07:20 Wednesday 25th January 2012
Peterborough Breakfast Show
BBC Radio Cambridgeshire
PAUL STAINTON: If you’re thinking about buying to let, Peterborough is THE place to do it. A city-based estate agent surveyed the whole country, comparing the average sale price of a house against its letting price, and guess what .. we’re top of the pops. Let’s speak to Martin Fitzjohn from Fitzjohn Ingle. Morning sir. How are you?
MARTIN FITZJOHN: Good morning Paul. I’m fine thank you.
PAUL STAINTON: It’s not very often we’re top of the pops at anything, but this is good, isn’t it? Let’s get out there and get a mortgage .. if we can.
MARTIN FITZJOHN: The buy to let market is different to the other sector. It’s primarily run by investors. Investors at the moment are getting a very poor return in respect of the money in the bank. So obviously they’re looking to utilise their cash.
PAUL STAINTON: So just explain how buy to let works then Martin, for the uninitiated.
MARTIN FITZJOHN: Ok. Basically somebody would purchase a home, let’s say a purchase price of £100,000 for round figures. They would look to let that out into the rental market, assuming that they would receive somewhere in the region of £450 to £600 per calendar month for their return, which would result in a better return than money sitting in the bank, with their hundred grand sitting in a property. You’ve also then got the capital investment over a longer period. So for example, over the last ten years, approximately we’ve seen a fairly hefty increase. I know we’ve had a price dip recently, but over the last ten years we’ve seen a fairly hefty increase in terms of the actual value of the property. So they’ve got a return on a monthly basis, and they’ve got a capital return in terms of their investment in the long term.
PAUL STAINTON: So you borrow a hundred grand, or ninety grand, or whatever, and you put your deposit in, and you buy your house, and you’re getting £500 a month in rental, roughly. What’s your mortgage repayment on that then?
MARTIN FITZJOHN: Depending on the rate you get, it would be somewhere in the region of £300, probably a little under.
PAUL STAINTON: So you’re making a couple of hundred quid a month.
MARTIN FITZJOHN: Yes, but you’ve also got the capital return as well, in the longer picture.
PAUL STAINTON: Which should go up from here, because I don’t think house prices can fall much lower, can they? But hopefully not, anyway. But the problem here is getting the mortgage in the first place. They’re difficult to let at the moment, buy to let mortgages, aren’t they?
MARTIN FITZJOHN: The market’s easing up slightly. The criteria is still very strait in terms of your history, your credit history. You have to be pretty squeaky clean at the moment to get a mortgage. But if you’re in that position where you can get the mortgage, and you’re buying to let in terms of an investment, that’s a good route. But don’t forget there’s a lot of people out there surprisingly that do have financial ability without borrowing. And it’s probably those people at the moment that are really looking at this closely, because their money in the bank is not giving them any return.
PAUL STAINTON: Yes. Why is Peterborough so good to invest?
MARTIN FITZJOHN: Well you’ve got quite a high turnover of personnel and people within the city. So you’ve got the high turnover, and you’ve still got the people that would normally come into the marketplace, and would go to buy. But for the reasons you said, they can’t get a mortgage. They’re being steered towards the rental market, because they want to move from home, they want to get married, or so on. And they can’t buy. So of course they’re naturally being steered into the rental market.
PAUL STAINTON: .. If you’re looking to buy a house, where’s the best places to let out in Peterborough?
MARTIN FITZJOHN: Well at the moment, we’ve got high demand everywhere, but particularly the Bretton area, based around the hospitals. That’s for obvious reasons,the personnel in the hospitals that are moving there. So within a mile or two of that area is quite popular.
PAUL STAINTON: Right. .. And what sort of properties, do you think? two, three beds?
MARTIN FITZJOHN: Yes. Normally a three bed. There’s a lot of people investors, are looking for the multi-lets, where they buy something with four or five bedrooms, convert reception rooms into accommodation, and then they go for a multi-let set-up, where each room is let individually, on a weekly basis, so there’s no long-term contract.
PAUL STAINTON: Yes. And what are the pitfalls here?
MARTIN FITZJOHN: Well, the pitfalls, there aren’t any really. It’s just tying your money up in the long run. So if you had any personal issues where you were thinking of getting somewhere for yourself, and you’ve signed off a chunk of money, that would be a negative. But in the long-term, there are no pitfalls.
PAUL STAINTON: .. So if people are interested in that, and they want to make some money, want to make their investments work for them, what would you suggest?
MARTIN FITZJOHN: Well start having a look to see what’s out there. There’s an increase slightly now of new property coming onto the market, which was a bit of a bottleneck for last year, but things are picking up now. Our registration for new applicants looking for houses has gone up, as has the new stock that’s coming onto the market. So I think we’re going to see an increase. And of course we’ve got the stamp duty window to push forward and beat. Because stamp duty kicks back in in a couple of months time. So there’s people out there looking to get purchase before the stamp duty kicks back in.
PAUL STAINTON: .. Thank you Martin .. Martin Fitzjohn from Fitzjohn Ingle in Peterborough. So if you’ve got cash sat in the bank, maybe now is the time to invest it in buy-to-let property.