Find Property Auctions , Find Cheap Property Repossessions ?
Or Buy Something Sensible To Invest In !
The big question on many a savers lips is:
'where can I invest my savings, currently languishing in deposit accounts, earning next to no interest and with the nagging worry of a run on the bank at any moment !'
Its not a good scenario, and has already led to some noticeable bubbles in property prices as some savers panic, and rush to get their money into premium property in London and some hot spots on the South Coast. There were reports that there were actually some property price rises in some hot spots in January 09 but as each week...month....passes the real black clouds are gathering and reality is hitting...property is still on the way downward.
We Live On A Small Island in the Atlantic, Take Away the Mountains , Agricultural Land And The Odd Horrible Bit...And There's Not Much Room Left
So the U.K. is different from mainland Europe and other overseas property sectors because land is restricted and this very fact underpins our property market.
The U.K. population is one of the most urbanised on the planet, if you have ever flown at night over the North of England then on down over the Midlands and then to the South East, you may well have been struck that there are just millions of lights bulbs shinning up into the night and that these conurbations of light stretch out across the country with one large conurbation almost joining the next.
So its not the supply of land or supply of property that's the problem, the cause of our downward property prices is quite simply The Economy and the Money Supply. Every one of us, need to be watching the upheaval in our economy and indeed the world economies in an attempt to piece together what to do with our savings and investments.
The first thing to consider is that with economic upheaval everthing is thrown out of balance, the rules of the game as applied for decades have been thrown into swings and distortions, and it is therefore hard to decide in what form these market balances will take in the future.
For Example:
Investors Rubbed Their Hands At The Prospect Of 80,000 Repossessed Properties Going Cheap During 2009,
However the majority of these repossessed properties are low grade housing attracting low income families looking to rent either cheaply or on Housing Benefit, offering poor yields and a low prospect of capital growth in the future.
There are a fewer number of better quality family properties available in the auctions but due to an over supply of this middle market in the private rented sector, it is reported that such properties are proving harder and harder to rent and that rents are falling. Remember there has been a growth in reluctant landlords entering the market, people who cannot sell their properties but need to move for employment and other reasons, so they rent out their property, and then buy or rent elsewhere.
The next category is the new wave of city centre apartments, which in many cases have taken the worse hit, because many were bought in the property boom at quite inflated prices usually off-plan....don't mention the phrase ' off-plan property trader' it's right up there on the lets hang um list along with 'merchant banker' and most of the financial services sector.
Selectively because these apartments have taken the worst hit they can in fact, in certain instances offer excellent rental investments. An example of this is Ropewalk Court in Nottingham, where some 2 Bed Apartments with parking have been bought recently at auction for as little as £80,000, in this instance Ropewalk Court is situated Near Nottingham Trent University, and nearly all of these apartments have let in double quick time and at good rents offering rent to value yields of over 7 % not bad. see www.apartments4students.co.uk But beware, other developments are not tapping into the rented market well, usually due to poor locations and their values look to fall further.
So unless you are lucky the property auctions currently do not appear to be providing an easy answer for investors.
Banks & other mortgage lenders quite rightly have been trying to sell better standard properties facing repossession through local estate agents, in an attempt to get unforced prices, but perhaps after the summer we will see more better standard properties passing through the auctions as the lenders give up the fight, and try to recoupe their losses.
Remember, with low deposit lending, and falling property prices the lenders are in many cases loosing too, and this is why they have been holding off selling better standard properties via the auctions.
The Balance Of Supply Against Demand Will Return To The Rented Property Market....But Not Yet
People need somewhere to live and the private rented sector now provides a healthy supply of tenants. However, if your buying now, the supply side / number of properties available, is currently distorted, due to a rush of auction and forced property sales and rents in some sectors are suffering. However, as the property market recovers and people start buying property again this distortion will balance out. The problem is, as investors can we ride out 2 to 3 years of lower rents while we wait for the property market to recover ?
The Answer Is Therefore To Invest In Higher Demand Sectors Of The Rented Property Market.
Your task is to buy in the Best Investment Locations..At The Best Price..Obtain The Best Yield...And Best Capital Appreciation
Not surprisingly, to achieve this you have to do alot of homework, hours of trawling through Rightmove and local estate agent's adverts etc and consider your longer term gains intelligently.
Tap Into The Most Buoyant Sectors Of The Private Rented Market.
Over Supply? - Why Invest In The Student Let Market? - Which Makes More Student House or Apartment?
Over Supply Of Apartments
The most buoyant and secure sectors of the U.K. private rented property market are quite simply young professional workers or university students.
Students need accommodation near the university that they are studying at, and young professionals need to live in our city centres to take advantage of the Service Sector employment that has expanded so greatly over the last ten years or so.
During the last property boom, there was an explosion of redevelopment in many of our city centres caused by generous planning and regeneration incentives, availability of mortgages and funding, and a rising property market. It was as through the sun and moon aligned together, a perfect set of circumstances for growth, investors and developers rushed in to capitalise on this rare opportunity.
The result was the birth of a new , high standard city centre housing stock, in the form of 1 and 2 bedroom apartments, designed to house those working in the growing Service Sector.
New city centre employment, new apartment housing stock, new shops, restuaurants, bars and bistro's, our city centres in many cases have regenerated from dying or defunct manufacturing districts, into city centres that provide an attractive life style, especially for those under 35 years of age, working in the Service Sector. The majority of these young professionals choose to rent a property rather than buy. This is because they tend to need mobility so they can move from one city to the next to take advantage of job promotions, their salaries are often not sufficient to buy a property, and yes they are under 35 years old, not married, no children, and want to enjoy the city life...hey doesn't sound bad does it.
All markets are about supply and demand, and as the last property boom progressed headlong, more and more cranes arrived, and more and more new apartment blocks were built, there comes eventually a saturation point and sometimes an over supply, and then things start to stall. Many of our city centres experienced elements of over supply , and the economy inevitably was also stalling and fell into recession. Some developers were caught out and there has been notable 'fire sales' of some apartments in recent years including areas such as The London Docklands.
Each city centre or district should be analyised for this element of supply and demand, this can be seen by evaluating the rents being obtained for apartments, and how quickly they let. In many cases it is those apartment blocks located in secondary locations or that are poorly designed that are failing, better located blocks of apartments continue to let well at good rent levels. This makes sense, those developers that pushed the boom mentality too far building on cheaper sites on the edge or away from high demand city centre catchment areas are going to be the first to fail, against competition.
Tenants want to live in definate and preferred districts of any city and will not be persuaded to let properties in areas that they perceive as less convenient or less desirable, even if the rent is cheaper...why should they , when competition is applied they can secure their first choice.
So investors need to pick primary located apartments, to secure their long term investment income. Equally it is these primary apartments that are most likely to experience increases in rental yields and capital growth.
Why Invest In The Student Let Market ?
Well many landlords who had invested in city centre apartments could now see a shrinking or certainly stagnant Service Sector and needed tenants to support their investments, and many have come to rely on a demand from tenants which has actually grown during the recession - THE UNIVERSITY STUDENT. Universities have expanded greatly and more than ever the demand for university places has become oversubscribed. This means universities can select the best standard of student applicants, and in this economic climate many students and their families take the opportunity of obtaining a university degree very seriously indeed.
One barrier to a university education is without doubt financial. There is a good percentage of university students that have parental financial backing, and this means that increasingly many university students come from more affluent homes and backgrounds.
Times certainly change, and the days of the bad student image incapsulated in the 'Young Ones' the run down student house run by a dodgy landlord have certainly gone, the expectations of today's affluent student and more importantly their parents could not be more different.
It is now standard management practice that parents of student tenants sign a binding GUARANTOR AGREEMENT which covers the landlord for any possible rent arrears or breakages, you certainly would not get such a guarantee with young professional working tenants.
Because apartments only house a single student or 2 students sharing, the management becomes an easy process, compared with the traditional large student houses of the past.
Students come from better and more affluent families so tend to be used to a higher standard of housekeeping, and are likely to be policed by visits from their parents who after all have had to guarantee that the property will be returned to the landlord in good order.
Stability of letting is a great benefit of student letting, landlords know that students will need their apartment for a fixed time period in line with the acedemic year. In practice this amounts to a full rent being paid for 11 months in each 12 month cycle ie: a 1 month void period per year. Not only do landlords have this element of certainty not always obtained from the alternative young professional tenant, but also in many cities student pre-book an apartment well in advance of them needing it. It is not uncommon for students to pre-book apartments located in the right locations up to 6 months in advance ! Well it doesnt get any securer than that.
More affluent parents means a higher expectation about where they want their son or daughter to live, the quality of the property itself and increasingly safety has become a big selling point for apartments. Parents can see modern, quality buildings with secure entry systems, car parking, etc, and these parents are willing to pay to make sure their son or daughter secures a good quality apartment. This helps to maintain high rent levels for your apartment investment.
Student letting in short represents a more stable property investment than most young professional tenancies.
In the future a student apartment can simply revert to professional letting as an economy improves.
In the longer term an apartment in a city centre is likely to be in higher demand from first time buyers or young couples looking to buy helping to underpin growth in capital value over time.
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