Once again the Bank of England Monetary Policy Committee has opted to hold interest rates at 0.5%. This has been the case since March 2009 or to put it another way the interested rate have remained at this level for the last 32 months.
There has been further commentary to the effect that interest rates are likely to remain at this level for another 12 months and in fact the money markets, through SWAP rates seem to anticipate this as well.
This is all good news for borrowers. However the opposite is the case for savers. With inflation officially at 5.2% then cash held in the bank is not only providing very little return but also going backward due to the effect of inflation.
Buy to let – an attractive alternative
Buy to let property investments do provide an alternative that is attractive to many savers. Yields can be achieved of 3 – 5% on residential property and there is the added advantage of some capital growth for the future.
We have advised a number of investors over the last few years and believe that there are good buying opportunities in the current market. Any investment will need to be tailored to the individual circumstances but one thing for sure is that property investors take satisfaction from the fact that they can see and feel their investment.
Market Harborough is an affluent town with a large employed and wealthy population. This means that tenants are in good supply. The housing stock is generally in good order and there is a healthy balance between flats, starter homes and family properties. The town has the benefit of a London main line railway connection as well as a wide range of industries and employers.
But to lets that we have sold have included flats and 2 bedroom houses up to the £150,000 level. Rents range for £400 pcm plus for a one bedroom to £500 to £700 pcm for a two bed house or flat. New build will have little or no repairing issues. It is even possible to buy properties with tenants already in residence. This not only means that rent is received straight away but also there is a track record of how the tenants perform.
With the prediction that interest rates will remain low for the foreseeable future is it the time to review your savings plans. If so property might just be the foundations to build on.