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Under the skin of the letting market

Here we share news and views on both the local letting market in & around Oxfordshire and all planned and recent legislation.

Who is buying what?

We live in interesting times. Another mortgage famine is probably on the way; house price predictions are mixed, to say the least; stocks and pensions have become a rollercoaster ride – whole countries appear to be hovering on the brink of financial oblivion.

Who would choose to enter the buy-to-let investment market under such circumstances?

Well, actually, rather a lot of canny investors seem to be doing just this, according to Finders Keepers managers across Oxfordshire. Some new landlords are simply turning up out of the blue, asking us to let a property that they have just bought. Others are using the Finders Keepers Inspired Investment service to provide balanced advice, sift the market, avoid the pitfalls, and buy the right letting property to exactly suit their portfolio and needs.

The Fair Mile Hospital in Cholsey has been re-built, offering 130 units “Risk-averse inheritors” are another type of client we are seeing more of at the moment. A large inheritance in a bank will provide very little return ‘whilst being eroded by rising inflation – sophisticated “financial products” look equally unappetising – what to do?There is a comforting solidity and permanence to bricks and mortar that cannot be denied. You can see and touch it. It cannot be stolen. You will not awake one morning to find that it has diminished overnight to a tiny fraction of its former size. You have the rental income while you keep the capital. And over time, house prices have an excellent track record.We have bought two units for clients in this Abingdon development recently In Oxford city we are seeing some very high-powered investment buying indeed. Some clients are quite happy to spend £1 to £3 million on a substantial North Oxford house, confident of a safe haven for their capital. These purchases are being justified by excellent rents, with up to 5% yields on capital – unheard of a few years ago, at this price level.These purchases, and those rents, both seem to stem from the “London Exodus”. The purchase money coming from the sale of a London property, and the rent from someone else, fresh from the city – perhaps spending a year or two renting, while they find the ideal place to settle down.Buy-to-let investors have bought four 1 and 2 bedroom apartments in this new block

Other investors are racing to beat impending changes in the planning laws, which will make multiple occupancy letting (to students etc.) a far more difficult business than it is now. Once again, yields are very attractive, with 5% to 6%  achievable.

Outside Oxford in the market towns there is a more traditional pattern, with investors following a proven strategy of buying mainly 2 or small 3 bedroom houses at £150,000 to £200,000 which are then let straight away to waiting applicants, once again, at yields in the 5% to 6% range.

3 bedroom Witney home bought off-plan for investment

None of this looks likely to change in the coming year or so. Given the continuing uncertainties in the markets, this “dash for bricks” seems set to continue. But, a word of warning…

Good advice throughout the process is essential. It is surprisingly easy to buy the wrong property. It will probably let – but the difference in rent, void periods, and  tenant quality will be costly over time.