Month: June 2016

what would brexit mean to the 10,900 property owners in the heatons?

At the time of writing, a £10 bet on the good people of the UK voting to leave the EU would yield a profit of £22.50, whereas the same bet on staying-in would return just £3.30. For those of you who don’t regularly have a flutter, that means the likelihood of Brexit is very slim. But then again that’s what the pollsters and bookies said about a Tory majority at the last election.

So if we believe the bookies, it seems the most likely impact of this referendum on the Heatons property market will be fairly negligible. There could be some mild economic uncertainty followed by a return to business as usual following a vote to stay in. In fact, even this mild uncertainty will come to be seen as nothing compared with the rush to snap up buy-to-let properties before the April 2016 stamp duty hike and subsequent flood of properties onto the rental market.

But what would an ‘out’ vote mean for the 10,900 homeowners of The Heatons or even the landlords of the 2,442 private rented properties? Well we think it all comes down to how reliant each local market is on buyers who work in the financial services industry. Some commentators claim that in the event of Brexit, the large global banks could pull out of the UK and relocate to somewhere within the EU, most likely Frankfurt. That would result in an exodus of relatively high income workers from the market, and it is these people who have been instrumental in putting upward pressure on house prices since the 1980’s.

As we all know, people working in financial services are mainly concentrated in South East England, within commuting distance to the City of London and Canary Wharf. However, there are also provincial outposts in the north of England, particularly in Leeds.

In The Heatons, there are 853 people working in financial services, equal to 4.8% of all jobs. In the context of the national picture, that puts it in the top half of all areas in terms of the concentration of financial services jobs. So the bottom line is that in relative terms, The Heatons is fairly reliant on the financial services industry. Consequently, The Heatons’ property market would be moderately exposed in the event of Brexit. However, there is a broader economic consequence of Brexit which would pose a menace to the SK4 and UK housing markets – interest rate rises. Theoretically, this could see the cost of mortgages grow swiftly, pricing many out of the market and generally making life difficult for buyers. However most buyers take fixed rate mortgages and two-thirds of landlords buy without a mortgage, so this woulddampen the effects in the short-term. It’s also conceivable that inflation would ramp up substantially if the price of imports went up, and if the Bank of England responded by increasing interest rates we might get into the situation we were in in the late 1980’s when mortgages were sky high, but inflation was eroding the debt.

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a fantastic buy to let opportunity in the heatons…

I couldn’t let the day pass without posting this property for you all to see, just in case it gets snapped up quickly!

The property is very nicely presented and looks as though it would appeal to a lot of potential tenants. It’s a ‘ready made’ investment on the market with Reeds Rains with an asking price of £110,000 and you could be looking at a rental income of £600 pcm which generates a potential yield of 6.5% gross.

These properties in The Heatons are really quite popular little units, there is always demand from tenants for them and the return is well above the average in the area. If you would like to have a chat about the property market and buying to let, feel free to pop in for a coffee.

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