£185,000 inheritance - Is buying Folkestone Property still the best place for my windfall?

Two Bedroom Ground Floor Flat in Julian Road

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


I had an interesting email from someone in Folkestone a few weeks ago that I want to share with you (don’t worry I asked his permission to share this with you all). In a nutshell, the gentleman lives in London, he is in his mid 60’s and still working. He has a decent pension, so that when he does retire in a couple of years’ time, it will give him a comfortable life. He had recently inherited £185,000 from an elderly aunt. One option he told me was put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%; meaning he would get £3,515 in interest a year. One of his other options was to buy a property in Folkestone to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords.

Notwithstanding the war on Folkestone landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the intricate cut to mortgage interest tax relief that will diminish, or even eradicate, the profits of many Folkestone landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.

I told him that buying a Folkestone buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £3,515 a year or, as he rightly suggested, invest in property in Folkestone. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Folkestone is 3.74% per annum, meaning our potential F.T.L (First Time Landlord) should be able to, depending on what he bought in the town, earn before costs £6,919 a year. (However, I told him there are plenty of landlords in Folkestone earning half as much again (if not more), if he was willing to consider more specialist investment types of properties – again, if you want to know where – look at my blog or drop me an email).

The bottom line is that the success of investing in Folkestone buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Folkestone have risen in the last twelve months by 8.4% meaning, that if our chap had bought a year ago, not only would he have received the £6,919 in rent, but also seen an uplift of £15,540 …meaning his overall return for the year would have been £22,459 (not bad when compared to the Post Office!).

..  but the doom mongers amongst you will say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in Kent currently stand 10.42% below the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Folkestone, we are well above these sorts of levels. Therefore, all this talk of property crashes is unfounded.

… and what would that £185,000 get you in Folkestone? A superb 2 bed apartment in West End, a lovely 2 bed terrace in Cheriton or a stunning 2 bed apartment with sea views in Sandgate .. in fact, the world is your oyster. But which Oyster? Well, my blog-reading friends, if you want to read similar articles like this and what I consider to be the very best of buy to let deals in Folkestone, irrespective of which agent is selling it, scroll back to the top and subscribe by email!

One Bedroom Apartments in Folkestone – Are They A Good Investment?

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


A potential new landlord popped into our office last month looking for advice about purchasing her first buy to let investment in Folkestone.  She’d seen the recent publicity in the newspapers about Folkestone being an up-and-coming seaside town and the rise of our arts scene fueled by the recent investments made by The Creative Foundation and our new fast train to London.  She was particularly interested in finding a property which had at least a 6% yield but also had the potential for capital gain in the future.  This particular landlord has just exchanged on a property that we found for her, but since then we’ve been instructed on another similar property just like it.

We currently have a one bedroom flat with a private garden on Julian Road

One Bedroom Flat with Garden
Currently Let at £575pcm - £110,000

available for a very reasonable price of £110,000.  The property is being offered as a Buy To Let investment. There is a fully referenced tenant who has just moved in on a 6 month Assured Shorthold Tenancy.  The rental income for this tenancy will be £575 pcm giving a 6.27% yield.  However, you must remember that every landlord’s tax position and interest rates are different, so it is essential to research your investment carefully before committing.

On a personal note, we're really hoping to find an investment landlord for this property since the tenant who has just moved in has had to move three times in the last 18 months due to his landlords selling their properties. Julie, our Sales & Lettings Co-ordinator, says that he's a lovely man who's hoping he won't have to move any time soon!

Finally, let’s not forget about the potential for increase in capital value of the property. I was looking at the history of sales prices for flats and apartments on Julian Road and found that they have increased in value by 15% in the last five years.  With more commuters moving to Folkestone every year, whilst capital gain is never a dead cert, it certainly is building momentum in Folkestone.

If you're interested in Investing in Folkestone, download our Market Analysis of the local market from our not so secret website which includes supply and demand statistics broken down by number of bedrooms and a map showing the fast train railway stations and the most (and least) popular areas.

BTL Property of The Week

Three Bedroom End of Terrace in Invicta Road, Folkestone

Important: We've moved our blog to www.folkestone-estateagent.co.uk


6.18% Yield on Invicta Road, Folkestone

Update: This property was sold for £138,000 (6.09% Yield)

Whilst rummaging around looking for my 6%+ deals I noticed this little interesting property just off Canterbury Road.

It's an end-of-terrace 3 bedroom property with two reception rooms which is in very good decorative condition and on the market for £140,000.

Based on a purchase price of £136,000 and a very conservative rent of £700 pcm  you'll be looking at a very respectable 6.18% gross yield. (£725 is achievable, but the former will keep voids down and your return on investment up)

This property was last on the market in 2009 and sold for approx £130,000.  Whilst it is only 0.8 miles from Folkestone's fast train to London (58 minutes), it's unlikely to attract commuters because of the steep hill between the station and Invicta Road, however the area is popular with blue and white collar workers with families who work full or part time.

Ideas to push down voids and increase demand:  

The property lacks carpets in the downstairs areas and is ideal for pet owners in that regard.  Accepting a cat or a small dog could push your yield up to 6.4% (£725 pcm) and enable you to take a 6 week deposit to mitigate any additional risk. 

Although the house is in a very good decorative state, I'd say that the bathroom is the weak spot of the property as a Buy to Let Investment.  The double sink unit is quite an extravagance, however the shower over bath is frankly a bit disappointing. An ideal rental would include both a good bath and an attractive shower.  Good tenants aren't keen on the mixer tap shower and will avoid it where possible.

In addition to this the tongue and groove cladding could encourage leaks and the tiling above looks like it has been there for a while.  If it were my Buy to Let Investment then I would remove the cladding, invest in some new tiling and install an electric shower and glass screen.

Finally I would replace the carpets in the bedroom for something a little more attractive and a little less grey.

If you'd like more information about the Folkestone Market then visit our not so secret website: Folkestone Rental Market Report.

Folkestone is one of the ‘Coolest New UK Areas to Buy a House’

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


Folkestone has been announced one of the forerunners in the Top 10 of the Coolest Places to buy a house in the UK! It was listed with nine other places around the UK on shortlist.com, stating that Folkestone is an up and coming creative place to live by the seaside.

For example plans to redevelop Folkestone’s seafront were approved late last year to build 1,000 new homes, restaurants, shops and sport facilities.  Meaning the location of the old Rotunda Funfair land will now have a use again bringing back tourists and new people to the area, therefore increasing the prices of property and making Folkestone a more desirable place to live.

With quirky pieces of local art work making a fresh vibe in Folkestone such as the numbered pebbles representing the British soldiers who died in the battle of the Somme, to the designed beach huts representing the old golf course which was found on the derelict Rotunda site, Folkestone is a fresh lovely place to live with lots of character.

So, all in all, Folkestone is the place to buy in the South East with property prices looking to soar offering the possibility of great returns in the future for those who buy now!  Here's what shortlist.com they had to say about my favourite UK Property Hotspot

If you don't feel like moving out of London right now but fancy trying your hand at a Buy To Let opportunity then give us a call and we'll talk you through our opinion on the better areas in Folkestone to make a nice combination of yield and capital gain… or if you'd just like to do a little research then download our Folkestone Rental Property Guide.

Here's a link to the full article: Coolest New Areas to Buy a House