What has the ‘Help to Buy’ scheme done for Derby?

The Conservative’s and Liberal Democrats launched 'Help to Buy' last year to give a boost to the housing market.

The Help to Buy scheme involves the Government guaranteeing up to 15 per cent of a mortgage, acting as an indemnity for the banks and building societies who sign up (so far only three banks have done so). This means lenders can provide mortgages more confidently to borrowers with a 5 per cent deposit. It will apply to all types of properties, first-time buyers, home movers and re-mortgagers.

In the first 14 months (to end May 2014) there were 22,831 properties bought  with the support of the Help to Buy: equity loan scheme, up 2,283 (11%) from the total as at 30 April the majority of sales were to first-time buyers, representing 86% of total sales the average (mean) purchase price was £206,084.

Mr Cameron, during a recent visit to Ilkeston, said the Help to Buy scheme, introduced in April last year, has helped people in the East Midlands purchase 2,860 homes, 85% of whom were first-time buyers, and 27,861   nationally. Of the 2,860, some 168 were in Derby, though the Cabinet Office could not provide figures for how many of these were first-time buyers.

Quite interestingly, first timer buyers have had access to 95% mortgages since 2010 so I am not sure what it will do to the market, except highlight that property can be bought with a 5% deposit.

Scheme or no scheme, Derby continues to have a buoyant property market. Prices are rising, but not at the double digit level that was experienced in the early to mid 2000’s. If the scheme enables those who want to buy, to buy, then that can only be good for everyone in the town.
Over the last 2 or 3 years, it has mostly been landlords that have been buying property in Derby to let out. Carrying out a quick search on one of the price comparison websites, I was able to find in seconds that landlords can get fixed rate buy to let mortgages from as low as 2.99% until the end of 2016.

With rental yields in Derby of around 4% to 7% per year and the values increasing by 7.1% in Derby, and the overall yearly return is the region of 8% to 11% per year.

However, buying a buy to let property is full of pitfalls. If you have a good tenant, in a good property and a good relationship between tenant and agent, then not much can go wrong, as long as the relationship between the landlord and agent is exceptional. I pride myself on exceptional relationships with my  
landlords and their continued business speaks for itself.

If you are considering  becoming a new buy to let landlord, feel free to pop your head through the door of our agency on the St. James Street in Derby for some advice and opinion on what (or not) to buy.
It is true the property market is showing signs of good improvement, but, if you know where to look and what to look for, there are still bargains in Derby to be had.

If you would like to discuss anything further then please pop in and see me, send me an email or call me directly on 07977 235545.

CLICK HERE TO REQUEST A NO OBLIGATION, 
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The Derby Property Market has been like a can of fizzy pop!

A number of landlords, first time buyers and investors have approached me recently, asking about the Derby property market. With all these headlines of massive increases in property values in the UK, should we be worried we are about to have a price crash?

We are at the early stages but the economy is now actually looking a lot healthier and there are signs we are seeing an actual recovery after several false starts.

I am of the opinion that over the last few years, whilst mortgages have been a little more difficult to obtain than the last decade of the 2000’s, this lack of mortgages has produced some pent up demand for property. Now we appear to be on the other side of the financial crisis, and the banks are more willing to lend, this is why sales, prices and first-time buyer numbers have improved so rapidly. It has been like opening a shaken can of fizzy pop. You get the initial fizz of activity, and then it flattens.

What we're seeing is a relatively normal market correction, not a quick transition from a recession to a boom.

Property values in Derby have risen, on average by only 7.1 % in the last 12 months. When I look at the East Midlands as a whole, prices have risen by 7.9% and nationally by around 8.7%. Compared to the boom years of 2001 to 2004, when property values increased by 20% in 2001, 33.9% in 2002 and 8.4% in 2003 in Derby, I cannot see why some are concerned about an unsustainable price boom. I believe house prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone.

We are seeing continued exceptional property price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery, and I expect prices to continue to rise in the short term.

Speaking to others in Derby, the issue isn’t house price inflation, but a lack realistically priced properties coming onto the market for sale, hence, a lack of supply.

In the last two weeks of April 196 properties came on to the market for sale in Derby, two months later in  the first two weeks of June, only 165  properties came on to the market. So should you be buying a property in Derby?  Now is a good time to buy, provided you accept prices may fall again in a few years. It depends on how long you plan to own the property (whether as a home or investment), whether it personally suits you and most importantly whether you can afford it.

Derby first time buyers preparing to take the plunge should bear these factors in mind. The biggest issue must be that buyers ensure they can take the hit of future interest rate rises and therefore, I ask the first time buyers of Derby to make sure you'd be happy in your new home, because you could be stuck there in five years' time.

Landlords tend to buy for the long term, so these short term movements don’t tend to affect them as much. The lack of supply in Derby of new properties coming onto the market indicates people wanting to buy have to move quickly, and don’t have the luxury of a few weeks to decide to view the property. However, my findings show that first time buyers and landlords in Derby aren’t prepared to pay over the odds for a property to secure it. Maybe, just maybe, the memory of the 2008 price crash has given a dose of realism to the optimistic Derby property market?

If you would like to discuss anything further then please pop in and see me, send me an email or call me directly on 07977 235545.

CLICK HERE TO REQUEST A NO OBLIGATION, 
FREE RENTAL VALUATION ON YOUR PROPERTY.

Derby’s property market has outperformed Bakewell’s by over 117%

Within Derbyshire we have many towns and  areas that make up our fine County, from the more up market areas of the Hope Valley, Bakewell and Ashbourne all the way to the working class, no nonsense areas of the Amber Valley and Erewash.

In fact, I have a  few landlords from Bakewell; one in particular has a decent portfolio of buy to let property in Bakewell and Derby.

Let’s be honest, Bakewell is a sophisticated  market town which enjoys a well-earned reputation for stylish and convenient living close to abundant countryside and commons. The thriving High Street, offers a comprehensive range of upmarket shopping facilities and the schools in are highly sought after having   excellent Ofsted results. All these factors make the average value of a property in Bakewell around £354,300.

Our city of Derby has an excellent choice of shops, banks and restaurants, but quite different to those of Bakewell’s. Our city offers excellent rail and road links and there is a good choice of schooling within the area, including Derby High School, Derby Grammar and Littleover Community and a number of decent primary schools. All these factors make the average value of a property in Derby around £175,200.

In the last 12 months, the average value of a property in Bakewell and Derby has risen by roughly the same amount; (Bakewell £11,400 and Derby £11,700). However, that doesn’t tell the whole story, because average property values are much lower in Derby.
As a percentage, values in Bakewell have increased by a modest 3.3%, but in Derby they have increased at more than double that rate, in fact 117% proportionally more at 7.1%. It shows that Derby is a town that people want to invest in.

Just to show it isn’t just a fluke, looking at Ashbourne, another neighbouring market town. Prices have only risen by 4.9% in the last year and Matlock have seen values increase by just over 4.6%.

By keeping an eye on the local market, I am able to judge if a property is good value to buy for a landlord. I give this advice and opinion at no charge to anyone who asks, be they an existing landlord of ours, or indeed, another agent. I will also give it to anyone considering becoming a buy to let landlord for the first time. I do not charge for this service, because if I offer you an honest and straight forward opinion, you may consider using me to manage your property. However, I must stress there is no obligation to do so.

PS .. before you get the Champagne on ice.... spare a thought for Buxton property owners who have seen their values increase by 12.3% .. It must be all that water they drink!

If you would like to discuss

anything further then please pop in and see me, send me an email or call me directly on 07977 235545.

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

In Derby, why don’t people buy instead of rent? It’s not just raising the deposit..

Quite often, when talking about the rental market, we talk about property and seem to  forget the other party in the equation, tenants.

Without tenants, there is no demand for the rental property. The profile of the Derby tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position when they could have bought a property.

Since the credit crunch, rents have been good value for money for most tenants outside London. Few rents (outside London) have kept pace with inflation as they tend to track wage inflation. In 2008, the average median gross wage according to Office of National Statistics in Derby was £22,900. Latest figures for Derby in 2014 show average salaries in the City had risen to £25,905, an increase of 13.1%.

I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £119 in 2014, making inflation 19% over those seven years.

Derby tenants are paying less than both wage and goods inflation. Derby rents are in fact still around 4.2% below the level being achieved in 2008 but the tenants are being paid 13.1% more. That is why we have seen a greater demand for Derby rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.

Overall, considering the recent rises in property prices over the last 12 months, we are still 7% below the 2007 boom prices in Derby. With reasonable rents, many would-be first time buyers in Derby have been wise to remain in the private rental sector.

Rents tend to move in line with wages as opposed to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren't hit with awful expenditure surprises as a normal home owner would be.

In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move. From the landlords point of view, the consequence of this philosophy is a steady, solid market throughout the Derby area, with good tenant demand, decent long term capital growth (as mentioned in last week's article) and average yields between 4 and 7%.

With home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy, hold, buy, hold.

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Is the Derby property market a Runaway Train?

Some of my landlords invest for yield, some invest for capital growth (however, it’s very difficult to get both in this market). Everyone is different; if you are a landlord in Derby, who invests for capital growth as opposed to yield, it is crucial to look to build in capital growth in a  property by getting a property at a discount or by finding a way to add value.

So, how can you get a discount in this property market, with Derby property values alight and property being snapped up over night? Achieving capital growth in Derby is going to be tough over the coming few years isn’t it?

Well, yes and no.

Looking at the headline figures, of the 3,044 properties available for sale today in Derby, 1,211 of them are sold subject to contract, an impressive 39.8% which could indicate a sign of a runaway Derby property market? Well, no it isn’t. Don’t get me wrong it is a lot better than it was a few years ago, but there are still good property deals to be had.

We asked Rightmove for all of the properties that had come on to the market in the last 28 days (888 to be precise), after one month, how many of those 888 had found buyers .. less than one in five (162 to be precise or 18.2%). Look at the last 56 days (2 months) and of the 1,524 properties that have come on to the market in Derby, only 400 have a sale agreed on them (or 26.2%) .. The property market is good but it’s not a runaway train, is it?

The main thing is that landlords must take as much advice as possible. They will need to take a long and serious look at any existing properties or new ones to make sure they can achieve capital growth and that this increases in line with inflation. I have a great technique for finding properties that have been on the market for sale over three months or more. You don’t need any special software. All you need to do is ask Rightmove to list your search results (when searching), with the most recent first. The ones on the last few pages are by definition, the ones that have been on the market longest and potentially ready to do a deal .. simple but  effective.

We have many landlords who send me a web link of any Derby properties they are interested in and I always give my honest opinion. (It might not be what you want to hear, but it will always what you need to hear!).
So why do we do that? Well, we are a Letting Agent. Once you’ve bought the property, we would very much like to manage it for you or help with just finding you a tenant. If we give our opinion, at no cost or obligation, then we start to build a relationship, you may just start to trust us and as we will be giving you great customer service, which at the end of the day, is what landlords want from their letting agent and you might end up asking us to be your agent in the future (but of course there is no obligation to do so).

With that considered, it’s very much in our interests that you buy something that’s sensible and lettable – we don’t want you buying a dud, or something where the figures don’t stack up!

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Why should you consider buying to let in Derby?

In last weeks article, we spoke about the difference between Derby and Nottingham property markets. Now this resulted in a number emails arriving into my inbox as well as a few people popping into my offices for a chat about investing in buy to let.

Many people in our part of Derbyshire, over the last few years, have seen the buy to let market become all about nest egg investment. It is fuelled by pitiful interest rates on building society savings and reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.

So what can you expect from your rental property investment? In the short term, rental yields are important, and in Derby, the average annual yield is in the order of 3.44% per year. However, that is based on averages, and as most landlords in Derby tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving 4.5% to 6.2% per year depending on location and price in the City.

In the long term though, the question of capital growth is as important, if not more important (because if you have great short term yields, but the value of the property doesn't keep up with the rest of the market, you will have an asset that in real terms is dropping). As we mentioned in a previous article, average property values in Derby currently stand at £170,300. Property values in Derby have risen by 9.65% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Derby landlords.

Roll the clock back 10 years to 2004 when the average value of a property in Derby was £146,100. 15 years back to 1999 makes really interesting reading, as the average Derby    property value was only £65,600, 30 years makes it £28,200 and just for a bit of fun, we looked at 1974 at it was £10,050!

However, if one looks at say a 30 year investment period, if you had put your £28,200 into the stock market in 1984 instead of buying a house in Derby, your shares today would be worth £134,690. Put the same£28,200 money in a Building Society account and you reinvested the interest back into the account, and your Building Society passbook would have £158,070. Compare that with the property market in Derby and the property would be worth £170,300 today.

Not much difference to the building society until you realise that with the rental property you would have received in excess of £108,000 in rent over those 30 years, which wouldn’t have received with the Building Society account!

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk

Derby vs Nottingham... property values, not football!

One topic that I am always asked about, both by existing landlords and new ones, is how one city’s property values have performed against another. When purchasing a buy to let property, there are two ways landlords make money through property letting; capital growth and rental income growth.
When a property increases in value over time, it is known as capital growth. Capital growth has been strong in recent times in both Nottingham and Derby, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you and, hopefully, this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your annual return.

I was attending the Graham Penny Auction in Nottingham a couple of weeks ago and a landlord from Breaston, who has a number of properties in both Derby and Nottingham, asked me about the difference between Derby and Nottingham housing markets. I was quite surprised with my findings and wanted to share them with you.

The average property price in Derby is currently £170,300. In the last 3 months property values in Derby, according to my calculations, have risen by just over 2.6%  which starts to claw back the losses we experienced in the latter half of 2012 when values dipped by nearly 1.75%. That sounds a lot, but roll the clock back a few years and in 2011 values dropped 5.6% from the property values being achieved the year before. However, irrespective of the roller coaster prices we have seen in the City, they are still 9.65% higher than the 2009 slump (before you get the party hats on, we still have 8% to go before we reach the 2007 peak!).
Nottingham, has a slightly different story. Whilst in Derby, prices would need to rise by 8% to take average values back to the 2007 peak, Nottingham property values are only 6.5% away from those 2007 peak prices. In 2007, the average property price in Nottingham £174,200 and today it is a respectable £162,800. Therefore, is Nottingham the better bet?

Well, not necessarily. Over the last 2 years, property values have increased at a 56% quicker rate than Nottingham’s. If this trend carries on, Derby might overtake Nottingham in 18 months, in relation to long term house price growth. But then there is question of yield, as  Nottingham normally has higher yields than Derby, but Nottingham’s rental market can be quite fraught with its stricter rules.
Each Derby (and Nottingham) landlord will have different needs and requirements in his or her property investment. We are able to give an objective and unbiased opinion on what (and  what doesn't) make a good property investment. Knowing what has happened to values in different towns, enables us to spot any
trends or opportunities for buy to let landlords.

If you would like to discuss my thoughts on the rental markets, please feel free to pop into our offices on St.James Street, contact me on 07977 235545 or drop me an email; simonj@professionalproperties.co.uk

If you would like to arrange a FREE RENTAL VALUATION then click HERE.
If you would like to see our selection of Investment Properties for Sale, then click HERE.

Call me at our office on: 01332 366171 or visit the website: www.pplets.co.uk