You
might ask, what has the plight of the Huddersfield savers to do with the Huddersfield
Property Market … everything in fact.
Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy
Committee in early August to cut the Bank of England base rate to an all time
low of 0.25 per cent, savers should prepare themselves for interest rates to
stay low well into the early 2020’s.
... And this isn’t some made
up story to capture the headlines of newspaper editors. The yield (posh word
for interest rate or return) on 10-year Government bonds is currently 0.61 per
cent. This indicates that the money markets believe that the Bank of England’s
base rate will, on average over the next ten years, be below the 0.61% rate
they are buying the 10 year bonds at (because they would loose money if the
average was over 0.61%). UK Interest rates are going to be low for a long time.
For those who have saved
throughout their working lives and are looking for ways to maximise their
savings, tying their money into property could prove advantageous. You see as a
saver, I did a search of the internet and the best savings rate I could find
was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest
egg would earn you £5,000 a year – not much. However, on the other side of the
fence, growth in Huddersfield house prices and princely buy to let yields have
made property investment in Huddersfield an appealing option for many. According
to my research, the...
Average Yield over the last five years
for
Huddersfield Buy to let property has
been 4.6% a year
… and average Property Values
in over the same period have risen by 12.2%.
Using these averages, the Huddersfield
landlord’s property would be worth £224,400 and they would have received a
total of £46,000 in rent – making the total return £270,400. Meanwhile, whilst
our 15,448 Huddersfield Saver’s,
using the average savings rates for the last 5 years, even if they had
reinvested the interest, their £200,000 would only be £221,184.
There are risks as well as
benefits to buy to let though. As my blog readers know, I tell it like it is
and investing in buy to let means locking up capital in a property that may
fall in value. Another option would be stock market income based
investment funds, which are paying around 5%, especially if put your nest egg
into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also
have the ability to sell up quickly if you want ... but one last thought…
The other side of the coin is
that you cannot buy an unloved ‘stock market income based investment fund’ and
set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t
something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that is why my
fellow Huddersfield homeowners and Huddersfield landlords is why the love
affair of the British and Property will continue.
If you are considering becoming a
new buy to let landlord in Huddersfield, what do you know about the Huddersfield
property market? Do what many established landlords do and visit the Huddersfield
Property Blog where there is a catalogue of articles like this and where the
best buy to lets deals are in Huddersfield https://huddersfieldproperty.blogspot.co.uk/
