Southampton Landlord’s mortgages top £1.4 billion!

The Brits can’t stop talking about property. A hot topic of discussion at various dinner parties in the suburbs of Southampton is the subject of the local Property market, and in particular, buy to let. These people are buying up buy to let properties quicker than then the most astute Monopoly player, or so it would seem if you read the Sunday papers! So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into?  The answer is Yes and No to both these questions! 

Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible for basic rate tax payers. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which, for an average Southampton terraced house, would mean finding £47,786 for the deposit (as the average Southampton terraced house is currently worth £191,145) and borrow the rest with a low interest rate buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it???

Let us not forgot that the current Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees; all of these will eat into your profit.

Interestingly, by my calculations, there are over 7500 Southampton landlords owing in excess of £1.4 billion in mortgages on those Southampton buy to let properties.  An impressive amount when you consider Southampton only has less the 1% of all the rental properties in the Country. So what factors should you consider in order to make your buy to let a successful experience? Well a lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a 5 year fixed BTL remortgage rate at 3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor, but that sounds like a reasonable rate! 

And the other thing to bear in mind is that buy to let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Southampton Property Market without advice? We give bespoke detailed advice to landlords to enable them to spot trends in the Southampton Property Market before others, enabling them to buy better properties at better prices. For example, did you know that detached properties are selling for around 2% lower than 12 months ago in Southampton yet flats are selling for 35% more (with every other type in between). 

Information on the local property market and the ability to process it is the strongest asset we can give you. As Lois Horowitz, the famous author says, “Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”.  If you are considering investing in the Southampton property market please do give me a call, I am more than happy to chat about the market, what lets well and what doesn’t. You can call me on 023 8001 8222 or drop into our office on London Rd.