I reminded them that one of the most important considerations you will have to make before investing is considering the balance between annual return and the capital growth of the property that you buy.
One of the most sought after places to live in is Branston, on the southern side of Burton. There are 2,825 households here and an impressive 2,192 of those households (77.5%) are owner occupied, yet only 391 of those households (or 13.8%) are privately rented. Branston has many different types of housing, but one the most popular are the 1990’s four bedroom detached houses, which sell for around £215k to £225k (although there are some rather more expensive ones in some parts of Branston) and rents are on average £875 per calendar month.
Winshill on the other hand is a different story all together. Only 2,220 of the 3,430 Winshill households are home owners (64.8%) and surprising only 318 private rental properties (9.3%), the rest being made up of local authority owned housing.
With this in mind, I carried out some further research and found that three bedroom terraced and semi-detached houses in Winshill have outperformed those detached houses in Branston. This is because a three bedroom mid terraced/semi-detached house in Winshill have been selling on average recently for £80,200 and the achievable rents have been £510 per calendar month. The yield which could be achieved from property on Winshill is therefore around 7.6% per year. When we compare this to the possible 4.6% per year yield on Branston, that return is 65% proportionally higher in Winshill than Branston.
We must remember however that yield is not the sole consideration when investing in Buy to Let properties. Areas which offer good yields (ie Winshill), often suffer from poor capital growth.
Looking at average property values in Branston back to 2000, the average property in Branston has risen by 120.5% up to today. However, average values in Winshill have only risen by 90.4% in the same time frame. It just goes to show that you sometimes have to look behind the statistics before making a decision. Do you want good returns or do you want capital growth when in investing in buy to let property?
If you would like more information on investing in Burton’s property market, please call me directly on 07973 666229, call the office on 01283 517444 or pop in and see me at 171 High Street in Burton town centre!
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