The nations favourite topic at lunchtime tends to be about ‘the boss’ and in the evening….we can’t stop talking about property!  The hot topic of discussion at the dinner parties, BBQ’s and local pub meetings of the movers and shakers of Walsall is the subject of the local property market, but in particular, buy to let in Walsall.  These people are buying up buy to let properties quicker than a seasoned Monopoly player.. or so it would seem if you read the Sunday papers.  So, is the buy to let market a sure fire way to make money?   Is it something everyone should be jumping into?  Is it a dead cert that you will get a return?  The answer isn’t as simple as that, to all those questions as it all depends on the plan and strategy you apply to your investment similar to any other!

Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible (some changes are afoot).  A landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price.  Find a modest deposit of 25%, often by re-mortgaging their own home, which for an average Walsall terraced house, would mean finding £22,455 for the deposit because the average Walsall terraced house is currently worth £89,818.  Then borrow the rest with a low interest rate buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years.  Sounds wonderful – doesn’t it? Or does it?

Let us not forgot that the half of one per cent Bank of England base rate is artificially low.  The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent.  Even though tenants are staying longer in their rental property, they still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property, agent’s fees, building insurance and home emergency cover… all things that eat into that profit.

Interestingly, by my calculations, there are approximately 3,790 Walsall landlords owing in excess of £891million in mortgages on those buy to let properties.   An impressive amount when you consider Walsall only has 0.491% of the all the rental properties in the Country.  It really does come down to a number of important factors going forward to ensure you are water tight for the future.  A lot of my existing landlords are fixing their mortgage rates.  One told me that the Metro Bank are currently offering a 5 year fixed BTL remortgage rate at 3.79% for 5 years based on a 75% loan to value.  I don’t give financial advice, so you must speak with a qualified mortgage advisor.. but that sounds very fair!

However, one thing I do know is this.  Buy to let is a long term investment.  It’s a ten, fifteen, twenty year plan and property prices will go down as well as up.  You wouldn’t dream of investing in the stock market without advice, so why invest in the Walsall Property Market without advice?  We give bespoke, detailed advice to our landlords to enable them to spot trends in the Walsall Property Market before others, enabling them to buy in better properties at better prices.  For example, did you know that flats are selling for around 10% lower than 12 months ago in Walsall yet semi’s are selling for 14% more?  This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues.

If you would like to discuss anything property related please feel free to contact me and I would love to hear from you.

Phone: 01922 637672

Email: salekm@ashmorelettings.co.uk