Inheritance - Is buying Warrington Property still the best place for my windfall?

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I had an interesting email from someone in Warrington a few days ago that I want to share with you. In a nutshell, the gentleman lives in Appleton, is in his mid 60’s and still working. He has a good pension, so that when he does retire in a couple of years’ time, it will give him a comfortable lifestyle. He also recently inherited £250,000.

One option he told me was to put the money 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 £4,750 in interest a year. One of his other options was to buy a property in Warrington to rent out and he wanted to know my thoughts on what he should buy, but he did not 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. 

Things any new landlord should consider

In spite of the war on Warrington landlords currently 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 concern himself with the cut to mortgage interest tax relief that will diminish (or even eradicate) the profits of many Warrington landlords. It is 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.  

How is buying property better than a savings account?

I told him that buying a Warrington 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 £4,750 a year or, as he rightly suggested, invest in property in Warrington.

The average yield at the moment in Warrington is 6.78% per annum, meaning our potential First Time Landlord should be able to earn, before costs, £8,199 a year.

(However, I told him there are plenty of landlords in Warrington earning 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 Warrington 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 a savings account, with property the capital you invested can also go up. Property values in Warrington have risen in the last twelve months by 9.6%. So, if our chap had bought a year ago, not only would he have received the £8,199 in rent, but also seen an uplift of £24,000 in the value of his asset… meaning his overall return for the year would have been £32,199 (not bad when compared to the Post Office!). 

What about values dropping?

The doom mongers among you will say property values can go down, as they did in 2008, and in 1988 and 1979.

But, after 1979 prices 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%.

What would that £250,000 buy you in Warrington? A couple of smart 2 bedroom terraces close to town? A couple of great 2 bedroom houses on Chapleford Village or Stockton Heath?

In fact, the world is your oyster. But you need to decide what property is right to maximize your returns. As ever this blog has articles that cover that point but for more detailed.

If you are looking for an agent that is well established, professional and communicative, whether you’re buying, selling or looking for an investment opportunity, then contact us to find out how we can get the best out of the Warrington property market.


Email me on manoj@hamletwarrington.co.uk or call on 01925 235 338 – we are based on the Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.

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