Buy-to-Let Banker on Bank Street!

Happy Wednesday, hope you're having a good week!  Just spotted this property, not new to the market but reduced in price this week making it an interesting investment prospect.

It's a two bed through terrace on Bank Street, close to the very popular Morley Victoria Primary School and handy for both Morley town centre and commuting into Leeds by bus or train.  

Originally marketed at £92,500 in January it has this week been reduced to £86,000.  It has a modern kitchen, although a bit on narrow side and what looks to be a spacious modern bathroom, possibly a little dated in other areas and may benefit from redecorating in a neutral colour scheme but should be popular and rent easily for £525pcm giving a 7.3% yield which is pretty healthy!

It's on the market with Manning Stainton, here's link to property on rightmove Bank Street - 2 bed terrace.

If you have a buy-to-let deal you are considering and want to run it past a neutral eye, feel free to drop me a line on claire@openhousemorley.com or call me on 0113 436 4360.  Always happy to help!


To read more on the Morley Property Market:

1,927 home bought by landlords in the last 10 years - is this the end for Morley first time buyers?

Where's the most expensive street in Morley?

£3,600 boost to Morley first time buyers

There’s a whole legion of wannabe Morley first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Morley landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Morley buy to let landlords has dropped away, in the interim, it offers Morley first time buyers (FTB’s) a chance to fill the vacuum, with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

Looking at the average value of a terraced house in Morley currently standing at £120,500, that means if our Morley FTB went up against a Morley landlord, the landlord would have to pay an additional £3,615 in stamp duty. Early anecdotal evidence from fellow property professionals in the town is suggesting landlords are reducing their offers slightly on Morley properties to reflect the extra stamp duty.

Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Morley property market as a whole.

Over the last 12 months, £120,538,023 has been spent buying 785 Morley properties

Since 2011/12, the Morley property market has performed very well indeed. Over the last 12 months, £120,538,023 has been spent buying 785 Morley properties.  Figures from the Land Registry have just been released and month on month in our council area, property values are 0.5% higher, yet 4.75% higher year on year. These figures are nowhere near the heady days of 2003 (April to be exact), when Leeds property prices rose by 30.3% in 12 months.

So as property values in Morley (and the UK as whole) have started to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Morley property market in a different light. Even with the Spring / Summer rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Morley Property Market Blog, take advice on what to buy or not to buy and what to pay, meaning Morley landlords are being more calculated with their Morley BTL purchases.  I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Morley, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

Now I know a lot of Morley landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Morley investors will return for the right Morley property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Morley FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!

Cracking buy-to-let deal at 9% yield - 2 bed flat on Frensham Avenue

Check out this flat just gone on the market - 2 bedrooms near Fountain Street, would make a great buy-to-let investment on the market at a guide price of £65,000.  It's decor looks a bit tired but in reasonable condition so in it's current state it should rent for around £475 pcm to £500 pcm but with a bit of money spending on up-dating the kitchen and bathroom this could easily reach between £550 pcm and £575 pcm.  So whether you did any work or not it would yield 9%+ which is pretty good going!  It's on the market with Onwards & Upwards - here's the link: http://www.rightmove.co.uk/property-for-sale/property-42713574.html

1,927 Morley homes bought by landlords in last 10 years - is this the end for Morley first-time buyers?

I was enjoying a coffee in Cucina with a fellow Morley business owner recently, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person that writes that Property Blog aren’t you? We have met before at that Business Networking event in Morley a few months ago’. I did then recognise him and, whilst I won’t mention his name, he runs a well known business in the Morley area. Anyway, I was at a loose end for five or ten minutes before my next appointment, so we had a chat.

He wanted to know my thoughts on the future of the Morley property market. Here we go again I thought! People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the town have a choice to what type of roof they have … they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s, 80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Morley youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering.

Roll the clock back 10 years and Morley was a different place. There were 22,734 households in Morley and 16,964 of those were owner occupied. Move to the present, surprisingly the total number of households has decreased by 12.4% to 19,919 and the number of owner-occupiers has decreased by 17.9% to 13,931.

However, it’s the rented sector that is truly fascinating … ten years ago, only 915 properties were privately rented in Morley … and now it’s 2,842, a rise of 1,927.

The twentysomethings of Morley housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 3,262 to 1,960 over the same ten-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy-to-Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Morley and those who educate themselves and treat it as a business will survive and prosper.

The best way Morley landlords can protect their income from property (and mitigate the effects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last couple of years, Morley tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Morley (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.

… And just as I was about dash off, he asked ‘What about the impact of Stamp Duty changes for Landlords since April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Morley property values will see much impact, they haven’t thus far – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to Buy-to-Let landlords in the coming decade as the housing market should return to balance.

To read more on what's happening to house prices in Morley click here

Or if you've always wanted to know which is the most expensive street in Morley click here

Great Buy-to-let deal - Quarry Lane - 7%+ yield potential

I noticed this property has been reduced in price today from £96950 to £92,950.  It looks to be a well presented 2 bed flat and at a realistic rent of £550 pcm which would give a reasonable yield of just over 7%.
Modern kitchen with integrated appliances, modern bathroom and neutrally decorated throughout, there is also a dedicated parking space which is always popular with professional tenants.

It's on the market with Reeds Reins, link below:

http://www.rightmove.co.uk/property-for-sale/property-40261017.html

50.3% of Leeds Voters voted to remain in the EU – What now for the 10,924 Morley Landlords and Homeowners?

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made .. what next for the 10,924 Morley  homeowners especially the 6,724 of those Morley  homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen. 

Morley Property Values

Morley property values will probably drop in the coming 12 to 18 months – but by 18% - I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster. 

Since the last In/Out EU Referendum in June 1975, 

property values in Morley have risen by 1301.4%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Matt Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down more in value (in actual pound notes) than the one you are selling.

The Morley landlords of the 2,649 Morley buy to let landlords have nothing to fear either, nor do the 5,087 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived! 

And the value of your Morley  property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

Brexit and the Morley Property market – 11.1% more properties on the market

A couple of months back April Fools Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Morley, all of us have noticed, since the clocks went forward, demand to buy in April, May and June from these landlords has eased.

Then we have the Brexit issue, which is also having a tempering effect on the Morley property market.  Now whilst an exit is likely to have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Morley property values, and whilst the rate of growth is slowing, Morley property values are still 5% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015.  Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.

All this had led to increase in the number of properties for sale. For example, in the LS27 postcode, there were 216 properties for sale in December (of which 42 came on to the market for the first time). In January, February and March, 238 properties came onto the market in Morley(or an average of 79 per month), meaning by end of the first Quarter, there were 240 properties available for homeowners and landlords alike to buy (i.e. a rise of 11.1% more properties for sale).

Nevertheless, I believe this easing of the Morley property market is a good thing, as investment landlords won’t have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 10,924 Morley homeowners, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Morley Property Market!

However, all the signals suggest that whatever the aftermath of the EU referendum, in the long term, the disparity between demand for Morley property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Morley property market. It wouldn't surprise me that if by 2021, whichever way we vote tomorrow, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be between 18% to 23% higher than they are today.