A dilemma many Buy to Let Investors mull over before buying their first property is whether to go for freehold or leasehold properties: “should I buy a house or a flat?” Whilst there are advantages to each, and the primary driver in the decision is most likely to be the amount of money the individual wants to invest, when most potential Landlords ask us for advice here at Martin & Co, the answer is usually to go for a house if affordable. This is based on demand over the past few years for 2 and 3 bedroom houses, availability of stock on the rental market and costs such as service charges associated with flats. However, having recently given this advice, I decided to get a better picture of the availability of flats in the Yeovil area, and just what kind of investment they can be.
There are over 3600 flats in Yeovil (BA20, BA21 and BA22 postcodes) and the surrounding area. This only represents around 12.6% of the housing stock here, with the national average being nearer 17.3%. The average price of flats with one or two bedrooms in Yeovil is around £107,000, which is just over 7% higher than 12 months ago.
You can buy a one bedroom flat in a desirable centrally located modern block in the town centre, for a very reasonable £75,000. If a landlord put down a £15,000 deposit and borrowed the rest, they could achieve around £475 per month in rent. Even after paying the service charge, yields could reach around 6.5% per year. However, you must remember that every landlord’s tax and interest rates are different, so it is essential to research your investment carefully before committing.
Finally, let’s not forget about the potential increase in capital value of the property. I was looking at the one bedroom flats in the Kiddles area, just off Reckleford, in the town centre and found that they have sold on average for around £37,000 in 2000. The value of these popular flats has in most cases, nearly doubled over the last 14 years, giving a satisfactory capital growth on the investment. Of the several properties managed by Martin & Co in this street, void periods are usually short due to the popularity of the area, another major consideration a Landlord should take into account when choosing to invest in a property to let.
If you would like some advice about what could make a good investment, please visit our office in Princes Street Yeovil for a friendly chat through your options.