Whether a first time buyer or a property investor there is a wide variety of property available to buy in and around St Andrews at present. With house prices in Scotland reportedly having fallen by an average of 8.1% during 2008, in a number of cases these properties are being marketed at prices lower than would have been the case 12 months ago.
Coupled with lower mortgage interest rates brought about in part by recent falls in the Bank of England base rate this points towards now as being a good time to buy.
With a high demand for rental property in St Andrews, fuelled by the university population, buying a property to let out in the town has the potential to provide investors with competitive return on their money when compared with other forms of investments such as savings deposits and stocks and shares. Each property is different in terms of the rental yield it can attract. Rental yield is the amount of money a landlord receives in rent over the course of one year, expressed as a percentage of the amount of money invested in the property. Factors such as the purchase price and rental income generated in turn, will have an effect on the deposit required and the mortgage payments to be made and these are all things which will affect the rental yield.
As a guide, however, gross yields of around 6% could be achievable in the current market.
Questions any potential property investor needs to ask themselves, in order to establish whether buying a property to let out might be a suitable investment, include:
Am I prepared to invest 30%-35% of the property's purchase price for the long term?
Do I have other funds available to cover emergency repairs on the property as and when they fall due?
Provided you can answer yes to both of the above questions then buying a property to let is worth considering.
Questions then to ask in order to establish whether a particular property will provide you with a suitable investment return include:
Will the rent I can achieve cover 125% of the monthly mortgage payments?
Will this still be the case if interest rates rise by 2.5%?
Is there sufficient demand for rental property in the area I wish to buy in?
Murray Donald Drummond Cook can assist you with the answers to these questions through our Independent Mortgage Advice Service and our Property Letting Department.
Anyone thinking of buying a home for the first time, would be entitled to feel that current market conditions make this an attractive proposition, with lower mortgage interest rates, low property prices and a wide selection of property available on the market.
For first time buyers, in the current market, some lenders are willing to lend with as little as a 10% deposit, although a larger deposit, would probably mean a lower interest rate would be available from the lender.
In recent weeks enquires from first time buyers have increased. In particular a number of enquiries have been received from parents of students at the University looking to buy a property for their son/daughter to stay in as opposed to them renting whilst studying at St Andrews.
Depending on circumstances, one way this can be achieved is by the property being bought in the name of the son/daughter with the parent acting as "guarantor". By doing this, the son/daughter is helped onto the property ladder by the parent, the parent has the comfort of knowing that their son/daughter is living in a property that is suitable for their needs. Additionally it is possible that the cost of their accommodation whilst studying in St Andrews can be reduced if a friend/lodger is then taken in to offset the mortgage cost. There can be favourable capital gains tax treatment too, if the property is in the name of the student rather than their parent.
The need for a deposit has been a barrier for a number of first time buyers over the last six months or so. Help with this could soon be at hand in the form of the Scottish Executive sponsored "Low Cost Initiative For First Time Buyer's" scheme (LIFT).
The scheme works on the basis of "shared equity" whereby an executive backed agency provides grants to certain categories of first time buyers. The grants can be from 20% - 40% of the property purchase price and are in effect a deposit for the first time in order to satisfy the lender's requirements. In return for the grant, the executive backed agency will take the corresponding share in the property's equity which will be repaid when the property is sold.
This scheme has been piloted in a number of areas of the country over the last twelve months. The Scottish Executive announced in October 2008 that the scheme will soon be available across the whole of the country.
Further information on any of the above can be obtained from Murray Donald Drummond Cook. We offer an independent mortgage advice service. With access to the mortgage products available from the whole of the UK market, through discussions about your requirements we are able to find the most suitable mortgage to suit your needs. For a free initial, no obligation appointment to discuss your requirements and obtain an illustration showing the set up and monthly costs of the mortgage most suitable for you, contact the Murray Donald Drummond Cook Property Department on 01334 474200.
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