The HomeTruths report 2017/18 recently reported that the average price of a home to buy in Gloucestershire has now risen to £278,492, this is 10 times the average salary earnings in the county, estimated at £27,659. This means that the rental market for Gloucestershire is on the rise as more and more people earning average salaries simply cannot afford to save the deposit sums required.
Hand in hand with the increasing reports in the media of ‘Generation Rent’, it is important that landlords are providing affordable, good quality homes to potential renters to keep up with this demand. Although the now estimated at 160 different legislation implementations and changes in the private lettings sector in the last 5 years means it is difficult to keep up and ensure you are compliant as a private landlord, investment property remains a lucrative business and an area we still see new landlords entering into and contacting us to take on those legal liabilities. We get lots of calls for advice on where and what kind of property to buy to maximise their investment from newbie landlords, and below are my top tips to keep in mind if you are a landlord considering investing in property in the local area;
Condition of the property
Ensure when researching investment properties that you make the condition and décor of the property one of your highest priorities. All tenants want a blank canvas, so white walls and neutral (hardwearing) carpets are a must. Also consider if you make it easier for tenants to personalise, it’s not only easier for them to visualise living there during the viewing but they will be less likely to want to make drastic changes like painting and making holes in walls later on. Put up picture hooks in readiness, add curtain poles and shelves which tenants can then make their own. Also consider that newer properties will require less upkeep in the long run, period cottages may seem like a great idea initially, but it will be you footing the cost of expensive structural repairs later on down the line. Repair costs eat into your annual yield, the properties with the lowest ongoing upkeep costs will obviously be the better investment in the long run.
Whilst it is a good idea to focus on items like transport links, what is most important is that a tenant is renting in the right location for their needs. Which market are you aiming at? if you are looking at the Student market (and therefore Houses in Multiple Occupation), you will want to consider city centre locations (students don’t like to spend those grants on taxi’s remember!) with good links to local Universities, Colleges and shops. However, if its families or professional sharers you are pitching at, consider suburban quieter areas, with great commuter access and strong links to communities.
When a tenant wishes to take a property, we advise them that they must multiply the monthly rent on a property by thirty, and this must equal their annual salary before tax. Therefore, if a tenant wanted to take a property at £700 a month, they must be earning an annual salary of at least £21,000 to afford the property, obviously couples who are sharing the rent will be better off with this but for lone tenants, many agents are hesitant to grant the let unless this applies. With rents reported to be taking up 36% of earnings, its essential that tenants live within their means, otherwise life will become a struggle, and it’s likely the first thing to give will be your rental payments. Make sure the rental properties you look at are within an average affordability range, otherwise if pitched towards higher tenants you are decreasing your potential tenant pool and may end up regretting the decision later when applications are low.
Managing Director CGT Lettings