This week we had a potential landlord come in to see us as they were looking to acquire their first buy-to-let property.
Being from Whittington, they were keen to buy a property that was close to home. This way, they could keep an eye on their investment. A lot of landlords do the same. He wanted to know if this was wise and asked about other areas. I did some research for him and gave him an example to compare against.
We also discussed the pros of buying a two bed rather than a 3 or 4 bedroom house. With this in mind, I obtained figures showing the average asking price for 2 bed semi-detached house as being £193,299 over the last 12 months. When comparing the average rent for the same type of properties, this came out at £657 per month.
Using these figures, this gave a gross yield return of 4.08%, which is not great (especially when compared to most savings accounts).
Afterwards, using the same criteria for 2 bed semis in the Leyfields, this gave an average asking price of £131,590 and an average rent of £588 per month. This offers an average gross yield of 5.36%. In comparison, this suggests that properties in the Leyfields achieved 31% higher returns compared to Whittington.
The higher asking prices in Whittington are to be expected as it is a highly desirable village, with two pubs, a local co-op and rural surroundings. However, the rents in Whittington have not kept up with the higher sales prices.
Also worth considering is the average £61,706 saving when comparing the purchase prices between the two areas. He agreed that it has given him some food for thought.