There is Apathy in the Derby Property market..

A state of indifference has hit the Derby housing market as sellers await the outcome of the general election and stricter mortgage regulation suppresses buyer demand. Now, I have contacted both the BBC and ITV to see if I can get spot on the live TV election debates and give all parties a bit of advice regarding the Private Rental Sector. As yet, I have not had a response…

This feeling of apathy is mirrored around the UK as Rightmove reported the number of homes registered for sale per estate agent fell to its lowest level for five years in December, with available stock 10 per cent lower than in the same month a year earlier.

Looking at Derby, in the summer of 2014, each estate agent in Derby had on average 44 properties on its books (as there were a total of 2,289 properties up for sale in Derby at the peak in the Summer of 2014). Our research shows that number has plummeted to 38 per agent in December and looking at first three weeks of January, this number will lower by the month’s end.  While the lack of new properties coming onto the market in the later months of 2014 in Derby pushed asking prices up slightly from November to December, traditionally a quiet season for the housing market, property sellers will need to work hard in 2015 to complete a sale.

The length of time a property takes to sell has increased over the last few months. Two bedroom properties in Derby are now taking 86 days to sell, three bedroom 94 days, four bedrooms 92 days, but here an interesting figure, one beds are taking on average 169 days to find a buyer.

2015 will be the year of the selective mover. With only 986 brand new properties a year being built in Derby since the turn of the Millennium, this woefully low and insufficient number of new buildings in the City over the past few decades and a systemic change in the type of properties homeowners want (with families splitting etc so we have too many larger houses and not enough smaller ones), buyers are becoming dissatisfied with, and therefore dismissive of what is up for sale.

In my opinion, the heat has gone out of the Derby property market and I anticipate a moderate reduction from the high transaction volumes seen in 2014. That might mean Derby landlords could bag a bargain during this period of uncertainty, especially if the financial markets do not like the election outcome. Markets and buyers do not like uncertainty, but savvy buy-to-let landlords know that property investment is a long term game, and irrespective of short term apathy, a reduction in the quality and quantity of stock for homeowners to buy or the election, if people don’t buy property, they rent.

Derby City Council aren’t building anymore properties, the council house waiting list is decades, not years for the better type of property.. the only other way to get a roof over your head is to rent a property!  Good old Bricks and Mortar!

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.

 

Is Allestree the perfect place for a buy to let in Derby?

Information is so important when making decisions on what (or not) to buy when investing in Derby property. The demand for rental properties is much greater that the supply and some circumstances, we have four to five prospective tenants for each decent property. As always the demand is much greater for properties that are 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 the Allestree to the North Western edge of Derby. By knowing the different areas of Derby, I can weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity.

The majority of properties sold in Allestree during the last 12 months were detached properties, selling for an average price of £252,200. Semi-detached properties sold for an average of £198,800, with flats fetching £77,300. Allestree, with an overall average price of £221,500, was similar in terms of sold prices to nearby Darley Abbey at £212,200, but was more expensive than Breadsall  at £178,300 and cheaper than Quarndon at £669,400.

In Allestree, there are 13,622 people living in 5,956 properties. It is the home ownership percentages that really got me interested, as it is this information, tied in with my intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Allestree, of those 5,956 households, 90.17% own their property (compared to the Derby average of 71.4%.)

There are only 416 rented properties in Allestree are in the private rented sector (7% of Allestree properties are privately rented compared with the Derby average of 15.6%). The reason the private rental sector is much lower is that Allestree has a high proportion of homeowners and hardly any local authority housing.

The properties do sell well, in fact 1,590 properties have changed hands since 2007. However, with such excellent demand from homeowners and tenants, this could be the right area to purchase your next buy to let investment.  Allestree might not have the stellar yields of Peartree and Chaddesden, but they are in the very respectable 4% to 6% range. However, where Allestree comes into its own is in its growth in property values. Allestree property values are 141.9% higher than the year 2000 (not too shabby when you consider that the overall Derby average is 116.3% higher over the same time frame).

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 email me today!

A new property portal is coming... OnTheMarket.com

On Monday 26 January 2015, a new property portal - OnTheMarket.com – is launched. The arrival of this brand new portal is a very exciting development for the property market.

The portal is run by Agents’ Mutual, which is made of a membership of over 2,000 property agency firms, amounting to 4,000 offices. It is envisaged that the membership will grow significantly once the portal goes live. The motivation of the portal is to deliver the best user experience for prospective tenants, with results produced clearly and in an uncluttered way with no pop-ups or third party advertising as is found on the other major portals.

To give the portal a chance of establishing a meaningful presence, each member agent will only be allowed to display properties on one other major portal. As such, Professional Properties undertook a detailed investigation into its own property portal data, looking at numbers of phone calls and email enquiries generated from both Rightmove and Zoopla. Further analysis into the quality of leads, as well as the conversion of leads received to successful lets was also looked at in detail.

In conclusion, we decided that that the best portal for Professional Properties to appear on, as well as OnTheMarket.com, would be Rightmove. Rightmove not only delivers more enquiries to Professional Properties, but the quality of those enquiries are, in our opinion, higher than those received from Zoopla.

Rightmove is, in our opinion, the market leader, ranked 8th in the list of the most viewed websites in the UK, well ahead of Zoopla at 35^th. Google has announced that it is the most searched for business in the UK, thus adding further evidence that Rightmove is the right choice.

We believe the combination of our own website, www.professionalproperties.co.uk, together with OnTheMarket.com, the new entrant with all the publicity that will ensue, as well as Rightmove, the most established and dominant portal in the market, will give our clients properties unrivalled exposure in respect of online marketing.

From 26th January 2015, properties being marketed by Professional Properties will no longer appear on Zoopla.

At Professional Properties, we firmly believe that this is an exciting time for the property market and we believe OnTheMarket.com will be of long-term benefit for all those with an interest in renting property in our local area.

If you have any questions regarding the above, please feel free to contact me.

Rental Returns hit £15000 in 2014

A chap popped into our offices on St. James Street the other day whilst his better half was doing a bit of post Christmas sale shopping.

He had come into some money and after reading my articles in the Derby Telegraph, 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 Derby, 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 Derby rental property stands at 3.5% a year, representing a fall of 0.1% from one year ago, down from 3.6% in November 2013.

Over the last 12 months, property values in Derby have risen by 5%, so taking into account capital growth, total annual returns on an   average Derby property stand at 8.6% over the twelve months to December. In absolute terms this means the average landlord in Derby has seen a return, before deductions such as mortgage payments and maintenance, of £14,781 in the last twelve months.

This is made up of rental income of £6,276 and an average capital gain of £8,505.

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 five to six percent seen before the credit crunch.

As I don’t sell property, I can look at the whole of the Derby 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 Derby tenants have to pay for Derby property are still 4% lower than they were in 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.

On a completely separate issue, I would like to thank the numerous landlords that I bumped into over the Christmas holidays who complimented me on these articles. It proves at least two things - firstly, my caricature must look like me as that is how I am being recognised in the street!  Secondly, it seems pretty obvious that information on the local property market is much more interesting than the usual “Landlords Wanted” or “Tenants Waiting” adverts that we often see. The one that seems to tickle landlords the most is the old “We do Free Valuations ” claim - as if it’s unique! I’m sure we stopped charging for valuations back in the 80’s! I’m glad the articles are proving useful!

Welcome to 2015!

Well hello again and welcome to 2015!

As an addition to my own blog this year, I will be posting any newsworthy items that I believe offer useful information to landlords and homeowners from the lettings industry.

The first of these is an article I spotted regarding the level of buy to let mortgages..

Over one million landlords have buy to let mortgages and last year repaid £21.9 billion - a sign of their commitment to the sector, claims the National Landlords Association.

It says the average cost of landlords’ mortgage repayments in the last year has been £20,950, which excludes up-front deposits of typically 25 per cent of property value.

The NLA’s findings show that landlords with one-to-four properties spent an average of £10,335 on repayments last year, compared to £55,285 spent by those with larger portfolios of 11 or more properties.

“These figures really hammer home just how much money private landlords put into providing homes for the UK’s estimated nine million renters, especially if we consider that such a large proportion are single-property or smaller portfolio landlords” says NLA chairman Carolyn Uphill. 

“The majority of private individual investors are keeping a supply of well-maintained homes on the market when previous governments have failed to incentivise or stimulate more housing and social housing has been in long term decline. There’s no sign of either of these issues letting up anytime soon so is it any wonder that buy to let lending is at an all-time high?” 

Well Carolyn, buy to let lending continues to grow and a lot of mortgage brokers that I speak to in the area tell me that the percentage of buy to let mortgages that they are doing now is higher than ever and is a massive part of their overall business. The rates are still good and the uptake is increasing. So, if you wish to take advantage of the buy to let mortgage market, give me a call and I will point you in the direction of the best mortgage advisers around!

Another article that caught my eye was on the subject of rent arrears. An article based on data from Your Move and Reed Rains - not specialist letting agents I hasten to add! - says...

Arrears by tenants in the private rental sector have increased for the first time since 2012 according to data from lettings agencies Your Move and Reeds Rains. 

In the final quarter of 2014 there were 68,100 tenants in severe rent arrears of more than two months. This represents an increase of 4,600 such tenancies compared to the same quarter one year earlier - the equivalent of a 7.2 per cent annual increase. 

On a quarterly basis the setback is less sharp, with 1,700 more cases of severe arrears in quarter four 2014 than in quarter three, representing a quarterly increase of 2.6 per cent.

  

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “Escaping the worst deprivations of the financial crisis has taken half a decade. And even now, for many households every month is still a difficult month. 

“Stretching to include even a little festivity often makes December particularly hard.  But just as the occasional setback is inevitable, the long-term trend is increasingly clear. Since the sharpest pinnacle of tenant difficulties in 2010 the number in serious rent arrears has practically halved.”

The statistics on the properties that we manage do not reflect these figures, however, we do have a great selection of Rent Guarantee products, including Rent on Time which guarantees that rent is paid every month. However, the article still shows a worrying trend and reminds both landlords and agents to be very vigilant when it comes to making sure that your tenant pays the rent.