Since we began working in the student property investment sector we have seen many developers and agents come and go. Normally those with a shorter-term approach to business, looking to profit quickly from any investor excited by the latest “buzzword” in the industry. This blog is testament to the fact that once again, Fresh Invest have delivered a great investment for one of our valued clients and…. We have more on the horizon!
Our approach to property investment has always been the same and we stand by it, which is why we are still in this market after 10 successful years. We believe in supplying property, which is either genuinely below market values assessed by ourselves, or RICS professionals, and providing strong and consistent yields in good locations. We only sell products that we would invest into ourselves and often do! In fact, we wish we invested in this last one…
We have worked with a developer in Liverpool recently to bring to market a development of 16 studio apartments, which were all sold off-plan to one purchaser. When the developer originally bought this investment to us, he had been advertising with another agent for a short while but was unhappy that they had sold none of the units on the current structure. We restructured the deal to make it both more secure and more appealing. Through our own due diligence, we found an appropriate market rent where we could be confident in 100% occupancy. We then worked this back to a NET yield of 10% which would be attractive in the investor market. We had a sale agreed on the property for all 16 units within 1 day of marketing!
Since agreeing the sale we have remained part of the process, helping with construction updates, chasing various parties when necessary, helping the buyer obtain a mortgage through our trusted broker and liaising with a local letting agent who are actively marketing the units. The local agents are actually marketing the units at prices higher than we originally accounted for and are getting a huge amount of interest. Due for completion in the next couple of weeks, the property, when fully tenanted, will provide our client with a return on his invested cash of over 25% per year!
This is just another example of the service we provide to both investor and developer, working with both parties to make sure everyone is getting the best out of every development.
Fresh Invest look forward to working with all parties again in the near future.
Developer or investor? Give us a call to see how we can help 01243 527327
Why purchasing high yielding student investments through Fresh Invest is the educated choice to make.
We have been operating in the UK student property investment market for a number of years now with projects nationwide. In the time we have been in this market, we have seen student investments of all shapes and sizes, offering yields from 8% up to 12% NET and guaranteed for anywhere up to 10 years! The investments are normally sold as either student pods, studios or HMO houses, new build or refurbishment. Here are some potential pitfalls to look out for:
- Over-valued property
- Unachievable rental prices
- Large deposits through build schedule with little security
- Pigeon holed property (only ever usable as student property)
- Incomplete information (are rents inclusive of bills?)
- Is the area popular with students?
Since the inception of the student pod, the market has been filled by a lot of developers looking to make a quick buck here and there. Offering products which, when investigated properly, do not stack up from a yield or a price perspective. The biggest thing to look out for is to see if the price has been “loaded” in order to pay back a guaranteed return. The easiest way to check this is to use comparables to compare the quoted rental prices, you may well notice that the prices quoted in sales literature are not going to be achievable, those prices are used to get you to pay more for the property up front, they can then be fed back in a guaranteed rental period. Once the guarantee period finishes, you are likely to be left with an over-valued, underperforming asset.
We don’t think student pods should be completely negated. We believe that there will always be a large number of students that like to live in this type of accommodation. It is social and gives students their own space, which is important. However, student pods are not our preferred method of investment in this market and the largest reason for this comes down to resaleability. Although resales are possible, the market is restricted purely to investors and the price will always be subject to the rental potential of the unit.
Our preferred method of student investment is with HMO’s, student cluster flats or studio apartments. These 3 types of investment give the increased flexibility of a property that can be sold to the owner-occupier market, if for any reason you ever struggled to attract student rentals. Another advantage of this type of investment is that the properties are all a mortgageable product, meaning you can leverage your funds to achieve returns in excess of 20%
Our last student project was a fantastic success with 9 x 6 bed HMO’s in Liverpool, all sold off-plan within 2 months of marketing. All of the properties were rented for completion with 100% occupancy at the quoted rental prices, giving NET yields of around 10%. All of the properties on this development are 100% occupied for the 2014/15 academic year too!
Our Next Investment
For our next student investment, we are partnered with the same developer as the last, who has a good track record in delivering projects on time and to a great specification. We will be building 27 x HMO properties in Liverpool, with deposits of 35% put down through the build schedule and only released upon particular stages of construction, signed off by an independent architect. Yields will be 10% NET after all costs and because this will again be a mortgageable property, we expect cash on cash returns around 20%
For more details of this and future property investments, register here http://www.freshinvest.co.uk/investors_registration/
We were contacted by a Liverpool based property developer who owned various sites across the city but because of the lack of bank funding available was unable to build these sites out.
This situation is rampant with small to medium size developers who have historically had good relationships with their banks but because of the severe financial restrictions imposed to many main stream lenders has become untenable.
This particular developer had a 10 year track record in providing top class residential accommodation and had successfully built over 100 apartments and houses in that time.
It was important for him to trade through this downturn.
As bank funding was not available, we needed to achieve healthy deposits from the investor, whilst making sure we do not expose them to unnecessary risk.
We also needed to come up with a property investment that was strong enough to attract off plan sales in a market that had predominantly moved away from it.
After reviewing a number of his sites, we came across one in Wavertree, this site had great connections to both Liverpool Universities and major transport routes. Wavertree also has a nice mix of residential and student accommodation.
Student Property Investment has become a “buzz word” in the investment industry. With the Government slashing funding for Universities, many have had to rely on third party builders to keep up with student demand.
We are big fans of student houses, we believe they offer a very important option over student pods in that houses can be sold and valued as residential property, with pods your exit strategy is severely reduced.
The development is on a road called Ashfield, this is predominantly terraced houses so building more terraced houses to fit with the area seemed the logical choice.
Our next step was to put together an investment package and do due diligence on occupancy and room rates. Our due diligence was concluded in 2 weeks after numerous conversations with letting and management agents. We decided on Downings for our management and letting agency, Downings have a long standing relationship with the developer and are one of the largest student landlords, developers and management companies in Liverpool.
We wanted to structure this student property investment in a way where the developer could be happy that the deposit money he will use to build is secure; and the investors risk in minimised by only releasing a % of the deposit at specific build stages.
We achieved this by asking for a 30% deposit in 2 stages, 15% at exchange and 15% when building is wind and watertight. The 15% is released in 3 stages and only after an architect has signed the previous stage off. This only exposes the investor to 5% of his funds at any one time but the 15% held by the developers solicitor means the developer can rest assured the money is there when needed.
We asked for a reservation fee of £2,000 which is fully refundable should planning not be achieved.
We launched the Ashfield Student Property Investment to our clients in the form of a 4 part email, 3 parts detailing different points of the investment process and the last concluding all information.
We sold out the entire scheme in 7 weeks, investors bought because of the stability of the off plan purchase process and the achievable returns available.
The developer can now move forward with his planning application safe in the knowledge the entire site is pre sold off plan.
It seems new pod developments are being marketed on a daily basis but are they really all they are cut out to be?
Let’s look at the facts:
History of student property investment
Let’s start with the reason all of these private student halls are being built?
The 2010-2011 academic year saw grants for capital projects, such as new buildings, cut by 58% in cash terms to £223m. In the 2009-2010 academic year, universities received £532m for building works.
Because of this universities were not able to respond to the increased demand from students and had to start to rely on 3rd party builders to satisfy that demand.
Student Pod developers can be easily classed into 2 different categories.
1. Large developers that are cash rich and can build out with their own funds:
This type of developer can afford to purchase a site, gain planning then forward sell to a fund at between 5-8% yields. Generally the developer will secure a FRI lease from the University for 25 years or so. The fund will then agree to purchase on completion.
2. Smaller developers or land owners that want to maximise their profit from land owned:
This type of developer/land owner generally either has an option on or owns the prospective land but does not have the funds to build out. They need to find 3rd party funding outside of the mainstream. These are generally the types of development that are offered to the individual investors.
3rd Party funding is provided by the investors who put down a percentage of the purchase price on exchange which is used by the developer in the construction process.
The absolute key to this type of proposal is to protect the investors deposit, this can be done by staging the tranches in which it is paid to the developer and making sure that a solicitor holds all deposits in a client account. For the developer to receive funds an independent architect would need to sign off each build stage.
How are they priced?
Good question, I will show you how they should be priced first of all.
- You decide what you want to build, so self contained pods, houses or flats.
- You work out what rental each room should achieve and the number of weeks they will be rented at
- You then work out the monthly, then yearly income that can be derived from the site, taking away the maintenance and management fee to give a net figure, divide this by the yield you want to offer and this gives you a sale price.
- Take away the agents fee and the site cost and you have net profit to the developer.
If the developer is happy with the level of profit then the investment goes to market, if not, it should be canned.
I won’t beat around the bush, its greedy developers or agents.
Normally when you get to point 4 above and it doesn’t work then it’s the end of the line, unless the developer wants to take less profit or the agent wants to take less commission.
What seems to be happening now is that investment companies use astronomical weekly rentals along with a high number of rental weeks to achieve higher rental returns, and in turn higher sales figures. Sometimes they guarantee this for a year or two but this is just worked into their profit.
I’m seeing a lot of opportunities that are advertised with a guaranteed return for 2 years but with absolutely no comparables to show what these pods will rent for after those 2 years.
An example, if we work to £100pw over 50 weeks -20% for management and maintenance = £4,000 (£40,000) on a 10% yield.
If this doesn’t work, increase the figure to £125pw over 52 weeks – 20% for management and maintenance = £5,200 (£52,000) on a 10% yield.
So you’ve paid £12,000 more for a property already, the developer can afford to guarantee this for 2 years because it will only cost him £3,000 if he rents at the figures of £100pw over 50 weeks.
The downside for the investor is that not only have they paid £12,000 more for the property, but their property will only be achieving a 7.6% yield after the first 2 years!
How would I know if the rentals are realistic?
A good investment company should provide you with full due diligence on the investment opportunity offered. It isn’t enough to offer a guarantee, you should be provided with comparables that show the rental being guaranteed is correct.
All investment companies should have conducted this due diligence as its service to you, if it’s not been done; you need to ask yourself why.
Don’t bury your head in the sand….You need to conduct your own due diligence as well, you can do this by phoning the university accommodation office and ask them about the area you are looking to buy the pod in, also speak to letting agents, its sometimes best to pose as an existing landlord, say you are looking to let your property and ask what you may get for it.
Is Student Accommodation sustainable and what happens if the market declines?
Whilst student numbers remain strong, yes it is. Liverpool universities showed an increase in student numbers last year and good quality student accommodation in favourable areas will always be in demand. What we will start to see is the death of the single landlord that owns a badly furnished house in an average area. I know when I was a student this was our only choice outside of halls. We will see good quality student houses and apartments that are regularly refurbished and well managed flourish but ones that are not will decline.
The management of student accommodation has moved forward massively over the last 10 years, gone are the days that a large percentage of landlords shied away from the student market; with a strong professional management company there should be no more hassle renting to students than there is to professional tenants.
Most people reading this will know that we are an advocate of the student property market here at Fresh Invest. With good management and an attractive property you can benefit from very high and secure rental yields.
With student demand increasing year upon year and a massive shortage in student accommodation currently available in the UK, it seems like Student Property is a great area for investment and many of our investors have been taking advantage of that fact and profiting
There are many different facets of student property available for investment and we feel that our Student HMO’s are the best opportunity out there right now.
Our latest Student Investment in Liverpool is ideal for those investors looking for large returns but still looking to maintain an easy exit strategy from the investment, with high capital growth.
We now have just 4 houses remaining from 9 in total on this development site and we expect them to sell quickly. The development was only released around 2 weeks ago and since then we have had significant interest in the properties.
Our Liverpool Student Investment was completely designed by us. The developer came to us at the end of last year looking for an idea of how best to develop out a piece of land he currently owned, taking advantage of its location. With our knowledge of the student market up there and previous experience of selling student property in Liverpool and the demand for that type of property from both investors and students, we designed a scheme with the investor in mind, minimising their exposure to risk, whilst maximising returns in capital and rental income.
The site lies within 2 miles of 3 major university campuses and just 2.9 miles from a fourth. With a bus stop just 100 metres from the development, communications with the university are great and students will have no problem getting to the various campuses
The investment provides the investor with the opportunity to invest just £57,000 and generate a net income of £15,310 per year, after mortgage costs, maintenance and management fees!
6 Bedroom Student Town house.
- Price: £190,000
- Deposit @ 30%: £57,000
- Mortgage Amount @70%: £133,000
- Yearly Rental Income: £25,500
- Gross Yield: 13.42%
- Mortgage Cost @5%: £6,650
- Maintenance: £1,500
- Management: £2,040
- Net Return Per Month: £1,276 (£15,310 per annum)
Please follow the link for our latest UK INVESTMENT OPPORTUNITIES
The student property market has been the focus of much debate over the past few weeks in the property industry. Still remaining strong and with more and more purpose built student blocks rising from the ground. But will the increased fees now payable to universities stifle the rental market as less people can actually afford to go? If they can afford to go are more students going to be looking towards the private rented sector and house shares to cut down their monthly overheads?
High Rise Student blocks have started popping up in most university student towns and cities as savvy developers see the potential for a 51 week tenancy agreement and maximising their rack rent by utilising as much of the available space in a building as possible by filling it with bedsits and communal spaces as opposed to self contained apartments.
High rise student blocks are often most popular with the overseas student market that will be coming over to the country and staying for a longer period of time often lets of 43 or 51 weeks, they tend to stay in the UK for the summer, they also normally pay higher fees, sometimes up to £20,000 per year making them a vital fee earner for UK universities.
London in particular is an area where student development is taking off and with figures recently released showing demand over the next few years and the supply that is currently in the pipeline, it could be only the overseas students that will be in a position to front the rising costs. The predicted shortfall of beds is 47,000 by 2016! In the new Nido scheme at Spitalfields students will be expected to pay up to £350 per week per person!
Even with the caps on overseas students that the government has proposed we feel the student property investment market is going to remain strong for a few years yet. As top universities start to charge higher fees in London maybe more students will start to look at smaller university towns and other large respectable locations may continue to grow.
To see our latest UK student property investment opportunities please click the link.
It wasn’t long ago that you could be mistaken for thinking that certain parts of Cape Verde were akin to a desert…
With little infrastructure and no direct flights from most European countries, Cape Verde as a holiday location was only for the most hardcore of travellers.
Fast forward a few years and Cape Verde presents a very different image. None more so than Sal.
Being only 5 and a half hours from the UK and now benefiting from a direct flight from many major cities there is little doubt that Cape Verde is the future winter holiday destination for most of Europe.
Through increased interest and build Cape Verde have been able to push more money to the infrastructure of the country, building roads and bringing power and water facilities up to European standards.
Cape Verde is now being talked of in the same breath as the Canary Islands and the Caribbean as a winter holiday destination. This is in no small part due to a handful of developers that have managed to build affordable quality property that offers high yields and low entry costs.
With the Completions of Villa Verde and Tortuga Beach Resort slowly but surely the face of Cape Verde is changing.
Tortuga Beach Resort brings the first of three 5* hotel resorts to the Island, all operated by world class operator Sol Melia, the quality of these properties have to be seen to be believed.
Many overseas developers promise a lot and deliver little, this is certainly not the case with Tortuga Beach, with the development going live to the public next month pictures of the finished product are now available for all to see.
Located right on Cape Verde’s famous Ponta Preta Beach, many apartments and villas have direct sea views and easy access to the beach and beyond.
The emergence of hotel companies managing developments built and sold on to investors is fairly new and as with every walk of life, as time flows these precesses are refined. I say this because there are plenty of developers that build with the intention of bringing a 5* hotel company in to manage but only a handful that actually manage it.
9/10 the hotel company realises the increased cost in terms of added specification of doing this and decided to go it themselves or attract a lesser hotel company to do this for them. Not in this instance! Sol Melia is well known for it’s 5* brand and it’s evident that Tortuga Beach Resort fits into this perfectly!
With a 5* Hotel branding also comes the benefit of increased specification and leisure facilities:
Tortuga’s Features and Benefits include:
- Stunning beach-front location
- Occupancy density of less than 25%
- 12 luxury front-line single storey 4 bed detached villas
- 40 luxury two storey 3 bed detached villas
- 306 two bed apartments
- 358 properties in total
- Two communal pool areas
- Lush green landscaped gardens
- Luxury 5-Star Hotel
- Apart-Hotel facilities for all villas and apartments
- Superb 150 seat restaurant
- Elegant Wine Bar and Piano Bar
- Luxury Spa and state of the art Gymnasium
With only limited availability left on this stunning development you may look towards this developers next project, Dunas Beach Resort. Ready at the end of next year and with build already underway you can be assured this will be bigger and better than it’s predecessor!
Or if you prefer, wait for Llana Hotel and Spa, the developers third resort which is due to be released next month.
Whichever you choose, Cape Verde as a destination is here to stay and these three developments will become a massive part of it.
Where does UK property and interest rates go from here? Economy shrinking, Inflation rising and rental values apparently falling…
Let’s start off here. If an economy is contracting this typically means that unemployment is rising, the reason for this is that, the size of an economy is measured on GDP (Gross Domestic Product) this is the total amount in pounds of everything circulating through the economy in a given year.
The formula for GDP is C + I + G + (X-M) = GDP
Where C = Consumer expenditure, I = Investment, G = Government expenditure and X – M = exports minus imports i.e. the total value added to products in this country.
If people are spending less, people are making less profit. If inflation is present it should be easier for GDP to increase as prices are rising, but the figure given as -0.5% is “real terms GDP” this is the total increase having taken into account inflation. Now, inflation can do two things it can lead to further spending or it can stop spending and send an economy into negative growth (much like it, seemingly has here) the reason it can do two things are:
1. Inflation can lead on to further inflation as people decide to purchase goods early before prices rise further. Resulting in further rises.
2. Inflation can lead to negative growth as people begin to slow their spending habits as prices hit certain levels i.e. a £9.99 CD becoming a £10.19 CD, the psychological effect of this small rise can damage sales, but the shop has no choice but to raise prices as prices of other goods and services are rising.
However I don’t feel that the negative growth can be solely attributed to increasing prices etc. What must be taken into account is the good old weather of the UK! Because of the poor weather conditions we suffered in December much of the country was unable to get to work and even unable to go out and spend.
But there are two significant ways for a government to battle inflation at the scary 3.7% it currently is and that is… raise VAT, or raise interest rates.
VAT has been raised from the beginning of 2011 and I feel we are yet to see the full effect of this in the figure of 3.7% inflation which was given at the beginning of the year. But now there are lots of rumours of an interest rate hike on the back of this as well, which should of course slow down inflation, but could quite easily send us back into negative growth and further stagflation where growth is stagnant and inflation is still present.
Now if interest rates were to rise I feel there will be lots of unhappy landlords on Tracker Mortgages, especially when rental values are apparently falling (this is taken from a generalised figure, which we try not to rely on too much in this industry) but this will normally mean less in the landlords pocket and in some cases, more out of their pocket!
Further to this we have the savers. Savers have had a particularly hard time throughout the recession, low interest rates and constant inflation means that at no point have they really been “better off” apart from possibly sheltering from losses in certain markets.
We still firmly believe that purchasing property through us on one of our developments is your best way to 1. Build up a portfolio for your retirement or 2. Make a “hands-off” profit, for years to come… or 3. Both!
After reading a few different articles regarding the state of the UK property market and realising we have not done a UK property article in a while, I thought I would share my view on the outlook for the UK property market for 2011.
The end of 2010 was an interesting time for the property market, with not a lot of people looking to move just before Christmas and the extreme weather conditions putting a further dampener on house sales. However, mortgage approvals and sales are still holding up and I would expect as we go into spring, house sales will increase and prices will follow suit.
With news today that the Consumer Price Index has risen to 3.7% the BOE may well decide to increase interest rates in the coming months to try and curb this. However, the recent Consumer Price Index will not be taking into account the increase in Vat which has just come into play. I feel that consumers will have purchased their products earlier due to the Vat increase and this would of course bolster the CPI albeit temporarily.
It seems that in the face of fiscal restriction increasing the interest rate to try and slow inflation could be a dangerous move by the BOE however is it something they have to do? I am unsure as to the strength of the economy coming out of this recession and feel that an increase in interest rates too early could cause another fall in house prices. But then again, does the economy need this in the long run? What we need to remember when looking at the property market is that, unless we have new consumers entering the market, then it could fall into stagnation and at the moment, it is still hard for a first time buyer to get on that first rung of the ladder.
First time buyers are the lifeline of the market they need to be buying to keep the market moving. But then again, say first time buyers have to turn to renting does this mean that the market will be bolstered by Investors for the time being until there are some more attractive lending options available for the first time buyer?
What do you think?
I know one thing’s for certain, by buying one of our UK property investments with built in equity and reliable tenants in good locations you will be either weathering a storm or riding a wave of success.
One of the benefits of being the director of a property investment company is that you generally get first dibs on the property opportunities you source!
For years this has helped some of us acquire good sized property portfolios. We generally need them as not many of us have pensions!
Now over the last few years the property investment market has got increasingly hard to operate in, there simply are not the funds that there were a few years ago. This means that we all have to be a lot smarter about where we invest, we can’t just take a chance!
Well as of yesterday I am the proud owner of apartment 6 block 4 at the Weston Resort, Barbados.
I thought I would write a brief summary on why I decided to invest here as opposed to any of the other investment opportunities we are offered on a daily basis.
1. The Location
In a market where yield really is king, I make sure I concentrate on areas that are already established. Areas that I know people will holiday at no matter how dire the financial market is. For me the West Coast of Barbados has this.
The types of people that regularly holiday here are not bothered that their mortgage rate just crept up a few percent. Most probably don’t have mortgages!
2. The Developer
Another important point for me is the quality and financial stability of the developer.
I have met the directors of Candelisa on numerous occasions, in London and at their fantastic glass fronted offices in Leeds.
I know that they have the facility to not only build this out but also deliver it on time.
3. Its Rental Return
I have holidayed in Barbados before so have an idea of the amount you pay to rent on the West Coast.
Before offering Weston to yourselves, we took some time to delve into rental values in the area, as well as reading through the information provided by the developer. We found that with just 38% occupancy a return after mortgage payments of over £10,000 per annum was achievable. This amount of return in such a quality area is almost unheard of.
In the UK you would not expect the same amount of rental return in Kensington as you would in Manchester, at Weston we have achieved exactly that!
4. Its Re-Sale Value
The final straw came when I conducted further comparable research on competitors resorts in the area. Quite simply, nothing came close.
The fact that I could purchase a 2 bedroom apartment within walking distance of Royal Westmoreland golf course at just £200,000 sealed it for me. Especially when I realised they were selling 2 beds at Royal Westmoreland at over £1m! The closest comparable I could find was over £50,000 more expensive!
5. My Long Term Goal
I don’t actually plan to visit Barbados in the near future, I will put my apartment in their management scheme and plough the profit back into the mortgage. I have worked out that I should be able to clear the mortgage in just over 10 years taking into account renting for just 20 weeks out of 52. If I manage to rent for 40 weeks out of 52 this is reduced to just under 4 years!
Why have I mentioned this?
I know if I was looking at purchasing abroad, the fact the guy offering me the property was in the same boat would definitely give me some comfort.
As of today there are just 11 apartments left at Weston. (One just came back to market)
4 X 2 bed apartments (1 with sea views) Invest from just £62,000.
4 x 3 bed apartments (3 with sea views) Invest from just £78,000.
3 x 4 bed apartments (1 with sea views) Invest from just £92,000.
Remember these are selling quickly, the sooner you come back to me the sooner we can secure your chosen apartment.
Forgive my scepticism, I can only talk from past experience, you see I’ve got a share portfolio which I’m looking to for a pension, I’ve had this for 7 years and rather than make me any money, it’s actually fallen 3% in value.
The news is full of programmes investigating the current financial crisis; no avenue of investment seems to be safe.
Panorama recently investigated the vast fees and commissions some pension companies take from their clients, in one case a lady’s net return over 21 years was just 3%…it would have been 4% if she had not been paying various charges!
Now I’m sure that there are other pensions that would return her a larger sum but as she pointed out, how do you know which are any good?
Well the answer is, you really don’t…
For years I have tried to educate clients as to the benefits of investing in property as your pension. Not only do you benefit from any rental returns after mortgage payments but you will also over a number of years, benefit from capital growth.
It has been widely documented that property prices have taken a tumble in many locations, however if you buy smart and at a good price you massively reduce your risk.
The average pension pot in the UK is around £33,000; now for many of you it may not be too late to do something about this.
Below I will show you a simple way to make your money work for you in property.
Let’s take a 35 year old male that wants to retire at 55.
- Purchase a 1 bed apartment for £150,000. (Multiple locations across the south coast)
- Deposit needed £30,000 (20%)
- *Repayment Mortgage over 20 years = £735 pcm (4% interest rate)
- Rent PCM = £750 pcm (average for this price and location)
- Management Cost £75 pcm (10%)
- Additional payments = £60 pcm.
*Remember this is a repayment mortgage, not interest only, the long term goal is to pay this mortgage off over 20 years.
If you look at the £60 as your pension payments, in 20 years time you will have a pension pot worth £150,000, not taking into account any growth; giving you a return of £750 pcm.
Now the chances are that there will be capital growth during this period, if we take it at just 5% per year, your property will be worth £397,995 in 20 years time.
Rental also historically increases over time, if we take 5% here as well, your £750 would be worth £1,990 pcm in 20 years.
When investing in stocks and shares, it is extremely hard to get an idea of what they will be worth come retirement time. Brokers and IFA’s will bombard you with figures, but for the most part it’s a shot in the dark.
One thing that not is historical data on property and rental growth, this can be proved, as can the UK’s desperate need for more property and the demand for rental property in certain areas.
Many of you probably own a house and have done for a number of years, cast your mind back 20 years and recall the re-sale and rental values then. See what I mean?
- £30,000 investment in property now
- £60 pcm top up
Should provide you with…
- An asset worth £397,995 in 20 years time
- Income of £1,990 per month.
Keep ploughing money into a product you’re not in control of and you probably don’t understand.
For information on how you can make your pension work best for you contact Fresh Invest on 01243 527327 or email firstname.lastname@example.org.
Michael Winner, Simon Cowell, Philip Green, Trevor Eve, Richard E. Grant, Amanda Burton, David and Victoria Beckham, David Frost, Lulu, Andrew Lloyd Webber, Wayne Rooney, Jemima Khan, Hugh Grant and not forgetting Cliff Richard and Cilla Black!
What do all these people have in common?
They all either holiday or have property in Barbados.
So why is this Caribbean island the second home location of choice for all of these celebrities?
I think firstly it is the idea of security, you are in the Caribbean but as long as you stay on the west coast you are never far from a cocktail bar, mulit million pound house or exclusive golf club.
Over the last 15 years the West Coast of Barbados or the Parish of St James has risen from relative obscurity to command the name ” the platinum coast”. It is now widely known as one of the most exclusive and expensive areas to live in the world.
With the cost to stay at the exclusive Sandy Lane Resort coming in at around £40,000 for a week over Christmas this location is certainly not cheap!
Expect to pay roughly the same in Barbados as you would in central london for dinner at a top restaurant.
So after all of this, why does tourism in Barbados continue to grow year on year?
Well actually its kind of because of this, the average joe would rather pay more to be near these kind of celebrities, they will probably never meet Michael Winner strolling down Sandy Lane beach but its the prospect of this happening that keeps people enthused.
And for the celebrities, its like a home away from home, at Christmas around Sandy Lane the same celebs come back year on year, they all know each other, they know the restaurants they can go to unhounded, they know the areas they can sunbathe without being papped!
Why would this change, the celebs can afford to holiday here, prices can increase as much as you like, your not going to price any of the above out of the market!
So what about the average person?
Well there are still some areas where you can pick up property at reasonable prices.
Just 5 minutes from Sandly lane and 2 minutes from The Royal Westmoreland golf course is Weston Resort, prices here start from just £180,000 for a ground floor 2 bedroom apartment. Fully furnished and ready to rent you are probably looking at £200,000. With mortgage available at 65% loan to value and only needing a 35% deposit you can buy one of these with just £63,000!
With possible rental yields of over 10%, not only could you afford to buy it but it would actually make you money year on year. Compound this with the fact you could safely holiday in this every year and remain fairly exclusive (under 50 apartments on this development) and you begin to imagine why this scheme is nearly sold out with around a year till completion.
For more information on how you can invest alongside the celebrities of barbados call 0800 043 6956 or email email@example.com.
As you saw in last weeks blog, i delved into my top 5 places to invest in property for 2010.
The first 3 were Cape Verde, Barbados and Barcelona.
Below are the last 2, and perhaps the most interesting.
Known to many, invested in by few….
Mallorca is one of the most visited islands in Europe, most of us have been there be it on a lads holiday or a family one!
What many people don’t know is that because of building restrictions prices have not been effected by the global downturn anywehere near as much as their close neighbour Spain.
We have a villa in Puerto Pollensa and in 15 years have not seen it lose money, also long term lets are easy to obtain in the winter, it yields around 11% per year AFTER mortgage payments!
Combine this with an average 3 weeks use per year and it looks like a great investment.
As the cost of far away holidays spiral and many long haul operators upping prices or going under altogether, holidays closer to home tick boxes for many people.
The fact that more and more people are buying second homes in Mallorca combined with laws on future building means that prices are sure to steadily increase in the near future and with a vibrant holiday market rentals will follow suit.
Risk = Low
Returns = Medium
Yields = Medium
Minimum cost to invest = £30,000
5. The UK
Well you knew it was coming didn’t you!
Ok the returns may not be as much as the countries mentioned earlier BUT many of you will have the market knowledge to know a “good deal” when you see it.
In this market many property investors that do look to invest are loking at minimising their risk as much as possible, for the masses that means not moving out of their comfort zones.
I’ll always tell you that using a property investment company is the way to go, they charge very little, normally get paid by the developer and have market knowledge and contacts that can only be gained by years in the business.
We have seen some really great stock recently, from tenanted apartments in Chorley yielding over 8% to townhouses in Chichester (where we are based) yielding close to 9% when let to students under an HMO license.
Check out our UK property investments for more information.
Risk = Low
Returns = Medium
Yields = Medium
Minimum cost to invest = £20,000
To Finish……These are my 5 places to invest in 2010, i would hope that by 2011 i will have invested in at least 3 of them. If you have a location you are looking at and a reason why, post it below!
I was just reading an article by BBC news about how taking investment advice from your bank is a bad idea. I’m sure many people reading this article will have been asked to speak to one of the financial advisors available at their local bank, who will tell them that investing their money in one of the banks medium/high risk funds is a good bet and it will return x% and increase in capital by x%.
One of the ladies in the BBC news article had invested £100,000 into a “Cautious fund” and she quickly lost £40,000… unbelievable! Not only this, but the lady’s money was also decreasing at a faster rate because of the fact it was shrinking against the rate of inflation.
At a time of inflation coupled with low interest rates, ideally you would like to be in a position where you have an asset which is making you money and your borrowings on that asset are also, in real terms, shrinking while inflation is present. Your asset will be making you an increased amount of money with inflation and in comparison to your borrowings against it; the time at which you will have no outstanding finance will approach quickly. I am, of course talking about property.
It is no surprise that property investment has, for a long time, served as the main entry route to the forbes 100 rich list. The process of buying property in the right location at the right time and making sure the rent is going to cover the repayments you have on any borrowings, is just the start of it. The distance you can make your money stretch in property is insurmountable, by refinancing and keeping the cash flow on each property positive every month.
I have seen an article today from a top economic forecaster predicting that interest rates will remain at 0.5% until 2014; you may have also seen that the UK economy grew faster than expected last month inflation is at a rate of around 3% this typically means that the price of most goods and services are increasing at that rate and, ideally, your wage at work, as opposed to your borrowings on your property, which will be shrinking in comparison. Ideally I would be looking to invest in property now, take advantage of very little new build stock, the low interest rates available and use some of the positive cash flow generated every month to reduce my borrowings, so when interest rates do finally rise I am less susceptible to increased repayments.
See some of our UK investment opportunities here
The property market in many countries has taken a real hit over the last few years, however this sometimes is not a bad thing.
If your looking at property investment as an alternative to stocks and shares then the time may be ripe to invest.
Below are my top 5 places to invest.
1. Cape Verde:
When looking for an overseas investment opportunity the first thing you should always ask yourself is “would i go there”. If the answer is no, the chances are your not in the minority.
The next question is, if you would go there, why?
For me Cape Verde offers a unique proposition, 360 days worth of sun that you can access via a 5 hour flight.
Combine these 2 points and it narrows the field down considerably; quite honestly the competitors i’ve either been to or i’d never want to.
The reason for this is as follows, not only does Cape Verde have a Caribbean climate but also a laid back lifestyle unlike many of its competitors.
The Prices are still relatively low compared to the likes of Tenerife and some Caribbean islands, this is mainly due to the infancy of the islands that make up Cape Verde.
This will not be the case for long, already some major 5 star hotel operators are building on the islands of Sal and Boavista, this will increase tourism and put more pressure on Airline operators to increase their flights.
One such 5* hotel operator is Sol Melia – the worlds largest hotel resort operator, they are taking over the running of our Dunas Beach Resort investment opportunity.
Risk = Medium
Returns = High
Yields = High
Minimum cost to invest = £33,640.
If you have deeper pockets abd want slightly less risk then Barbados may be for you, offering the true 5* lifestyle with prices to boot.
The reason i think this is a good investment is that even though prices are high, you can still achieve yields in excess of 10%, as witnessed in our opportunity on the West Coast Barbados.
Yields this good along with the knowledge that you are investing in the holiday makers favourite Caribbean island means that occupancy rates should remain strong. Most other Caribbean islands are so far behind that no threat to this crown seems anywhere near appearing.
Demand is Barbados is so high it has become the place for celebrities to have second homes, as proved by a host of premier league footballers, golfers and tv personalities.
Risk = Low
Returns = Medium
Yields = High
Minimum cost to invest = £64,990.
3. Spain – Barcelona:
I love Barcelona, its my favourite city by a long ways.
Sea, Sun, Football, Great Beaches, Great Nightlife andf now a grand prix! I don’t know another city that offers so much.
I also think its a bit of a hidden gem, 1 bed apartments on the outskirts of Barcelona can be picked up for around €160,000 and if you can rent them for 40 weeks of the year you should be on for close to a 8% yield. Not bad for one of the most cosmopolitan cities in the world.
Demand will always be strong because of the sheer size and climate of Barca.
Combine this with the fact that house prices in Barcelona have hardly been effected by the global financial crisis and you know that values will remain robust in all but the most dire of circumstances.
Risk = Low
Returns = Medium
Yields = Medium
Minimum cost to invest = £27,111
Too see what numbers 4 and 5 are, click here!
In the past investing in property overseas was an arduous process, finding a suitable property was not the problem, it has always been the due diligence involved in an overseas purchase. Are you buying in the right location for Capital Growth? Will you be able to let your apartment or villa for long enough to cover your repayments on any finance used? What is happening to the local property market at present? Is there a long and complicated buying process? Will your apartment or villa be up to the standard promised by the developer? The questions can continue forever.
Investors are of course and rightly so, more tentative about investing overseas because of the reputation that some overseas developers have given the market when they, ran out of money or built a development that was subpar and then scarpered before the investor could so much as ask for their money back. But the thing that attracted investors to the overseas market in the first place is that chance of finding the property in a location that will provide you with capital growth and a large positive cash flow to line your pockets every month, with the added benefit of a free holiday.
Now we carry out a full due diligence test on all of our developments and our due diligence test on overseas property is second to none. However without any request from ourselves or our investors, we have just received one of the best partners for our due diligence tests that money could buy. The hotel operator!
When you purchase an investment property in an overseas development that is due to be run by a hotel operator, as soon as the agreement is made the developer is not now building to the standard of the investor, they are now building to the very high standard of a hotel operator and if they don’t, they risk losing the operator. Not only will the standard of your property be of the upmost quality but you now have somebody with a large web presence to promote your apartment for you, meaning that your apartment or villa is tenanted as often as possible and you are therefore provided with a handsome return. The hotel operators will of course also carry out very strict due diligence on the location to make sure that it is in a location where occupancy can be maximised and therefore your return can be maximised which will, in turn, add value to your investment.
We have 2 overseas developments that fit this bill exactly at present:
The developer of Dunas Beach Resort has recruited “Sol Melia” to run the resort upon completion. Sol Melia are the largest resort operator in the world and are constantly winning awards for their dominance in the market and the quality of their resorts. The build cost of this resort in relation to any others on island is double and they have already completed one resort on the island and the results speak for themselves.
The developer of our properties on the West Coast of Barbados has recruited Mango Bay Resorts to carry out the hotel operations on site. Mango Bay constantly receive fantastic reviews for their operations on Barbados and their average occupancy is 80% which, in our resort, would give investors a return of up to 23% per year! The developer also offers purchasers the chance to help with the design of their apartment on line throughout the construction period.
Ladies and Gentlemen this is the future of overseas property investment!
With news that the new Con/Lib coalition are to raise the tax due on Capital Gains for anyone selling a second property Fresh Invest shares it’s views on how this may affect the property investment market.
Firstly let’s decide why the government has decided to impose this new tax there are 2 main reasons:
- The previous government has run up an astronomical budget deficit – hence the note recently left by the outgoing treasury minister Liam Byrne, to the new chief secretary David Laws which stated “Dear chief secretary, I’m afraid there is no money. Kind regards and good luck! Liam.” For this reason it is imperative that the new government make a lot of cuts, to bring the level of this deficit to an acceptable level they need to recoup money from the tax payers and this new capital gains tax will do just that.
- The second reason is that because of the slack lending criteria over the past decade many people have bought up a large amount of property in small holiday towns throughout the south of England, through this they artificially increased the prices of all the houses around these areas and they are now financially out of reach of the average worker in those towns.
The government is therefore going to impose an increased Capital Gains Tax on all second home sales as a way of raising cash for themselves and a way of stopping people becoming too greedy and putting house prices out of reach for first time buyers in holiday locations throughout the UK.
Now what could happen as a result of an increase in Capital Gains Tax?
The big sell off – This first scenario would really depend on when the government decides to impose this new tax, if they decided to impose the tax from the new tax year i.e. 6th of April 2011 then I would suspect a big sell off of second homes in desirable locations, creating a very large influx of supply into the property market and without the demand to match, probable falls in prices.
The buy and hold – The other scenario, I believe would also depend on the time the new tax is imposed. I would suspect that if it was to be imposed straight away then second home owners and investors alike may decide not to sell their properties as the gains are no longer high enough. Hopefully this will not cause any form of stagnation in the already fragile property market.
One thing is for sure. This will slow down the purchasing of property just for the capital gains that come with it, as the risks may begin to outweigh the possible rewards .An advantage of this however will mean that investors do not inflate property prices further and therefore eliminate first-time buyers from the market. Hopefully this will lead to longer, sustained growth.
Maybe it’s time to look to the overseas property market for your significant capital growth?
What are your views?
Fresh Invest is a property investment company with the aim of maximising our investor’s funds whilst minimising their risk. For more information see www.freshinvest.co.uk or phone 0800 043 69 56.
BBC news reported last week that homeowners have been paying off record amounts of their mortgages over the course of the past year. In total UK homeowners paid off £22.3bn last year! We believe this is great news for the housing market and therefore the property investment market.
The reason for this is simple:
When the banks dropped their interest rates, UK home owners on a tracker or variable rate mortgage had 2 choices:
- Spend their increased discretionary income as they wish living a better lifestyle with luxury goods or,
- Invest their increased discretionary income back into their property.
Now this piece of news shows that the majority of UK homeowners have chosen to do the latter…
Well done UK! The reason this is so good for us as a nation is that we, and therefore the banks, are now not so heavily leveraged on our properties and when the Bank of England inevitably raises the interest rates, we will still be able to afford the repayments on our now smaller borrowings.
This piece of reassuring news can put your mind at rest that the UK house prices should remain buoyant and we will not see the “dead cat bounce”
Others will argue that the idea of lowering interest rates is to get the UK homeowners to spend their increased discretionary income in the consumer markets, However, I don’t agree.
As interest rates dropped UK homeowners continued to keep the consumer markets ticking over as they paid off their mortgages. It would seem we have got through the hard stage and now we are in a good position to continue spending in the consumer markets, whilst maintaining our now lower mortgage repayments… Either way we see this as good news!
I personally i think they missed the biggest point which is the slow down in new build development. But you get the same result.
We still have a few new build developments with discounts available, if you are looking for a property investment click the link!
Another option is to buy a student property, some of our wealthiest investors specialise totally in student accommodation investment. A couple of them have yields close to 20% on massive portfolio’s!
Some investors don’t like the hassle of student property but if you have a management company set up all you need to do is collect the profits!
Rather than buy to let investors paying stamp duty for an entire bulk purchase, the government is looking at charging bulk buyers per individual property. Because of this, bulk purchasers of property are more likely to stay below thresholds for higher stamp duty rates.
Current stamp duty rates are as follows:
£125,000 – £250,000 = 1%
£250,000 – £500,000 = 3%
£500,000+ = 4%
See below for some figures on how this new policy would help you if you are looking to purchase multiple properties.
The current figures:
10 properties @ £150,000 = £1,500,000
Current stamp duty bill = £60,000
10 properties @ £150,000 = £1,500,000
Anticipated stamp duty bill = £15,000
As you can see, on this particular transaction you would be saving 75% from your stamp duty tax bill!
Another new policy from the government could lead to barriers for Real Estate Investment Trust’s being lifted, this would allow REIT’s to invest in residential property and owners would hold shares in actual bricks and mortar rather than the REIT itself.
For a list of our bulk investment opportunities see here
See the article in The Times here
Now many people may think this is a major set back to investors investing in student accommodation, but in actual fact that could not be further from the truth.
What this actually means is that Universities have to concentrate their funding on their core facilities. For instance, up keep of their academic buildings is obviously very important, where as building accommodation for students is secondary.
You may argue that without the accommodation, attendances will drop. Actually this may not be the case.
What the university is hoping for is that third party developers will step in and build for them.
This has always been a much maligned area for Universities because they know that the more accommodation they own, the more revenue they will generate.
Problems arise when spending is cut, they can’t afford to develop so are almost completely reliant on commercial developers.
In short, third party commercial developers have the universities over the proverbial barrel!
Take a look at our Student Property Buyers Guide for more information!
I think you will be in the minority if you haven’t suffered some kind of hardship this year, many investors have seen thier dreams of retirement severely set back.
This has not been confined to property, if you had shares or your money in some banks you could be in a worse situation!
So what should this year have taught the average investor?
1. The only way to build a profitable portfolio for the long term is by investing smart.
For me that means keeping at least 20% worth of equity in any property so you build yourself a buffer to combat any drop in values.
Investors have been stung by dropping loan to value rates, an unwillingness by lenders to remortgage on to rates previously offered has seen investors have to increase the equity in their properties, leaving them severely stretched.
Over the last 2 years i have seen investors with portfolio’s worth in excess of £100m go bankrupt, how can this be i hear you say.
What some property investors seem to misunderstand is that if you have a portfolio worth £100m, with lending on it of £90m. You actually have a portfolio worth £10m. If property prices drop 10%, what is the worth of your portfolio…Nothing!
If this happens you are entirely reliant on the income that your portfolio brings in, investors too highly geared normally cannot withstand more than a couple of months of empty properties.
2. Property Investment is not a get rich quick scheme – investors that use it as such usually find they have leveraged too high.
I am one of the biggest exponents of flipping property, i think that if you have the time and the know how it is possible to make decent profit this way but it is entirely dependent on a couple of factors.
Firstly, you need a massive amount of knowledge of the local market, this is not something that can be learnt quickly, so for this reason either keep to one area or find yourself a property specialist that you trust completely.
Secondly, always have another exit strategy, so if you are buying to re-sell, make sure that if worst case you can’t do this immediately, you can let the property out and pay your mortgage that way.
I have refurbed properties for over 6 years and we are also in the middle of developing apartments, i value every property investment opportunity by the number of exit strategies it provides.
3. The good times will come again, use times like these to research the market and decide where the best profits will be made next year and in the future.
If i could focus on the single most important factor i have taken from 2009 it’s that within the next month or so the vast majority of new build developers will completely run out of stock.
At Fresh Invest we are in contact with all major new build developers and 9 months ago all of them decided to stop all build that wasn’t already past footings. This decision was made because the last thing the market needed at that point was more new build stock. They are all building again now but this has created a back log where all finished sites have been sold and the next tranche of stock is still around 6 months away.
We have seen average discounts reduced from 40% 9 months ago, to 15%-20% now, and thats if you can find any stock. We have 2 developments left on our books which are selling at around 2 a day.
The first 6 months of 2010 will see property prices increase due to a lack of supply and increased demand as more confidence seeps back into the market.
I would take the first few months of 2010 to pick up the last pieces of good quality discount property around, there is only 1 way values are going to go in 2010.
New Opportunities through Fresh Invest:
1. We are launching a scheme that should give clients access to lender stock, for property investors looking to pick up great quality buy to let property in a particular area this is the one!
2. We are working hard on some student schemes, these should yield over 8%, have really low interest rates and start at around £80,000. With massive demand and industry professionals flocking to this market this is definitely one for the future!
In a market where many investors have seen rental voids, capital values decrease and Ltv rates decrease, why are many of the UK’s most renowned investors focusing on Student Accommodation?
If you look at the simple economics, student accommodation really does sell itself.
In short, you can purchase a property that will rent at a much higher value to students than an equivalent unit would to a private individual. You also do not have the downfall of rental voids! In fact, many landlords are filling their units 6 months in advance!
Many investors want hands off investments with high returns and no rental voids.
If this is you, look no further.
Where rental demand in the residential sector is prone to peaks and troughs, student number have continued to rise from 1.8 million in 1996-97 to approaching 2.4 million in 2009-10*.
Indeed early indications are that the economic conditions have led to even more people looking to higher education.
UCAS data revealed that UK university applicants rose 10% between 2008 and 2009 and overseas applicants rose 13.6% during the same period.
“Overall student numbers are likely to remain stable and in the medium-term there is unlikely to be a substantial uplift in student places as caps remain in place. However, the expectation is that the proportions of both overseas and postgraduate students will continue to grow, underpinning future demand for private professionally managed halls.” Knight Frank
Private Student Development is still made up of the 4 main service providers, UNITE, UPP, Opal and Liberty Living. The majority of students have to rely on halls for their accommodation with a small percent benefitting from access to private operated rooms.
Many university run halls are found to be outdated and lacking in necessary facilities. This creates demand for private accommodation but with development finance so hard to come by, this accommodation is nowhere near keeping up with demand.
“Student Numbers are growing at 15 times the rate of new supply in London” Savills
Student accommodation rents have increased by 5% p.a for the last 6 years with growth increasing right into the 2009/10 academic years. Compare this to residential and commercial rents which have both fallen overall during this period and you start to understand what makes this market so appealing.
“Student Housing delivers income during uncertain economic times” Savills
As student accommodation is commercial by class this has also seen an increase in values, this sectors robustness is highly attractive to a growing number of investors who want high capital growth that can be depended on for the long term.
Even in the midst of a global downturn occupation levels for good quality purpose built private accommodation is close to 100% with rental levels for 2010 predicted to increase by at least 5%.
Yields and Values:
Although the rentals gained have not been hit by the credit crunch, one side that has been impacted has been the finance student developers have been able to find. Because of a lack of this many new build schemes have not got off the ground.
If we factor this and the fact that university applications have steadily increased we have a demand/supply scenario which is drastically in the favour of the buy to let investor with student property in their portfolio.
Compound this with the fact that many universities cannot afford to build the necessary accommodation themselves and we have a scenario where these same universities cannot grow to their potential because of this lack of accommodation.
Universities have always relied on private developers to make up the deficit that their own student halls cannot fill.
With many student developers not building because of the lending constrictions, small investors are starting to fill the void with new build 4/5 bedroom houses. These normally comply with the rigorous build accreditations and rent for a lot more than residential lettings.
Through this lack of supply yields have risen steadily and values have followed, we envision this to be the case for the foreseeable future. The student market is continually growing and with many universities operating on shoestrings it falls to the private student developers to build in their place.
How we can help:
You will have seen by previous posts, blogs and emails that Fresh Invest have faith in the student market as a valid buy to let option.
For this reason we are due in the very near future to bring you a selection of landmark student pods which can be bough individually as “completely hands off” investments.
These properties will come already tenanted with high yields and great commercial mortgage options.
Below is an example of a property we are close to agreeing an exclusive for.
1 bed student pod – First Floor – From £90,000
- Deposit Needed – £31,500
- Rental achievable – £541 (£125 per week)
- Mortgage – £58,500
- Mortgage Payments – £138 pcm (RBS, 65% LTV @ 2.83% Tracker)
- Service Charge and Ground Rent: £70 pcm
- Positive cashflow of £333 pcm!
Register your interest for these opportunities here.
We all knew that lenders were going to need to increase their loan to value rates, and that when they did it would make a massive difference to the property investment market.
Over the past few months half decent rates had been reserved for investors with 40% deposits. Now i do not condone most no money down deals, i think they lead to more problems than they alleviate.
However! the case for the investor with a healthy 20% deposit should be heard, they have a large amount of equity in their property and should now be relatively safe from negative equity.
It seems the lenders now agree.
What are the new rates like?
Since the BOE base rate reached 0.5% products requiring a 15% deposit have risen from 169 to 231. And the number of products requiring just 10% upfront has gone up from 89 to 105 in the last month alone.
This is certainly a massive difference to a year or even 6 months ago.
Nationwide has already announced a new influx of deals, including some at 85% loan to value and they have also released some of their best rates at 70% ltv, from their previous at 60%.
They have even released a special 90% ltv rate for investors that hold one of their flexaccounts. These start at 4.63% for a 2 year tracker.
The Woolwich have also released details of their new 75% ltv rates, this is the first time the lender has made it to 75% for at least a year. The new mortgages include a lifetime tracker on 2.94% and 2 year fixed on 3.99%.
Abbey also have a new range out, these are exclusively for their current account customers. One of their best is a 90% ltv 3 year fixed rate at 5.99%, their cheapest mortgages are now available at 70% from 60%.
So why the sudden change?
It seems that lenders now believe that the worst is behind us, in short if they are offering 90% ltv mortgage they believe that property prices will not drop more than 10%, in fact they believe that prices will increase in the future, as now being reported in most news channels.
Just last month hsbc pledged to lend an extra £500m at 90% ltv by the end of this year!
Add this to the political pressure being put on lenders by the government, this was summed up by the governments own lending house northern rock as they released some of the best ltv rates seen for over a year!
So should i buy now?
If you are looking at getitng into property investment there has never been a better time to invest, there are still seller under pressure but now there is also the promise of some competitive rates. This means that not only can you buy cheap, you can also borrow cheaply!
We don’t expect this to remain the case for long so why not add or start your portfolio with some discounted property now!
Also check out our UK Buying Guide for handy hints and tips.