So what did our landlord do?

Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Colchester Property Blog for a while and because of the knowledge we impart to the landlords of Colchester, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £55 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.

William H Brown buy to let 6% Return!

This 1 bedroom ground floor apartment has come to market with William H Brown situated to the North of Colchester in California Close. The property benefits from 2 allocated parking spaces and a modern finish throughout. It is also within a close proximity to local shops and also provides very good transport links to the town centre, train station and A12. 

In the current market this property would let for £575pcm and if purchased at the asking price of £115,000 would achieve a return of 6%. This is a fantastic return and the property would offer a great long term investment. 

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

Will the young people of Colchester ever own their own home?

I had the most interesting chat with a mature couple (in their early/mid 50’s) from Beacon End the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Colchester property market and how they had bought their first property in the town just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.

Their son, like many 20 to 30 year olds in Colchester, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Colchester is huge. There are in fact 10,975 private rental properties in Colchester at the last count, impressive when you consider there are 4,748 council houses in the town. However, let us not forget 30,255 properties are owner occupied (16,834 with a mortgage).

Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.

Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the mid £110,000’s in the Highwoods area of Colchester (meaning a modest deposit of £5,500 would be required).

When it came to affordability, I was able to tell them that when they bought their first house in Colchester in 1988, the ratio of house prices to salary was 7.54 to 1 in Colchester ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!

I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.

Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.

So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£5,500 in Colchester as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.

Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you by the right property, at the price, in the right location. 

Close to station - 5.8% Return!

This 2 bedroom apartment has come to market with William H Brown. Situated North of Colchester on Chapman Place it is within easy reach to the A12 and Colchester's Mainline train station. The property benefits from an open plan living area, allocated parking and is being old with no onward chain. 

In the current market this property would let for £675pcm and if purchased at the asking price of £139,950 this would achieve a return of 5.8%. This is a great return and would offer a great long term investment. 

For more information please follow the link below.

http://www.rightmove.co.uk/property-for-sale/property-39072954.html

6% Return from Jackson and Co... Tenants in Situ!

This 2 bedroom third floor apartment has come to market with Jackson and Co situated to the east of the Town centre within walking distance to the University of Essex and the Hythe station. The property benefits from two double bedrooms with an en-suite to the master and also allocated parking. 

The apartment is being sold with tenants in situ paying £850pcm, if purchased at the asking price of £169,995 would achieve a return of 6.1%. 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-37872039.html

6.1% From Knight west .. Close to university!

This two bedroom apartment has come to market with Knight West benefiting from underfloor heating and an allocated parking space. The well maintained property is situated close to the Town Centre towards the Hythe which is within close proximity to the university and amenities. 

In the current market this property would let for £695pcm and if purchased at the asking price of £135,000 will achieve a 6.1% Return. This is a great return and offers a fantastic investment due to its location. 

For more information on this property please follow the link below. 

http://www.rightmove.co.uk/property-for-sale/property-38963610.html

Palmer and Partners... 6.3% Return!

This 2 bedroom first floor apartment has come to market with Palmer and Partners situated on De Gray road located north Colchester. The property is in a fantastic location with easy access to the A12. It is well presented and also includes one allocated parking space.

This apartment would let for £650pcm in the current market and if purchased at the asking price of £122,500 it would achieve a return of 6.3%. This is a great return and the property is being sold with no onward chain giving the opportunity to get tenants in as soon as possible.

For more information please follow the link below.

http://www.rightmove.co.uk/property-for-sale/property-52564186.html?premiumA=true