The 5th of March 2009 was the
date Mervyn King, the then Bank of England Governor, slashed UK interest rates
to the unparalleled figure of 0.5%. In just under five months, starting on 8th
October 2008, the rate had come down from 4.5% to that low figure, all in an attempt
to ensure the British economy survived the worldwide credit crunch. Now as we deck
the halls with bows of holly nobody expected that, over six years later, rates
would still be at that low level.
In the summer, people were predicting a
rise in the New Year, yet now, some forecast it may remain the same for years to
come the due to the issues in China. Now, I am not some City Whiz kid with a
hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent
from Grantham, so I can not profess to know what will happen to interest rates.
However, what I do know, speaking to my Grantham friends and Grantham landlords
is that these low interest rates have hit savers really hard.
If you added up everyone’s bank and
building society savings in the UK, they would add up to £1,300,000,000,000,000,000
(that’s £1.3 trillion), most of which is earning a pittance in interest.
That is why more and more 40 and 50 year old Grantham landlords have been
investing some of that cash into Grantham bricks and mortar, as they search for
a low risk investment opportunity.
Buying a Grantham buy to let property isn’t
risk free, but there are certainly things you can do to mitigate and lower
one’s exposure to risk. You see by buying a rental property, it potentially offers
an enigmatically decent proposition in terms of being able to obtain attractive
returns that beat inflation and savings accounts, yet without taking the levels
of risk associated with stock markets.
The UK residential property market has long
been the safest form of collateral for lenders of all varieties. Against a
backdrop of a greatly changing economic environment, Grantham house prices have
been extraordinarily robust, increasing by over 1715.3% between 1974 and today.
Some will say there have been significant property price falls, namely in 1975,
1988 and 2008, yet each time after this has been followed by an upturn in
property values. For the record, the stock markets in the same time frame only
rose by 432.5%!
.. and that is the best thing about buy to
let property. Unlike the stock market, with its unfathomable equities, shares
and bonds, that nobody really understands (as they are controlled by some faceless
whizzkid in Canary Wharf!) with a buy to let property, landlords can
take control and understand their investment .. in fact you can touch and feel
the bricks and mortar investment.
..
but before you go out and buy any old Grantham property, plenty of
landlords still get it wrong. You have to be aware of your legal
responsibilities when it comes to tenant safety, tenants deposits, energy
certificates and in the new year, landlords will have the added responsibility
of checking the immigration status of prospective tenants. Get it wrong and big
fines and even prison is an option – but that’s why many agents use a letting
agent to manage their property for them.
Next, you have to buy the right property at
the right price. Recently I have seen some really heart breaking situations in Grantham
and the immediate area, of people paying way too much for a property, only to lose
out when they came to sell. One example that comes to mind is that of a property
owner in Victoria Street, a very popular investment street close to Grantham
town centre .. a decent two bed terraced house, 91 sq metres inside (979 sq ft
in old money) sold in May 2013 for £86,950. In the summer, it only obtained
£69,500, a drop of 20.07% or 9.77% a year - a very disappointing result.
I cannot stress enough the importance of
doing your homework. One source of information and advice is the Grantham
Property Blog where I have similar articles to this about the Grantham property
market and what I consider to be the best buy to let deals around at any one
time in the town, irrespective of which agent it is on the market with. If you
haven’t visited and you are interested in the local property market in Grantham
.. you are missing out! .
