... 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 Stoke on Trent house prices and princely buy to let yields have
made property investment in Stoke on Trent an appealing option for many. According
to my research, the...
Average Yield over the last five years
for
Stoke on Trent Buy to let property has
been 4.6% a year
… and average Property Values
in over the same period have risen by 18.3%.
Using these averages, the Stoke
on Trent landlord’s property would be worth £236,600 and they would have
received a total of £46,000 in rent – making the total return £282,600.
Meanwhile, whilst our 25,912 Stoke on
Trent 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 Stoke on Trent homeowners and Stoke on
Trent 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 Stoke on Trent or Newcastle under Lyme, what do you know about
the local property market? Do what many established landlords do and visit the Stoke
on Trent Property Blog or pop in to see us at
either of our offices (Hanley or Newcastle) or give us a call on 01782 453001
