Back to school

You may have heard in the news recently that the government are going old school when it comes to qualifications, with talk of scrapping the GCSE’s and going back to how it used to be – exams, nothing but exams.

Many people think this is a great idea, scrapping coursework and sending children into exam room armed with nothing but their memory. The first subjects to change will be English and Maths, I remember how Maths was one of the subjects that I excelled at because it relied heavily on memory, but I don’t know if I could remember all those calculations you had to memorise if I did those exams now. Maths calculations do come in handy now though when working out certain sums, for example yields on properties to establish their profitability.

Now let’s see if you can work out a maths sum, one that you should really know:

 

 

e.g. £8,000/£100,000 = 8% yield

An 8% yield on a buy to let property would be considered very good as the average rental yield across the country is 6.2%. The highest yields are commonly found in the North of the country, in the first quarter of 2012 the North West saw the highest yields of up to 6.6% and rent in outer London was trailing with 5.7%.

Yields on other buy to let properties such as those with Houses of Multiple Occupancy were dramatically higher. The Association of Residential Lettings Agents statistics for the first quarter of 2012 showed that the average rental yield on HMO’s reached a staggering 10.7% especially in city’s with a large population of students.

When investing in a buy to let it is important to shop around to find the best yield on a property, as I mentioned, HMO’s particularly in student areas are good for high yields particularly those in the North West. Smaller properties may produce better yields; terraced houses achieved an average of 7.28% in 2012 with flats achieving 6.8%. So the ideal Buy to let property would be situated in the North, an HMO terrace home, let out to students in an area that does not have a lot of rental properties on the market.

With the rental boom showing no signs of stopping buy to let properties are an exciting investment opportunity for many people,

Lancashire Mortgage Corporation has a variety of finance options available for buy to let to increase your client’s portfolio. To see the profitability of a purchase make sure you work out the Gross yield and shop around.

That’s all for the maths lessons for this week, next weeks blog lesson will be preforming arts, the power of mime, only joking.