Why should you consider getting into buy to let in Cheltenham

A recent article, when we spoke about the difference between Cheltenham and Gloucester property markets, produced a number emails and a couple of people popped by my offices for a chat about investing in buy to let.

Many people in our part of Gloucestershire, over the last few years, have seen the buy to let market become all about nest egg investment. It is fuelled by pitiful interest rates on building society savings. It reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.  So what can you expect from your rental property investment? In the short term, rental yields are important, and in Cheltenham, the average annual yield is in the order of 3.8% per year. However, that is based on averages, and as most landlords in Cheltenham tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving 4.5% to 6.2% per year depending on location and price in the area.

In the long term though, the question of capital growth is as important, if not more important (because if you have great short term yields, but the value of the property doesn't keep up with the rest of the market, you will have an asset that in real terms is dropping). The average property value in Cheltenham currently stands at £303,800 and property values in Cheltenham have risen by 17.6% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Cheltenham landlords. Roll the clock back 10 years to 2004, the average value of a property in Cheltenham was £196,985. 15 years to 1999 makes interesting reading, as the average Cheltenham property value was only £101,112, 30 years makes it £31,809 and just for a bit of fun, we looked at 1974 at it was £12,010!

However, if one looks at say a 30 year investment period, if you had put £31,809 into the stock market in 1984 instead of buying a house in Cheltenham, your shares today would be worth £190,573. Put the same £31,809 money in a Building Society account and you reinvested the interest back into the account, and your Building Society passbook would have £177,357. Compare that with the property market in Cheltenham and the property would be worth £303,800 today (as mentioned above). Not bad until you realise that with the rental property you would have received in excess of £162,000 in rent over those 30 years, which wouldn’t have received with the Building Society account!

If you would like to discuss my thoughts on the rental markets in Cheltenham and Gloucester, feel free to pop into my offices in Cheltenham or Gloucester, or pick up the phone or email me on neil.west@belvoir.co.uk

2 Bed Semi - Cheltenham 5.2% Yield

This 2 bed Semi has come onto the market with RA Bennetts at £165,000. It is located in a popular area and should rent for around £725 PCM. It looks as if it is in tip top condition and ready to go. £725 PCM would give a yield of 5.2 % . Don't forget the potential capital gain also.

                             http://www.zoopla.co.uk/for-sale/details/34938547

Bennetts don't think that this will be around long and I tend to agree. If you would like any advise on this or any other property, please do contact me on neil.west@belvoir.co.uk

3 Bed Semi - Linden - 5.3%

This 3 Bed semi has just come on the market with Steve Gooch . Situated in Linden , this would let easily at £595.00 PCM, giving a yield of 5.3 % . Bathroom downstairs, will put some people off but dont let this deter you as will let relatively easily. 

                              http://www.zoopla.co.uk/for-sale/details/34920137

This is what Steeve Gooch has to say :This Extended Three Bedroom Semi Detached House Is Situated In The Popular Area Of Linden. Benefits include 16ft Lounge, Fitted Kitchen Units, Breakfast Room, Gas Fired Central Heating, Predominantly Upvc Double Glazed, Off Road Parking, Large Rear Garden and No Onward Chain the property details you are about to view are awaiting vendor approval and therefore may be subject to change.

If you would like advice about this or any other properties, please contact me on neil.west@belvoir.co.uk 

Gloucester vs Bristol property values – which City has performed the best?

One topic that I am always asked about, both by existing landlords and new ones, is how one city’s property values have performed against another. When purchasing a buy to let property, there are two ways landlords make money through property letting - capital growth and rental income growth.

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 both Bristol and Gloucester, but the value of property does go up as well as down, and of course the local conditions surrounding your property have a big effect. Rental income is what the tenant pays you - hopefully this will grow over time too. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. 

A landlord from Stroud, who has a number of properties in both Gloucester and Bristol, asked me a few weeks ago about the difference between Gloucester and Bristol housing markets. I was quite surprised with my findings and wanted to share them with you.

The average property price in Gloucester is currently £201,800. In the last 12 months property values in Gloucester, according to my calculations, have risen by just over 9.5%. Yet roll the clock back a few years and in 2011 values dropped 4.4% from the property values being achieved in 2010. However, irrespective of the roller coaster prices we have seen in Gloucester, they are still 15.8% higher than the 2009 slump.

Property values in Bristol over the last 12 months have risen by 10.4% and over the last five years (2009) by 17.3% which, on the face of it, means that Bristol has performed better than Gloucester.  However, go back to the property boom of 2007 and property values in Bristol are only 2% higher than they were at the peak of the 2007 boom, the same percentage figure as Gloucester’s. (Although Cheltenham’s are 3.2% higher!)

Then there is the question of yield, as Bristol normally has higher yields than Gloucester, but Bristol’s rental market can be quite fraught with its stricter rules. Each Gloucester (and Bristol) landlord will have different needs and requirements in his or her property investment. Knowing what has happened to values in different towns, enables us to spot any trends or opportunities for buy to let landlords. If you would like to discuss my thoughts on the rental markets, feel free to pop through the door of our offices on Worcester Street in Gloucester or send me an email to neil.west@belvoir.co.uk

2 Bed Flat Lloyd Close - 5.8% Yield

This first floor apartment is on the market with Adams at £117,500. It will let for £575.00 PCM and that equates to a yield of 5.8%. There will be some service charges so these will need to be factored into your figures.

                             http://www.zoopla.co.uk/for-sale/details/34059963

This is what Adams have to say: A modern, first floor two bedroom apartment. Available with no onward chain and in good decorative order throughout, this spacious apartment offers a central hall, large living room. Two double bedrooms, full bathroom and modern fitted kitchen. An excellent investment or first time buyer opportunity.

I agree that this could be a good investment opportunity. We let and manage a lot of flats on this development and they are always in demand, appealing to professionals who work locally. 

If you would like advice on this or any other property, please do contact me on neil.west@belvoir.co.uk 

Modern 2 bed Gloucester No Brainer 7.3% Yield

£87000 Guide Price - This has just come on the market- If you can get this at around £90K and let for at least £550 , that's a 7.3% Yield - NO BRAINER.!!!  OK, I think that this will probably go for more as has a garage, en suite and is low maintenance. 

                             http://www.zoopla.co.uk/for-sale/details/34869920

We have let a few on Tolsey Gardens and always popular. You must give this a look as that is a great yield on a modern property.

Call The Property Centre now and book your viewing - I can guarantee that this will go quickly , wish we were selling it!

2 Bed Flat Lansdown Cheltenham £700.00 PCM 4.9 %

I like the look of this 2 bed flat in Lansdown Road on the market with Elliot Oliver at £170,000. I think it should let for around £700 PCM giving a return of 4.9% . Great area , very close to the station and as as I say great layout. 

                               http://www.zoopla.co.uk/for-sale/details/34836432

Two double bedrooms so would appeal to sharers which makes the rent more affordable. If you would like advise about this or any other property, please do contact me on neil.west@belvoir.co.uk 

Cheltenham & Gloucester – Battle of the Postcodes

I was asked last week if postcodes make a difference to property values. Well in swanky West London, the difference between SW3 and SW10 can make values drop or rise by thousands, even millions of pounds. However, in Cheltenham and Gloucester, we don’t have many Russian Oligarchs and Saudi Prince’s buying our properties. However, after doing some investigating, I did find out some interesting info.

The main postcode areas of Gloucester are GL1, GL2 and GL3 with Cheltenham’s main postcode areas being GL51, GL52 and GL53. The postcode with the best performing housing market over the last 12 months has been the GL52 postcode with the area to the East of Cheltenham going North, passing the Racecourse onto Bishop’s Cleeve with average values rising by 6.7%%. However, in a very close second and third come GL2 and GL3 with rises of 5.46% and 5.21% respectively in the same 12 month period with GL1 and GL51 seeing more modest, yet healthy rises of 4.49% and 4.4% - whilst the worst performing area is GL53 with a rise of only 2.74% in the last 12 months. Over the last 5 years, values in all of the six postcode areas have been much tighter with the best performing areas being GL1 and GL3 at 14.2%, all the other postcodes come in between 13.3% and 13.8%.  I think you would agree that this is a much closer spread than short term gains over the last 12 months.

However, property values are only half the story when it comes to property investment. The average yields tell a slightly different story. The best performing postcodes for yields are the respective town centres of GL1 in Gloucester at 6.74% and GL51 Cheltenham’s town centre at 6.4%.  Then there is a second tier of yields with GL52, GL2 and GL3 having respective yields of 4.6%, 4.5% and 4.3% per year.  However, it is of no surprise that GL53, with its’ rural nature has low yields of only 3.1% per year.

Therefore, if you are considering buying a property for investment in the near future 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 (yield, capital growth or a bit of both). If you are a landlord, new or old, pop in and see us at our office's in either Cheltenham or Gloucester for a chat or email me direct on neil.west@belvoir.co.uk  

4 Bed Semi - Great Family Let 4.8 % Yield

Remember what I said about 3 and 4 bed houses? They are in great demand and families tend to stay longer. Longer tenancies means less voids and repairs bills. This one is a 4 bed semi on the market with Taylors . Two receptions, family bathroom, downstairs WC and an en suite. I think this will let for around £825 PCM , maybe more, depending on what is around at the time. 

                            http://www.zoopla.co.uk/for-sale/details/34794221

If you are looking for a rental investment for the long term with a reasonable yield and potentially a good capital growth, this is the sort of property, you should be looking at. 

Please feel free to call me on 01242 221188 or email me on neil.west@belvoir.co.uk  for more advice.

Leckhampton – the place to buy a buy to let?

One of the final chunks of census data has recently been released by the Government, and for those of you who like to look at data, it is a treasure trove of information. Information is so important when making decisions on what (or not) to buy when investing in property. The census data allows anyone to look at the data for housing estates or areas, but even better down to individual roads. Such information allows us to weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity.

After discussions with a landlord who had been reading the Cheltenham and Gloucester Property Blog he took me up on the offer of popping into our offices on Bath Road in Cheltenham.  We got discussing the area of Leckhampton in Cheltenham and whether it made a good buy to let investment area.   After carrying out some research this is what I found out; there are 5,275 people living in 2,276 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 this area of Leckhampton of those 2,276 properties, 47.7% own their property without a mortgage (compared to the 32.1% Cheltenham average) and an additional 37.7% of households own their property with a mortgage (again the Cheltenham average is only slightly higher at 32.4% and that includes all the posh villages!). 

237 or 10.4% of households in Leckhampton are privately rented.  This is not due to a lack of demand by tenants but of a lack of supply, confirming that it is a very popular area with owner occupiers.  The average value of a property in Leckhampton at this moment in time is a rather high £381,800 with average rents at £901 per month.  This gives us an average yield of 2.83% which is not at all high when you consider that in the city centre yields of between 4% and  6% can be achieved.  It must however be noted that average values in Leckhampton have risen by approximately 85.2% since 2002, which is considerably higher than the Cheltenham average of 51.8% since 2002.  

Therefore, if you are considering buying a property for investment in the near future, 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, we’re certainly more than happy for you to pop in and see us at our offices in either Cheltenham or Gloucester for a chat or email me direct on neil.west@belvoir.co.uk

Hopwood Grove , Cheltenham- 4.8% Yield

Take a look at this very well presented property in Hopwood Grove, Cheltenham. On the market with Cook Residential at £170,000 and should let for £675/ 695, which will give a yield of 4.8%. Ok , the yield is not spectacular but this will always let well with few void periods. 

                           http://www.zoopla.co.uk/for-sale/details/34725897

This is what the sales agent say : 

Offered For Sale With Onward Chain Complete

Two Generous Bedroom House

Both Bedrooms With Fitted Wardrobes

Enclosed Low Maintenance Rear Garden

Upstairs, Beautifully Presented Family Bathroom

Two Allocated Parking Spaces

I think its worth a look and if you would like any advice on this or any other property, please do contact me on neil.west@belvoir.co.uk 

Sycamore Close - Gloucester - 5.2 % Yield

This property has only come on to the market today with Farr & Farr. Great family rental opportunity in this popular area of Gloucester. on the market at  £149950 and should rent for around £650.00 PCM, that's a yield of 5.2 % 

                            http://www.zoopla.co.uk/for-sale/details/34693796

Farr & Farr say: An attractive semi detached family house with good proportions.

Sycamore Close is situated in a lovely quiet position overlooking a well tended area of green in this popular part of Gloucester. Good local schooling and shops are close by and Gloucester city centre is approximately a mile and a half to the north.

No.39 has been very well maintained and offers good light accommodation with the benefits of gas central heating and double glazing, good sized lounge / dining room and to the exterior attractive private gardens and garage.

Read more at http://www.zoopla.co.uk/for-sale/details/34693796

I really dont think that this will be on the market for long and if you are interested , please dont delay. If you would like any advice regarding this or any other property, please contact me on neil.west@belvoir.co.uk