Letting Agent in Oxford – Ask Me Anything

by Mark Crampton Smith

4 years ago

Letting Agent in Oxford – Ask Me Anything

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Letting Agent in Oxford – Ask Me Anything

Mark Crampton-Smith - Letting Agent in OxfordMy name is Mark Crampton-Smith, I am a letting agent in Oxford – “ask me anything”

I am a member of ARLA, SAFEagent and The Property Ombudsman redress scheme. I am also a landlord.

I am responsible for letting and managing nearly 400 units, of which 170 are HMO’s

Please feel free to ask me anything about letting in Oxford.

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Comments

Mark Alexander

4 years ago

Hi Mark

I have lots of questions about Oxford as it's an area which has sparked much controversy in respect of being an early adopter of selective licensing and article 4 planning restrictions. I will leave others to ask about that.

What I am particularly interested in is the cash on cash returns on a typical Oxford HMO assuming assuming; let's say 75% financing and a 5% interest rate.

It would be incredibly helpful if you you break this down for me in the format used in the Landlords Calculator which I designed for people to use online via Property118 - please see >>> http://www.property118.com/landlords-calculator/40091/

Thanks in advance for your response.

@MarkA good question..... Oxford is an interesting place for HMOs. The Article 4 directive has been in place for some time now and that is limiting the supply. As values go up faster than rents, yield will fall! The other factor that makes Oxford unique is the number of parents buying for their children whilst studying here. Because they are not going to pay rent for a few years they have a different perspective on yield..... The outcome of all of this, is that there are people buying at 5% and if we find one that generates 6% or 7% it will fly. If you would like to find an HMO in Oxford follow Oxford Landlords on.... either Facebook or Twitter; https://www.facebook.com/OxfordLandlords?fref=ts

Vanessa Warwick

4 years ago

Hi Mark CS,

Lovely to see an agent promoting their accreditations as this shows a commitment to professional standards.

For anyone who does not know what a SAFEagent is, there is a short video available called "SafeAgent in 2 minutes" which explains in wax crayon why all landlords and tenants should choose to let through a registered SAFEagent.

http://safeagents.co.uk/blog/post/2013/05/13/SAFEagent-Awareness-Week-launches-with-new-consumer-information-video.aspx

Mark Alexander

4 years ago

Thanks Mark but that doesn't really answer my question 🙁

Mark Alexander

4 years ago

Sorry, I was trying to embed the video which Vanessa linked to but I'm having difficulties. Will try again later.

@VW Thanks Vanessa...... Love your Tribal Gathering of Landlords by the way!

Vanessa Warwick

4 years ago

Thanks Mark! 🙂

I hope you can join us too as both PT and P118 share the view that landlords need support and education and neither of us mind where they get it, as long as they do!

@MarkA- OK I can confirm that the Cash on Capital invested in Oxford is generally between 7% and 9% assuming a fixed term loan of 3.9% (we have seen a product offering 10 years at this rate) What is bumping it up at the moment is all the investors on Standard Variable rates. Your calculator is great ............ well worth the very generous donation that I made.... as a one off BTW so hopefully I can use it again.
Having said all of that there are other drivers for investing in Oxford. In many parts of the city, capital growth is currently somewhere in the region of 2%pa and the shortage of supply ensures void free letting.

Mark Alexander

4 years ago

Thanks for the response Mark, would you mind sharing the input details please so that readers can run similar calculations themselves please?

@Mark Alexander – using your calculator and a very typical HMO property for us to be managing I have put together the following example.

Property value £320000

Monthly rent £1600

Gross rental yield is 6%

Based on your suggestion the amount of mortgage/loan would be £240000, i.e an LTV of 75%.

The interest rate I have used is 3.9% which is a 10 year fixed rate mortgage currently available.

We have assumed 20% of rental income will be required to fund the costs of; insurance, advertising/letting, management, Gas checks, maintenance, ground rents, service charges and void periods (lost rent due to arrears or when the property isn't let). This equates to a monthly cost of £320. This figure is based on what we are actually achieving for clients.

Monthly cashflow based on the above is therefore £500

Based on these figures the cash on cash return is 7.5%. This is the NET annual cashflow expressed as a percentage of the equity in the property.

This property breaks even when interest rates hit 6.4%, however, as the assumption is based on a 3.9% 10 year fixed rate this isn't quite so relevant. If you would like to see what the ROCI is based on a different set of numbers you can input your own figures here: http://www.property118.com/landlords-calculator/40091

I trust I have answered your question fully now?

There is a link to my website in my Member Profile if you would like to contact me.

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