Staines' Savers batten down the hatches with Low Interest Rates set to continue into the 2020s

You might ask, what has the plight of the savers in Staines to do with the Staines Property Market … read on and all will be revealed! Every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

... And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would loose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

For those who have saved throughout their working lives and are looking for ways to maximise their savings, putting money into property could prove advantageous. You see,  as a saver, I did a search of the internet and the best savings rate I could find was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Staines house prices and princely buy to let yields have made property investment in Staines an appealing option for many. According to my research, the...

Average Yield over the last five years for

Staines Buy to let property has been 5.7% a year

… and average Property Values in over the same period have risen by 30.4%.

Using these averages, the Staines landlord’s property would be worth £260,800 and he would also have received £57,000 in rent – making the total return £317,800. Meanwhile, whilst our Staines savers, using the average savings rates for the last 5 years, even if they had reinvested the interest,  would have turned their £200,000 into £221,184.

There are, of course, risks as well as benefits with buying to let. As my blog readers know, I tell it like it is and you need to be aware,  that  investing in buy to let means locking up capital in a property that may fall  as well as rise in value.  Another option for that nest egg would be stock market income based investment funds, which are paying around 5%, especially if you put your funds into a tax free Stocks and Shares ISA. Whilst you can only add £15,240 a year into an ISA, you would however have the ability to sell up quickly if you wanted / needed to ...         One last thought… The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that, of course, is why the love affair between the British and their property continues to endure – I for one cannot see that changing! If you are considering becoming a new buy to let landlord in Staines, do pop into our office on the High Street for a chat, we are always happy to offer free advice over a cup of tea or coffee.