To keep things simple he bought properties with tenants already in situ and picked up properties at auction, where in the early days he said he could buy at 20pc or more below market level. He put down his initial deposit with savings and then began remortgaging to release equity to fund more purchases. Mr Jones did not agonise too much about location, buying properties everywhere from Scotland to Kent, as long as there were decent transport links. But now he does look at the bottom line. “My rule is to buy property only with a yield of at least 9pc,” he said.
In 2006 Mr Jones, who is married with two grown-up children and lives in Bedford, was made redundant from his job as a chartered engineer. At the time he had around 10 properties and decided to exchange the nine-to-five for running his burgeoning empire full time.
He now owns around 50 properties and has outsourced some of the day-to-day work by using a maintenance company that his tenants can contact directly. He uses Caridon Landlord Solutions to help him find new tenants.
Much has changed since Mr Jones bought his first buy-to-let property. Bargains are much tougher to find at auction, stamp duty surcharges must be paid and licensing has been introduced in many areas. Crucially, mortgage interest payments on rental properties are no longer tax deductible.
To get around this Mr Jones has incorporated his property holdings within a company, which allows him to continue to deduct mortgage costs. The number of such incorporations has more than doubled in the year to August compared with the previous year, according to buy-to-let firm GetGround. But there is a sting in the tail, warned Mr Jones, in the form of expensive overheads such as accountants to draw up annual reports.
“It is a lot harder for people starting out now to make money than it was when I started,” he said.
In the future he will have to deal with planned new energy efficiency regulations, which will make it an offence to rent out homes with an Energy Performance Certificate rating of less than C from 2025. “It is something a bit troublesome on the horizon,” said Mr Jones. He will wait and see if this change actually comes into force and then renovate below‑C properties where cost effective and sell the rest.
Mr Jones has no plan to retire yet and on that basis has not bothered to calculate how much his portfolio is worth. “All I know is that I make a comfortable income now and can continue doing so,” he said.
When he does decide to retire his plan is either to revert to plan A – sell off some properties to pay off the mortgages on the rest and live on the income they produce – or hand over to the younger generation if one of his children is willing to make buy-to-let their career.
Britain’s richest homebuyers are ditching their traditional London stomping grounds and are decamping to the Home Counties en masse, new research shows.
The capital’s glitziest postcodes have suddenly lost favour with England and Wales’ super-prime buyers, who are increasingly shopping for more rural homes in the likes of Surrey, Buckinghamshire and Hampshire.
So far this year, more than a third (34pc) of the top 1,000 most expensive home purchases in the country were made outside London, according to exclusive research by Search Acumen, a prop tech company.
This was a 45pc jump since 2021, when the share was less than a quarter.
A desire for access to green space in the wake of the coronavirus lockdowns has been key. Back in 2019, before the pandemic, the share of big ticket sales happening outside the capital was just 15pc.
St George’s Hill in Elmbridge, Surrey, was the number one location for the highest value home sales outside the capital in the year to date.
It was followed by Highclere Park in Newbury, Hampshire; North Fambridge in Chelmsford, Essex; and Ridgemont Road in Ascot, Berkshire.
Surrey accounted for the largest share of big ticket buyers after London, with 81 of the most expensive purchases in the country in the year to date.
Buckinghamshire was the second most popular county, with 32 sales, up from 20 a year earlier. In Hertfordshire and Hampshire, the number of top end sales more than tripled, to 28 and 26 respectively.
By contrast, the number of big ticket sales in Kensington and Chelsea – the longstanding favourite amongst the wealthiest buyers – fell by 45pc year-on-year to 154.
Similarly, in Westminster, sales halved to 92, while Camden saw a 36pc drop to 53 – little more than half the number recorded in Surrey.
The trend reflects the fact that international buyers – who are more likely to spend in prime central London than in the suburbs – largely disappeared during the pandemic, Search Acumen said.
In the first six months of this year, international buyers accounted for just 21pc of home sales in Greater London, according to Hampton estate agents, down from a peak of 35pc in 2018.
Overseas buyers are now returning to prime central London – accounting for 48pc of transactions this year, up from 35pc in 2021 – but it seems a lasting legacy of the pandemic that the top end of the English property market has become more dominated by British spenders.
Buying outside the capital also means that the top 0.1pc of purchasers are now spending drastically less.
The average price paid across the top 1,000 sales so far this year was £3.4 million – roughly half the £6.3 million spend in 2021.
Andy Somerville, of Search Acumen, said: “The days of London being the default location of choice for high-value house purchases are increasingly behind us as big-spending homebuyers look to invest their time and money in locations beyond the capital.”
Dawn Carritt, of Jackson-Stops estate agents, said: “Key to this rebalance has been the void of international buyers during lockdown.”
The shift to remote working drove fierce demand for country property during the pandemic period, but the frenetic pace of the market is now cooling, Ms Carritt said.
“Offers that are being made now feel much more grounded in reality than they did this time last year. Buyers do not want to enter the bidding wars we sometimes saw six months ago.”
“We believe this development has huge potential as a model for other landowners as part of the UK climate change agenda,” said Roger File, the director of Blenheim Property.
“Our goal is to create long-term, high quality new homes that benefit their surrounding communities and are built in a sustainable and environmentally positive way, which helps to address both the climate change and fuel poverty agendas.”
Family homes in the area sell for £500,000, but Gareth Belsham from building consultancy Naismiths said the Blenheim Estate properties would likely carry a premium.
“Especially in light of energy cost crisis we’re experiencing, it’s definitely the direction of travel for developers,” he said. “It really is an aspirational purchase. There’s definitely more of this sort of stock emerging on the market.”
The 180 homes will be heated using energy supplied by solar panels and a mechanical ventilation system with heat recovery, which traps and purifies hot air inside the nearly air-tight building.
Research from Knight Frank last year found that the energy efficiency of a home was important to 86 per cent of potential buyers.
‘Pioneering’ green credentials
The UK has some of the leakiest homes in Europe, and the Government has imposed new standards for rented properties from 2025 and wants all homes to be upgraded by 2035.
Mr Belsham said the estate, which is awaiting planning permission, would be “pioneering” in terms of its green credentials and its scale.
He added that co-working spaces were increasingly a feature on new developments since the pandemic, but had so far been mostly limited to spaces in blocks of flats.
“That’s going to be a growing trend because there are a lot more home based workers now,” he said.
More than 40 per cent of those who worked from home during the pandemic say they now have a hybrid working pattern, only going into the office part time, according to Government data.
Over the duration of a two-year fix, they would spend an extra £21,432 compared to if they had locked in a mortgage deal a year earlier – and traders expect rates will continue to rise even higher. The consensus from economists, however, is for a less extreme peak in the Bank Rate of around 3.5pc in 2023.
Pantheon Macroeconomics, an analyst, has forecast only a 0.5 percentage point increase on Thursday. But analysts have warned that transactions will still drop sharply. Soaring mortgage rates are already taking a heavy toll on buyer demand, as purchasers have less money to spend.
In August, new buyer inquiries plunged at the fastest rate recorded since April 2020, when the housing market was shut down during the first lockdown, according to the Royal Institution of Chartered Surveyors, a professional body.
Excluding the 2020 data, August saw the biggest drop in buyer inquiries since the global financial crisis – and that was before Thursday’s rate rise.
Ross Boyd, of Dashly, a mortgage comparison website, said: “A rate increase of 0.75 percentage points will send shockwaves through the property market. Factor in the impact of skyrocketing inflation and an economy that’s teetering on the edge, and you have all the ingredients for a serious slowdown in transaction levels.”
First-time buyers, who have been unable to benefit from high house price growth, will be hardest hit. A 0.75 point increase in the Bank Rate would push up the monthly mortgage bill on a typical £243,700 first-time buyer home from £1,148 in August to £1,240 – an extra £92, or £2,208 over two years, according to Hamptons.
This would mean first-time buyer mortgage costs would have increased by 34pc since December. If the Bank Rate hits 3.75pc, the average first-time buyer’s monthly mortgage bill will be £1,402 – an extra £478 per month compared to if they had got a mortgage offer in December. Hamptons’ calculations were for a buyer with a 25pc deposit, purchasing with a two-year fixed-rate mortgage.
“The impact on me has been anxiety, because you put your life plans on hold,” he said. “You’re worried about having this potentially worthless asset that, in this case, I saved up quite long and hard for in order to be able to buy.”
He said he now regretted signing up to the shared ownership scheme, which had been marketed as an affordable way to get on the property ladder. It was the only way he would have been able to afford to buy at the time, he said.
“I absolutely want to have nothing to do with that flat or any shared ownership schemes in the future,” he added.
‘I can no longer afford childcare’
Nicola Oldcroft, 36, also used shared ownership when she bought her first flat in London in 2016; she paid £110,000 for a 30pc share of the property. The purchase had come at an emotional time: she was able to afford it only because she had been severely assaulted and managed to get some compensation in court.
When her partner moved in, they managed to increase their ownership share to 100pc. They are also on a standard variable rate mortgage and their payments have gone from £922 a month in March last year to £1,410 now.
Ms Oldcroft, a bereavement counsellor, has been unable to get a fixed deal owing to the cladding on the building, which she found out about only after she had bought the flat. She and her partner have two children, aged one and three, and they have been desperate to sell the flat but are unable to do so until the cladding is removed.
F-rated homes achieved the lowest proportion of the asking price, at 94.9pc. The figure for A-rated properties is 97.7pc, and for B-rated properties it was 97.4pc. On a £500,000 home, the difference between homes with A and F ratings amounts to £14,000.
Nathan Emerson, of trade body Propertymark, said the Government was forcing buy-to-let landlords to upgrade their houses, as it plans to require all newly let properties to have an EPC of at least C by 2025.
“As a landlord or potential landlord investor, you wouldn’t go out and buy an F- or G-rated property today,” he said. “You would look for something with a higher rating.”
Donna Rourke, of estate agents Strutt and Parker, said as properties with a higher EPC sold for larger sums, lower-rated homes risked being left behind. “Are those going to be stranded assets? Yes and no. There’s always going to be a market for those properties, but what we’re seeing is stricter lending rules coming in as the banks have their own net zero targets,” she said.
Prime Minister Liz Truss has announced her intention to scrap or weaken many green targets. Announcements could be made in Ms Truss’s so-called “mini-Budget” which will take place this week. However, Ms Rourke said banks are “starting to limit how they will lend on properties that do not have a decent EPC”.
“Some banks are already instructing their mortgage surveyors to take energy efficiency into account, so it is likely that it will get harder and harder to borrow money to buy those properties,” Ms Rourke said.
The figures illustrate how people are increasingly having to stretch themselves to get on the ladder in the face of rising interest rates and mortgage costs.
Separate figures show couples are now stretching themselves more than ever before to get on the housing ladder.
Data published by the Financial Conduct Authority show the proportion of “high” loan to income loans – defined as more than three times income for joint borrowers – stood at 39.2pc of all mortgage lending in the second quarter of this year.
This is the highest proportion since at least 2007, and compares to 20pc before the financial crisis.
Bank policymakers are expected to raise interest rates by at least half a percentage point next week, as officials battle to get a grip on rampant inflation.
Andrew Bailey, the Governor, and the other eight members of the Monetary Policy Committee (MPC) were expected to meet this week, but delayed their decision on interest rates following the death of Queen Elizabeth II.
It began raising interest rates in December, and next week’s move is set to take borrowing costs to at least 2.25pc, the highest level since 2008.
Banks and building societies have passed this on to homeowners with variable rate mortgages, and to those who are taking out new fixed-rate loans.
The average five-year fixed rate mortgage taken out by buyers with a 75pc deposit came with an interest rate of 3.6pc last month.
That is more than double the 1.4pc typically charged a year earlier, Bank figures show.
First time buyers with a smaller deposit pay even more. The typical two-year fix for a buyer with a 10pc deposit costs 3.9pc, up from 2.5pc 12 months ago.
The average property sold for £292,118 in July, according to the Office for National Statistics, a record high.
This is up 15.5pc compared with July of 2021, marking a record jump. This is in part because much of the stamp duty holiday offered during the pandemic came to an end in June 2021, briefly pushing prices down again last summer after a frenzy to beat the deadline.
But prices are still up by 12pc compared to last August, and 10pc compared to June 2021, the final month of the stamp duty break, illustrating the scale of the boom in the market even after the tax break was wound down.