Most buy to let investors will buy smaller property, be that studios, one beds and two beds. Larger property that we let has often has been lived in by the landlord rather than being specifically bought as a buy to let (BTL) investment.
There are a few reasons for this. The yields, which are the rent received annually compared to the cost of the house, tend to be lower on larger property so a three bed semi might let for £1,350pcm (being conservative here) at a price of £375,000 the yield would be 4.2%. If you are borrowing at around 5% buying lower yield property is less attractive as the mortgage interest cost is greater than the rent. Previous owners can worry about this less because they often have no mortgage or small mortgages so rent easily covers the mortgage payments.
Your Local Knowledge
People who have lived in their own homes are more acutely aware of the increase in value they have seen and so they want to stay invested in the property to continue to see those rises in value. Here in Hillingdon the last set of official data I saw showed property prices have risen in the last year by 16.9%. There are no guarantees to continuous future price growth (especially not on the scale we have seen recently) but unless a lot of houses are built locally there will be a steady increase in prices over the long term. The short term is always going to be more susceptible to the financial ebb and flow of things like mortgage rate changes.
Over the long term Hillingdon Borough average house prices have risen from £84,000 in 1995 to £339,000 in 2015, outstripping inflation by a factor of three times.
Staying Invested Could be Emotionally and Financially Sensible
Moving home is not without risk, so hanging onto your home can be wise, especially in a rising market. But trying to live somewhere else, perhaps buying a smaller new home or renting for a little while you offset that risk by getting to know a new area can make a lot of sense financially and emotionally. You loved your old home so you can always go back to it if you want. Subject to the normal caveats that you have a tenant living there who has right to peaceful enjoyment of your home until the let comes to an end!
Average Rents in Oak Farm
Three bed homes in Oak Farm, Hillingdon are currently on the rental market for between £1,400pcm to £1,595pcm. Given the rise in rents and rise in property values we have seen locally your money now goes much further out of London than it used to!
If you want to talk to me Jeremy Wasden about letting your property feel free. Happy to talk over how you get your home ready to let and some of the stickier problems in letting like can you make sure a tenant pays the rent and will a tenant damage my home?
