First BREXIT, now a lower interest rate ... what is your exit plan?

After much conjecture and rumour we now know that the Bank of England has decided to half the base rate down to just 0.25%, after a period of 7 years in order to bolster the economy following the decision to BREXIT. This will inevitably benefit some mortgage payers and offer little, or no hope, to savers relying upon their nest egg for financial support during their retirement.

Figures produced by the Council for Mortgage Lenders suggest that the amount left to pay on each home loan in the UK is £116,000 and there are 11.1m households paying a mortgage. The calculation that will interest these mortgage payers is that yesterday's 0.25% interest rate cut will save them just £22 on a monthly mortgage bill of £779. The Office for National Statistics (ONS) calculated this figure based upon a typically priced home of £211,000 after paying a 20% deposit. The Bank of England has also put additional measures into place to ensure the banks pass this lower rate on to their customers.

Those on bank rate tracker mortgages will see an immediate affect because their loans vary according to the interest rate that goes up or down in direct relation to the Bank of England's decision to increase or decrease the bank rate. One in five mortgage holders have this type of loan.

The Bank's intention is to reduce savings to encourage consumers and businesses to make purchases and investments to boost the state of the economy. However, those who save their money to generate an additional income, rather than spend are the people to suffer. The current average interest rate on an easy access savings account is 0.65%. If savings are to reflect the reduction in base rate the interest paid on these accounts will fall to 0.4%.

So, for example, if a person has saved £10,000 in such an account, they will receive a measly £40 a year in gross interest, which is £25 less than before the cut. How can you live on that and what can you do to improve your financial returns?

No doubt there are many people in this situation especially here in Guildford where young couples bought their property in the 1970's and now in 2016 their mortgages are paid off; the family has flown from the nest and while they rattle around in their large house are wondering how to seek a high rate of return on their investments. 

One answer is to downsize and therefore take equity from their properties but no doubt this is the money that is sitting in their easy access savings account earning little interest. Secondly, they may have allocated their funds to property for their children helping them onto the first rung of the property ladder, when ordinarily this may not have been achievable without their parent's investment.

It is the combination of low savings rates and the lack of affordability in housing for first time buyers here in London and the South East, that is driving the housing market at present. In this case the answer to low savings rates may well lie in property and making it your investment vehicle.

It is a well-known fact that property typically doubles every 10 years. For those in Guildford it definitely has! My parents purchased a 3 bedroom linked detached house in Guildford in 1962 for £2,000. A similar house in the same street, sold last year for £520,000 which is considerably more.

Realising that this was the best and proven way to invest my savings I educated myself with the UK's leading property investors and became a member of a property mastermind group, sharing opportunities with, and providing support to, other property investors.

So if you are considering an investment decision or would like to have a chat in general about the Guildford property market please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

56.2% of Guildford voters vote to remain in the EU – what now for the 45,670 Guildford Landlords & Homeowners?

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. 

As most polls suggested a Remain Vote, this came as a surprise to many people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made, what next for the 45,670 Guildford  homeowners especially the 18,944 with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen. 

Guildford  Property Values
Guildford property values will probably drop in the coming 12 to 18 months – but by 18%? I am sorry but I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. 

The iconic Guildhall clock

But the UK property market is quite a monster. Since the last In/Out EU Referendum in June 1975, property values in Guildford have risen by 1894.7%. (This isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) they are still up 10.14% higher.

Another Credit Crunch?
And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930's and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and sooth-sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our bricks and mortar and we do need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK interest rates have risen to reverse that drop. Whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier, it will make British exports cheaper which is great for the economy.

And what of interest rates?
Since 2009, interest rates have been at 0.5% to which many people have become accustomed to. So what if interest rates were to rise? Would this be the end of the world? 

Interest rates in the 1986/88 property boom were on average 9.25%; in the 1990’s they were on average around 6.5%; and during the uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) 4.5%. Many of you reading this, in your 50’s and older will no doubt remember interest rates at 15%.

However I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing.

So while property values might drop in the country, they will bounce back. It’s only a paper loss. It only becomes real if you sell. And even if you do have to sell, again, as most people move up market when they sell, your property might have dropped by 5% or 10% but then the one you want to buy will also have dropped by the same 5% to 10%. This is the best part – you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) more than the one you are selling. 

For example, if you are selling a 3 bed house to upgrade to a four bed, in Guildford, the average asking price for a 3 bed is currently £538,589 and £814,264 for a 4 bed. If prices did fall by 10% then the new house would be £81,426 cheaper and while you might realise £53,858 less for the current property the overall transaction (excluding all sales and purchase costs) to upgrade would be £27,568 cheaper.

The landlords of the 8,522 Guildford buy to let properties also have nothing to fear and neither do the 21,766 tenants living in their properties.

Buy to let is a long term investment. However there may be some buy to let bargains in the coming months as some people, irrespective of evidence, decide to panic. Even if we did decide to pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property construction level. 

Britain is building 139,600 properties a year, but according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still. 

As the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person, demand is only going to go up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?
Well, there are many challenges ahead, it would seem. The country has spoken and we are now in unchartered waters – but we have previously endured a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and still we survived! 

And the value of your Guildford  property? It might have a short term wobble… but in the long term - it’s as safe as houses regardless.

So if you are considering an investment decision or would like to have a chat in general about the Guildford property market please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

Should you invest in a 2 bed flat or house?

Many investors approach me wondering whether they should purchase a flat or house if their investment fund is limited. Some might therefore be surprised by the answer.

So what type of property would make a better investment if an investor wants to hold for the long term and therefore rent out to prospective tenants? The first question I ask them is what are they looking for from the investment - capital growth or a great yield? Answering this question will help an investor to figure out which properties to buy.

When considering 2 bedroom properties, figures for the last 10 years state that houses have risen in value by as much as 80%, in Guildford. Flats have risen but by a lower 67% so 2 bed houses have achieved a higher capital gain over this period to suggest they potentially make a better long term investment.

Typical two bed flats in Guildford

The average asking price for a 2 bedroom flat today is £334,950 but for just £15,000 more a 2 bedroom house can be purchased so it would appear wise to invest in a house.

The rentals for both types of 2 bedroom properties are also similar. A 2 bed flat is on average £1,275 pcm while a house is just £20 more at £1,295 pcm. A flat may however be slightly less financially attractive because the investor will need to consider the cost of the management fees to be deducted from the monthly rental income.

A typical 2 bed house in Guildford

The gross yield is therefore 4.6% and 4.4% respectively so as there is little difference between these figures this suggests that the investment decision may not be made on a financial basis.

The decision may be based upon market demand and perhaps the investor's preference towards tenant type. A flat will be more desirable possibly to young professionals starting out on the property market and because they are young may prefer a social life to having to spend time maintaining the property and a garden. There is a more plentiful supply of flats in the Guildford property market than houses too.

Houses may appeal more to couples, possibly with a child, because they will have the benefit of more space and a garden plus more privacy. They might also enjoy the pleasure of maintaining their property and the occasional DIY, at the expense of having a social life. 

As regards the investor it would appear that there is little to choose between both types of property. However investing in flats might now be the answer as there is not only more demand for them but with the advent of AirBnB, requests for short term accommodation particularly in flats, is on the increase. 

The potential rental income could therefore be significantly greater in this instance as the investor can charge more for short stays than they can for longer term tenancies. However there is a lot of specialist knowledge required to operate an AirBnB business so an investor would be wise to research this market place and the factors that they need to consider when operating short term holiday lets. 

So if you are considering such an investment decision or would like to have a chat in general about the Guildford property market please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

How to invest in property with no money of your own

Offer a pot of gold! That is, an opportunity to make money.

Having spoken to many investors and property landlords in Guildford one challenge that they all face is that, from time to time, one will always runs out of money. Nobody has a bottomless money pit from which to extract more money for further investments however wealthy they might be.

So rather than stop investing and do nothing, how does one deal with this issue so that you can continue to profit from future property purchases?

Believe it or not, there are many people who do have funds to invest but their challenge is either a lack of time or insufficient knowledge to invest in property successfully. In that case how do we locate these individuals and what do we do to enable them to invest in us instead?

The answer is to form a joint venture. This may set up to fund investments or to leverage other people's skills and time.

There are a number of ways in which you can operate a joint venture. For example, you could work with a vendor to help sell their property in return for a fee or share of the profit that you generate for them. You could acquire funds in return for paying a fixed percentage interest rate over a period of time (like a loan); you could share a profit 50:50; or form a company to purchase a property, having a shares in the business.

In the instance where the investor offers a loan they are unlikely to have an interest in the property as they are using it only as a vehicle to enable them to earn a higher rate of interest on their money than they would otherwise do by leaving it in the bank. They have little risk as their loan interest will be paid whatever profits are made from the property venture. They would receive the loan amount back upon the property investor selling or refinancing the property.

If the investor becomes a joint venture partner they would have a shared risk and profit so are dependent upon the property investment being successful. Typically a Deed of Trust is taken out to protect their financial interest. The share percentage offered is subject to negotiation.

When setting up a joint venture it is wise to have a business plan to agree the deal with your jv partner. This will cover the nature of the project, the funds required and for how long, a cashflow and profit statement plus details of the exit routes available to the investor. 

The business plan should show examples of projects that you have successfully completed in the past, including photos and video plus the figures to show how you made money, to demonstrate your experience. This document should be submitted to a number of investors so you can attract several funding options so you can proceed with your project without delay and more importantly, without running out of money. It is always wise to have a contingency fund too.

So how do you find your investors? Well, as stated above, there are many people looking for a profitable home for their savings, inheritance, redundancy, windfall and even funds borrowed on the basis of equity in their own home.

Firstly, you need to speak with as many people as is possible, even if this is outside your comfort zone. Having acquired your business cards you should network in property and business groups. in addition to approaching everybody in your family and on your contact list. When meeting with professionals, including accountants, architects and solicitors ask if they have clients keen to invest in profitable ventures too. The most important question you can ask is "Who do you know who wants a better return on their money?".

Do not enter a venture unless you like and trust the person involved.

A legal agreement should always be written up by a solicitor. There should be a Heads of Terms to detail both party's requirements and responsibilities. There may be a Deed of Trust to protect the investor too. This puts their name of the property registration to provide them with further protection. As stated above an investor could have shares in the company through which the property is purchased and if not, possibly a first charge on the property to provide them with total security. Finally one should always complete due diligence, including taking out references, on the other party to satisfy the investor that their money will be invested wisely.

By having access to an investor's funds in advance of a project you are ready to go as soon as required.

Finally, some deals will face challenges. If so, it is always wise to be open and honest with the investor, keeping them updated at all times especially if an issue does need to be flagged up so that both parties can work on a solution to the problem. Very often, if you have sourced sufficient funds, there may be another investor waiting in the wings ready to take over the funding of your project, in the event the initial investor has to be paid off early.

Please note that I am offering my own opinion and not financial advice.

Secondly, when looking for a joint venture partner you should always ensure that when promoting any offer for an investment you are always talking with a person of high net worth, as defined under PS13/3 to comply with FCA regulations.

So if you are looking for a golden opportunity to invest for a higher rate of return please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

Investors need to know the "price of the bedroom"

The "price of the bedroom" represents the capital gain to he achieved when creating an additional bedroom. This may be created by splitting an existing large room; converting a garage into a bedroom; using the loft area to accommodate a bedroom; or by building an extension to include another  bedroom.

So why is this figure so important and what does it represent?

In simple terms an investor acquires a property, then adds the bedroom as suggested above, allowing them to resell the property for a higher price. The aim is to therefore make a profit once all legal and building costs required to complete this task, have been deducted.

Realising that there is a substantial demand for family houses in our  investment area, especially in certain high performing school catchment areas, research was carried out to review the average price for both 3 and 4 bedroom houses in the area, to determine how much an additional bedroom could add to the price of a typical 3 bedroom house.

The average asking price for a typical 3 bedroom property is currently £334,950 and £440,950 for a 4 bedroom house, therefore providing a difference of up to £106,000. This is the potential price of a bedroom. 

The trick is to purchase a property that is in pristine condition and can therefore be moved into right away. Why spend on a house "in need of modernisation" if there is limited capital gain to be achieved even though a considerable sum of money has been spent on it? It is far better to invest in a project to increase value.

If a large room with two windows is not available to split into two separate rooms then a loft extension is an economical way to add an ensuite bedroom to provide the price uplift required. This is our preferred option especially as properties in our investment area do lend themselves towards loft extensions as the roofs tend to have steep pitches with excellent headroom.

Once the property has been revalued we are able to mortgage it, having first used a bridge to fund the initial purchase. This then leaves two options - to sell to make a quick, capital gain; or to hold and therefore generate an income from the property. The decision on which approach we take will very much depend upon our financial priority at the time.

If we do decide to hold, this offers another opportunity. It enables us to offer the property to a family unable to afford a deposit or to obtain a mortgage but who will be able to do so sometime during the next 5-7 years.

How do we do this? Well read our next blog article to discover how.

Bad debt or good debt?

People often come to me concerned that the return on their savings is so small now that interest rates are at an all-time low. They are therefore challenged to find a home for their money where they will attract a higher rate of interest.

When I ask, "Well, have you considered 'property' as the home for your money?" they tend to retort, "Does that only work when you have lots of money?"

This is because we are all brought up to believe that you need a 20% deposit to buy a house and then a mortgage to fund the remainder of the purchase price. Yes, this does apply when buying your own residential property. However investment properties are different.

Firstly, the mortgage on your own home is considered to be "bad" debt. This means that you have to pay the amount owed on the mortgage out of your own hard-earned income over a period of (say) 25 years when hopefully your finances will be in order at all times. Sadly, many property owners will go through a period of their life when times will not always be financially sound for them. For example, it's a sad fact but at least one in three people get divorced. Many people will be made redundant at some point in their working life too. So unless, there is a safety net there may not always be sufficient income to cover mortgage payments every month for the 25 year term.

When debt is used to fund property investments it is considered to be "good" debt. "Why is that?", do I hear you ask. If your property investment is a rental property, your tenants are paying for your mortgage. This debt is called "good" debt because you are investing in an income-producing asset. Once your tenants have paid their rent to cover the cost of your monthly mortgage payment plus utility and Council tax bills (if you pay for these) any remaining money is profit, having allowed a percentage of this income to cover professional fees, maintenance, insurance and tax.

Investment property is therefore an income-producing asset, while the purchase of a residential property provides accommodation but no profit (unless you rent out a spare room).

The second concern that people often have is that you need vast sums of money to be able to invest in property. The answer to this is two-fold. In the first instance you should not invest too much cash in one property but use this investment to afford a number of properties in order to spread your risk and secondly, to make your money work harder for you.

The second answer is that few people will have hundreds of thousands of pounds lying around in their bank account and if they do, they are surely not receiving sufficient interest at today's rates to make this a practical thing to do. This means that all property investors, however wealthy they may have been, will eventually run out of personal funds to invest unless they are educated, professional investors who therefore know how to work round this challenge.

I am developing my expertise in property investment. I have done this by becoming a student on a 12 month Property Mastermind course to become educated and to grow my network of property investors and specialists.

This experience has enabled me to offer both friends and personal contacts golden opportunities to produce an effective means to enable them to achieve their goal to generate a higher rate of return without necessarily having to become educated in property investment themselves. These returns have far-outweighed those earned by leaving their money in the bank and they have had the pleasure of sharing in the success of a number of property ventures.

Want to achieve the same? Then watch this video No money, No problem.

Still excited? Call me to arrange a chat over a cuppa coffee to see what I can achieve for you.

Boxgrove Gardens developed for town and country living

This delightful development has been built on a former Department for Environment, Food and Rural Affairs (DEFRA) site. This development was a highly successful example of where disused public land can be developed to create desirable, well designed new housing for people to enjoy in an area where they want to live.

Honoured by a visit from David Cameron and Nick Clegg 

The Boxgrove Gardens development was held up as such a fine example, that it was selected as a location for both The Prime Minister, Rt Hon David Cameron MP and his Deputy, the Rt Hon Nick Clegg MP, to visit in 2011 to announce the Government's new Housing Strategy, underpinned by the new mortgage initiative Help to Buy, for new homes, providing 95% loan to value mortgages.

This 199 home sustainable development, less than a mile from Guildford’s High Street, is an award-winning example of mixed tenure with 70 homes built for shared ownership and affordable rent.

The stylish development has quickly become one of Guildford’s most desirable new neighbourhoods, with houses built with airy conservatories, timber detailing, spacious balconies and floor-to-ceiling windows surrounded by lush, green, modern gardens.

4 bed semi detached featured in a recent blog

The development comprises superb one and two-bedroom apartments plus prestigious three, four and five-bedroom signature houses, The centrepiece is Uplands House, a historic former country manor. This has been converted into stunning apartments overlooking the beautifully, landscaped gardens.

Uplands House converted into flats and adjacent to stunning gardens

Three large oak structures now enhance the grounds of Boxgrove Gardens thanks to the Council, artist Roger Day and developer Linden Homes. The sculptures, collectively called Connected Living, highlight the public right of way that passes through the site to Merrow Downs. Each sculpture has an opening that people can look through, leading them to the next sculpture and the countryside beyond.

Connected Living sculpture by Roger Day

It generally takes only a short amount of time to let properties on this stunning development. Tenants consider the proximity of both Merrow Downs and Guildford town centre to be an advantage. In one moment you are shopping in a bustling High Street and the next strolling through the countryside with views over Surrey and into West Sussex. A recent blog featured a four bed semi-detached property in Saxon Gardens on the market for £650,000. A three bedroom end of terraced property is currently available for an asking price of £499,995.  A two bed flat would be priced at around £325,000.

As the development was built only recently, in 2010, these properties will offer an excellent standard of accommodation built to recent building codes and so will rent out quickly. The rent that could be achieved for the four bed semi is £2695 pcm; £2,225 pcm for the 3 bed house and around £1,525 pcm for the two bed flats. This means investors can potentially expect yields of around 5% to 5.5% per year.

Whether you have already done a search for property, or are trying to figure out where to start, we’re happy to advise on properties before you buy, to let out. It’s in your interest that you purchase something that can let quickly, whether you are currently one of our clients, or not, so if you would like advice about what could make a good investment, please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

Will flats in GU1 offer the best return?

Having considered a number of investment opportunities recently that have seen a potential return of more than 5% from purchasing a flat I thought we should examine the case for investing in flats, in Guildford, and in particular in the GU1 postcode area.

There is a considerable range of flats in GU1, from 1 bed to 3 beds, purpose built and conversions. There are developments built overlooking Stoke Park or The River Wey too, all offering pleasant surroundings and views over the town, yet within walking distance of shops and transport links.

The price range varies enormously too.  For example, a one bed flat in a cul de sac just off Manor Road was featured recently in the blog, because the asking price of £169,950 was considered to be one of the lowest prices to be paid for a residential property that it not a shared ownership, in Guildford, in recent times. However this was in the GU2 postcode area.

One of the lowest priced properties in Guildford at £169,950

At the other end of the scale one might expect to pay in excess of £1/2 million for a three bed purpose built flat in Printing House Square, just off Guildford High Street, as this is a prime location, in the centre of town where local services and shops are all very accessible. The flats in this development were also built to a very high specification.

High spec flats in prime location

In fact there are over 5,700 flats, in the GU1 postcode area alone. This represents around 39.77% of the housing stock in the GU1 postcode area, with the Guildford average being 19.51% compared to the national average of 17.36%. 

The average asking price of flats with one or two bedrooms in Guildford is around £269,950, which is nearly 3.45% higher than it was 12 months ago. 

You can buy a two bedroom flat, for example in the development on Jordans Close, Boxgrove for a very reasonable £250,000. If a landlord secures the typical monthly rental of £1,100 for a property there, they will manage a gross yield of 5.3%. 

This compares favourably with flats in the Printing House development where one might expect a gross yield of around 3.9%. This is perhaps the reason why many of these flats are let out as serviced apartments achieving £155 per night. Assuming these have (say) an 80% occupancy rate the monthly rental would amount to £3,720 and the gross yield would be as high as 8.5% which certainly would not be achieved when investing in flats elsewhere in Guildford.

Flats attract gross yield of up to 8.5%

Finally, let’s not forget about the potential increase in capital value of the property, which as is always the case, the dominating factor in the Guildford property market.

I was looking at the two bedroom flats in the Faraday Road development recently to discover that they sold for around £183,000, when new, in 2004. This value has almost doubled in the 11 years since (even allowing for the price dip 2007-8), as one was sold for £320,000 earlier this year. Prices will continue to increase for the foreseeable future now that we have a Conservative Government and therefore a pro-property party in power.

Flats in Faraday Rd nearly double in price since 2004

If you would like advice about what could make a good investment, please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk.

Does Farncombe offer better returns than Godalming or Guildford?

A client living in Godalming has asked what my thoughts were on the town's suitability as a place to buy to let.

The Godalming property market has been slowing down a little over the past quarter following a substantial rise in prices 12 month's ago. However the town is expected to benefit from a resurgence in house price growth in the forthcoming months, now that there is a new pro-property Government in power.

The best advice we can give to those looking to invest in property is our secret trick of the trade. You can judge the affordability of a town by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.

When we put this to the test, we found that Godalming currently has an average property value of around £537,518 with the average salary being £30,118. This is a ratio of 1 to 17.85. Meanwhile in Guildford, where the average property price is £509,223 the ratio of property values to salary is 1 to 15.66, which suggests that property in Godalming is 14% less affordable than in Guildford.

The Pepperpot, Godalming

We also had a look at Farncombe and found the average salary there is £30,118 and the average property value is £291,448. This means that property in Farncombe is 47% more affordable than in Guildford, with a much lower ratio of 1 to 8.3.

This could mean that now is an excellent time to invest in Farncombe. The affordability ratio is lower; and prices are starting to recover though a little bit later than in both Godalming and Guildford. 

A 3 bed semi-detached property in Farncombe can be purchased for as little as £350,000 and let for £1,345 pcm to provide a gross yield of 4.6%. In Godalming £350,000 may only afford you a 2 bed semi-detached property, unless you can locate a 3 bed townhouse to buy, as these do tend to sell for a little less than conventional 3 bed properties. The rental for a typical 2 bed house in Godalming is around £1,195 pcm providing a gross yield 13% lower than in Farncombe.

Guildford might however offer the best investment opportunities. If we keep to the asking price of £350,000 there are several 3 bedroom properties that can be located in the Bellfields area, where one can achieve a rental of up to £1,500 pcm. This will achieve a gross yield of 5.1% which is 10% higher than what is achievable in Farncombe.

To discuss how much your property is worth or where you should make your next property investment in Guildford, call me for a chat on 01483 320 207 or sign up to The Guildford Property Blog. I should love to hear from you.

Ex-council properties in Guildford ... are they good buy to let investments?

Have your property cake and eat it?

It is common knowledge that many landlords purchase their investment properties in Bellfields because they have found that these ex-council properties can achieve good, annual yields of around 7%. This is especially so if they take advantage of the typical layout and design of these properties. 

Most are built with an outhouse where coal would have been stored in the old days; or alternatively an outside toilet. Those investors that have demolished this outhouse have been able to build a substantial extension in its place to provide an additional utility room, toilet and reception room and if a two storey extension, an ensuite bedroom upstairs.

6 bed HMO delivers 14% gross yield

Investors in Houses of Multiple Occupation (HMO's) have taken this process one step further by modifying a 3 bedroom house on Hornbeam Road, for example, to convert a downstairs reception room into a bedroom to provide a total of 4 bedrooms and then extend out to the rear to enlarge the kitchen to create a larger communal area and two further bedrooms. They also managed to squeeze a shower unit into each bedroom to maximise their rental from the property. 

Their rental income amounted to a staggering £4,200 pcm, compared with a typical rental of £1,350 for a similar 3 bed property down the street that has not been extended. This investor would have paid (at current asking prices) £360,000, so is achieving a remarkable gross yield of 14%. This obviously does not account for the investment required to extend the property but no doubt the increase in property value (estimated to be £450,000) has enabled the investor to remortgage and therefore take most of his money out of the property to provide a very healthy return on cash invested.

While this opportunity will deliver an extremely healthy cashflow the next question to ask is "would the capital growth for this property in Hornbeam Road be typical of that experienced by Guildford property taken as a whole?"  

What is the capital growth in Grange Rd compared with Hornbeam Rd?

How does capital growth compare for these 3 bed houses compared with Hornbeam Rd?

When sold prices for Hornbeam Road are  compared with those for similar sized 3 bed semi detached properties in nearby Grange Road and Princess Mary Close, Queen Elizabeth Park, built in 2003, the following figures, suggest that the answer is a resounding "yes".

The growth in capital for the houses in Hornbeam Road was 200%, Grange Road was 169% and finally Princess Mary Close was just 132%.

While the ex council estate property may have been considerably cheaper to purchase 11 year's ago it's growth rate would suggest that the demand by investors and owner occupiers for these properties has increased and therefore pushed prices up over this period. However they still remain cheaper than properties in the surrounding areas and will therefore remain attractive to investors especially if they are keen to create an HMO as the landlord quoted above did so successfully.

It therefore does seem that you can have your property "cake" and eat it!

If you would like advice about what could make a good investment, please call 01483 320 207 or email richard@guildfordpropertyblog.co.uk

Monopoly in Guildford ... How would you play?

A couple of local landlords and I had a discussion about the property market in Guildford, when the subject of risk versus returns arose. We concluded that all landlords are different in the way they play the property game.

Guildford Monopoly Board

One group of landlords is interested in high returns, with a greater risk as regards to the quality of the tenant, so they much prefer the student market. They tend to invest in cheaper property where they can convert reception rooms into bedrooms to maximise their yields substantially.

Other landlords have a preference towards accepting a modest yield/return on their investment in exchange for an increased certainty of finding a quality tenant. They therefore tend to invest in smaller, terraced properties in the centre of town but away from the university, in order to attract the young professional tenant.

Landlords preferring the safest route typically invest in high quality houses within commuting distance of the town centre to attract families wanting access to decent schools including St Peters, in Merrow and George Abbot, in Burpham, for example. 

We also assumed that these landlords were more likely to be accidental landlords having to move away from their current home, for example, while working on a contract located elsewhere, here or abroad. They would therefore be letting out their own home and so they would be happier knowing that so long as their mortgage payments were being covered, they would gain potentially from relatively higher capital gains over time, because their properties were situated in the more desirable areas of the town.

We therefore determined that before these landlords started playing monopoly, it would be a good idea for them to have a game plan to determine what sort of property and area would best suit their investment objectives.

For a low risk investment they might buy in either Burpham or Merrow. Weylea Farm, Burpham, for example, is a popular area for families to rent property as it offers modern housing of all sizes, all built within recent years and located within the catchment area of local schools. If an investor were to purchase a 4 bedroom house in Selbourne Road, off Sutherland Drive, they would achieve an annual yield of no more than 4.2%. 

If a landlord does not mind a slightly higher risk of void periods, or a more varied quality of tenant, they are likely to be rewarded with a higher annual yield, of around 4.8%. This level of risk can typically be taken with Victorian terraced houses around the centre of town, along the Woodbridge Road. For example, Markenfield Road and Dapdune Road attract young professionals because there are local pubs including the Kings Arms and The Stoke, at the end of the road.

If they are a property investor attempting to maximise their rate of return then one of the most profitable areas in Guildford town centre, will be Guildford Park Avenue where annual yields of 7.9%, or greater, are achievable. However investing in this street will potentially be more of a risk as many of the properties here are houses of multiple occupancy. This suggests they have 3 floors, which many of the town houses on this estate do, and accommodate 5 or more people, from 2 or more families. 

This area is sandwiched between the university campus and railway station so attracts students who are often seen staggering home on the nearby Guildford Park Road, returning after a late night at bars and clubs on this side of town. This has created noise pollution which has therefore attracted the attention of the local council.

Secondly, this type of property will always remain an HMO and so never realise the level of capital gain that a property would do in Selbourne Road. Secondly, the property in Guildford Park Avenue is worth less at an average price of £314,788 compared to £523,791, for Selbourne Road.

The game of monopoly therefore very much depends upon a landlord's objective. Do they want to maximise rental income or capital gain? What is their attitude towards risk?

To discuss how much your property is worth or where you should make your next property investment in Guildford, call me for a chat on 01483 320 207 or email richard@guildfordpropertyblog.co.uk

Should you invest in Guildford or a local village?

Many of our landlord contacts live in the beautiful villages surrounding Guildford (GU1) so are always intrigued to determine what the average property values are in both the villages and the town centre and how these could affect their annual returns/yields.

The average terraced house in Puttenham, for example, is worth £335,743, whilst terraced houses in Guildford are worth around 19% more with an average of £400,116. The same was found for the value of an average semi-detached house worth £407,829 in Puttenham, with the value increasing by 2% in Guildford at £416,684. For a detached house in Puttenham, you can pay approximately £792,969. This value is increased by 15% in Guildford, with average values of £915,704.

The Good Intent, Puttenham was first mentioned in the 1861 census.

If you want to invest in property located in the picturesque village of Shere then there is a premium to be paid. Terraced properties are worth on average £422,050 an uplift of 5% over prices in Guildford town centre; semi-detached properties attract a substantial premium of 29%; and detached properties are typically 16% more than detached properties in Guildford.

The White Horse, Shere

If you are a landlord looking to buy property to let, before you buy in Puttenham, Shere or any GU postcode village, you should consider the possible annual returns/yields in Guildford compared with these villages. The gross yields are typically quite low, at around 3.3%, in both Shere and Guildford where properties are typically more expensive compared to Puttenham where the gross yields are 15% higher at 3.8%.

It is quite clear that if you are looking for a high yield, Guildford or the local villages, are not the areas for you to invest in but if you are looking for capital growth the see-saw is definitely in your favour. Average selling prices in Shere have risen by a whopping 340% since 1995.

Furthermore your property will be surrounded by stunning scenery, and located close to popular scenic sites like Newlands Corner and the Silent Pool. The quaint picturesque village of Shere is popular with walkers as well as being a favourite location for filmmakers with scenes in Bridget Jones, The Edge of Reason and The Holiday being filmed here so you are guaranteed the high living lifestyle even though you may not be a Hollywood mogul in reality.

If you would like to know how much your property is worth or where you should make your next property investment in Guildford, call me for a chat on 01483 320 207