8 Feb

Liverpool Private Rents Hit £13.25 per sq. foot

As I am sure you are aware, one the best things about my job as an agent is helping Liverpool landlords with their strategic portfolio management. Gone are the days of making money by buying any old Liverpool property to rent out or sell on. Nowadays, property investment is both an art and science. The art is your gut reaction to a property, but with the power of the internet and the way the Liverpool property market has gone in the last 11 years, science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is that is a great way to judge a property from the point of view of the tenant … what space they get for their money. Now of course, location (location, location in a Phil and Kirstie style) has a huge influencing factor when it comes to rents (and hence rent per square foot). Like people buying a property, tenants also have that balancing act between better/worse location, more vs. less money and size of accommodation (bigger and more rooms equalling more money) and where they live (location) verses making ends meet.

Interestingly, I know there are a lot of you in Liverpool who like to see my statistics on the Liverpool property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot on the values. In Liverpool, the current AVERAGE figures are being achieved (and I must stress, these are average figures, so there will an enormous range in these figures), but on average, properties in Liverpool, split down by type are achieving …

  • Liverpool Detached Property – £226 / sq ft
  • Liverpool Semi Detached Property – £184 / sq ft
  • Liverpool Terraced Property – £137 / sq ft
  • Liverpool Apartments – £219 / sq ft

So, the rental figures:

The extent of space you get for your rent is replicated in the space you get for your money when buying a property. The average size of rental property in the Liverpool area is 803.8 sq ft (interesting when compared to the national average of 792.1 sq ft)

This means the average rent per square foot currently being

achieved on a Liverpool rental property is £13.25 per sq ft per annum

So, what we can deduce from this?  Well the devil is always in detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite clear from data that there is relationship between the average £ per sq ft figures on property values and average £ per sq ft on rental figures as a property grows in size. However, something quite intriguing happens to those figures, in terms of what the property will sell for and what it will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Liverpool property doesn’t mean you will double the value of it … in either value or rent. This is because the marginal value increases diminish as the size of the property increases. In layman’s terms … Subject to a few assumptions, double the size of the house doesn’t mean double the value … what really happens is a doubling of the size gives only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part … when it came to the rental figures, double the size of the house meant only 20% to 45% in increase in rent.

In a future article, I will be discussing the actual added value an extension can bring … but in the meantime, in an overall and sweeping statement, most of the time it makes sense to extend if you are going to live in the property as long as the extension is proportionate to the property, but if you are going to rent it out … possibly not.

7 Feb

Balantyne Grove, Bootle, Liverpool, L20 0AD – Tenant in Situ – 7% Gross Yield

I have noticed this lovely three bedroom house, located in the popular L20 area. This property is located just off Southport Road, and minutes away from Orrell Lane, where you will find local amenities including supermarkets, restaurants and bars.

The property is on the available for Offers Over £100,000, which is an excellent price considering the size, location and current condition of the property.

This property is offered for sale for investors only, as there is a long standing tenant in situ who has maintained and decorated the property to a very high standard. It has a bright lounge with a feature fireplace, a lovely kitchen, dining room, 3 large bedrooms and a family bathroom.

It is currently let to a lovely and reliable tenant who is paying £5,700 per annum; however I feel this could be increased to £6,300 per annum This is bringing back a gross yield of 7% based on an offer of asking price, which is an excellent return this type of property.

Although there is a tenant in situ who intends on staying long term, should she ever move out I do not feel this property would ever be empty for long! I would expect this property to attract families due to the ease of the local amenities nearby, the generously proportioned living space and the high volume of nearby schools.

Click Here to see sold prices in the area

Click Here to view other 3 bedroom properties currently for sale in the area

 

This property is not available on the open market, however it is for sale through myself, so if you are interested in this property, please do not hesitate to contact me on adamr@liverpoolpropertyblog.com

1 Feb

£439.61pm – The Profit made by every Liverpool Property Owner over the last 20 years

As we go headlong into 2018, I believe UK interest rates will stay low, even with the additional 0.25% increase that is expected in May or June. That rise will add just over £20 to the typical £160,000 tracker mortgage, although with 57.1% of all borrowers on fixed rates, it will probably go undetected by most buy-to-let landlords and homeowners. I forecast that we won’t see any more interest rate rises due to the fragile nature of the British economy and the Brexit challenge. Even though mortgages will remain inexpensive, with retail price inflation outstripping salary rises, it will still very much feel like a heavy weight to some Liverpool households.

Now it’s certain the Liverpool housing market in 2017 was a little more subdued than 2016 and that will continue into 2018. Property ownership is a medium to long-term investment so looking at that long-term time frame; the average Liverpool homeowner who bought their property 20 years ago has seen its value rise by more than 213%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historic gain in Liverpool property values has come from property market growth, although some of that will have been added by homeowners modernising, extending or developing their Liverpool home.

Taking a look at the different property types in Liverpool and the profit made by each type, it makes interesting reading..

 

However, I want to put aside all that historic growth and profit and looking forward to what will happen in the future. I want to look at the factors that could affect future Liverpool (and the Country’s) house price growth/profit; one important factor has to be the building of new homes both locally and in the country as a whole. This has picked up in 2017 with 217,350 homes coming on to the UK housing ladder in the last year (a 15% increase on the previous year’s figures of 189,690. However, Philip Hammond has set a target of 300,000 a year, so still plenty to go!

Another factor that will affect property prices is my prediction that the balance of power between Liverpool buy-to-let landlords and Liverpool first-time buyers should tip more towards the local first-time buyers in 2018.

The Council of Mortgage Lenders expects the number of buy to let mortgages to drop by 34% from levels seen in 2015. This is because of taxes being increased recently on buy-to-let and harder lending criteria for buy to let mortgages, which means I foresee a gradual move in the balance of power in favour of first-time buyers rather than buy-to-let landlords. First time buyers will also be helped by The Chancellor eradicating Stamp Duty for all properties up to £300,000 bought by first-time buyers in the recent budget.

This means Liverpool buy-to-let landlords will have to work smarter in the future to continue to make decent returns (profits) from their Liverpool buy-to-let investment. Even with the tempering of house price inflation in Liverpool in 2017, most Liverpool buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Liverpool buy to let landlord ensure that continues?

Since the 1990’s, making money from investing in buy-to-let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be as easy. Over the last ten years, I have seen the role of the forward thinking letting agents evolve from a ‘rent collector’ and basic property management to a more holistic role, or as I call it, ‘landlord portfolio strategic leadership’. Thankfully, along with myself, there are a handful of letting agents in Liverpool whom I would consider exemplary at this landlord portfolio strategy where they can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, speak with your current agent – or whether you are a landlord of ours or not – without any cost or commitment, feel free to drop me a line.

31 Jan

Ashburnham Way, L3 8QG – 3 Bedroom Townhouse – Potential HMO – 8.6% Gross Yield

There is a fantastic investment opportunity up for grabs here! A 3 bedroom town house, located just minutes away from the City Centre!

The property is 3 storey, and briefly comprises of kitchen/diner and wc on the first floor; the lounge, with patio doors leading rear outside area, master bedroom and family bathroom with shower on the second; and then on the 2nd floor, there are two double bedrooms and a shower room.

The layout of this property creates a fantastic opportunity for a HMO room by room let. In order to convert this, you could use the 3 bedrooms, along with the lounge as separate rooms to let, and then use the kitchen/dining area as a communal area. The property benefits from 2 main bathrooms and a downstairs WC, which is ideal for HMO lets.

If you were to rent this property out, we have estimated that you would achieve a rental income of £900 per calendar month. Based on the asking price, this is securing a fantastic 8.6% gross yield!

The location of this property is ideal for any young professionals or students due to its close proximity to the City Centre and the Royal Hospital, so letting it should never be an issue!

Click Here to see the property

If you would like any further information about this, or any other properties, then please do not hesitate to contact me on adamr@liverpoolpropertyblog.com