The Beeches, Salisbury – £155,000

Advertised for sale with Whites is this fantastic, well proportioned two Bedroom flat, situated off of Tollgate Road.

Accomodation briefly comprises Lounge, Kitchen, two Bedrooms and Bathroom. I would expect this cracking property to achieve a rental figure of £750pcm, giving you a healthy 5.8% Yield.

Give Whites a call to arrange your viewing  https://www.rightmove.co.uk/property-for-sale/property-65619574.html

£290,015 – The Typical Profit Each Salisbury Landlord Could Make in The Next 25 Years

I am of the opinion that buy to let investment in Salisbury, in the long-term, will bring substantial returns for landlords, irrespective of latest regulation and tax changes.

Taking a very conservative (with a small ‘c’) view, I believe landlords will see a projected net profit of £492,386 per property over the next 25 years through capital gains and rental. When inflation is taken into account that works out at £290,015 (in today’s money) or around £11,601 per year. The breakdown applies to a basic tax-paying landlord placing a characteristic 25% deposit on a £265,200 terraced/town house property.

Capital gains make up a substantial part of a landlord’s returns. Again, being conservative, I have assumed that Salisbury house prices over the next quarter century (between 2018 and 2043) will rise at half the rate they did between 1993 and 2018 (the preceding 25 years), therefore the example Salisbury property in the previous paragraph would grow in value to £723,320, providing gross capital gains of £458,120.

A typical Salisbury landlord receives, on average, rent of £9,600 per annum per terraced/town house property and so, over a 25-year period, that example property would generate a total rental income of £366,960 (again – very conservatively assuming a compound annual growth rate in the rent of 1.71% per annum).

Nevertheless, there are costs to running a buy to let property (mortgages, void periods, repairs, agents fees etc) .. and over those same 25 years, I have estimated that to be £131,338  .. giving the net profit levels mentioned in the second paragraph.

Now of course I have had to make assumptions to reach these figures, yet I hope you would agree, I have been very unadventurous with my assumptions.

The Salisbury (and UK as a whole) buy to let property market is experiencing a massive sea of change. Regulation and tax changes have altered the dynamic in the property market, diminishing its appeal to inexperienced and amateur landlords, and these new tax changes mean higher tax bills for higher rate tax landlords. Yet, despite these rising costs, there are still healthy returns to be found in Salisbury buy to let investment for knowledgeable and steadfast landlords. Nonetheless, the days of anything making money and idle speculation are long gone.

Buy to let is a long-term business undertaking, necessitating commitment and expertise. Don’t put your head in the sand and think it doesn’t affect you. Salisbury buy to let landlords must be equipped to start business and tax planning, take portfolio management advice to ensure their investments will meet their investment goals, appreciate the risks as well as the rewards, and, most crucially, the obligations they have towards their tenants.

If you are a Salisbury landlord, irrespective of whether you are a client of mine or another agent in Salisbury (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Salisbury rental market and where opportunities may lie.

Additional 1,378 Salisbury Rented Homes Required by 2027

I have been doing some research, looking both at National and Regional reports on the demand and supply of property and people together with future projections on the economy, population and family demographics with some interesting results.  According to the Office of National Statistics, in the last financial year nationally, private renting grew by 74,000 households, whilst the owner occupied dwelling stock increased by 101,000 and social (aka council and housing association) stock increased by 12,000 dwellings.

It was the private rental figures that caught my eye.  With eight or nine years of recovery since the Credit Crunch, economic recovery and continuing low interest rates have done little to setback the mounting need for rented housing.  In fact, with house price inflation pushing upwards much quicker than wage growth, this has meant to make owning one’s home even more out of reach for many Millennials, all at a time when the number of council/social housing has shrunk by just over 2.5% since 2003, making more households move into private renting.

There are 7,321 people living in 3,215 privately rented

properties in Salisbury.

In the next nine years, looking at the future population growth statistics for the Salisbury area and making careful and moderate calculations of what proportion of those extra people due to live in Salisbury will rent as opposed to buy, in the next ten years, 3,138 people (adults and children combined) will require a private rented property to live in.

Therefore, the number of Private Rented homes in Salisbury will need to rise by 1,378 households over the next nine years,

That’s 153 additional Salisbury properties per year that will need to be bought by Salisbury landlords, for the next nine years to meet that demand.

… and remember, I am being conservative (with a small ‘c’) with those calculations, as demand for privately rented homes in Salisbury could still rise more abruptly than I have predicted as I would ask if Theresa May’s policies of building 400,000 affordable homes (which would syphon in this 5-year Parliamentary term is rather optimistic, if not fanciful?

So, one has to ask wonder if it was wise to introduce a buy to let stamp duty surcharge of 3% and the constraint on mortgage tax relief could curtail and hold back the ability of private landlords to expand their portfolios?

Well a lot of landlords are taking on these new hurdles to buy to let and working smarter.  Buying the property at the right price and using an agent to negotiate on your behalf (we do this all the time) … and the 3% stamp duty level isn’t an issue.  Incorporating your property portfolio into a Limited Company is also a way to circumnavigate the issues of mortgage tax relief (although there are other hurdles that need to be navigated on that tack), but just look at the growth of proportion of Buy to Let properties in the Country since the Summer of 2016 … something tells me smart Landlords are seeing these challenges as just that … challenges which can be overcome by working smarter.

I have a steady stream of Salisbury landlords every week asking me my opinion on the future of the Salisbury property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters … it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would you?).

Neville Close, Salisbury – £189,950

Advertised with Charlotte England Homes is this two bedroom maisonette. Situated in the popular Bishopdown area, accomodation is well proportioned throughout and briefly comprises Lounge, Kitchen, two Bedrooms and family Bathroom.

I would estimate a rental value of £750pcm, giving you a reasonable yield of 4.7%, however I would think that a reasonable offer would be accepted, increasing your yield.

If you would like our advice on the rental potential of a property, whether it’s your own property, one you are in the process of purchasing, or one you have seen advertised, contact a member of the team! https://www.rightmove.co.uk/property-for-sale/property-66366982.html

Douglas Haig Road, Salisbury – £185,000

A project for property developers! For sale with Oliver Chandler is this fantastic two bedroom property, situated just off of Castle Road. The property is in need of full renovations, so would make the perfect investment property. It boasts a large plot, so scope for extension and also potential for off-road parking with the right planning consents.

Give Oliver Chandler a call to arrange your viewing. https://www.rightmove.co.uk/property-for-sale/property-66288541.html

 

Glenmore Road, Salisbury – £159,950

Offered for sale is this fantastic 2 bed flat, situated on Glenmore Road.

Accomodation briefly comprises Lounge/Diner, Kitchen/Breakfast Room, two double Bedrooms and family Bathroom. The accomodation is well proportioned and the property is in a fantastic location.

We previously rented a flat within the same block for a figure of £750pcm, giving you a fantastic yield of 5.6%

Give Bassets a ring to arrange your viewing. https://www.rightmove.co.uk/property-for-sale/property-55086489.html

 

 

Will the Salisbury Property Market Crash?

And if it does … who will be the winners and losers?

Those Salisbury people wanting property values to drop would be those 30 or 40 something’s, sitting on a sizeable amount of equity and hoping to trade up (because the percentage drop of your current ‘cheaper’ property will be much less than the same percentage drop of the more expensive propertyand trading up is all about the difference). If you have children planning to buy their first home or you are a 20 something wanting to buy your first home – you want them to drop. Also, landlords looking to add to their portfolio will want to bag a bargain (or two) and they would love a drop!

Yet, if you have recently bought a Salisbury property with a gigantic mortgage, you’ll want Salisbury property values to rise. If you are retired and are preparing to downsize, you will also want Salisbury property values to rise (because you will have more cash left over after the move). Also, if you, a landlord looking to sell your portfolio or a Salisbury home owner, who has remortgaged to raise money for other projects (meaning you have very little equity), you will want Salisbury property values to rise to enable you to put a bigger deposit down on the next purchase.

So, before I discuss my thoughts on the future, it’s important to look at the past…

The last property crash, caused by the Global Financial Crisis, was between Q3 2007 and Q3 2009 … when property values in Wiltshire dropped 13.77%

…taking an average property from £227,133 in September 2007 to £195,849 by September 2009 … and since then – property values have over the medium-term risen (as can be seen on the graph).

So … what is happening now?

The simple fact is people in the UK are moving less (and hence buying and selling less). Estate agents up and down the land are blaming “Brexit” for this but the reality is that the problems in the British housing market are a lot greater than measly old Brexit!

There is a direct link between how people feel about the property market (sentiment) and the actual performance of the property market. However, the question of whether people’s sentiment moves as a result of changes in the property market, or whether changes in the property market drive sentiment is a question that baffles most economists – you see if someone feels assured about their financial situation (job, money etc.) and the future of property, they are more likely to feel assured to spend their hard-earned earnings on property and buy and if you think about it … vice versa. So, I believe Brexit isn’t the issue  – it’s just the “go to” excuse people are using. Humans don’t like uncertainty, and Brexit itself is causing uncertainty – it is, after all, the great unknown.

So, is it the flux of global politics? Politics are causing hesitation in the posh £5m+ markets of Mayfair and other high value Monopoly board pieces – but certainly not in sleepy old Salisbury (I don’t think Salisbury is too high up on the house buying list of all these Saudi Prince’s and Russian Oligarchs) … no the issues are much closer to home.

So, coming back to reality, one the biggest driving factors in the current state of play in housing market has been the part Buy To let landlords have played in the last 15 years. Making money as buy to let landlord in these golden years was as easy as falling off a log – but not anymore! Landlords had been getting off quite lightly when it came to their tax position, but with Osborne changing the taxation rules on buy to let … things have become a little more difficult for landlords.

Landlords have been hit with a supplementary rate of stamp duty, meaning they pay 3% more stamp duty than first time buyers. High rate taxpayers in the past have been able to offset the interest payments from their buy to let mortgages against their self-assessment tax bills – at their marginal rate. Between now and 2020 … this is being reduced in small steps, so they will only be able to claim back relief at the basic rate of tax. The bottom line is that it will be much tougher for investors to make money on buy to let. Tied in with this, the mortgage rules were changed a few years ago, meaning it’s also become slightly tougher to obtain buy to let mortgages (although if I’m being honest – they need too).

And what of Salisbury first time buyers? Well, I was chatting recently to a colleague about the Salisbury Property Market, and I mentioned that last year was the best year for over decade for first time buyers. For the last 30 years, buy to let investors have constantly had more purchasing power than first time buyers, as they were older and more established, together with their tax breaks. Yet, now as many amateur landlords are having second thoughts in staying in buy to let, this has given first time buyers a chance to get on to the property ladder.

What will happen to Salisbury property values? The simple fact is we don’t have the conditions that caused the crash in 2007 (i.e. sub-prime lending in the US, causing banks not to lend to each other, thus stalling the global economy as a whole). Assuming everyone is sensible on the Brexit negotiations, the biggest issue is interest rates.  As long as interest rates remain comparatively low (and don’t get me wrong – I think we could stand Bank of England base interest rates at 1.5% to 2.5% and still be OK, then the thought of a massive property market crash still looks improbable.

Yet correspondingly, I cannot see Salisbury property values rising quickly either.

The double-digit growth years in property values between 1999 and 2004 are well gone. A lot of that growth was caused by an explosion of buy to let landlords buying property to accommodate the influx of EU migrants in those years.  Mark Carney at the Bank of England can’t make interest rates any lower, so it’s difficult to envisage how credit conditions can get any easier!

Balance of probabilities … Salisbury property values will hover either side of inflation over the next five years, but if we did have another crash, what exactly would that mean to Salisbury homeowners – if they dropped by the same percentage amount, as they did in the last crash?

If Salisbury property prices dropped today by the same percentage as they did locally in the Global Financial Crisis back in 2007/9 … we would only be returning to the property values being achieved in July 2015 … and nobody was complaining about those!

Therefore, looking at the number of people who have bought homes in the area since July 2015, that would affect approximately only 17% of local home owners and landlords … and only a small percentage would actually lose – because you only lose money if they decide to move (and come to think of it, some of those sellers would fall into the category mentioned above that would relish a price drop!). So, really not many people would lose out.

Interesting don’t you think?