Category Archives: Property Investment

Posh Supermarkets Push Up Prices

It is well known that access to good schools, transport and a vibrant high street all contribute to a strong local housing market and house price premiums, but now the new must have is an upmarket supermarket.

New research suggests that buyers looking to be close to a Waitrose store should expect to pay 25% more than the average in their area.

Analysis from international real estate adviser, Savills, compares house prices in the postcode district where Waitrose stores have opened over the past five years to the average for the whole county and found that house prices are 25% more expensive.

London shows the biggest premium at 50%, followed by the North of England, where the premium stands at around a third. More rural regions, such as the South West and the East of England have a much smaller premium, due in part to higher average values overall.

In London, although Waitrose hotspots are linked to house prices that are 50% higher than the Greater London average, a closer look shows a more diverse picture. Three quarters of the capital’s Waitrose stores are located in postcode districts where house prices are significantly higher than the London average.

At the extreme, for a prime central London store location, house prices are more than three times, some 327%, above the London average. In the remaining London Waitrose locations there is no identifiable premium.

The firm says that in such cases it is likely that the store has a broad, transient client base, for example Westfield Shepherds Bush and Stratford, and house prices in the local area did not outperform.

The top 20 locations enjoying a Waitrose premium all have house prices at least 40% above their local county average. Nine out of the top 20 are in London, while the Cheshire wealth belt features in the list four times, with Altrincham ranked highest with a premium of 107%, suggesting house prices around double the county average.

‘Our analysis identifies a very clear house price premium in Waitrose store locations,’ said a Savills research analyst.

‘It’s difficult to state with certainty that a Waitrose store opening will boost prices, but it is clear that buyers should expect to pay significantly more for their home if they wish to have a Waitrose store on their doorstep,’ they added.

 

Smaller Properties Provide Best Return

Smaller properties provide a better return than larger ones, with one- and two-bedrooms providing average yields of 6.8% and 6.4% respectively.

Countrywide, the national chain, has produced national yield, rent and arrears data for the first time, based on the number of bedrooms.

It has taken its information from 50,000 rental properties on its books across Britain.

It says three and four-plus bedroom properties are achieving an average yield of 6.2% and 5.6% respectively. The average rent for four-bed properties was £1,398pcm in the first quarter of 2013 while for one-bed properties it was £673pcm.

Although larger properties achieve greater rents, it is the smaller properties that have seen rents rise the most, with one- and two-bed properties seeing a 3.3% year-on-year increase in rents, three-bed properties a rise of 2.3% and four-plus bedroom homes a rise of just 0.3%.

All sizes of properties have seen a fall in rental arrears in the first quarter of 2013, with the greatest fall (of 1.5%) at three-bed properties and the smallest fall (0.4%) at one-bed properties.

The data was produced to show landlords and investors what sized properties are achieving in terms of rents and yields.

One- and two-bed properties are providing greater yields than larger properties for landlords, and 6.8% average yields for one-bedroom properties means there are some really good opportunities for investors with relatively low budgets.

With rents rising, arrears falling and some significantly improved buy-to-let mortgage products compared to those available in the last two years, the findings are very encouraging for investors who are looking to start or expand their property portfolio this year.

Perfect Time For Buy To Let Says Report

Average rents rose, rent arrears fell and lettings times became faster in the first quarter of this year, says a new report.

The largest property chain says it provides the perfect recipe for buy-to-let investors. It puts average UK rental yields at 6.2%.

The Countrywide data, based on over 50,000 properties, is claimed to be the largest index of its kind, covering the whole of the UK.

It says rents rose highest in Wales and the East of England, to £616 and £814 per month respectively. Average rents in outer London rose 5.4% year on year to £1,107 per month. The highest rents were in Inner London at £2,387 per month in the first three months of this year, up 1.9% from the prior year.

Scotland was the only region in the UK with an increase in arrears, up 2.6% from the prior year to 6.6% of the rent roll.

Inner London had the highest arrears at 7.3% of rents due, despite a drop of 0.1% over the year.

The survey showed that rising rents and stabilising house prices are making rental yields highly attractive to investors, with the average yield at 6.2%. The highest rental yield was in Wales at 6.7% closely followed by both the North and Midlands at 6.5%. The lowest rental yield was in Inner London at 4.6%.

Based on the average yield and the Q1 2013 average monthly rent of £835, the average investor could expect to make a total annual return of approximately £10,000 per property over the next 12 months.

Countrywide found that the average time it took to let a property in the first quarter of 2013 was 14.5 days, down on last year when it was 15.1 days.

Buy To Let Properties Require Energy Efficiency Improvements

One in 10 buy-to-let homes will be unlettable in five years’ time unless landlords take steps to improve their properties’ energy efficiency.

New laws that take effect in 2018 will make it an offence to let out properties with the worst energy efficiency ratings. Such properties are much more common in the private rented sector than among owner-occupied homes or those rented out by councils or housing associations.

Tenants will also be able to demand improvements to insulation from 2016, when landlords will not be able to refuse tenants’ “reasonable” requests for energy efficiency measures.

The legislation states that landlords must not let out properties with the two lowest energy efficiency ratings, F and G, after April 2018 at the latest. According to the English Housing Survey, published earlier this month, 11.4pc of homes in the private rented sector were rated F or G in 2011. By contrast, only 2pc of local authority homes and 1.6pc of housing association properties had the lowest ratings. Among owner-occupied homes, the figure was 8.2pc.

The poor energy efficiency scores of privately let homes reflect a relative lack of basic insulation. Fifty-seven per cent of owner-occupied homes had cavity wall insulation where a cavity existed, whereas the figure for privately rented properties was 38pc, the English Housing Survey found. Among social housing the figure was 63pc.

More than 12pc of homes in the privately rented sector had no double glazing, compared with just 5.3pc among those occupied by their owners.

The Government is consulting on whether the ban on letting poorly insulated homes will take effect on a set date or whether properties with an F or G rating can continue to be let until the end of an existing tenancy.

The National Landlords’ Association has launched a scheme to help investors to make energy efficiency improvements to their properties. It is based on the Government’s new Green Deal, under which energy efficiency measures are paid for by a loan that is repaid via a supplement on the property’s electricity bill. The idea is that the loan repayments are cancelled out by the reduction in energy bills, so there is no net cost to either landlord or tenant.

“The Government has made it clear that there will be consequences for those who do not voluntarily improve the energy efficiency of their properties by a specific time, so there is no excuse not to comply with the cost-neutral scheme,” the association said.

None the less, the requirement to make sure their properties are well insulated could come as an unwelcome surprise to Britain’s growing army of buy-to-let investors. Last week it emerged that they borrowed £16.4bn in total last year, 19pc more than the previous year and the highest level for four years. The total number of buy-to-let mortgages outstanding at the end of 2012 stood at 1.45 million.