Investing in buy to let property in Mid Somerset is different from investing in the stock market or depositing your hard-earned cash in a building society.
Investing your money in a building society is considered by many to be the safe option but the returns are awfully low. The best bond rate at the time of writing is 2.06% for a 1-year bond (Al Rayan Bank) and if you were prepared to commit for longer, blme will give you 2.55% for a 7-year bond.
Another investment option is the Stock Market, which can give good returns, but unless you have your finger on the pulse and are prepared to be in regular contact with your broker you will have to settle for stock market funds, making the investment quite hands off and one always has the feeling of not being in control.
However, with buy to let, things can be more hands on. One of the things that appeals to buy to let investors is it is about bricks and mortar that you can touch. It is this factor that attracts Mid Somerset investors who can make their own decisions rather than entrust someone in Canary Wharf to gamble their savings on the stock market.
Investing in property is a long-term game. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Mid Somerset but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases. Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. Over the last 10 years, the average price paid for a Glastonbury property has risen by £48,031 (equivalent to £13 a day). The mythical average yield for a Glastonbury property is just 3.4% based the average asking rent (Rightmove) and the average price paid (Land Registry) but if investors do their homework higher yields are of course achievable.
Looking at recent market activity shows what long-term returns can be achieved with Glastonbury property.
Property Original price paid, date original sale, recent price paid, date recent sale, % increase, AER:
- 12 Bath Close, £166,000, 28 Jan 13, £310,000, 17 Mar 17, 86.75%, 16.31%
- 4 Chalice Way, £180,000, 27 Mar 15, £222,500, 03 Apr 17, 23.61%, 11.05%
- Flat 37 Old Market Court George Street, £102,500, 16 Jul 15, £120,000, 17 Feb 17, 17.07%, 10.39%,
- Cordis Mundi Bove Town, £530,000, 08 Aug 12, £775,000, 09 Mar 17, 46.23%, 8.64%
- 21 Manor House Road, £125,000, 12 Apr 01, £363,000, 07 Apr 17, 190.40%, 6.89%
- 125 Wells Road, £160,000, 25 Nov 11, £228,000, 31 Mar 17, 42.50%, 6.84%
- 2 Pendragon Park, £55,000, 15 Nov 96, £202,500, 15 Feb 17, 268.18%, 6.64%
- 12 Higher Actis, £64,000, 12 Dec 97, £215,000, 10 Feb 17, 235.94%, 6.52%
- 5 The Close, £245,000, 11 Feb 13, £315,000, 02 Mar 17, 28.57%, 6.39%
- Tump House Butleigh Road, £135,000, 19 Feb 99, £400,000, 10 Mar 17, 196.30%, 6.20%
This clearly demonstrates how the Glastonbury property market can provide very strong returns for the average investor – compare this to the bond rates discussed earlier but property is a long-term investment not for someone who wants to make a quick buck.
About Tom Morgan
Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk
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