Following publication of the last newsletter, I had an interesting chat with a chap who lives in Weymouth who popped into our office whilst his better half was shopping in town.
He is thinking of buying his first buy to let property and wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that with all the newspaper headlines of a booming house market, there wouldn’t be any demand from new tenants.
One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade.. You can judge the affordability of an areas property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable the property is.
When we put this to the test we found that Weymouth DT4, currently has an average property value of £211,800.00 for a three bed with the average salary being £21,237. This is a ratio of 1 to 8.83.
Meanwhile in Dorchester the ratio of property values to salary is 1 to 9.74 with the average price for a three bed house £245,700.00.
Both of these ratios are very fair, comparing with other parts of the UK and are what you would expect and also obviously make Dorchester more expensive to buy. Here you must refer to yields to decide! (more next month)
However, the issue isn’t affordability, it’s the raising of the 5% deposit, which when you take into account fees and other costs, will be in the order of £15/20,000.00
Tenants inability to raise that sort of money for the deposit is driving demand for rental property something we see every day in this office. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please come and see me at our office on St Thomas Street Weymouth