Guildford Property Market update - February 2020

It appears that the prospects for an upturn in activity in the property market have been realised since the result of the General Election was announced, according to data from activity on the Rightmove portal over the last month.

The UK Market

According to the latest Rightmove Price Index report there has been an increase of 2.3% in the price of property coming to market this past month; and over 1.3 million buyer enquiries since election, which is up by 15% compared to the same period a year ago, to suggest there will be an active spring market ahead. There has also been an increase of 7.4% growth in the number of sales agreed this past month as sellers have acted quickly to beat the Spring rush.

Furthermore there were almost 65,000 properties marketed between the 8th December and the 11th January, which is the largest monthly rise that Rightmove have ever recorded at this time of year. This suggests therefore that these new sellers are feeling a surge of optimism. The number of enquiries made to estate agents were also up by 15%, compared to the same period last year, to suggest demand was on the increase. This then led to a 7.4% increase in the number of sales agreed over the same period.

Whether this is a sign of the pent up demand being released will remain to be seen over forthcoming months but it does appear that some sellers have moved quickly as was anticipated over the Christmas and New Year period.

The Guildford Market

There were 23 additional properties added in the last 14 days mainly replacing those taken off towards the end of last year so have been relisted, and in some cases with a new agent in the expectation that they will have more success. Overall stock levels therefore remain constant although there do appear to be more detached properties currently for sale. The average asking price for this type of property has marginally increased too.

The number of properties taken off market having been listed for between between 2 and 4 months might suggest that a number of offers were accepted towards the run up to the end of 2019. Alternatively this might also confirm the point above that vendors decided to de-list and then relist after the news regarding the General Election and the start of a New Year.

The average time taken to sell properties in Guildford over the last 90 days remains at 154 days, with half of the sales taking place within 78 days.

According to the latest data from Land Registry (available up until November 2019) approximately the same number of properties sold at a slightly higher average price of £498,595 in Guildford due to more detached properties being sold in the last month.

Having talked with local residents there does seem to be greater confidence in the market about the prospects for selling their property in the short term though one overriding comment made was that they feared how the growth of Guildford property prices in recent years will challenge those wanting to get onto the property ladder or to upsize. Having said this, many residents are sitting comfortably having decided to stay in their homes for the long term and experienced wealth that they could never have forecast at the time they purchased their home.

See you again soon for next month's property update to discover whether this initial feeling of optimism, that the New Year and the release of some of the pent up demand have brought, will be realised with a growth in property sales over the forthcoming months.

To request a copy of the latest Rightmove Price Index report featured in this update, please call 01483 320207 or text 07786 965631. Always happy to have a chat about the local property market too.

Investment decision: Lindfield Gardens v Tormead Road

A landlord came to our office for advice recently asking whether he should invest by buying a five bedroom house in a more affluent area within a short distance of the town centre to let to a large family or to sharers. They were considering the residential area bordered by London Road, Epsom Road, Cross Lanes and Boxgrove Road.

We did some research and found a spacious sized five bedroom townhouse in Lindfield Gardens, with views over Stoke Park and on the bus route into the town centre and then onwards to the Surrey Research Park and Royal Surrey County Hospital.

This property was available for £575,000 and could be let out for £2,750 per month as a family single let to achieve an annual gross yield of 5.7%; or to young professionals (subject to receiving an HMO licence) for £3,850 per month, to achieve an annual gross yield of 8%.

Lindfield Gardens - townhouses

Properties in this area are very popular with families because there are a number of private schools located close by. These include Tormead, Lanesborough, Guildford High School plus George Abbot School so there is great demand from investors and tenants alike, making it a relatively good investment area within a desirable part of town.

Tormead Road is located within a 10-15 minutes walk of the town centre. London Road railway station is nearby, to provide links to both Guildford mainline and all stations to London Waterloo. Spectrum Sports Centre is located on the edge of Stoke Park and Merrow Downs are not far away, so active families are able to enjoy both town and country life here.

A place on which to reflect in Tormead Road

We then compared the property in Lindfield Gardens with a more spacious and therefore bigger five bedroomed detached house on Tormead Road to determine if the landlord would gain more financially, by buying there. The two streets are just five minutes walk apart so provide a useful comparison within the same area of Guildford.

A 5 bedroom detached house in Tormead Road was sold recently for £892,450 with a rental value of £3,350. While a more desirable road and mainly owner occupied it is unlikely to attract sharers as the nearest transport links may be considered too far away.

This means it is likely to be a family single let so while the rental will be £600 per month greater than the single let rental value for Lindfield Gardens it will not attract the premium rental for a shared property. The annual gross yield will be lower than the property in Lindfield Gardens, at 4.5% but the potential capital gain greater having invested more for the property in Tormead Road, will be greater.

Tormead Road

This shows that while properties can achieve a higher rent than others in the same geographical location it does not always suggest there will be higher returns for the investor.

More importantly an investor could purchase an investment property in this desirable area, where there is high demand for rental property, for a lot less than they might have thought possible all because they have done their due diligence on the type of properties available, and at what price, on various roads within a specific area.

In this instance our landlord will have the advantage of being able to offer his tenants the benefit of being located across the road from Stoke Park and on a major bus route, so both parties will be happy.

If you would like any advice on doing your due diligence when choosing properties in a particular area of Guildford or a general discussion on investment opportunities in the area your call will always be welcome. Phone 01483 320207.

Good debt or bad 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 at least a 20% deposit to buy an investment property and then a mortgage to fund the remainder of the purchase price. Yes, this does apply when using your own funds but there is an alternative way to invest.

Robert Kiyosaki developed the idea of good debt/bad debt in his popular book, "Rich Dad, Poor Dad".

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?", 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 cash to afford a number of properties in order to spread your risk and secondly, to make your money work harder for you.

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.

Successful property investors offer their network of contacts a golden opportunity to generate a higher rate of return on their funds. These returns will far-outweigh those earned by leaving their money in the bank; and they will have have had the pleasure of sharing in the success of a number of property ventures without having to spend time educating themselves in property investment methods.

When investing your own funds into property it is always wise to invest in a property that can be purchased below the typical market price i.e. at a discount. If this is not possible then one should add value by increasing the number of bedrooms to provide a higher rental income. This may be achieved simply by converting a reception room into a bedroom; or by converting a loft into a bedroom. Then the property has the potential to realise additional value so that the property can be remortgaged to provide the funds required to repay the investor.

As with all investment decisions professional advice should be taken and due diligence carried out.

If you would like any advice on doing your due diligence when choosing properties in a particular area of Guildford or a general discussion on investment opportunities in the area your call will always be welcome. Phone 01483 320207.

Do investment decisions require divine presence?

When speaking to a local landlord recently about buying investment property in the streets surrounded by Rydes Hill, Aldershot Road, Northway and Shepherds Lane he had two questions. The first was why are the roads named after cathedral cities - Canterbury, Durham, Peterborough, Lincoln, Gloucester and Worcester; and secondly would it make sense to buy more investment properties in these roads?

When finding an answer to his first question it did make me wonder. No doubt the streets were named many year's ago but did they have a link to the town having its own cathedral?

Guildford Cathedral, built between 1936 and 1961, is the seat of the Bishop of Guildford.

Guildford Cathedral

Guildford residents have always wondered why the town has not been granted city status. Traditionally this is given to towns with diocesan cathedrals, an association established in the early 1540s when King Henry VIII founded dioceses in six English towns and granted them city status by issuing letters patent and has continued to this day. As of 2014, there were 51 cities in England.

Guildford's 2002 application to be granted the status of a city was unsuccessful, losing out to Preston, the only English town that was formally recognised as a city as part of the Queen's Golden Jubilee celebrations.

No information as to why these streets should be named after cathedral cities in England so one must assume that the local authority named them for no other reason than to celebrate these other cities.

This area attracts landlords because the properties have been relatively inexpensive to purchase and are located within travelling distance of the Surrey Research Park, the University of Surrey, the hospital and the town centre so are suitable for students and young working professionals happy to share their accommodation with others.

Properties in the area covered by Durham Road, Lincoln Road, Canterbury Road, Worcester Road and Durham Close typically comprise 3/4 bedrooms and are currently valued at an average of £337,053. This is an increase of 361% over the last 18 years. Average rents are £1,995 pcm though landlords charging by the room will receive an estimated monthly rental income of between £2,400 and £3,000 depending upon whether they convert a reception room into a bedroom.

Keeping to the theme of cathedrals, Cathedral Close located close to the cathedral and behind the University campus is therefore ideally situated for the tenants living in the roads discussed above.

However the properties located here and in the adjoining road, Ridgemount, are owner-occupied family homes. The average price for a 4 bedroom property here is £840,900 and a typical rental is £2,500 pcm so the gross yield in the roads named after cathedral cities will be nearly three times greater than for the properties in Cathedral Close and Ridgemount.

However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. When compared to the capital growth of 4 bedroom semi-detached properties in the cathedral roads area the properties in Ridgemount have risen by 390% over the same period. Some may say that this is due to divine intervention because Guildford Cathedral overlooks Cathedral Close and Ridgemount but no doubt the reason for the higher capital growth has to be supply and demand.

Nevertheless the landlord would be wise to buy in the roads named after cathedral cities as his objective to maximise gross yield will be realised while gaining capital growth at the same time. History has proving this so there is no need for a miracle to take place.

Dreaming of your first home

If you are in your twenties, or possibly thirties, or you have children of this age then you are probably giving considerable thought to the idea of buying a home for first time buyers. Hopefully you have reached the stage where you are settled in your work and have been saving up for a deposit to consider affording a home.

Whether you are wanting to extricate yourself from your parents house or are tired of renting and paying off someone else's mortgage, especially if you are sharing with others, it's hard not to dream about finding a property to call your own.

The next thought you probably have is will this be possible in Surrey, especially as it has a reputation for property prices that might not be affordable? If you've searched online it can be depressing looking through the many million pound houses for sale around Surrey but as a first-time buyer you're certainly not alone in that respect.

First-time buyers made up more than a third (36%) of all property purchases in 2018, according to Zoopla. These numbers are up by 85%, from 2010.

So, how does Surrey hold up against the national average of a first-time buyer home?

Typical asking prices in Surrey

The national average price for a first-time buyer home purchase is £220,000 so, of course, you would expect to pay more in Surrey. However, if you manage to set your expectations at a realistic level by looking to buy a starter property like a studio or one bed flat, research suggests that studio apartments can be found for as little as £100,000, in Sunbury-on-Thames and Farnham.

More realistically, the average asking price for a one bedroom flat in Surrey, is currently around the £200,000 though this is likely to be located in less desirable areas of the county.

If your desire is to live in Guildford, a studio flat can be found for as little as £150,000 with the average asking price for a one bed flat at around £265,000, only a little higher than the national average.

The facts

Thirty-three is the typical average age of a first-time buyer in the UK, according to the Government’s most recent English Housing Survey (2017/18).

Twenty-nine is the current average number of years for a first-time buyer mortgage term and therefore four years more than the more traditional 25 years recorded just a decade ago.

The average earnings for those living in Guildford is £26,481 so the price earnings figure for those wanting to afford a flat for £265,000 will be 10 times. This is a useful calculation to make when comparing the affordability of one area with another.

Opportunities to reduce your purchase price

There will be instances where a property may be reduced in price because it is not selling (for whatever reason) or where there is work, or modernisation required, so the price can be negotiated downwards to allow a contribution towards the building costs.

There may be the opportunity to purchase a property at a lower price through an auction; or even from the local council, if it is empty and has no proven owner.

However these properties are unlikely to be mortgageable so may need a substantial cash input. In these instances it is always wise to consult with a mortgage broker experienced in funding investment properties.

While Surrey property does cost more doing one's research should unearth more affordable properties. If a first time buyer does manage to get onto the first rung of the property ladder they will potentially realise a capital gain over future years, and if so, this equity will gradually allow them to upscale so you never know, they may even be able to afford the home of their dreams one day to prove that dreams really can come true.

You should have bought in Markenfield Road 10 year's ago!

One of the most frequent questions asked by those starting out in the world of property investment is "when is the best time to start investing?" The response from experienced investors tends to be "10 year's ago". I suppose this is based on the assumption that properties are assumed to double in price every 10 years. The secondary response is "and if not 10 year's ago, the answer is now!"

How are landlord's properties performing?

One of my more established landlord friends has been investing for 10 years so was interested in discussing how his investments in Markenfield Road had performed during this period. I suggested we look at both the sale prices and rental figures achieved for properties in the street during this time. Then we could determine how the gross yield had changed as a result of these price changes.

Markenfield Road

This is a well established street situated opposite the cricket pitch, where Surrey County Cricket Club have played in the past. This pitch is also home to the annual Guildford beer festival. The street is located within a 10 minute walk of Guildford town centre

The properties in this street were built in Edwardian times, all to a similar design. Most comprise of 2 reception rooms, a kitchen and three bedrooms plus bathroom. Many have been extended by moving into the cellar or up into the loft to provide an extra bedroom plus bathroom. Several houses have been extended out to the rear to provide a larger and more modern kitchen.

Ownership status

The last census suggests that half the properties in the road are owner occupied and approximately a quarter are privately rented, so is popular with landlords. In fact one sixth of properties are occupied by more than 3 people suggesting that they are multi-lets.

The majority of owner occupiers are in professional or managerial roles, between the age of 30 and 44 with many being single. The number of degree educated people living here is also greater than the average number in streets local to Markenfield Road. This might have something to do with the proximity of the bars and restaurants in the town centre plus The Stoke Pub and Kings Head pub, at the top of the road. 

The figures

Returning to the figures the average value of a typical 3 bed semi terraced house on Markenfield Road was £245,250 in 2005. This figure had risen sharply to £360,395 by 2007 but dropped back to £335,950 for two years before recovering in 2010. Prices have continued to rise with the average value now standing at £469,900. A house in the street has recently sold for £524,950, a 214% increase in 14 years.

Then the landlord stated that the rents he had achieved on Markenfield Road seemed to be fairly stable over the ten years. In 2005 the average rent was £1,535 per month but is now between £1,695 and £1,850, dependent on the size and quality of the accommodation provided so rents have risen by just 10-20%. 

This is all great news for the landlord because his investment back in 2005 would have achieved a gross yield of 8% and now that rents have increased he is achieving 8.3% where as a landlord investing at today's current prices in Markenfield Road would achieve a gross yield of only 4% i.e.50% less. If the new landlord were to rent out to sharers he might increase his gross yield to 5.5%. 

The answer

It therefore seems that the maxim that states the best time to start investing was 10 year's ago is therefore true. Just imagine what the yield would have been if one had invested (say) 50 years!

If you would like to have a chat regarding property prices in a specific street and how they compare with prices elsewhere in Guildford or to just talk about investment opportunities in general your call will always be welcome. Phone 01483 320207 or email richard.hodgson@newman.uk.com

Railwayman's Cottage Designed for Modern Living

This wonderful railwayman's cottage was built at the time when the railway first came to Guildford and so has considerable character yet it has been completely refurbished, including a new kitchen.

I like it because it is located directly opposite the mainline railway station and so would be ideal for a couple busy commuting up to London and wanting a guest bedroom, or even a nursery if planning to start a family.

The property is semi-detached with 2 reception rooms and 2 bedrooms so would also make an ideal multi-let property for young commuters happy to share. There is an upstairs shower room which is unusual for a property of this type.

For further information please visit https://www.rightmove.co.uk/property-for-sale/property-59400522.html. If you would like to arrange a viewing please contact the agents Winkworths but please hurry as the property has been reduced in price and will therefore prove to be popular.

If you would like a chat about property prices in Guildford or want to discover where you will find your next residential or investment property in Guildford call 01483 320207 or email richard.hodgson@newman.uk.com

In the meantime why not visit https://instantvaluation.newman.uk.com/ to perform an online valuation for your home to discover how much it might be worth in today's market.

Create a new home in a delightful garden village

These properties do not come up to often but when they do they provide a great opportunity for either a new owner, or a developer, to bring them up to a modern standard in order to reflect their personality on the property. This is a three bedroom, 1930's, character, semi-detached house with views across to Guildford Cathedral.

Property with potential to extend

I like this property because it has a garage which could be replaced by a 2 storey extension subject to planning permission and is located in the very popular and sought after area of Onslow Village. This was not only designed as a garden village and has therefore its own unique styling but is conveniently located for the mainline railway station, Surrey University, the Royal Surrey County Hospital and the town centre.

This 3 bed house is being marketed by our friends at Surrey & Hampshire, in Godalming so why not contact them to arrange a viewing now - https://www.rightmove.co.uk/property-for-sale/property-63509145.html

If you would like a chat about property prices in Guildford or want to discover where you will find your next residential or investment property in Guildford call 01483 320207 or email richard.hodgson@newman.uk.com

In the meantime why not visit https://instantvaluation.newman.uk.com/ to perform an online valuation for your home to discover how much it might be worth in today's market.

Delightful property on corner plot with potential to extend

Located in a quiet close but within a short distance of Merrow village and local schools, including St Peters Catholic and George Abbot this property has the potential to become a desirable family residence.

Having lived in the property for over 40 years with little change except for the addition of a conservatory and double glazing there is scope for some modernisation work and the opportunity to extend (subject to planning approval) into the garden which is a corner plot, to make it into a delightful family residence in a desirable area.

There are several larger 5 bedroom properties valued at the £1m+ mark to confirm that this will be a viable proposition. This is why I like this particular property.

Property with potential to modernise and extend

For those who enjoy the game of golf, Guildford Golf Club is just across the Epsom Road.

The price was recently reduced so there will be a surge in demand for this property so why not contact our friends, at Hill Clements, to arrange a viewing before the property sells?
https://www.rightmove.co.uk/property-for-sale/property-72108418.html

If you would like a chat about property prices in Guildford or want to discover where you will find your next residential or investment property in Guildford call 01483 320207 or email richard.hodgson@newman.uk.com

In the meantime why not visit https://instantvaluation.newman.uk.com/ to perform an online valuation for your home to discover how much it might be worth in today's market.

Family living at a reasonable price close to town centre

This property provides a reasonably sized home for the advertised price so would make an ideal home for a young family. There are three bedrooms with two reception rooms and is located within a stone's throw of London Road railway station and the town centre yet has the luxury of a car parking space.

It would make an ideal investment property as well, returning around 4% gross yield if the rent charged for a single let was pitched at around £1,500 pcm. This is why I like this particular property.

Family house close to Guildford town centre

This 3 bed house is being marketed by our friends at Bourne Estate Agents so why not contact them to arrange a viewing now - https://www.rightmove.co.uk/property-for-sale/property-65673382.html

If you would like a chat about property prices in Guildford or want to discover where you will find your next residential or investment property in Guildford call 01483 320207 or email
richard.hodgson@newman.uk.com

In the meantime why not visit https://instantvaluation.newman.uk.com/ to perform an online valuation for your home to discover how much it might be worth in today's market.

How can you find a good property deal in Guildford?

I was talking to a developer the other day, when he suggested that there were no property bargains for him to buy in Guildford. Here is what I discovered recently about finding bargains that I had discovered over the last few months.

A 2 bed bungalow in Gateways sold last May for £525,000. In July 2016, the property had previously sold for £575,000, a drop in value of 8.7%!

Having purchased the property at a reasonable price and realising that the average price of property in this road is £1,120,750 a developer would have had the opportunity to profit from their investment.

This road comprises mostly detached 4/5 bedroom homes so the buyer would have the scope to increase the size of this property. While the property would not lend itself to being converted into a house it did at least have sufficient garden room to allow for the floor space to be increased subject to planning permission, and by modernising the bungalow increase its value to resell the property at a higher price.

On the other hand another property in Harvey Road sold for £1,622,500 in May this year. This represented a substantial increase of 63% since it was last sold for £995,000 nearly 4 year's ago, in November 2015.

This increase in price was realised by using a cleverly designed plan to maximise the use of space throughout. This home is now an impressive refurbished and remodelled six bedroom detached family home. The property has been extended to provide an additional 100 sqm. There is a new and substantial kitchen and breakfast area plus two additional bedrooms including one further ensuite bathroom.

The prime area of Harvey Road is situated above the High Street so is very close to the town centre, in addition to providing beautiful far reaching views across Surrey and Berkshire on the horizon. Harvey Road is also close to Pewley Downs providing access to miles of lovely walking and riding countryside with many footpaths and bridleways. The Royal Grammar School for boys is located in the Upper High Street not far away; and a short walk to The High School for girls.

This just goes to prove that a property does not necessarily have to be purchased at a discount in order to realise a healthy return on one's investment, However understanding your market and creating a high specification to meet the expectations of your buyer, ideally wanting to live in a lovely house close to the town centre, does help.

If you would like to talk to us about property in Guildford please feel free to call me on 01483 600840 or go to https://instantvaluation.newman.uk.com/ to discover how much your property is worth today.

Dennisville - built for Dennis workers, home to students

A landlord recently missed his chance to buy a three bed semi-detached property on Raymond Crescent, near the University of Surrey and the Cathedral, as it sold in a matter of days. He asked me if there is something special about the area, so I did a little research.

I have included St John's Road, Downing Avenue and Raymond Crescent in my findings for the area affectionately known as Dennisville. This was constructed for the workers at Dennis Brothers, the manufacturer of buses, fire engines, lorries and dustcarts, all built nearby on Cathedral Hill, now demolished and occupied by companies such as Philips, Palmolive, RBS and Avaya.

Dennisville was built to house Dennis factory workers

Two hundred and twenty-three houses were constructed for their workers, in the 1930's. John and Raymond Dennis died in 1939 so their names are commemorated in the names of Dennisville's St John's Road and Raymond Crescent.

Street named after Raymond Dennis, one of the Dennis Brothers

A number of two bedroom houses have sold in the area for around £400,000 in the last two years. To prepare the property as a rental investment could take around £20,000 to redecorate and install new bathroom and kitchen but this could achieve a rental of around £1395 per month, which would provide a reasonable annual yield of around 4%.

The three bedroom semi-detached properties in the Dennisville area, which were selling for a maximum of £450,000 last year, are now selling for £400,000 which is probably a reflection of the recent 7.22% slowdown in prices, over the last 12 months.

The bigger houses offer the buyer or investor more rooms, which can be more appealing especially if a landlord is planning to house students studying at the nearby University of Surrey. One such property has been let recently for £3,750 pcm, having been extended to provide six rooms for let, and even the 3 bed houses can be let to sharers for a round £2,000 pcm.

The potential gross yield for these properties will therefore be an attractive 6-10% and there is high demand from students for these properties as they only need to walk 5-15 minutes to reach their destination, at the University.

In conducting my research I managed to speak with one of only two of the original Dennis workers still living in the area. They have been residents since 1960. They purchased the property for £2,000. Now their home is worth around £400,000 and because it is unencumbered they could realise a £398,000 profit over the 59 years, which equates to an annual income of £6,745.

If you would like to talk to us about property in Guildford please feel free to call me on 01483 600840 or go to https://instantvaluation.newman.uk.com/ to discover how much your property is worth today.

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

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