Rental Market Report - September 2014

Update:  We've moved our blog to www.folkestone-estateagent.co.uk

Lettings Market Report - September 2014

 

There's been a rather interesting development in the market recently which I'd like to share with you.

In the last few months there's been a significant shift in the balance between supply and demand in the lettings market. 

The number of available quality properties has dropped and the demand from tenants has risen considerably. The most likely explanation for this shift is that landlords who have been waiting to sell their properties have now been released from the market and an imbalance is being felt as a result. i.e. too many prospective tenants and not enough properties.  We've also noticed that there has been a rise in achievable rents for properties in high demand areas.

What Does This Mean For Landlords?

Put simply this means that rents are rising, and it's a good thing too since interest rates will be on the up at the end of the year.  However it is still important to take the usual steps to make your property as attractive as possible to prospective tenants, when preparing it for a relet, or they won't be tempted to make the move.

The other thing we've noticed is a rash of existing tenants handing in their notice and then retracting it again after about a week.  They appear to have noticed the rising rents and lack of supply and are batoning down the hatches until they feel it's safe to come out again.  So, as always with supply and demand, over-enthusiastic pricing can stall the market so consider comparable properties on the market before setting your price. (or give us a call!)

My Tenant Has Just Handed in Their Notice - Should I Wait to See if They're Leaving?

No, definitely not!  We're very happy to get your property on the market for you and liaise with your tenant for viewings and we'll soon find out if they're serious about moving.  If they don't move, then we'll be ready to get it on the market again quickly when they do. This way you won't have lost any time in finding a new tenant.

What Kind of Rent Increase Might I Be Expecting?
This varies per property, so give us a call and we'll give you an idea of the kind of rents we've been achieving for properties like yours in the last few months - you might be pleasantly surprised.  Call 01303 212797 and ask to speak to either myself or Tracey Horton, our Branch Manager.


Rachel Roodhardt
Client Liaison Manager
Martin & Co Folkestone.

Have You Future Proofed Your Investments Against Rises in Interest Rates?

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


After five years of enjoying the rewards of low interest rates and cheap properties it's time to take stock and future proof our investments.
 

The general view in the city is that The Bank of England will have raised interest rates by January 2015 or earlier, although no one seems to be expecting a dramatic hike in interest rates, rather a steady, gradual increase towards a specific goal.

So what does that mean?  Well no-one except Mark Carney knows for sure but we can speculate a little based on what the Bank of England has been telling us so far.

A year ago the BoE said that they would not raise the rates until unemployment dropped below 7% (currently 6.4% at the time of writing)

Only a few days ago at a BoE press conference Mark Carney said, "sustained economic momentum is looking more assured" and that future interest rate rises were likely to be "gradual and limited increase".

 

Furthermore, Carney said that the "normal interest rates of tomorrow are likely to be lower than those of yesteryear". Replying to a question from Sky's Ed Conway, Carney said market expectations of future rate rises were consistent with a change that would be gradual and limited.

What does "Lower Than Yesteryear" Mean?

One would expect that he's referring to rates experienced only in the last fifteen years where the pre-market collapse figure stood at just shy of 6%.

This is further supported by the BoE's forecasts issued on the 1st August:

0.83% in one year
1.35% in two years
2.18% in five years

Although we've also heard 2.5% quoted as a projected rate in five year's time.

Could these predictions be wrong?  Of course, there are many schools of thought, but Bank of England predictions are as close as you're going to get to a crystal ball.


Planning for Interest Rate Rises.

Take a look at the margin you're currently making on your investment properties and make a financial projection for each one to see what the inpact of rising interest rates would be on your return on investment.  Are you charging enough rent for this property?  Has your agent been reviewing the rent annually in line with the terms in your tenancy agreement?  Have you redecorated the property during voids to maximise the rent you receive and the quality of tenants?  If you're seriously up against it now with the mortgage payments then perhaps its time to think about selling?

Sit down with your agent and review your options to safeguard your investment now, and if you're not sure that your agent has the time or accumen to help you with this, then give us a call to discuss your options.  Afer all, sometimes a fresh pair of eyes sees opportunities that were there all along.

 

One Bedroom Apartments in Folkestone – Are They A Good Investment?

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


A potential new landlord popped into our office last month looking for advice about purchasing her first buy to let investment in Folkestone.  She’d seen the recent publicity in the newspapers about Folkestone being an up-and-coming seaside town and the rise of our arts scene fueled by the recent investments made by The Creative Foundation and our new fast train to London.  She was particularly interested in finding a property which had at least a 6% yield but also had the potential for capital gain in the future.  This particular landlord has just exchanged on a property that we found for her, but since then we’ve been instructed on another similar property just like it.

We currently have a one bedroom flat with a private garden on Julian Road

One Bedroom Flat with Garden
Currently Let at £575pcm - £110,000

available for a very reasonable price of £110,000.  The property is being offered as a Buy To Let investment. There is a fully referenced tenant who has just moved in on a 6 month Assured Shorthold Tenancy.  The rental income for this tenancy will be £575 pcm giving a 6.27% yield.  However, you must remember that every landlord’s tax position and interest rates are different, so it is essential to research your investment carefully before committing.

On a personal note, we're really hoping to find an investment landlord for this property since the tenant who has just moved in has had to move three times in the last 18 months due to his landlords selling their properties. Julie, our Sales & Lettings Co-ordinator, says that he's a lovely man who's hoping he won't have to move any time soon!

Finally, let’s not forget about the potential for increase in capital value of the property. I was looking at the history of sales prices for flats and apartments on Julian Road and found that they have increased in value by 15% in the last five years.  With more commuters moving to Folkestone every year, whilst capital gain is never a dead cert, it certainly is building momentum in Folkestone.

If you're interested in Investing in Folkestone, download our Market Analysis of the local market from our not so secret website which includes supply and demand statistics broken down by number of bedrooms and a map showing the fast train railway stations and the most (and least) popular areas.

Are High Yield Properties Too Good To Be True?

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


I'm going to be a bit controversial here, remove my letting agent hat and talk to you as a landlord and a property investor.

I often speak to new and existing landlords who have called the office to ask about a particular property that they've seen for sale online.  I'm always delighted to have these conversations firstly because I'm human and I enjoy sharing my experience and expertise, but also because nine out of ten new landlords aren't yet switched onto this inconvenient truth:

95% of High Yield Properties Don't Deliver on Capital Gain

And that's why I'm so happy to talk to landlords about their potential purchases before they buy them.  For those of you who aren't already nodding your head in agreement, let me explain.


High Yield Properties Tend To Exist on the More Affordable Side Of Town.

Yes, there are exceptions to this rule, but in the majority of cases this is a universal truth.  Taking Folkestone as an example, three bedroom properties are in high demand and low supply in the whole of the rental market, making them an ideal investment opportunity at the right price.  Let's compare two properties, one in the affordable side of town and the other near the fast train to London.

Invicta Road, Folkestone	Limes Road Folkestone
Price: £140,000 (Update: Sold for £138,000*)	Price: £385,000
Expected Rental PCM: £700	Expected Rental PCM: £995-£1100
Estimate Gross Yield: 6% (*6.09%)	Estimate Gross Yield: 3-3.5%

So Invicta Road massively outperforms Limes Road in terms of gross yield, and in fact you could buy two three bedroom houses on Invicta Road for the price of Limes Road and make potentially twice the yield.  Wow!  If you're simply looking for a short term investment which outperforms the bank then Invicta Road is worth a look.

What About Capital Gain Then?

Let's look at two similar properties, of the same size, on the same streets and see how much they've sold for in the last ten years…I know which option I prefer for capital gain.

So there we have it - High Yield and Capital Gain are in most cases mutually exclusive when you go to the extremes.  There is, however a sweet spot in between and other ways to get your capital gain… but that's a story for another day.

If you'd like more information about the Folkestone Rental Market then download our report or give us a call on 01303 212797.

BTL Property of The Week

Three Bedroom End of Terrace in Invicta Road, Folkestone

Important: We've moved our blog to www.folkestone-estateagent.co.uk


6.18% Yield on Invicta Road, Folkestone

Update: This property was sold for £138,000 (6.09% Yield)

Whilst rummaging around looking for my 6%+ deals I noticed this little interesting property just off Canterbury Road.

It's an end-of-terrace 3 bedroom property with two reception rooms which is in very good decorative condition and on the market for £140,000.

Based on a purchase price of £136,000 and a very conservative rent of £700 pcm  you'll be looking at a very respectable 6.18% gross yield. (£725 is achievable, but the former will keep voids down and your return on investment up)

This property was last on the market in 2009 and sold for approx £130,000.  Whilst it is only 0.8 miles from Folkestone's fast train to London (58 minutes), it's unlikely to attract commuters because of the steep hill between the station and Invicta Road, however the area is popular with blue and white collar workers with families who work full or part time.

Ideas to push down voids and increase demand:  

The property lacks carpets in the downstairs areas and is ideal for pet owners in that regard.  Accepting a cat or a small dog could push your yield up to 6.4% (£725 pcm) and enable you to take a 6 week deposit to mitigate any additional risk. 

Although the house is in a very good decorative state, I'd say that the bathroom is the weak spot of the property as a Buy to Let Investment.  The double sink unit is quite an extravagance, however the shower over bath is frankly a bit disappointing. An ideal rental would include both a good bath and an attractive shower.  Good tenants aren't keen on the mixer tap shower and will avoid it where possible.

In addition to this the tongue and groove cladding could encourage leaks and the tiling above looks like it has been there for a while.  If it were my Buy to Let Investment then I would remove the cladding, invest in some new tiling and install an electric shower and glass screen.

Finally I would replace the carpets in the bedroom for something a little more attractive and a little less grey.

If you'd like more information about the Folkestone Market then visit our not so secret website: Folkestone Rental Market Report.

Folkestone is one of the ‘Coolest New UK Areas to Buy a House’

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


Folkestone has been announced one of the forerunners in the Top 10 of the Coolest Places to buy a house in the UK! It was listed with nine other places around the UK on shortlist.com, stating that Folkestone is an up and coming creative place to live by the seaside.

For example plans to redevelop Folkestone’s seafront were approved late last year to build 1,000 new homes, restaurants, shops and sport facilities.  Meaning the location of the old Rotunda Funfair land will now have a use again bringing back tourists and new people to the area, therefore increasing the prices of property and making Folkestone a more desirable place to live.

With quirky pieces of local art work making a fresh vibe in Folkestone such as the numbered pebbles representing the British soldiers who died in the battle of the Somme, to the designed beach huts representing the old golf course which was found on the derelict Rotunda site, Folkestone is a fresh lovely place to live with lots of character.

So, all in all, Folkestone is the place to buy in the South East with property prices looking to soar offering the possibility of great returns in the future for those who buy now!  Here's what shortlist.com they had to say about my favourite UK Property Hotspot

If you don't feel like moving out of London right now but fancy trying your hand at a Buy To Let opportunity then give us a call and we'll talk you through our opinion on the better areas in Folkestone to make a nice combination of yield and capital gain… or if you'd just like to do a little research then download our Folkestone Rental Property Guide.

Here's a link to the full article: Coolest New Areas to Buy a House

BIG Landlord Survey

Update:  The BIG Landlord Survey is now closed, but you can still download the tax guide by following the link!

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Our "Not So Secret" Head Office are currently inviting Landlords across the country to share their opinions in a five minute survey which could net you an iPad Mini, some Amazon Vouchers or a copy of a rather good book called "Why Property Works"

An even more compelling reason to take part is free 15 page guide to "Knowing Your Property Tax Strategy" which you can download at the end.  The guide can help you to save hundreds of pounds on your tax bill as a landlord.

Share your views in The BIG Landlord Survey

Top 10 Agent in the South East Region.. Again!

Phil Spencer talking at The ESTAs…..

Update:  We've moved our blog to www.folkestone-estateagent.co.uk


Today we met Phil Spencer for the third time.  Lovely chap with a dry sense of humour and a real commitment to excellence in the property industry.

Sometimes I've noticed at award ceremonies that the hired celebrity is there only for the money, but each time we go to The Estate & Letting Agency Awards and listen to what he has to say, I get a stronger sense of how much he appreciates the value that a good agent can add… if you'll excuse the pun.

If you're not familiar with The ESTAs, it's the property industry's version of the Oscars, honouring great customer service in Estate Agency and Lettings.  But unlike the Oscars, to get shortlisted in The ESTAs you need to be voted for by your customers

Property Investing in Folkestone - Location, Supply & Demand

As an experienced agent who's been around for a few years, I've become quite used to giving investment landlords my virtual tour of Folkestone when they pop into the office for the first time.

Usually they've come in to talk about one of our sales properties and the conversation switches to whether we think it would stack up financially as an investment property.  This is the point where I reach for my giant laminated map of Folkestone and the virtual tour begins….

Like any town, Folkestone has its good areas, not so good areas and lots more in-between.  Folkestone West is perhaps the most desirable part of Folkestone and the harbour area has the most potential.  The Morehall district of Cheriton benefits from a combination of: