Who can really afford to buy a house these days?

The easiest way to judge the affordability of property within an area is to look at the ratio of the average property price to the average salary.  In Weymouth, DT4 the average price is £211k for a three bed house whilst the average salary is £21,237.  This is a ratio of 8.83. 

In Dorchester the affordability ratio is 9.74, meaning property is slightly less affordable.  No surprise there then but perhaps the issue is not this measure of affordability but the other.  Deposit!!  A 5% deposit is in the order of £15/20k

Tenants’ inability to raise that sort of money is driving demand for rental property, something we see every day in this office.  If you would like some advice about buying to let, where to buy, what to buy, what lets best or quickest do come by for a chat at the Martin and Co office at the top of St Thomas Street in Weymouth.

BTL? Do your sums!

A nice two bed flat overlooking the harbour is going to cost in the region of £200,000 and return around 4.2% whilst a two bed house in Sandpiper Way will cost £165,000 and return 4.7%.  This may not sound a lot of difference but actually represents a 12% better return.  

When you take into account the block management costs of a flat, which can amount to the equivalent of two months’ rent you are looking at a 34% better return.  Both properties will rent well and quickly but this does show how important it is to do the sums when investing in a BTL.

Add on the fact that the two bed in Sandpiper Way is around £35000 less money to start with and it becomes obvious where the sensible money goes.  Of course not all BTL investors are only interested in the return and may have other reasons to buy a flat with a poorer return but in a nicer position.