The first interest rate increase in a decade! How will this affect Baldock homeowners and landlords?

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At the start of this month the Bank of England’s Monetary Policy Committee announced a rise in the Bank of England base rate of 0.25% – the first increase in over a decade.

The base rate is the figure on which mortgage rates in particular are based and a whole generation of aspiring homeowners will be wondering what to make of it.

Don’t panic!  Although the base rate has effectively doubled, 0.25% remains a very small increase and simply returns us to the same 0.5% rate that had been in force between March 2009 and August last year, when it was dropped in response to the Brexit referendum result.

While those on a variable rate or tracker mortgage will notice a small increase in monthly payments, those who chose a fixed rate mortgage will not feel any effect at all.

If this new rate is passed on to mortgage interest rates, as it almost certainly will be, the monthly commitment of new buyers will be around £31.25 extra per month on a £150,000 mortgage. This is unlikely to have any direct effect on the property market.

This increase appears to be in response to increasing inflation and the indirect effects could be more noticeable.

However, is this the start of a rising trend?  If you are contemplating a move, it would be worth doing so quickly; sell before any downward pressure on house prices kicks in, and lock in to a low fixed rate mortgage on your purchase.

As ever, as your local property experts, we’d be happy to advise, without obligation, on how this, and any other market influences, might impact on your moving plans or property value.  Please feel free to call me or the team on 01462 894565 or pop into the office for a cup of tea and a chat.

Great one bedroom investment opportunity in Baldock

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Available for sale through Country Propeties in Baldock at £165,000, this property seems like an ideal investment opportunity!   Less than half a mile from the mainline station to London and in a quiet development with allocated off road parking.  Anticipated annual yield of 4.7%.

Take a look at the advert here and call Country Properties to view ASAP!

 

‘Flipping heck – Baldock’s property values rise by £41.58 a day!

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Investing in Baldock buy to let property is different from investing in the stock market or depositing your hard earned cash in a  Building Society. When you invest your money in a Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar. It is this factor that attracts many of Baldock’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

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I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’.

Capital growth, also known as capital appreciation, has been strong in recent times in Baldock, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.

Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Baldock property has risen by £75,892 (equivalent to £41.58 a day), taking it to a current average value of £367,100. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money.  Flipping – buying a property, carrying out some minor cosmetics and re selling it quickly.  I have seen several investors recently who have made decent returns from this strategy. For example …

One Baldock Investor paid £300,000 for a 3 bedroom house on Church Street in September 2015.  The property was re-furbished and it was resold a few months ago (November 2016) for £437,500 … 45.83% return before costs (or compound annual return equivalent of 37.34% AER).

Some shots of the property before the work was completed:

A shot  of the  garden after  the work was completed & intended kitchen:

This demonstrates how the Baldock property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Baldock landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Baldock people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what  would, and what would not,  make a decent buy to let property in Baldock, please contact us on 01462 894565 or send us a rightmove link to consider.

Baldock property of the week…..

Take a look at our latest property of the week video – Country Properties are selling a two bedroom apartment with Juliet balcony in prime high street development for £199,950.  With a potential rental yield of around 5% this is one we feel landlords should look at.   Click here for Country Properties advert and call them quick – this won’t hang around long!

With 1,539 people in Private Rented Properties in Baldock – Should you still be investing in Baldock Buy To Let?

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If I were a buy to let landlord in Baldock today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Baldock property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Baldock property prices do drop, the downside to that is that first time buyers could be attracted back into the Baldock property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Baldock landlord, almost a blessing in disguise.

Baldock has a population of 13,085, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

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Yields will rise if Baldock property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Baldock landlords add to their portfolio. Rental demand in Baldock is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Baldock landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

At a recent family get together, I got chatting with my nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Baldock and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

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So, as 11.8% of Baldock people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Baldock – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch – there is nothing like bricks and mortar!

For more views and opinions on the Baldock property market – visit the Baldock property market blog:  www.baldockpropertyblog.co.uk.

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