30 Mar

Liverpool’s housing affordability hits a ratio of 4.91 to 1

A Liverpool homeowner emailed me last week, following my article posted in the Liverpool Property Blog about the change in attitude to renting by the youngsters of Liverpool and how they thought it was too expensive for first time buyers to buy in Liverpool.  There can be no doubt that buy to let landlords have played their part in driving up property values in Liverpool (and the UK) and from that made housing a lot less affordable for the 20 and 30 somethings of Liverpool.

In the email, they said they thought the plight of the first-time buyers in Liverpool was like a novice tennis player, playing tennis with Andy Murray. If you played him once you will unquestionably lose and if you were to play him 100 times you would lose 100 times. That is what they thought it was like for all the 20 something’s first time buyers of Liverpool going against all the buy to let landlords.

They went on and asked if the Bank of England (BoE) should be tasked to control house price inflation in the same way as the BoE controls inflation.  The BoE has a target for the annual inflation rate of the Consumer Prices Index of 2%, whilst it is also required to support the Government’s economic policy, including its objectives for growth and employment.  So, should BoE be charged with containing buy to let housing market, by possibly changing the rules on the loan-to-value (LTV) ratio’s?

So, let’s look at how affordable Liverpool is?  The best measure of the affordability of housing is the ratio of Liverpool Property Prices to Liverpool Average Wages, (the higher the ratio, the less affordable properties are).   (i.e. looking at the table below, for example in 2014, the average value of a Liverpool property was 4.45 times higher than the average annual wage in Liverpool).

This deterioration in affordability of property in Liverpool over the last couple of years has been one of the reasons why the younger generation is deciding more and more to rent instead of buy their own house.

… but it’s not the only reason.

A quick look on Money Supermarket today found 169 lenders prepared to offer 75% LTV Buy to let Mortgages and none at 85% LTV.  Lenders have self-imposed a high level of entry for buy to let landlords (i.e. putting down at least 25% of the purchase price in cash).  The BoE don’t need to meddle there!  Also, the Tories have certainly done lots to level the playing field in favour of first time buyers.  For nearly a year now, Landlords have had to pay an additional 3% in stamp duty on any buy to let purchase and over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket.  Neither, it doesn’t help that the local Authority sold off council houses in the Thatcher years and so for many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).

It’s easy to look at the headlines and blame landlords.  First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 2 bed terraced property in Liverpool for around £70,000 and only need to find £3,500 deposit.  Yes, a lot of money, but first time buyers need to decide what is important to them.  Either save up for a couple of years to save the deposit and go without two annual foreign holidays, the full Satellite or Cable TV package with Sports and Movies costing three figures a month, the latest mobile phone and out socialising … or not as the case maybe?

I think we as a Country have changed … renting is returning to be the norm.  So my opinion is, landlords have it tough.  Let’s not blame them for the ‘perceived’ woes of the nation … because to be frank … we haven’t always been a country of homeowners.  Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord – today – its only 15.3% nationally.

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or what not to buy in Liverpool), one source of information is the Liverpool Property Blog www.liverpoolpropertyblog.com

27 Mar

One Park West, Strand Street, Liverpool, L1 – Studio Apartment – Gross Yield of 7.8%

I’ve come across this studio apartment in the popular One Park West Development in Liverpool One.

This development is very popular with tenants due to it’s close proximity to Liverpool One Shops, Albert Dock, Liverpool’s Iconic Three Graces and the Waterfront.

The property is currently on the market with Venmores for £85,000 (as always, try to negotiate at least 5% discount off the sale price).

These apartments would achieve a rental income of £6,600 per giving this a gross yield of 7.8% and this could increase to over 8% if a discount can be negotiated on the sale price. You don’t see apartments in One Park West as low as this so I feel this is a great long term purchase. There is no mention of the ground rent or the service charge so you will need to check out the charges relating to this apartment and work out the net yield achievable.

Click here to view the property

If you would like any advice on this property or any other properties that you have may have seen in Liverpool, then contact me on adamr@liverpoolpropertyblog.com

23 Mar

‘Flipping’ Heck – Liverpool Property Values Rise by £12.14 a day

Investing in Liverpool buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar. It is this factor that attracts many of Liverpool’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Liverpool, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Liverpool property has risen by £22,150 (equivalent to £12.14 a day), taking it to a current average value of £159,200. Yields range from 6% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping – buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example …

This demonstrates how the Liverpool property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Liverpool landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Liverpool people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and what would not) make a decent buy to let property in Liverpool, then one place for such information would be the Liverpool Property Blog.

22 Mar

Torrisholme Road, Liverpool L9 6AS – 7.2% Gross yield tenant in situ!



I feel this property is a great investment, it has an asking price of £75,000.

It comes with a tenant who has been living in the property for 4 years and is more than happy to stay. They are currently paying £450pcm they have had no rent increase throughout their tenancy. These figures give a gross yield of 7.2%. The property is a two bedroom mid terrace comprising; lounge, kitchen, two bedrooms and bathroom.

The property has been managed by the landlord and is willing to show financial statements to prove the rent has never been an issue, the deposit is also held with the DPS and all information will be transferred.

This property has not been put on the open market as the landlord does not want to worry the tenant so this is an exclusive offer to Liverpool Property Blog!

If you have any questions regarding this property or tenancy, then contact me on adamr@liverpoolpropertyblog.com