Well my Plymouth Property Blog reading friends, as seems to
be all the rage with Jeremy Corben asking the PM questions emailed in to him at
Prime Minster Question Times, I to wish to answer a question emailed into me
from a potential Plymouth landlord last week. Nice chap, lives in Derriford,
and it turns out, after having a coffee with him, he works in IT, has a spare
bit of cash (now the kids have flown the nest) and wanted to buy his first buy
to let property.
Leasehold flats and apartments in Plymouth are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!
However, some Plymouth leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Plymouth apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.
His main question was ... Do I buy
a freehold house or a leasehold flat in Plymouth?
Most people will say freehold every time, because you own
the land. However, it’s not as simple as that (it never would be would it!). The
definitive answer though is to research what Plymouth tenants want in the area
of Plymouth they want! The tenant is ultimately your customer, and, if they
don't want to rent what you decide is best to buy, then you are not going to
have a successful BTL investment. So starting with the tenant in mind and working
backwards from there, you won’t go far wrong. In a nutshell, find the demand before
you think about creating the supply.Leasehold flats and apartments in Plymouth are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!
However, some Plymouth leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Plymouth apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.
So what do the numbers look like? Well since 2003, the
average freehold property in Plymouth (detached, semis and terraced) has risen
from £136,187 to £214,460, a rise of 57% whilst the average Plymouth leasehold
property (flats and apartments) has gone up in value from £79,497 to £117,870,
a more mediocre rise of 48%.
I was really interested to note that of the 19,431 rental
properties in the Plymouth City Council area that the Office of National
Statistics believe are either let privately or through a letting agency, 10,778
of them (or 55.5%) are apartments. However, there are only 28,113 apartments in
the whole council area (be they owned, council rented or privately rented), which
represents 25.7% of the whole housing stock in the area. This really intrigued
me that, quite obviously, there is a high proportion of Plymouth’s leasehold
apartments/flats rented to tenants compared to detached, semi’s or terraced.
Fascinating don’t you think?
Every Plymouth apartment block, every terraced house or semi
is different. Like I said at the start, the definitive answer though is to
research what Plymouth tenants want in the area of Plymouth they want. Demand
for city centre apartments, near the nightlife and transport links can be
popular and can offer the Plymouth landlord very good yields with minimal
voids. However, Plymouth terraced houses and semis, whilst not always offering
the best yields (although sometimes they can), they do offer the Plymouth
landlord decent capital growth.
My advice to the prospective landlord as it is to you is do
your homework. One such website, which
only talks about the Plymouth buy to let Property Market, is the Plymouth Property
Blog. Another source of info many Plymouth landlords use is me! What many Plymouth
landlords do, irrespective of whether you are a landlord of ours, a landlord
with another agent or a DIY landlord, if you see any property in Plymouth, that
catches your eye as a potential buy to let property, be it a terraced house,
semi or flat ... email me and I will email you back with my thoughts (although
I will tell you what you need to hear .. not want to hear!)
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