One of the points I will be discussing at the property
seminar we are running in Falkirk in later this year will be the affordability
of property in Falkirk.
Property values in Falkirk have by increased 5.3% in the last year, in the past five years prices are up by 17.7%.
At the same time interest rates have plummeted, so whilst renting used to be on a par in terms of cost compared to owning your own home, now it has become incredibly cheap to finance a property purchase.
Property values in Falkirk have by increased 5.3% in the last year, in the past five years prices are up by 17.7%.
At the same time interest rates have plummeted, so whilst renting used to be on a par in terms of cost compared to owning your own home, now it has become incredibly cheap to finance a property purchase.
Recently a two-bedroom flat on Teviot Street was on the
market for a fixed price of £55,000; a perfect first-time buyer starter home.
As the price is fixed, the flat will sell for £55,000. Our first-time buyer would require a £2,750 deposit, nothing for Land & Buildings Transaction Tax plus money for the legal fees. Their £52,250 95% mortgage with a five year fixed rate of 2.39% would cost £231 per month (which, importantly, includes paying down the debt).
That same house was in fact sold to a buy-to-let investor and is now up for rent…..at £425pcm!
So, if it’s so much cheaper to buy why doesn’t everyone
do so?
Well there’s certainly some who choose to rent rather than buy for social and job mobility reasons. Some don’t want to be tied down to a particular property or area and in today’s more nimble economy this can be a sensible practice for many.
But affordability issues remain a major factor in people’s minds; they think that they will have difficulties in raising the deposit as well as getting the banks to lend enough money in the first place.
A couple with a joint income of £25,000 will be able to get a mortgage for the flat I mentioned above and, if they made is a priority, I would have thought they could have saved the £3,250 needed for a deposit and legal fees – that works out as being £180/month over 18 months.
This suggests that affordability issues are more on the mind of renters rather than being a reality.
Well there’s certainly some who choose to rent rather than buy for social and job mobility reasons. Some don’t want to be tied down to a particular property or area and in today’s more nimble economy this can be a sensible practice for many.
But affordability issues remain a major factor in people’s minds; they think that they will have difficulties in raising the deposit as well as getting the banks to lend enough money in the first place.
A couple with a joint income of £25,000 will be able to get a mortgage for the flat I mentioned above and, if they made is a priority, I would have thought they could have saved the £3,250 needed for a deposit and legal fees – that works out as being £180/month over 18 months.
This suggests that affordability issues are more on the mind of renters rather than being a reality.
Alternatively, people are choosing to rent nicer
properties in nicer areas where they would struggle to afford to buy (they
could afford to buy a property in a less nice area, but they choose to rent in
a nicer area).
As I mentioned at the start of this post, the Falkirk
Property Blog is hosting a property seminar in Falkirk later this year – watch
out for more details.
If you would like any advice on buying a property to
let, feel free to pop into our office at 6 Vicar Street, Falkirk for a chat,
give me a call on 01324 469840 or email me on news@thekeyplace.co.uk.
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