26 Feb

32,040 Liverpool Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?

32,040 Liverpool Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?

There I was, out with the family at the Victoria Gallery and Museum last weekend, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person writes that Property Blog aren’t you? We have met before at that Business Networking event in Liverpool a few months ago’. I did then recognise him and, whilst I wont mention his name, he runs a small but perfectly formed well known independent retailers in the city … It’s amazing who you see when out walking! Anyway, I was at a loose end for five or ten minutes as the other half was sorting things with the family, so we had a chat.

He wanted to know my thoughts on the future of the Liverpool property market, and I would now like to share with you that conversation, my Liverpool property Blog reading friends. People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the city have a choice to what type of roof they have … they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s/80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Liverpool youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering … and I want to share them with you.

Roll the clock back 20 years and Liverpool was a different place. There were 207,719 households in Liverpool and 99,445 of those were owner occupied. Move to the present, and with all the building in the city, the total number of households has increased by 16.7% to 242,558 and quite surprising (to me at least), the number of owner-occupiers has increased to 120,531 (although as a proportion, it is only 49.6% compared to 47.8% twenty years ago).

However, it’s rented sector that is truly fascinating … twenty years ago, only 19,321 properties were privately rented in Liverpool … and now its 51,361, a rise of 32,040.

The twentysomethings of Liverpool housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 55,981 to 13,524 over the same twenty-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy to Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Liverpool and those who educate themselves and treat it as a business will survive and prosper.

The best way Liverpool landlords can protect their income from property (and mitigate the affects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last three or four years, Liverpool tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Liverpool (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.

… And just as the other half had sorted the family, he asked ‘What of the news of Stamp Duty changes for Landlords coming in April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Liverpool property values will see much impact – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to buy to let landlords in the coming decade as the the housing market should return to balance. For more in-depth thoughts on the Liverpool Property Market, which have a library of similar articles like this, all on the Liverpool Property Market, please visit my blog – www.liverpoolpropertyblog.com

22 Feb

£100,000 inheritance – Is buying Liverpool Property still the best place for my windfall?

£100,000 inheritance - Is buying Liverpool Property still the best place for my windfall?

I had an interesting email from someone in Liverpool a few weeks ago that I want to share with you (don’t worry I asked his permission to share this with you all). In a nutshell, the gentleman lives in Crosby, he is in his mid 60’s and still working. He has a decent pension, so that when he does retire in a couple of years’ time, it will give him a comfortable life. He had recently inherited £100,000 from an elderly relative. One option he told me was put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%; meaning he would get £1,900 in interest a year. One of his other options was to buy a property in Liverpool to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords.

Notwithstanding the war on Liverpool landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the intricate cut to mortgage interest tax relief that will diminish, or even eradicate, the profits of many Liverpool landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.

I told him that buying a Liverpool buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £1,900 a year or, as he rightly suggested, invest in property in Liverpool. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Liverpool is 4.64% per annum, meaning our potential F.T.L (First Time Landlord) should be able to, depending on what he bought in the city, earn before costs £4,640 a year. (However, I told him there are plenty of landlords in Liverpool earning half as much again (if not more) – look at my blog or drop me an email).

The bottom line is that the success of investing in Liverpool buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Liverpool have risen in the last twelve months by 6.1% meaning, that if our chap had bought a year ago, not only would he have received the £4,640 in rent, but also seen an uplift of £6,100 …meaning his overall return for the year would have been £10,740 (not bad when compared to the Post Office!).

..  but the doom mongers amongst you will say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in Liverpool currently stand 19.74% below the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Liverpool, we are well above these sorts of levels.

… and what would that £100,000 get you in Liverpool? A decent 1 bed apartment in the City, a nice 2 bed semi in West Derby or a lovely 3 bed semi in Old Swan .. in fact, the world is your oyster. But which Oyster? Well, my blog reading friends, if you want to read similar articles like this and what I consider to be the very best of buy to let deals in Liverpool, irrespective of which agent is selling it, then you need to visit the Liverpool Property Blog www.liverpoolpropertyblog.com

20 Feb

Shaftesbury Terrace, L13 – £70,000 8% yield

Shaftsbury Terrace (1)

“Conveniently located off Prescott Road where you’ll find plenty of local amenities including supermarkets, eateries and banks. Group these with a local primary and secondary school near by and you can see why this is a popular location. This two bedroom, two reception room terrace house is available with no onward chain and must be viewed.” Location is key and these are the words of the agent which to me, explains why this is a great investment property.

The sitting tenants currently pay £480 pcm; they have occupied the property since 2013 and have expressed their interest to stay long term – a great advantage for a landlord looking for a simple investment. The vendor has advised that the whole roof was replaced in 2009. The eco-friendly damp proof course was put in in 2010 and the living room, dinning room, hall & landing and the main bedroom were plastered in 2010. Excellent news for the next owner! The full sales details can be seen here.

Viewings are recommended and can be arrange by speaking to Lori at Belvoir Liverpool Central – call 0151 231 1616 (opt 1).

18 Feb

Golden Investment Property on Liverpool Waterfront

 

waterside3

Belvoir have listed a lovely apartment in Waterside Apartments- it’s rare to see a property for sale here and it’s listed at £140,000 so I had to have a look! This development is known for being a desirable spot for professional tenants. Similar apartments have let between £775 pcm and £875 pcm making a potential yield of between 6.6% and 7.5% yield. I know that’s not the greatest of returns when factoring in service charges but when it comes to capital growth…

Rightmove have issued their House Price Index recently and according to this, the average price of a two bedroom apartment in L3 is £180,000. This particular apartment is on the outer part of the City Centre but on prime land with waterfront views so I would say £160,000 would be a fair valuation yet the asking price is £140,000. The vendor is clearly motivated.

I think this is a gem of an investment and Lori at Belvoir agrees. I spoke with her for some information and she advised there are already multiple viewings booked in for this weekend. I also noticed the apartment is currently let to a company and has been for three years. My advise it to view asap. The full details can be seen here.

As always, comments or questions are more than welcome.