"Old Blighty is undoubtedly beginning to creak under the strain and the fallout is going to be horrible. There’s a cold, winter coming, and no mistake. But looking on the bright side, at least gas will be a bit cheaper this year"
Yes, yes, I know, rates are still going up. It's all I’ve heard for goodness knows how long now. Think we’d all be used to it by now, wouldn’t you?
We have had record-low rates for as long as anyone can remember. Surely that is the norm, isn’t it? Who on earth would have the audacity to put them back up?
In all seriousness though, we all know that there are people out there who are struggling, big style. People not being able to pay their mortgages, losing their jobs and worrying about the electricity and gas bills. Although I must admit, I haven’t seen any of them.
This is what I have seen though:
· The struggle to get a table in some of the nicer eateries in Cardiff is real. There never seem to be any tables. “Full tonight I’m afraid, and all weekend”. The Welsh are dealing with the crisis by drowning their sorrows in Tomahawks and Malbec.
· Every fast-food outlet I go to, I get side-swiped by a constant stream of bearded chaps wearing massive boxes on their backs. Presumably delivering comfort food to the sofas of people too financially stressed and worried (lazy) to make the 4-minute journey themselves.
· Taxi drivers, school Mums and other inconsiderate sorts leaving their massive diesel engines running while scrolling Insta for 20 minutes before picking up little Johnny. Have they no knowledge of the exorbitant price of fuel or the environmental disaster that is slowly engulfing our planet? Turn them off!
· Every campsite, log cabin or holiday let in The Lake District, Cornwall and Devon is completely booked out. And don’t even talk to me about Centre Parcs. Perhaps Brits are staying home this year, avoiding the increasing cost of international travel?
I don’t think so though. I spend half my time in the Algarve and as I sip my morning coffee in the glorious sunshine, a plane passes over our house every 10 minutes, filled with 250 boozy Brits with wallets out ready to go bananas.
So, forgive me, because I appear to be missing something.
Spare a thought for the nation’s mortgage brokers. Those guys and girls are having a tough time of things lately. They are so busy that they are barely able to return your call. Golf days, British Grand Prix, Monaco Grand Prix, Wimbledon, Ascot, Lords, Glastonbury, Download, Harry Styles, Coldplay, and bi-weekly boozy awards dinners at swanky hotels in London town.
I can barely hear myself type for the sound of popping champagne corks and back-slapping. It’s hardly surprising that they are unable to find time to get that rate you’ve been trying to secure.
But I’m being facetious of course. We can’t all have it all ways folks, something’s got to give.
Old Blighty is undoubtedly beginning to creak under the strain and the fallout is going to be horrible. There’s a cold, winter coming, and no mistake. But looking on the bright side, at least gas will be a bit cheaper this year.
This brings me neatly to matters of property investment, and indeed the laws of economics still hold true: as rates go up, property prices of course will come down a bit, for a period at least. Anyone looking to invest in rental property right now must take this into account, and so should vendors, many of whom still think they are in the giddy heights of 2021 house prices.
Want to sound like a pro? Learn this verbatim: Rising interest rates increase mortgage rates which decrease mortgage product availability and increases underwriting stringency which affects people’s affordability, reduces the number of would-be buyers, and negatively affects asking prices.
Try saying that after a few glasses of Lanson to your PR agent sat next to you in Centre Court.
Considering the level of refurbishment works, you should be looking to get a 10-20% discount on the purchase price of a BTL to absorb any future reduction in value. Check your yields and make sure you are fully aware of any surprises like a full rewire – take your electrician with you. Pay him in steak bakes.
Watch out for hastily-repaired-just-for-the-sale roof leaks. Look for uneven painted patches near upstairs ceilings, decorated over just for you. Head into the loft and use your sniffer. I find my nose to be a most useful finder of issues that are hidden behind an agent’s smile.
In this market, there is no room for error. Trying to justify a £7,000 unseen cost is simply not cricket, darling.
Anyone selling property outside of the hottest spots should be prepared to take a haircut, especially if the decor is not up to standard. The longer they leave it, the shorter their fingernails will become.
‘Tis, after all, a buyer’s market. Don’t feel like you’re doing anyone an injustice. You are helping someone out of a financial situation they no longer wish to be in. They need your money, and nobody else is giving it to them by the looks of things.
As I always suggest, get out and look at properties that have been on the market for some time. A previous sale may have fallen through, the owner is losing their mind in a chain, or they may simply be expecting too much. Agents want to do deals and their commission barely changes whether you get it for £30K under the asking price or not.
You may never see prices like this again in your lifetime. So, make sure you get a deal, as it’ll be the best money you’ve ever earned when prices recover and start to shoot up again, which they will. Because they always do.
Matt offers Property Investment Advice to new and fledgling investors. Get in touch with him here
