I HAVE MOVED!

I HAVE UPGRADED MY BLOG TO A MUCH MORE INFORMATIVE, USER FRIENDLY VERSION WHICH CAN BE FOUND AT:

www.burtonpropertyblog.co.uk

UNFORTUNATELY, YOU WILL HAVE TO RE-REGISTER TO RECEIVE THE BLOG POSTS BY EMAIL - BUT IT WILL BE WORTH IT!

MANY THANKS

David

Do you need to Extend your Burton Investment Property?

Last week, a landlord from Burton e-mailed me to ask, after reading the Burton Property Blog, if he should extend his terraced house by making an extra bedroom in the loft. He had a builder friend who owed  him a  favour, and thought it would be a good way to get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and home owners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terrace, it will add, on average, around 10% to the value of the property. Turn a three bed terraced into four bed terraced, and 9% will be added to the value. Looking at semi detached properties, if a two bed is turned into a three bed then 12% will be added to the value, whilst making a three bed semi into four bed will add 9%.

However, before you rush off to the planning department or contact ‘Loft Conversions R Us’ there are some important considerations, whether you are a home owner or landlord.  What would be the cost of making that extra bedroom? You have to seriously consider whether the outlay is worth the potential benefit.

The average value of a terraced house in Burton is currently £104,600 whilst the average value of a semi detached house is £151,900, meaning to make money the cost of the extension would need to be less than £9,965 on the terraced property and £15,949 on the semi detached house. Talking to a number of trade’s people in the town, most are booking up into the New Year. Also, no matter how good a friend he was, I know of no builders that would charge as little as that. Maybe the builder was just thinking of a bit pointing work on the chimney!

Well, that got me thinking about how bedrooms affect rental prices and rentability as well.   Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rentability of the property – the difference does not warrant the expense, hassle and trouble of extending.

·        45.1% of the one bed properties on the market to rent in Burton have a tenant with an average rent of £399 per month

·        47.6% of the two bed properties have a tenant with an average rent of £520 per month

·        52.1% of the three bed properties on the market to rent in Burton have an average rent of £584 per month

·        35.7% of the four bed properties, an average rent of £742 per month

Now, if you do want to increase the value of your property, be you a Burton landlord or homeowner, there are things that cost a lot less than building extra bedrooms. Spruce up the exterior, decorate all the rooms, install fresh carpets and curtains. For homeowners, a matter of a few hundred pounds will add thousands whilst for landlords, these things can add an extra 10% to the rent that you can achieve.

Simple Economics in the Burton Property Market

I penned a recent article about the state of the Burton Property market and in particular what had happened to rents in Burton since 2008. If you recall, I said rents in Burton are still 4.68% lower than they were in 2008. However, following a chat with a Burton landlord who then rang me after reading the Burton Property Blog wanting to know more of the story of what was happening to rents in the City. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.

The Burton rental market is all about supply and demand - isn’t it so in all parts of the economy! On the supply side, 149 rental properties have come up for let in the last 31 days in Burton. It sounds a lot until you consider there are 5,453 rental properties in Burton, meaning only 2.73% of the rental stock of properties in Burton is coming onto the market - it is normally is around 5%.  One reason for this lack of new rental properties coming on the market is the fact that tenants seem to be staying in properties longer.

With this lack of supply, newer tenants have to pay more to secure the property they want. This is the crux of the matter.. properties they want. Older properties in Burton, that haven’t been maintained, still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents drop. Tenants now want either modern properties with all the mod cons or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Burton have risen by 0.4% in the last month Any properties, old or modern, put on the market in good or excellent condition normally rent within a matter of days.

   

Interestingly, looking at Burton property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015, the latest set of data, property values remained static in Burton, with 0.2% growth, meaning they are now 2.5% higher than they were a year ago.  When one looks at the regional picture, the average property values in our area rose by 0.2% in the last month.

Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Burton to rise by 3% to 5% over the coming 12 months, following the Conservative Election victory.   In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the town.

 

..and so back to our landlord. Each property is unique and, as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week with a fresh pair of eyes! 

For more in depth thoughts and opinions like this, on the Burton Property market.. visit the Burton Property Blog.