It is almost 7 years since Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5% – 5th March 2009 to be precise! In just under five months, starting on 8th 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 and there it has stayed since.
In the Summer of 2015, people were predicting a rise in the New Year, yet now, some forecast it may stay at this level for years yet to come with 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 Walsall, so I cannot profess to know what will happen to interest rates. However, what I do know, speaking to my Walsall friends and Walsall 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) – imagine that as a pile of chocolate coins! Most of which is earning a pittance in interest. That is one of the main reasons why more and more 40 and 50 year old Walsall landlords have been investing some of that cash into Walsall bricks and mortar, as they search for a low risk investment opportunity.
Buying a Walsall 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 have 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, Walsall house prices have been extraordinarily robust, increasing by over 1637.3% between 1974 and today. Some will mention 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 whizkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment.. in fact you can see, touch and feel the bricks and mortar investment.
.. but before you go out and buy any old Walsall property, plenty of landlords still get it wrong. You have to aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates, immigration status etc. Get it wrong and big fines and even prison is an option – but that’s why many landlords use a professional 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 Walsall 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 near the Town Centre at the Smiths Flour Mill development in Wolverhampton Street…a decent one bed apartment, 37 sq metres inside (approximately 400 sq ft in old money) sold in October 2007 for £99,000. In November 2015, it only obtained £72,000, a drop of 27% or 3.4% a year – a very disappointing result.
I cannot stress enough the importance of doing your homework. One source of information and advice is the Walsall Property Blog where I have similar articles to this about the Walsall property market and what I consider to be the best buy to let deals around at any one time in the Town, irrespective of which agent it is on the market with. If you are interested in the local property market in Walsall….you are missing out if you don’t sign up to my blog!
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