Market Comment from Lee Fenn-Tripp, Director of Downer & Co
Investing in Newbury buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society it 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 Newbury’s landlords – they are making their own decisions rather than entrusting them to city whizz-kids in Canary Wharf playing roulette with their savings.
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 Newbury, 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 Newbury property has risen by £97,900 (equivalent to £53.64 a day), taking it to a current average value of £418,400. 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 redeveloping property to make money. I have seen several investors recently who have made decent returns from this strategy. For example …
- One Newbury Investor took a chance and paid £85,000 for a Tenanted property on Boundary Road in June 2014. The tenant vacated in July 2015 and the property was refurbished throughout. It was re-valued a few months later (January 2016) for £130,000 … 65% return before costs.
This demonstrates how the Newbury 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 Newbury landlords and investors to become particularly successful.
If you want to know what (and what would not) make a decent buy to let property in Newbury, then one place for such information would be the Newbury Property Blog. Please visit www.newburypropertynews.co.uk view our pages on Facebook or pop into our office in Cheap Street in Newbury.
