Heanor – the place to buy a property?

 

Information is so important when making decisions on what (or not) to buy when investing in Amber Valley property. The demand for rental properties is much greater than the supply and in some circumstances, we have four to five prospective tenants for each decent property. As always the demand is much greater for properties that are in good areas. Also, we are noticing that tenants are staying longer in their chosen property with some tenants signing for the third and fourth years. This is obviously causing problems from the supply side so we are relying on new investment Landlords to bring in some new properties.

Today, I want to look at Heanor.  By knowing the different areas of Amber Valley, I can weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity. The overall average price of a property in Heanor presently stands at £120,500 which as one would expect is cheaper than nearby Smalley at £189,100, Codnor at £132,900 and Horsley Woodhouse at £161,100.  Interestingly, prices in Heanor are 5% up on 12 months ago and still only 6% down from the boom of 2007 when they averaged at £128,100.

In Heanor, there are 25,480 people living in 10,820 properties. It is the home ownership percentages that really got me interested, as it is this information, tied in with our intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Heanor, of those 10,820 households, 71.2%  own their property (compared to the Amber Valley average of 74.1%).

There are only 1,242 rented properties in Heanor that are in the private rented sector (11.4% of Heanor properties are privately rented compared with the Amber Valley average of 10.7%). The reason the private rental sector is much lower is that Heanor has a high proportion of homeowners and hardly any local authority housing. The properties do sell well, in fact 861 properties have changed hands since 2009. However, with such excellent demand from homeowners and tenants, this could be the right area to purchase your next buy to let investment. 

Therefore, if you are considering buying a property for investment in the near future, as I don't sell property, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Spruce Property Blog  www.heanorpropertyblog.co.uk

What can landlords expect from their Ilkeston rental property in 2015?

 

 

 

 

 

 

 

 

A local chap popped into our offices at the Denby House Business Centre on Taylor Lane in Heanor  the other day whilst his better half was visiting a friend in Loscoe. He had come into some money and after reading my articles in the www.ilkestonpropertblog.co.uk, took me up on the offer of a chat about investing in property. I reminded him that landlords who invest in property achieve a return on their investment in two ways. The first is their rental income, which is what the tenant pays you . If you divide the annual rent into the value (or purchase price) of the property,  this is your yield, or annual return. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Ilkeston, but the value of property does go up as well as down, and of course the local conditions surrounding property will have a big effect.

The gross average yield on the typical Ilkeston rental property stands at 4.2% a year, representing a fall of 0.1% from one year ago, down from 4.3% in December 2013. Over the last 12 months, property values in Ilkeston have risen by 4.5%, so taking into account capital growth, total annual returns on an average Ilkeston property stand at 9.7% over the twelve months to December. In absolute terms this means the average landlord in Ilkeston has seen a return, before deductions such as mortgage payments and maintenance, of £12,179 in the last twelve months. This is made up of rental income of £6,048 and an average capital gain of £6,131.

However, yields for new investors are going to be tough to make ends meet when interest rates rise, so it’s essential new buy to let landlords seek the best advice, buy the best sort of property, buy that property at the right price and factor in mortgage rates of 5% to 6% seen before the credit crunch. As I don’t sell property, I can look at the whole of the Ilkeston property market and tell you what I would consider buying, without any conflict of interest.

A few weeks ago I talked about future property value increases, so this week I want to finish with my thoughts on rents. You see, at present, rents are moving in an upward direction, but in the main it is only in line with inflation. Therefore, from a landlord’s point of view, in real terms, they are no better off. Ideally if wages were rising, as they should be, with inflation, neither would tenants be better off either. Finally though, it might interest readers to know that the rents Ilkeston tenants have to pay for Ilkeston property are still 4% lower than they were 2008. Considering prices for other things (gas, food, petrol etc) have risen by 19% since 2008, tenants are getting a good deal whilst landlords are achieving good returns themselves.

Rent vs buy in Eastwood – Which is best?

 

Recently, my article about why Eastwood twenty something’s aren’t buying property anymore, caused a number of landlords to contact me. So much so, I want to revisit the story for a second time as some landlords are still concerned demand will dry up as people start to buy instead of rent with the recent reductions in property values.

 

So .. Renting verses Buying in Eastwood – Which is best? An intriguing question, yes? Or one which would appear patently obvious to answer? Surely we are all in this to own our own property one day rather than paying out large sums of what is essentially ‘dead’ money as some like to call it in rent. Or is there a little more to it than that?

 

Let’s firstly look at a typical property sale.  In Blackthorn Drive in Eastwood, there are a number of two bedroom semis for sale at £85,000. Say a first time buyer bought it for £82,000 working off a typical mortgage rate of 3.49%, with a 30 year repayment plan and based on an initial deposit of £4,500, the monthly repayments would be £348 per month. Turning my attention to the rental side and this property would fetch approximately £495 per calendar month.

 

So, it’s cheaper to buy then rent, so it would appear as though the answer is obvious. Buying must be the way to go. The sales market must be booming, but yet in a lot of cases it is not, and the number of people choosing to rent continues to grow. Besides the numbers, it’s clear that a certain percentage of people still favour renting than buying. The National Centre for Social Research Report backs this up pointing to a shift in attitudes from previous generations when buying at the first opportunity was the ‘done thing’.

 

Although in pure monetary terms, buying seems like the best option, first time buyers are clearly also considering the risk associated with owning their own property. The reasons for that reluctance to buy are many and varied, but here are some of my thoughts.

 

Firstly, it’s a big financial commitment –first timers need to be sure they can afford what they’re taking on.  Also, when interest rates rise, repayments will also go up . New homeowners also need to be sure they can afford maintenance costs such as replacing a boiler if it packs up or fixing a leaky roof. If you stretch yourself too much when you buy you may resent not having money for meals out, holidays and entertainment.

 

You have less flexibility than when renting. For example, if you want to move for work or personal reasons selling up and moving on is far more expensive if you own as you’ll have all of the associated estate agency and legal fees. Also bear in mind that it may not always be easy to sell your home – (it was really tough to sell a property in Derbyshire in 2008 and 2009), so it’ll be dependent on what’s happening in the market. Finally, if you’re living with someone else and split up, the process of sorting out the property will be far more complicated and expensive

 

Buying and owning your own home is certainly what the majority of us continue to strive towards, and but now more than ever ‘Generation Rent’ continues to gather considerable momentum and shows no sign of slowing down in the future. No doubt this will be welcomed news amongst Amber Valley, Broxtowe and Erewash landlords and investors.

 

 

Amber Valley, Broxtowe and Erewash : What Property Boom?

 

 

Put the streamers and silly hats away, the party that is ‘The Amber Valley and Erewash Property Boom’ is over. Over the last couple of months, property values have only dropped by 0.1%. So is it doom and gloom for the local property market in our part of Derbyshire? Well, no actually because the Amber Valley and Erewash housing marketing is entering a new phase. It has been through the 2001 to 2007 boom, a bust in 2008 and 2009 and a recovery cycle since 2012, and as we head into 2015, a year that will see the formation of a new Government, we are now entering a more stable, yet still challenging era.

As I said to a landlord from Belper, who recently changed agents to us, in the East Midlands, (especially the big cities like Nottingham, Leicester and our own Amber Valley, Broxtowe and Erewash) we are all facing a housing crisis, because in the East Midlands – with its high employment rates, excellent quality of life, and rapidly growing strengths in a range of sectors, it is becoming a victim of its own success. People want to live here but nobody wants to build on greenbelt. With planners not willing to give planning permissions for thousands of new properties that are required for our ever growing Amber Valley and Erewash population, accommodation in Derby city is in ever greater demand whilst supply remains worryingly slow to come through.

Just because property prices have levelled off in Amber Valley, Broxtowe and Erewash, doesn’t mean the housing market is ready to jump off a cliff. I actually see this as a good thing, in fact, for the savvy landlord, a blessing in disguise. If you think the housing market is done and dusted for 2014, think again. This is the perfect time to snap up a bargain. Despite recent mild weather, chill winds are hitting parts of the market now. This means every seller has three strong reasons to get their business done this side of Easter. You see, as a landlord with cash in your pocket, ready to buy the next buy to let investment, you can get a bit of a bargain at the moment. We have seen it in Amber Valley, Broxtowe and Erewash as a seller’s market for 12 months, but as the pressure mounts for property sellers to sell, the market has tipped.

Another reason sellers want to do a deal as soon as possible is the uncertainty surrounding the general election in the coming Spring. In the past, the prospect of an election means buyers hold back until they know how their income and tax might be affected. But for the brave landlord, it’s a chance to look at properties with fewer rival landlord purchasers waiting in the wings.

As we don’t sell property, we can give an objective opinion on what (and what doesn’t) make a good property deal in Amber Valley, Broxtowe and Erewash). Just as many Amber Valley and Erewash landlords do now, whether they use us to manage the property or not, feel free to email any Rightmove link on any Amber Valley, Broxtowe and Erewash property you are looking at, and I will always give you my unbiased opinion. 

 

West Hallam property market - Good Capital Growth?

 

Well my last article about West Hallam made the phone ring! The subject of investing in villages for buy to let is an interesting one. In fact it can be as risky as investing in student lettings or HMO’s (Houses of Multiple Occupation where everyone has a bedroom with a shared kitchen and bathroom). As I keep saying in these articles, investing in the Amber Valley, Broxtowe and Erewash property market is something that shouldn’t been done lightly.  For those new to the buy to let investment game, the yield is the yearly rent from a property reflected as a percentage of the value of the property (one might consider it in the same light as the interest rate from your savings account) whilst the 'Capital Growth' is the amount the property goes up in value each year reflected as a percentage of the value of the property.

Previously we said West Hallam property values were 5.5% above the 2007 peak of property prices (considering that average property prices in Derbyshire as a whole are currently 7% below the 2007 peak). However, property investment cannot be judged over short time frames and most certainly not by averages. Often, when looking at a market for a landlord, I like to take a longer look at the market, and consider 10 to 15 years a more suitable time frame for capital growth. After doing my research, looking at every West Hallam property that sold in 1999 (and there were quite a few!) and the very same property selling again 2014, average property values had risen on average by 172.5% in West Hallam, whilst in Amber Valley and Erewash they had only risen by, on average, by 127.3%

That's not to say everything in West Hallam turns to gold. A two bedroom modern town house on Farnham Walk in West Hallam sold in March 2005 for £104,000 and quite recently someone purchased the property again for £110,000.  This was only a rise of 5.7% over 10 years.  Interestingly, the property was purchased as a buy to let investment and is currently on the market for rent for £525 per month, giving the landlord a potential yield of 5.72%.   As we don't sell property, I can always give my landlords (or landlords who aren't with me but want a second opinion and even people who are thinking of becoming landlords for the first time) my unbiased opinion on what to buy and not buy. I pride myself by knowing the market with all its ups and downs, so I can give some great advice and opinion. It might not be what you want to hear but, I can assure you, it is what you need to hear.

 If you want to chat about property investment in the Ilkeston, Eastwood, Heanor and Belper areas, then if you buy right, you will build yourself some capital growth for the future. Our office is in Heanor and I look forward to seeing you soon or you can email me on lettings@sprucetree.co.uk

 

What happened to the Belper property market in 2014?

 

In previous articles, we have talked about Belper’s history of rents, property values, tenant demand and yields; all important matters for a landlord, but we haven’t discussed the future.

Property values rose by 8.4% (Oct 13 to Oct 14) in Belper over the same time frame. Good news all round, but when you consider property values have previously dropped by 17% between September 2007 and June 2009, this is not as good as the media would have you believe.  It should be no great surprise to hear that Belper property values are starting slow up as we head in to the New Year.  Whilst property values in Belper were growing by nearly 1% a month in the Summer months, on the run up to Christmas,  they have slowed and now increased last month by 0.5%.  

The reality is we have had a year and a half of decent market conditions in Belper, but now all that pent up demand is starting to fade. The big question moving forward is whether the Belper market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Belper property market.

Looking at the UK as a whole, because we can’t look at Belper just on its own, the recent strong rise in house values in some parts of the UK in the early part of the year (especially in London), along with earnings growth that remain below inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand. This weakening in demand has led to a modest easing in both property price growth and sales. A moderation in growth looks likely into next year as supply and demand become increasingly better balanced.

Now with the General Election just a few months away, whichever Government takes power, they, along with the Bank of England, have a thorny job to do in balancing the expected rise in interest rates with the continued resurgence of the housing market, to ensure the property market doesn’t drop and drag down the economic recovery forcing people into selling their property at a loss.

However, back to Belper, long term property values which track peaks and troughs are more helpful to landlord investors. The questions I seem to be asked on an almost daily basis by landlords are:-

“Should I sell my property in Belper, or even buy another?”

“Is the time right to buy another buy to let property in Belper and if not Belper, where?”

“Are there any property bargains out there in Belper?”

Many other Belper landlords, both who are with us and many who are with other  Belper letting agents, like to pop in for a coffee to  discuss the Belper property market, how Belper compares with its closest rivals; Eastwood, Ilkeston and Heanor, and hopefully answer the three questions above. Give me a call and I will just give you my honest opinion.

Kirk Hallam yield 7.4% +

This 3 bedroom home in Kirk Hallam needs a little cosmetic TLC and a bit of a garden facelift but is a great property to put into your Portfolio.  Kirk Hallam is popular with both families and professionals alike.  If you ask for a minimum of £525 pcm you’ll yield a nice return of 7.4%, even more if you’re canny.  Lets talk after you’ve done your viewing!