In Walsall, 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 Walsall 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 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. Indeed there is pressure mounting on the lawmakers for a judicial review by various landlord groups of which I am proudly a part of.
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 (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.
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 Walsall have risen by 169.50% (average selling price), compared to our neighbouring cousins in Birmingham, which rose by 213.75%. This has proved that capital growth increases faster in the more expensive Capital, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Edgbaston (2% per year at best with a fair wind), as a 3 bed semi in Walsall. However, whilst the figure of 169.50% is an average for the area, certain areas of Walsall 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 Walsall Terraced Houses tend to generate a better yield than the detached houses, which is due to the value against rent ratio. However, the semi’s and detached houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built with Walsall in need of more family accommodation.
So what should you be buying in Walsall, and more importantly, how much should you be paying?
The average apartments in the Town are currently selling for approximately £158 per square foot. Terraced houses in Walsall are currently obtaining, on average, £112,707 or £129 per square foot.
The average semi in Walsall is selling for £169,800, achieving £185 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 Walsall houses and apartments, and the yields that can be obtained, depending how many bedrooms there are.
In the meantime, if you would wish to discuss any aspect of the above or pick my brains on a property you are looking to purchase and just want my opinion, please don’t hesitate to contact me. Just email me the link and I’ll be more than happy to give you my honest opinion.
Phone: 01922 311016