Month: November 2015

30th November 2015

Bargain or not ?

Take a look at this 1 bedroom flat at Connaught Gardens, West Green, Crawley, on the market with Astons at £167950. The property is marked for “Investors Only”, which probably means that there’s a tenant in-situ. However, no rent is quoted and there are no internal photographs.

Connaught 30-11-15

For further details, here’s the Rightmove link http://www.rightmove.co.uk/property-for-sale/property-52224760.html

One thing to notice straight away is that the picture looks quite “summery”, rather than indicative of the end of November!  A little further digging and we found an identical photograph, advertising (presumably) the same property, from July 2015 at a lower price of £164950. Here’s the Rightmove link https://www.rightmove.co.uk/rmplus/property/showPropertyMcr.action?propertyId=35578086 You’ll also notice that there is a “Sold STC” flash on this picture. So presumably, an offer was accepted by the vendor, but for one reason or another the sale did not go through to completion.

If the property didn’t sell at £164950, why market it now for £3000 more?

Well, perhaps the agent could argue that the market has now “moved-on” a bit since July and the vendor, fed up with waiting for another sale, has also decided to let the property out. Hence it is now being marketed for “Investors Only”.

Of course, the above is just speculation on our part you understand, but these things do happen.

One bedroom flats like the one we’re considering rent for between £775pcm & £795pcm. So based on a marketing price of £167950, the rental yield would be in the region of 5.5% to 5.7%. Regular readers of our blog will know that a rental yield at this level is pretty good.

However, let’s take a closer look at the asking price.

Land Registry price paid information for properties can easily be found from sites such as Rightmove or Zoopla. Looking at the price paid information for Connaught Gardens, Crawley, on Rightmove, you’ll see that a similar one bedroom flat sold for £155000 (June 2015) and a 2 bedroom flat completed in April 2015 for £167500.

So the question remains, is the 1 bedroom flat we’re considering a bargain at £167950 or not?

Well, from the marketing price history of the flat, together with recent sold price information for other properties in the same development, £167950 does seem to be a bit on the high side. This is inspite of the fact that the   rental yield appears to stack up. So armed with the results of our investigation, you could sensibly approach the agent with a below asking price offer and argue quite a convincing case for it to be accepted.

Of course, it remains to be seen whether the vendor would be persuaded! However, your most powerful weapon in any negotiation is that you can make a “sensible” offer and then walk away. This will leave any decisions to be taken, firmly in the vendors hands. And remember, don’t get “hooked” up on any one particular property, there are others around to consider.

If you currently have your eye on a buy-to-let property in and around the Crawley area, but are not sure whether you’re paying too much for it, why not give us a call on 01283 515588. We would be more than happy to offer you our advice. Alternatively, you can also e-mail us on crawley@northwooduk.com.

 

27th November 2015

1 bedroom flat, Manor Royal, Crawley

Those of you with your ear to the ground or a finger in the air (to check wind direction !) , will have noticed how some office blocks in Crawley town centre are being converted into residential dwellings. Relaxation of the planning laws essentially means that provided the developer does not alter the outside of an office block, they can obtain “prior approval” to change its use.

The first office block to undergo this transformation in Crawley was First Choice House in Manor Royal, as reported last May in the Crawley News http://www.crawleynews.co.uk/successful-request-turn-offices-flats-Manor-Royal/story-21090362-detail/story.html

So, here’s a 1 bedroom flat for sale in First Choice House, Crawley. The property already has tenants paying rent of £850pcm, according to the marketing agent, Astons. The property is on the market for offers in excess of £180000.

For further details, here’s the Rightmove link http://www.rightmove.co.uk/property-for-sale/property-52230799.html

First Choice Hse 27-11-15

Clearly the vendor would like as much “in excess” of the purchase price as they can get ! However, bearing in mind that we are in a traditonally slow part of the year, with the the run-up to Christmas and IF you are an investor who can move quickly, do use your bargaining power.

If you can get the property for around the £180000 mark, with a rent of £850pcm, your potential gross yield would be just over 5.6%. So, pretty good. However, do check the tenant’s rent payment history and how well they’re looking after the property well.

Should you be an experienced investor, or new to the buy-to-let market,  do give us a call on 01293 515588. We’d love to discuss the different property investment opportunities that Crawley has to offer. Alternatively, you can also e-mail us on crawley@northwooduk.com.

 

 

 

 

23rd November 2015

2 bedroom flat, Furnace Green, Crawley

Marketed by Astons to “investors only” is this 2 bedroom flat in Furnace Green, Crawley on the market for £169950. The agents state that the property is currently tenanted and that the rent being achieved is £875pcm. Here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-52224724.html

Furnace Green 23-11-15.jpg

As we’ve said before, if you plan to buy with tenants in-situ, do check their rent payment history. In addition, to avoid disrupting the tenants and to save yourself a few pounds, you might be able to get the white goods “thrown-in” with the purchase price. After all, it is unlikely that the current owner/landlord will have anywhere to put them ! Lastly, for the purpose of due diligence, always enquire as to why the owner is selling.

What about the rental yield ?

We’ve checked comparable properties in the area and the quoted rent of £875pcm seems spot on. So based on the purchase price of £169950, you would expect to get a return of close to 6.2%. So not too bad at all.

Whether you’re an experienced investor or considering buying an investment property for the first time, we’d be more that happy to have a chat with you. Should you see a potential investment property through another agent, we could also view it and give you an independent opinion on its suitability – before you part with any money on surveys or solicitors fees. We don’t charge for this service, so just give us a call on 01293 515588. Alternatively, you can also e-mail us at crawley@northwooduk.com.

 

 

20th November 2015

Horsham v’s Crawley !

Well, the Christmas Season is really starting to gather pace now. As it does you’ll usually find that the sales & lettings markets start to quieten down a bit. However, do keep your eyes peeled. There will be some bargains to be had, particularly as most people will be turning their attention towards the festive season.

One of our landlords called up the other day after reading the blog we posted on 6th November. If you re-call, in this blog we showed why the price of flats in Crawley had underperformed houses over the last 10 years. Well, the landlord concerned lives just outside of Horsham and has investment properties there, as well Crawley. He asked us if the price of his flat in Horsham had similarly underperformed the market.

When we compared average sold prices of flats in Crawley & Horsham over the last decade, Horsham clearly came out on top. As shown in the Table below, the difference in the average sold price between flats in Crawley & Horsham was barely discernible in 2005. By 2010, however, it had increased to 3.7% and over the last 5 years had widened even further to 21%. So in direct answer to our landlord’s question, his Horsham flat had probably performed much better over the last decade, outpacing Crawley by a good 20% or so.

Table: Sold Prices in Horsham & Crawley (From Land Registry)

Crawley Blog 19-11-15 Table 2

Just to round off the Horsham v’s Crawley story, we also decided to check the current average For Sale prices advertised on Rightmove for flats in both towns. These were calculated by taking a snap-shot of flats advertised on 13th November. By doing this we found the average For Sale price of Horsham flats was about £220000 and was 11% higher than Crawley, with a figure of £198000.

In contrast to the average For Sale price, however,  when we looked at  average rents being advertised on Rightmove on the same day,  we found that Crawley was ahead at £930pcm, with Horsham lagging behind at £880pcm. Using these average rents and the current average For Sale prices, we calculated rental yields for both towns. In this case, Crawley again came out on top with an average yield of 5.6%, while Horsham was 4.8%.

So it would appear that where Horsham outperforms Crawley in terms of Capital Growth, the reverse is true for Rental Yield.

As we’ve seen before, Capital Growth & Rental Yield tend to move in opposite directions. It’s therefore well worth taking the time to consider your investment strategy thoroughly. You need to decide if you’re looking to maximise you income now, or go for maximum long term capital growth and sell later on. Of course, you could also take a compromise position between the two.

Whatever your answer is to the Capital Growth v’s Rental Yield question, we’d be more than happy to have a chat with you to explore the different options available. Why not give us a call on 01293 515588 or e-mail us at crawley@northwooduk.com.

19th November 2015

1 bedroom flat, Three Bridges, Crawley

Greenaway estate agents have just put this 1 bedroom flat on to Rightmove, with an asking price range of £175000 to £185000. Located at the popular Pemroke Park development, it comes with an underground parking space and has a balcony.  Here’s the Rightmove link for further details: http://www.rightmove.co.uk/property-for-sale/property-35472354.html

Pembroke Pk 19-11-15

As we’ve said before, location is vital when you’re considering property investment. It is one of the key factors in determing the length of void periods you might suffer during your ownership of the property.

Location is very good for this particular devlopment which, as a consequence, is popular with tenants and investors alike. If you’re familiar with Crawley, the flat is well placed for access to Three Bridges main line station (fast trains to London), Gatwick airport, Crawley town centre and just a short drive to the Manor Royal industrial estate. So, in our opinion, location is very good.

So what about the yield ?

Flats like this rent for between £825pcm and £875pcm at the present time. Based on the asking price & rent ranges, the gross rental yields are between 5.4% to 6%. Not bad at all, in our opinion.

If you’re looking to purchase an investment property now or in the future, do give us a call on 01293 515588. Even if you’re buying a property through a “rival” agency, we’d be more than happy to view it and give our opinion on the potential yield you might achieve. What do we charge for this service, I hear you ask ! To you Sir, to you Madam…. it’s free. But please, don’t let on to  anyone else ! Alternatively, you can also e-mail us on crawley@northwooduk.com.

 

18th November 2015

1 bedroom flat, Southgate, Crawley

Here’s a nice looking 1 bedroom flat in Southgate, Crawley that has just come on to the market with Homes Partnership, for £169950. The flat is marketed for investors only, as there’s a tenant in-situ. So potentially, a ready-made investment for you. Here’s the Rightmove link for further details http://www.rightmove.co.uk/property-for-sale/property-56041028.html

Southgate 1 bed flat 18-11-15

A couple of points to consider before we get to the rental yield. The property details do not mention a shower over the bath. If the current tenant moves on we would advise putting one in, if there isn’t one already – just check with the agent in the first instance. The second point to note is that the property details mention the flat is freehold. Usually flats are sold leasehold. However, sometimes a share of the freehold is available as well. Again, just check this with the agent.

Ok, so what about the rental yield ?

Although the advertised details do not mention the rent currently being paid by the tenant, a property like this should fetch around £800pcm. So, based on this and the asking price of £169950, your rental yield would be about 5.6%. Which, in our opinion, is not too bad at all.

If you’re interested in purchasing the flat with the tenant in-situ, do make sure that you check the rent payment history. As we’ve said before, you want to buy an investment, not a nightmare !

If you’re looking to invest in property in and around Crawley, why not give us a call on 01293 515588. We’d be more than happy to have a chat with you about our favourite topic ! Alternatively, you can reach us by e-mail on crawley@northwooduk.com.

 

13th November 2015

3 bedroom house, Bewbush, Crawley

Connect-UK are marketing this 3 bedroom house in Bewbush, Crawley at £259950. The property is being marketed to “investors Only”, which often means that a tenant is in-situ. A call to Connect, however, should clear that up. Here’s the Rightmove link for further details https://www.rightmove.co.uk/rmplus/property/showPropertyMcr.action?propertyId=37700691

Colwyn Cl 13-11-15

If you’re interested in the property and it is being sold tenanted, do check that they are up to date with the rent and are looking after it well. After all, you want to buy an investment property, not a nightmare (and it is Friday 13th !) – scary thought.

Properties like this in Bewbush, in good condition, can rent for around the £1200pcm mark. We know that for sure because we recently rented one in the same location !

For investment purposes this house would primarily suit a family. As we’ve mentioned before, all things being equal, families tend to stay in properties for longer, so your turnover of tenants & void periods should be shorter in the long run.

Based on the purchase price of £259950 and a rent of £1200pcm, the gross yield for this property would be around 5.5%. So not bad at all.

If you’re looking for investment properties in and around Crawley, why not call us up for a chat on 01293 515588. Alternatively, do drop us a line to crawley@northwooduk.com.

9th November 2015

4 bedroom house, Broadfield, Crawley

We don’t normally consider 4 bedroom properties as ideal for investment purposes. However, here’s an exception in Broadfield, Crawley. Marketed by agents Homes Partnership for £229950, they also quote a potential rent of £1200pcm, which we think is pretty close to the mark. Based on this rent, the gross rental yield would be an impressive 6.3%.

Readers of our blog will know that this potential yield is at the high-end of what we tend to find in Crawley. If you would like to have a look at some further details of the property, here’s the Rightmove link  http://www.rightmove.co.uk/property-for-sale/property-55273673.html

Broadfield 9-11-15jpgPlease remember that properties with higher rental yields tend to have lower long-term capital growth. The reverse is also true. So when thinking about property investment you need to consider whether rental income or capital growth are more important for you. Once you have the answer to this question, you’ll then start to have more of an idea about what type of property investment would suit you best.

If you would like to discuss the property investment options that Crawley and surrounding towns have to offer, please don’t hesitate to give us a call on 01293 515588. Alternatively, drop us an e-mail to crawley@northwooduk.com.

6th November 2015

Crawley Property Prices Over The Last 10 Years

You may recall we showed the following headline BBC News Headlines: Prices of flats rising faster than houses, says Halifax in one of our blogs last month (26th October).

When we compared the national picture with the Crawley property market, however, we showed that the opposite trend had occurred.  In Crawley, over the last 10 years, the price of houses has in fact outperformed flats. We also showed that the average price of flats & houses had diverged over the same period. Here’s the graph again, showing average prices for flats & houses in Crawley from 2005 to 2015.

Graph 1 26-10-15So the question arising from our October blog was:  what has caused house prices in Crawley to outperform flats over the last 10 years ?

To understand the answer to this question you need to consider our old friend Supply & Demand. All prices are governed, one way or another, by Supply & Demand and property prices are no exception. In order to investigate Supply & Demand issues in the Crawley property market, we have looked in detail at average property prices (from Land Registry), together with the volume of sales that have occurred.

In the first section of this blog we’ll give you an overview of our findings, so that you don’t have to wade through all the graphs & tables to understand the trends that have occurred. In the second section, we’ll discuss the analysis in further detail, together with the graphs & tables.

1.  Overview

Our analysis shows that at least part of the reason for the different capital growth rates between flats & houses in Crawley over the last decade (shown in Graph 1 above), relates to the number of new-build properties coming on to the market.

Over the so-called credit crunch years (approximately 2008 to 2012), the number of second-hand or re-sale property sales has decreased dramatically from its peak in 2007. This is the same for both flats & houses and represents a “natural” response to market conditions i.e. less demand, less sales.

The number of new-build house sales in Crawley from 2005 to 2015 represents less than 10% of the total market. It has also broadly followed a similar pattern to that seen in the second-hand (or re-sale) market, with a reduced number of sales during the credit crunch years.

In contrast to new-build houses, however, new-build flats have not followed the same drop in sales volumes. In fact, the number of new-build flats being sold during the credit crunch years was similar or higher than in 2007…… the so-called peak of the market. In addition, new-build flats from 2007 to 2012 represented more than 40% of the total number of flats sold in Crawley. New-build flats therefore appear to have been oversupplied to the Crawley property market during the credit crunch years.

In our opinion the main reason behind the oversupply of new-build flats was that a number of developers continued to develop sites in Crawley during the credit crunch period. It would have been too costly for them to have moth-balled the sites part-way through the building works.

New-build flats in Crawley from 2007 onwards therefore had to be completed & sold by the developers even when demand in the market was depressed.  In this situation, where there is more supply than demand, prices can fall or, at very least, remain subdued. In the case of the Crawley market, the sheer volume of the oversupply of new-build flats has, in our opinion, led to the drop in the average price paid for a new-build flat from £204000 in 2007 to £168500 in 2014.  As the average price of new-build flats has dropped, so there has been an adverse knock-on effect for the second-hand (or re-sale) market.

For developers this type of market is the perfect storm in which they have to finish building & selling properties while demand, due to circumstances beyond their control, falls away. Because of the sheer volume of new-build flats coming on to the market during the credit crunch years, the more the developers sold the more downard pressure on prices !

The net result of the oversupply of new-build flats to the Crawley market during the credit crunch, has resulted in lower capital growth for flats compared with houses.

2. Detailed Analysis

The following analysis has some more graphs & tables. If you’re not used to looking at this type of information, please don’t be put off. The graphs may look far more complicated than they actually are and we’ll describe them in detail to reveal the trends they represent.

Graphs 2 & 3 show the average price paid for flats & houses in Crawley from 2005 to 2014, together with the number (or volume) of actual sales. We have excluded 2015 from these graphs because the Land Registry information only goes up to August this year. There will, of course, be many more sales in the remainder of this year.

Graph 2: Crawley Houses: Average Prices & Sales Volumes

Houses Analysis 6-11-15The solid blue line in Graph 2 shows the average House price in Crawley and is the same as that shown in Graph 1. The left pointing black arrow indicates that the blue line refers to the Average Price axis to left. The dashed lines show sale volumes and these refer to the right hand Sales Volume axis, as inidicated by the black arrow that points to the right.

Now lets look at the dashed lines in Graph 2. The purple / mauve dashed line shows the total volume of house sales i.e. both new-build and re-sale. As expected, we see an increase in sales volume to 2007, followed by a rapid decrease in 2008. Sales volumes of houses in 2008 are less than half those at the peak in 2007. From 2008 onwards we see a very gradual increase in sales volume, indicating a slow recovery in demand. Over the last couple of years there has been a more rapid increase as the market starts to return to “normal”. The green & red dashed lines show the sales volumes for New-build Houses and Re-sale Houses, respectively.

Two important things to say here about the green (new-build houses) & red (re-sale houses) dashed lines. The first is that the number of new-build house sales only represents a small percentage of the total number of house sales. To better illustrate this point we show the sales volumes for both new-build (represented by the green dashed line) and re-sale (red dashed line) in Table 1 as a percentage of the overall number of house sales.

Table1: Crawley Houses: Sales Volumes 2005 to 2015

Table 1 6-11-15 blogAs can be clearly seen from Table 1, the new-build house sales volume never gets above 9% of the total house sales market. The response of house prices in the Crawley market is therefore by and large the “natural” response of supply and demand. Hence as demand dampens down during the credit crunch, so does the supply.

Let’s now consider the same situation for the sale of flats in Crawley. Graph 3 shows the average sold prices from 2005 to 2014, together with the volumes of new-build & re-sale flats.

Graph 3: Crawley Flats: Average Prices & Sales Volumes

Flats Analysis 6-11-15Two things are obvious straight away. The first is that the volume of new-build flats coming onto the market is a much higher percentage of the total Crawley market, when compared with houses. In Table 2 we also show these volumes as percentages of the total number of flats sold.

Table2: Crawley Flats: Sales Volumes 2005 to 2015

Table 2 blog 6-11-15During the credit crunch years, new-build flats remained at over 40% of the total sales volume of flats in Crawley. Even in 2012, the percentage was over 30%. Hence, because they are a higher percentage of the total number of flats sold, new-build flats will have a much greater influence on the overall average price of flats in Crawley.

The second and perhaps even more telling point is that new-build sales volumes of flats  remain at a relatively high level during the credit crunch period between 2008 to 2012. This trend is clearly seen in Graph 3 where the green dashed line of new-build flats sales volume remains high. In contrast, however, the red dashed line showing the re-sale volume, drops in direct response to the lower demand for property seen during the credit crunch.

New-build flats sales volumes therefore appear to remain artificially high and do not fall in sympathy with the reduced demand experienced during the credit crunch. In the first section of the blog we explained that the reason for this was (in our opinion) due to developers having to complete building works and then sell large numbers of new-build flats in a depressed market.

In the situation where there is more supply than demand, prices can fall or at least remain subdued. This is exactly what appears to have happened to the new-build flat prices in Crawley, as shown in Graph 4. Here we can see that although prices have more recently started to increase, the average new-build price for a flat in Crawley in 2014 (at £168500) is around 17.5% lower than at the peak in 2007 (at £204000).

Graph 4

New-build sales blog 6-11-15

In summary, therefore, we have shown that the capital growth of flats in Crawley has been adversely affected by a large oversupply of new-build flats that have came onto the market during the credit crunch years. In contrast, capital growth for houses has been much greater, principally because there has been a better match between supply and demand.

5th November 2015

1 bedroom flat, Horley

Here’s a 1 bedroom flat in Horley, on the market with estate agents James Dean at £130000. As far as rent is concerned, they say that a flat like this should achieve a figure of £750pcm, which in our opinion seems reasonable. Here’s the link to Rightmove if you would like some further details…. http://www.rightmove.co.uk/property-for-sale/property-37525584.htmlLongbridge Flat 5-11-15

Based on the agents estimate of the likely rent and an asking price of £130000, the rental yield is an impressive 6.9%.  Do remember in general, however, the higher the yield, the lower the capital growth.

If you’re an investor looking to purchase a property in Crawley or the surrounding towns such as Horley, Redhill, Reigate, Horsham & East Grinstead, don’t hesitate to give us a call on 01293 515588. We’d be more than happy to have a chat with you. Alternatively, you can also drop us an e-mail to crawley@northwooduk.com.