Great buy to let opportunity!

Found this great apartment for sale which I think would make a great buy to let investment!

It's a one bedroom apartment up for just under £90000. Potential rental of £400 - £425pcm would offer you a decent return. The other advantage is that it is new, modern and would rent very quickly thus reducing any void periods!

Check it out as it will go quickly!!

Click HERE to view the property!

Rent Controls in Burton? - That’s one way to destroy a city says economist.

In the last few months, politicians in Westminster have decided to step into an area which affects all of us reading this - property.

Anyone who rented property in the 1970s and 1980s knows the difficulties of tenancy agreements from that era which allowed the tenant the right to stay in the property for life. In some cases, tenancies could be transferred to their children, rents could not be increased and tenants could not be removed.

One of the suggestions by the Labour Party is rent controls. With more than 4.4 million people renting 3.4 million properties in England alone, it was clear that this could be a policy that was purely playing with the sentiments of these tenant voters.

In a damning report, the Institute of Economic Affairs says that Ed Miliband is going for completely the wrong solutions and accuses him of flawed thinking.

Instead, the IEA says he should instead look at a radical liberalisation of the planning system to allow the private rented sector to grow.

Under the current legislation, tenants are already in a position to challenge rent increases that are unreasonable and they have the advantage of giving a months’ notice to the landlord (when the tenancy is a rolling agreement ie a periodic tenancy). But do rents need capping?

Well, in Burton, there are 11,253 people renting 4,895 rental properties. The average rent of a Burton property in 2008 was £634 per month. If Burton landlords had raised the rents in line with inflation, (which sounds fair to anyone), as inflation has been a total of 19% since 2008, the average rent in Burton should be today £  £634 + 19% = £754.  At this moment in time, the average in Burton is £609... and similar comparisons are being repeated all around the UK.

However, restricting rent rises in the future could put more properties back on the market for sale as it would destroy the confidence in the housing market. In turn, this would reduce property prices. With less property available to rent, and a lack of interest from potential investors (due to the poor yields) this policy would end up creating a shortage of affordable housing.

Even with the vast increase in renting in Burton over the last ten years, 8% of property being rented in 2001 to 18.2% in 2011, the number of homeowners in Burton only dropped by 1.3% (there were 18950 homeowners in 2001 in Burton, but it only dropped to 18,713 homeowner households by 2011 in Burton.

It is clear that the changes to the law of tenancy agreement made in Housing Act 1988 resulted in benefits to both landlords and tenants. The law has made it easier to rent a property and at the same time, the Assured Shorthold Tenancy gives the tenants a right to quiet enjoyment of the property for a period of time. Yes, the total rent paid by Burton tenants is an awful lot of money, £35,553,420 in fact, but as rents are free to move up, but just as important down, why fix what isn’t broken?

The IEA’s report also says that rent controls in Britain between 1915 and 1989 were associated with the collapse of the private rental sector, from close to nine-tenths of the housing stock at the start of the 20th century to close to one-tenth by the late 1980s.

Swedish economist Assar Lindbeck once said: “Rent control appears to be the most efficient technique presently known to destroy a city –  except for bombing.”

As usual, if you would like to discuss any  aspect of letting your property then please contact me on 01283 517444 or pop into our office on the High Street.

Click HERE to arrange you FREE RENTAL VALUATION.

Does the number of bedrooms affect 'rentability' in Burton?

Last week, I spoke to one of my landlords and she asked me if the number of bedrooms in a property had any relationship to the return she could get. I did some research and followed up her query – I was actually quite surprised with the results…

Currently in Burton, the average rent for a one bed property is around £423 per month with an average value of £72,400. This means an approximate return/yield of 7% per year. This is of course, the average. There are one bed apartments on the market for rent at a higher price than some two bed apartments. In fact, some one bed apartments in Burton can attract rents of £500, if not more, whilst some converted terraced houses with flats in them can be rented for as little as £290 per month. This means yields on one beds can range between 5.2% and 10.2%!

Two bed apartments in Burton can be priced anywhere between £127,500 in one of those modern upmarket developments in the Grants Yard development (pictured) and as low as £50,000 on Alexandra Road (just off Ashby Road). Again, rents can be quite varied, ranging from over £850 per month for some bespoke unique apartments in the Anson Court development (off Horninglow Road) in Burton to £350 per month for a converted terraced house off Shobnall Street. However, looking at the average rent for a two bed apartment in Burton, I calculate it to be £496 per month with the average value being £82,700 which gives a return/yield of just over 7.1% per year.

Whilst there is a little difference in the yields when it comes to the number of bedrooms, it is only one of many factors you should consider before buying a property. Whilst two bedrooms are more expensive to buy, they will always let slightly better. Do they sell better? Well, 34% of the two bed apartments on the market in Burton at this moment in time are sold stc compared to 17% of 1 bed apartments – quite a bit of difference there.

It really comes down to the property and type of tenant. Two beds attract sharers, which brings both advantages and disadvantages to the landlord but one beds can be harder to sell (important as one day you will want to liquidate your investment).
It depends what you want from your investment. I know the lettings market in Burton so I can advise you what you can expect to achieve in rent and how it go up in value together. I don't make a penny out of you buying something, I make my money ensuring I can find the best tenants for the best properties.

Please feel free to pop through the door of our offices on the High Street, call me on 07973 666229, or email me at davidm@professionalproperties.co.uk

Click HERE to arrange you FREE RENTAL VALUATION.

Are rental returns in excess of 12% p.a really possible in Burton?

I regularly talk to landlords about investing in Burton and the surrounding areas.

Following a discussion with one of them last week, he asked me to look into the Waterside Estate area, and whether it was a good place for him to invest in.  There is a 3 bed semi up for sale with Guide Price of £45,000. Average rents in these types of properties have risen by 22.2% since 2008, which is amazing considering average rents in Burton are in fact 4%  lower (on average) than those being achieved in 2008.

Let’s say you buy it for £50,000, the achievable rent can be in the order of £500 to £525, depending how much effort you have put into presenting it; but being sensible, we are still looking at a yield in the region of 12% to 12.5% per year... yields that are only normally achieved in risky HMO’s (Houses of Multiple Occupation ie Student housing .. with the fun and games that brings!).

Property values since 2002 have risen, according the Land Registry, in Burton by 56.5%. One would expect properties in areas in Waterside not to have kept up with those sorts of increases, but looking at the properties that sold in 2002 and again more recently, average increases in property values in Waterside have kept pace with the rest of the town.

So is this an investors paradise – great rental growth, great yield and reasonable capital growth?. Well, all is not as it seems. This is a great example of the headline numbers (yield and capital growth) being not the only factor to consider when choosing an investment property, as you should also consider how long it takes to find a tenant. The average time it takes to find a tenant in the Waterside Estate area can be up to six to eight weeks, whereas in most other parts of Burton a tenant is usually found in one or two weeks. If you take into account the extra five or six weeks of void   period for your property,  every six to nine months, because tenants in areas in such as the Waterside Estate tend to have a high propensity to move more regularly and the extra fees a landlord has to pay each time a tenant moves in and out, the annual overall return from the property is lower than it seems.
Finally, the property is constructed with non-traditional means ie not a cavity wall of two skins of brick and breeze block, but of a    concrete frame. These are difficult to obtain mortgages on, so it’s only normally cash buyers who can go for these. I am not suggesting you don’t buy it, but go in with your eyes wide open and having done your homework.

Having this knowledge of the Burton property market to hand enables me to give to my landlords the best advice on what (or not) to buy for buy to let. Irrespective of you are a landlord with another agent or someone who is thinking of dipping their toe in the water for the first time as a buy to let landlord, if you want to pick my brains on any matter to do with the Burton property market, please feel free to pop through the door of our offices on the High Street, or call me on 07973 666229!

Click HERE to arrange you FREE RENTAL VALUATION.

What has happened to home ownership in Burton?

Last week, a couple from the Repton, came in to discuss with me about them potentially
investing in the Burton property market for the first time.

As my regular readers will know, the most important consideration you will make before investing in property is the balance between annual return and capital growth. However, what affects those two things (yield and capital growth) in Burton are very varied and complex. The quantity of property and whether property is owner occupied, social housing or private renting has a big difference on yield and capital growth.
The growth in home ownership in Burton, which started in the 1950’s, continued through the 1960s and, by 1971, the proportion of  owner occupiers was equal to those renting. By 1981, 62% of Burton households were owner occupied and, for the first time, the proportion of rentals was less than home owners but by 1991, it reached 71%.

Roll into the 21st Century and in 2001, there was a slight increase in the tenure structure in Burton, as owner occupation increased to 75.3%. The significant change over the decade (1991 to 2001) was within the rental sector, where the proportion of households privately renting increased for the first time since 1918. 6.9% of households were privately renting in 2001 in Burton, while those socially renting had decreased to 14%.
Between 2001 and 2011, the number of households in Burton rose from 42,717 to 47,251, an increase of 10.6%. but the percentage of households that were owner occupiers in Burton dropped significantly to 69.6% (from the previously quoted 75.3% in 2001).

However, that doesn’t tell the full story, because whilst there was a significant drop in the percentages (75.3% to 69.6%), the actual numbers tell a completely different tale. Of the 32,206 households in Burton that were owner occupied in 2001, that figure increased to 32,879 households being owner occupied .. so why if the number of homeowner households had gone up, why the huge drop in percentages?
In 2001, 2,968 houses were privately rented (6.9%) in Burton, but roll on another ten years and there are 6,519 households in Burton that are privately rented (13.8%). The rapid increase in the number of households privately renting in Burton could be linked to the decline in the number of households getting on the housing ladder, usually by way of a mortgage. This is mainly because of the increasing difficulty for first time buyers being able to raise deposits for a mortgage, which haven’t been helped by high property prices.
The average Burton house price for those who were first time buyers increased by 91.3%  between 2001 and 2011. This meant larger deposits which are linked to the house price, were required. Also tighter lending requirements, especially in the wake of the recent credit crunch meant a larger percentage of the house value was required as a deposit, as 100% mortgages became a thing of the past.

Finally, declining wage growth and rising inflation over the period exerted pressure on household spending and eroded the value of savings. While in 2001 the average house price in Burton was four and half times the average gross wage, by 2011 the average Burton house price was seven times larger than the average wage. This meant households needed to save for a longer period in order to provide a deposit.

Having this knowledge of the Burton property market to hand enables me to give to my landlords the best advice on what (or not) to buy for buy to let. Irrespective of you are a landlord with another agent or someone who is thinking of dipping their toe in the water for the first time as a buy to let landlord, if you want to pick my brains on any matter to do with the Burton property market, please feel free to pop through the door of our offices on the High Street or call me on 07973 666229.

Click HERE to arrange you FREE RENTAL VALUATION.