South West property prices take a tumble, but Bournemouth still on the increase!

The Land Registry has today released the property price data from March, and it shows a surprising picture. As you know, March was the last month for investors to complete on purchases before the increase of Stamp Duty on the 1^st April. With this in mind, it was predicted to be a heated month of property transactions and inflated property prices – but what actually happened was transactions tumbled by over 5% and prices across the UK fell by 0.5% - the greatest tumble in over 6 months.

The South West, having seen a high annual growth of 6.7% as at the end of February, saw one of the biggest property price tumbles in the UK – a huge drop of -0.9% in monthly property prices. This however had no effect on the property prices in Bournemouth which has seen yet another month of consecutive property price increases, +0.7% on last month which continues to exceed property price forecasts made before the start of the year. This brings the average price of a property in Bournemouth to £196,262 which is an annual growth of 7.9% compared with March 2015.

As the property market slows down, Bournemouth Landlords realise the true cost of the Stamp Duty changes

From the 1^st April 2016, Stamp Duty has increased for the purchase of investment properties and additional homes. As many of you will know, this change has increased the cost of Stamp Duty by 3% of the overall purchase price of the property affecting tens of thousands of buyers. It’s no surprise then that we saw huge increases in volume of transactions in the months leading up to the change as investors looked to complete their purchases before the tax changes came into effect. But what is the true cost of this tax change? Is it still worthwhile investing in Bournemouth property?

I have been speaking to a number of buy to let landlords over the last few weeks about this very subject. Yes, many landlords have been put off by the recent tax attacks on landlords, not just the increase on Stamp Duty. Having said that, when you look a bit closer at the figures and work out the true cost of the changes, you might be just a little surprised. 

Dorset house prices dip, but Bournemouth continues to rise!

According to the Land Registry House Price Index, February saw a stutter in the overall property market. The UK as a whole dropped 0.2% in the month of February despite the increase in demand from private landlords looking to complete purchases before the Stamp Duty increase took effect. Despite the strong demand and historic price jumps month on month, even Dorset stumbled with a -0.1% drop in prices.

The South in particular, along with London, has seen huge increases in property prices over the last few years. So it’s interesting to see some areas dropped in value despite the increased demand to buy at the start of the year from property investors. But despite the average property price dropping in Dorset as a whole, Bournemouth has certainly continued strong, growing in value for another consecutive month at +0.5%

Bournemouth landlords - What group of tenants should you target?

When planning to invest in property, there are a number of considerations you need to make; where to invest, how much to invest, how the investment will be funded, expected return on investment etc. But really, all of things result from the number 1 question you should be asking – who is my target market.

When businesses are formed, it is best practice to write up a business plan. The business plan can vary greatly in what it contains, but in essence it states what the business does, how much it plans to make, and who is going to buy the product/service. For the majority of property investors, only the first two elements are focused on – what you do (let out a property or room) and how much you plan to make (working out the gross/net yield). Far too often, the final element is only focused on once the property has been purchased – who is going to buy (who is the tenant). By then it’s too late.