Which would you rent out: a HMO or a family let?

I was having a chat with a landlord who had recently purchased a four bedroom house in Rochester. It needed a bit of work, so was questioning whether or not it would be ideal for a student let, or just to stick to what he knew and rent it to a family. So I did a little research for him, and wanted to share it with you, in case anyone else is considering the same.

Ask the big question – what is the rental market like in your local area? Is there a demand for student lets? Medway has seen an enormous rise in HMOs in recent years, especially Gillingham and Rochester, and as such, the student market is starting earlier and earlier each year as younglings look to secure the best properties with their friends. There are 68 student properties available in Gillingham currently, but only 20 in Rochester.

So let’s assume demand > supply in Rochester for student properties. At the moment, on the market there’s one 4 bedroom house in Rochester Avenue for £338.00pppm. Monthly that’s £1352.00. If you bought that for £162,500 (as one currently SSTC on Rightmove) – your yield is 9.98%! If you rented it to a family after purchasing for that price, you’re looking at a monthly rent of approx. £850.00 and a yield of 6.26%.

Also, compare your property’s location – if you’re looking to purchase something in a quiet residential area, it is unlikely that choosing to go with a HMO would be the best idea. On the face of it, student and professional HMOs will yield you a much higher rent. Yet there could be issues – some will ask for a 10 month tenancy, so you have 2 void months per year, but some are open to 12 months and pay ½ rent for the 2 unoccupied months. There’s also a lot of extra work for a HMO landlord – not just finding & referencing new tenants yearly, but organising 4 tenants and 4 guarantors can be a time eater in itself!

Also you must consider your legal duties as a HMO landlord – though the rules vary between councils, you will need to modify the house to some specific standards – including fire & electrical safety obligations. Also, should your home be over 3 floors and have 5 or more occupants, you’ll need a license from the local council – and even more standards to adhere to.

That all said, a family let also has its pros and cons (longer tenure, though risk of redundancy, pet damage, less rent/yield). Always consider what you’ve purchased the property for – if you can happily apply safety standards to your property, and you’re looking to maximise the investment as much as possible, perhaps go with the HMO. If you’re looking for a stable, long term let with a lower profit margin, perhaps stick with the families.

Our landlord in the end chose the latter option. What would you choose? Remember, if you need any advice, don’t hesitate to pick up the phone and call us on 01474 833050/01322 860500, email us here, or visit our website here (where we currently have a stonking HMO for sale).

Do properties on Rochester Road, Gravesend make good investments?

We've been chatting to a lot of investors over the last week about houses in the local area. Most of them had originally called us about our house for sale on Rochester Road – one that very swiftly went under offer. So we had a little think about how popular the road is for owner occupiers, landlords and tenants.
Rochester road, if you look a little closer, is actually a fairly great investment – whether you’ll be living there yourself, or renting it out to a lovely tenant. It’s close to the town (and the train station), on the same road as a Primary School, a Secondary school and the College and nearby to the A2 (along Old Road East, up Valley Drive and there you are). It also has ample on street parking if you’re not lucky enough to have a garage (providing you don’t want to find a space in school rush hours).

Our house on the road comes under the ‘owner occupier’ bracket, but there is seems to be a healthy mix of owned and rented. For instance, in the last six months, four properties have been rented, at an average of £722.50. Four houses have sold in the same time frame, for an average of £202,498.00. House prices in Rochester Road have increased 23.4% in the last 10 years – a steady return on any investment.

The majority of houses along Rochester Road are terraced three/four bedrooms, rented as they are to families, or split into rooms and let individually (of course, you’re looking at much higher yields for HMOs, but much more stringent legislation – something we know a fair bit about, if you have any questions). Judging on the examples used above, it takes an average of 31 days to rent our your property on Rochester Road.

So, you’d purchase (let’s say) a three bedroom house on Rochester Road for the average price of £202,498.00, and rent for the average price of £722.50, you’re looking at a yield of just 3.5%. But if you look at a specific property currently available for sale (£199,995.00), and take into account that specifically houses have rented on Rochester Road for an average of £870.00, you looking at a much healthier yield of 4.4%. So it’s always best to get your agents opinion on the rental value while you’re having a look round, rather than relying on the law of averages.

All in all, where you live/purchase to rent comes down to personal choice. Everyone has different priorities and reasons for their purchases.  We keep on top of the whole of the market and if you want to pick our brains on what would make the best buy to let investment/new home for you, email us here, visit our brand new website, call us (you must know the number by now, but if now - 01474 833050) or pop in and see us for a cuppa. 

P.S. Our next blog post will be on 20th June.

The DA13 property market - good capital growth?

Today, we’ll give a look at the DA13 property market and compare its rental yield and capital growth for all you buy to let investors out there. For those new to the buy to let game, the yield is the yearly rent from a property reflected as a percentage of the value of the property, whilst the capital growth is the amount the property goes up in value each year reflected as a percentage of the value of the property (but we all knew that, right...?).

DA13’s average property value in December 2006, just before the crash of 2007, was around £284,000. The year after, in the 2008 slump, average prices surprisingly spiked in the postcode to over £395,000. Considering values today in the village are around £328,000, if you bought in DA13 in 2006 just before the crash, the value would have increased by just over 13%. This is a really good increase, though not as much as if we were still at 2008 levels.

Between June and November 2013, prices for detached properties in DA13 rose up from an average of £350,313 to £435,063 – a fantastic 19% increase for such a short space of time. On the other side of the coin, semi detached properties have not increased much at all, only a slight 0.1% (better than nothing I guess).

However, property investment cannot be judged over short time frames and most certainly not by averages. 5 to 15 years is normally a more suitable time frame for capital growth, though it can be affected by slumps and booms. In October 2006, a detached freehold property in Beechwood Drive, Meopham, was sold for £285,000, and resold four years later for £410,000, a capital growth of 44%.

That's not to say everything in DA13 rapidly turns to gold. There are good properties that have nearly stagnated in value. A home in Blenheim Close, Meopham sold in February 2011 for £291,500. A buyer got it at a steal for £295,000 in June 2013 – a 1.2% increase in price in just over more than two years.

We always give our landlords, landlords who aren't with us but want a second opinion, and people who are thinking of becoming landlords, our unbiased opinion on what to buy and what not to buy. As is the risk with asking for advice, it might not be what you want to hear, but it is what you need to hear. If you want to chat about property investment in the area, be it Meopham, Gravesend, Dartford, or any of the surrounding area, pop in for a cuppa (remember - Southfleet or Sutton-At-Hone!) or call us up for a chat (01474 833050 or 01322 860500) - we look forward to hearing from you!

P.S. You can also catch us on the web here - we're about to relaunch our website, so keep an eye on it!

What a housing 'bubble-pop' will mean for you

Following on from last week’s discovery that house prices have jumped on average in Swanscombe by 18% in the last year, we’ve briefly condensed information for you on the reported housing market ‘bubble-pop’ that the media seem so keen on this week.

House prices shooting up? Will the Bank of England increase interest rates next year? Tough new lending rules? All of these have lent weight to the idea the housing market is going to deflate at some point throughout the year. But what will this mean for you as home owners and investors?

Issue: House prices are soaring in the South East
Answer: Oh, the age old issue of supply & demand, don’t you just love it? London & the South East have the fastest growing populations in country – and, unsurprisingly, there is not enough housing in these areas, thus pushing the largest price hikes, and pushing down rental yields. Great if you’re selling, not so much if you’re buying.

Issue: No decent rental yields
Answer: There isn’t enough decent stock out there… that’s about the gist of it. Prices are currently so high that they have forced rental yields down. Fine for a cheap property you purchased in 2008, as it’s unlikely to have affected you (rising rental figures help here), but not so great for if you want to add to your portfolio now.

Issue: Are the media scaremongering?
Answer: KPMG & Shelter have released some dire figures: if England continues to build less than half of the 250,000 new properties needed yearly, the average house price will rise to £900,000 in 20 years’ time. Bear in mind, the average house price in England in 2009 was £151,000, it’s currently £183,000, and when was the last time this country built 250,000 homes? Where are they getting these figures from?!

Issue: How will affect investor purchasers?

Answer: Positively! Aside from the obvious potential cheaper prices & higher yields, swathes of people to rent will come to the market as they can’t secure a mortgage, or are struggling to get a deposit. You’ll have a better choice of tenant as a lot of potential buyers will be looking to the rental market (although, in the recovery, they will likely move on to purchase). And you’ll (hopefully) get a better choice of property to buy (people need to move, slump or no slump). You’ll have opportunity. What more could you ask for?

For all your rental advice and property needs, call us on 01474 833050, email us here, visit our website, or pop in to Southfleet or Sutton-At-Hone to speak to us (and don’t forget, you’ll even get a nice cup of tea to go with your advice).

Have a great Bank Holiday weekend!

Your next buy to let should be in...

Drumroll please!

Recently we've covered Gravesend, Dartford, Rochester, Meopham. What about the smaller areas with dreamy futures? Who’s looked at property in Northfleet, for instance? Would you purchase something there, because it’s cheap and has a higher yield? And risk tenants preferring something a bit snazzier? Or would you purchase something in Swanscombe, an area with a relatively battered reputation, but close to some heavy investment works (Paramount Park, Ebbsfleet’s Garden City, anyone?), and wait it out until the area becomes what so many hope it will?

So what about Northfleet? Well, over the last year, 244 properties have sold, mostly terraced houses, which went for an average of £163,000. The semis went for an average of £189,000, while the flats were on average £107,000. BUT Northfleet’s prices have only risen 5% in the last year.

Swanscombe, on the other hand, has had 82 properties sold in the last year. Again, mostly terraced, averaging at £170,000, the semis at an average of £208,000, and the flats at £101,000. Overall, the Swanscombe property prices have SHOT UP by 18% since last year! Perhaps a bit of a coincidence after the announcement of Paramount Park… Perhaps all you savvy investors are getting in there quick, snapping up the cheaper properties and waiting it out!

In Swanscombe, there are currently 11 properties available to rent, with an average rental of £707.00pcm. So, you purchase a terraced house at an average of £170,000, rent it for £707.00pcm, you have yourself a yield of 4.1% - just above the average yield for Gravesend (4%). In Northfleet, there are currently 43 properties available, with an average rental of £799.00pcm. So again, you buy your terraced investment for £170,000, rent it out (with River & Country) to a lovely tenant for £799.00pcm, and you have a slightly more respectable yield of 4.7%.

Would you go for Swanscombe’s slightly lower yield, seeing that prices have risen 18% in the last year, or do you go with a comfort purchase like Northfleet, with a steady yield of 4.7%, but a slow riser?

We're all about giving free property advice to all of you! You can call us on 01474 833050, 01322 860500, email us here, visit our website, or pop into our offices in either Southfleet or Sutton At Hone.

Buy to let - is Meopham a good place to buy?

It’s important to have a balanced portfolio when buying and renting out property. Getting the balance between buying properties that offer good monthly returns (high yields) but quite often offer poor capital growth (i.e. they don't increase in value that much over the years compared with the average) verses properties that do go up in value quicker but often offer a lower yield is tricky. Another consideration has to be the mix of town properties verses the villages.

Choosing the right village, though, is very important. Living in a village often has a higher cost, especially transport and petrol. Some tenants don't buy because they can't afford the mortgage, so if you buy in the wrong village, you could limit yourself to the type of tenant who can afford those extra costs.

However, one town that has a high demand with tenants is Meopham, particularly popular with workers from London and the surrounding areas who know of the village’s popularity. With five churches, three pubs, three schools, possibly the most idyllic cricket green and a windmill, Meopham offers a peaceful environment matched to a varied social scene. The village consists of some 4,000 dwellings of different housing types and a population of just over 6,400 people.

Rental prices range at the lower end from around £600.00 per month for a one bedroom ground floor flat, which at that price should fly out the door. £750.00 should get you a purpose built two bedroom apartment, while a three bedroom semi-detached can be rented for between £1100-1250.00 per month, depending on condition. If you really want to splurge, there is a very nice five bedroom detached property in the vicinity going for £1900.00. There is always a huge demand for properties in Meopham – currently there are only seven available, compared to 50 in nearby Northfleet.

So, does that mean you should buy a property in Meopham as a buy to let investment? Before I can answer that, you must really consider the capital growth vs yield question. Some local buy to let investors often make the mistake of chasing yield over capital growth. Some investors believe that by chasing high yielding properties, in say the more deprived parts of Gravesend, they will make a faster profit than waiting for capital growth. The problem with this is that to achieve high yield you usually have to compromise on capital growth.

Therefore it would seem the most logical solution is to find a high yielding property in a strong capital growth area but, these simply don't exist, and in actual fact, most of the time lower yielding properties have a better capital growth. This is because there is generally a contrary relationship between yield and capital growth so the higher the yield, the lower the capital growth and vice versa. Property investment in Meopham, and Gravesend as a whole, is about balancing the two.

Not many landlords, especially those of you who use buy to let mortgages, can afford to service high levels of debt without a reasonable yield, forcing you to look at ways of making an investment affordable by finding the right balance between capital gain and yield. 

Yield is critical to the survival of a buy to investment but it’s not the key to building wealth. Don’t chase yield for yield’s sake, but rather chase capital growth with enough yield to make it serviceable, because in the long term, it is the capital growth, not the yield that will generate you the wealth and the financial independence you are seeking.

For advice (it’s free!) on how your property is performing, call us on 01474 833050 or 01322 860500, email us here, visit our website here or pop in to see us in either Southfleet or Sutton At Hone.

P.S. Our next blog post will be 16th May.

The Gravesend property market - compared to Dartford and Rochester

Knowledge is half the battle when deciding what (or not) to buy for your next property investment, because if you know something about the past, or what's happening now, it may help you anticipate the future.

A good guide to judge a property is the number of properties for sale, compared to the number that has been sold, subject to contract. When doing our research, we found in Gravesend around 235 properties available for sale and an additional 547 sold subject to contract – 70% of owners of property in the Gravesend area have a buyer, STC.

In Dartford, there are 149 properties available with an additional 563 properties having sales agreed on them – 79%! However, in Rochester, it’s a bit of a different story.  Of the 640 properties on the market, only 403 have buyers, just 63% are sold subject to contract.

Delving deeper into the Gravesend market, some sectors are doing better than others. Of the 196 flats on the market, just over half (111) have buyers. Of the 595 houses on the market, three quarters (446) have buyers. Deeper still, three bedroom semi-detached houses in Gravesend, over three quarters (78% to be precise) have buyers. As a comparison, the four beds have 70% of buyers and 85% of two bedroom houses also have a buyer. It would seem Gravesend is a popular place for purchasers at the moment – perhaps due to the recently announced Ebbsfleet Garden City?

For free advice on anything to do with the property sector, call us on 01474 833050/01322 860500, email us here, or visit our website here. Don’t forget, you’re always welcome in our offices for a cheeky cuppa.

Redress schemes and what they mean for you

Newly released figures from popular redress scheme The Property Ombudsman show that communication failure was the highest reported issue with Letting Agents during 2013 with a whopping 23% (closely followed by duty of care with 17% and reports & maintenance with 9%).

When an Agent is ARLA regulated, they are required to be a member of a formal redress scheme. This gives Landlords and Tenants a way to further progress their complaint if they are unsatisfied with the Agent’s findings, ore have not had a response from the Agent at all. It gives Landlords and Tenants greater security over grievances, and shows the Agent is certain to try and provide you with an exceptional service.

News released yesterday have given the go ahead to make it mandatory for all letting agents to join a redress scheme, as estate agents must, to give greater peace of mind to consumers.

Enquiries to TPO rose 23% in 2013 from 2012. This is a worrying figure as it seems to be showing a communication breakdown between Landlords and Agents, and that perhaps some Agents are not investigating any issues as thoroughly as they should. At River and Country, you have a direct point of contact with Lettings and Property Management at all times who can respond to complaints, and an easy to follow procedure.

When choosing an Agent, you should be asking the question, “are you ARLA regulated?”; and if they are, they will be members of TPO. The TPO is free to use for Landlords and Tenants.

Have you had a problem with a Letting Agent in the past? Or are having one now and want some advice on how to tackle the situation? Our team are local experts and are fully ARLA, NAEA and APIP qualified. Call us for friendly advice on 01474 833050, email us here or visit our website here.

P.S. Have a wonderful Bank Holiday weekend.

Gravesend terraced houses to rent - is Lynton Road South a good buy?

We've recently sold a mid-terraced house on Lynton Road South, a property where we were invited to give both a rental and a sales valuation. The owner decided to sell for personal reasons and it was sold to a first time buyer, so no chance of it coming on for rent (sadly). It got me thinking – it’s a fairly tucked away road and I couldn't remember the last time I’d seen something come up for rent down there, so I carried out some investigating on the road.

Lynton Road South is predominantly made up of terraced houses (not taking into account Lynton Court tucked away), but that, according to local sources, are all totally different.  According to my research, there are 45 properties on the road and the average price of a property on Lynton Road South is £181,318. Quite interestingly, since 2001, nearly half of the properties have changed hands (21 in all), which isn't too bad over a period of 13 years, though out of these 21 properties, they have been sold 38 times in the 13 years. The average rent achieved over the last 3 years in the close vicinity is £750.00 per month, giving a yield of 4.1%, much higher than the average yield for the whole DA11 postcode which is just 3.5%. This is where it's important to compare like for like. You see, the average price of a terraced in the DA11 postcode is actually £220,180, much higher than the average of Lynton which is above, hence the lower yield.

Even more interesting, is that despite the average figures for the road, our house sold for much more than the average shown above, and it was valued for rent much higher than the average for Lynton Road South. This shows how popular the road is (and how swiftly the market is moving), if the only data available is out of date! Judging by what we sold & valued the property for, the yield would be 4.3% - so a better investment today than the average prices are telling us.

It really comes down to what is available to buy on the day, and how much a hard bargain you drive on the purchase price. Always get the best advice and opinion you can. Speak to us, speak to others, do your homework and negotiate the price, as that’s the figure which will determine your yield and return.

Remember, you’re always welcome to pop into either our Southfleet or Sutton-at-Hone offices for a cuppa and a chat, or call us on 01474 833050. You can also email us here or visit our website here.

How affordable is Gravesend & local property?

A landlord came in to our office earlier this week to discuss the affordability of property in Gravesend,with the national property market being in recovery with increasing house prices and rapid sales (9.5% in a year - amazing). The best advice I can give to those looking to invest in property is our secret trick of the trade. You can judge the affordability of a town by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.

When we put this to the test, we found that Gravesend currently has an average property value of around £249,660 with the average salary being £33,250. This is a respectable ratio of 1 to 7.5. Meanwhile in Rochester the ratio of property values to salary is 1 to 7.7, which suggests the property in the town is only slightly less affordable than in Gravesend. We also had a look at Dartford and found the average salary is £32,500 and the average property value is £235,900. This means that property in Dartford is only slightly more affordable than both Gravesend and Rochester, with a ratio of 1 to 7.2.

This could mean, surprisingly, that now is a brilliant time to invest in Dartford’s property market, while the average value of property is low compared to the average salary. If you would like to talk to us about your potential investment, please call our sales team on 01322 860500 or our lettings team on 01474 833050, visit our website here or email me here.

Which town to invest in for buy to lets?

Should you be investing in Gravesend or Rochester when it comes to rental property?

Both demographics are similar in size, though taking into account the surrounding villages, have different average property values. The average value in Gravesend is £249,660, while Rochester is £223,660, whilst the average rents are vice versa - £802.00 per month in Gravesend and a whopping £983.00 per month in Rochester. Now, compare these to the average rental values in Dartford at £1,095.00 per month and Medway £847.00 per month - Rochester is way above the norm of Medway while Gravesend tends to languish behind Dartford. Purchasing a buy to let property in Rochester gives an average yield of 4%, whereas in Gravesend it gives 3%, compared to 3.5% across Medway and 4% in Dartford.

Both areas have strong links to London but it seems Rochester pips Gravesend to the post when it comes to rental yield. But, investing in property is all about what you buy the property for. You make your money with your buying value, rather than your eventual sale value. Over the last twelve months, property values in the DA postcode have increased by 2.41%, against the national average of 1.31%, with ME postcode coming in slightly under at 2.33% - still above the national average. This is great for those that have already bought a property in either town. If you are considering buying now and you would like our advice on what to buy, feel free to call us on 01474 833050 or pop into our brand new office in Sutton-at-Hone, or our original Southfleet office - we make a mean cup of tea (and we like our biccies). You can also check out our website here,, or send me an email here.