We were chatting recently with a couple who have been looking at the rental market for a little while with a view to investing. They have a preference for a new build type central apartment in Lancaster. Their simple question was: what has happened in the market recently?
Anecdotally, it is easy to say that this type of property is popular as a rental investment and also popular as a home with tenants. If we look at some statistics, we can the evidence. If we take the Dukes area of Lancaster, which includes the likes of Aalborg Place and The Roundhouse, we can see that the most recent data shows a private rented figure of 616 households out of 1,267 total households i.e. 48.6%. If we look at the same information for 2001, we see a private rented figure of 403 out of a total of 967 i.e. 41.7%. The percentage growth itself is interesting and encouraging for this general area and also shows a great concentration of rental provision and demand, with the equivalent period private rented households for the most recent figures showing 18.9% of a 57,822 Lancaster district total. But, if we also look specifically at the growth in the number of households of 300 and consider that developments such as Mill View House and Court View House at Aalborg Place, together with the Nelson St and Robert St portions of The Roundhouse, account for nearly 200 new properties and other recent central developments often consist of conversions suchas Windermere House. We then consider thatt he private rented household total has increased by 213 there would be a strong argument to say that these developments have taken the bulk of the growth in private rented homes.
We can safely say that this property type and location is proving popular. However, there is always a counter opinion to consider, and in this conversation the point to bear in mind concerns the charges for property maintenance. When comparing to perhaps an older freehold property in a very similar location, the maintenance costs though uncapped are ultimately under the control of the landlord, whilst the fixed costs associated with block management charges can be quite significant and should always be researched in advance and considered when calculating yields. Also of course, they are actually not usually capped, as if the development requires exceptional expenditure, the leaseholders will often be required to make additional or increased payments.