One of the best things about Chelmsford is the variety of properties available, whether you’re buying, renting or looking to invest.
As a landlord, the kind of property you choose to invest in will play a part in your success.
Chelmsford’s spectrum of property ranges from modern, city centre flats to stunning period homes in areas like Great Baddow and Moulsham.
Depending on your target tenant market, older period homes can be a great investment.
There’s certainly plenty of demand from tenants looking for character in their rental homes, but is investing in an older property the right thing for you as a landlord?
We’ve looked at a few of the pros and cons of buying older buy-to-let properties…
Pros of buying an older investment property: Better value for money
It’s true that newer homes, and particularly new builds, can command a higher asking price.
But that usually means slower capital growth over time, while many newer homes are comparable with other, similar properties nearby, meaning a ceiling price.
Older homes, on the other hand, can provide better value for your initial purchase price and can often be improved or made larger to boost their value.
For a landlord seeking long-term capital growth as well as a solid rental income, an older home can offer both.
You could even consider a high-yielding House in Multiple Occupation (HMO) from an older property, if a conversion is possible and space can be added.
Remember, however, that HMOs are subject to stringent licensing procedures.
Older properties usually come with more space.
It’s a fact that new-build homes can often be crammed into much smaller sites due to the need for housing and for developers to make enough from their investment.
Older homes, though, and particularly period properties were built when land was more freely available and, as such, tend to come with more space.
That can be both a benefit for tenanting purposes and for adding value through extensions.
As time goes on, fewer and fewer period properties are available.
It’s easy to forget that some of these properties have stood for more than 100 years so as we move quickly through the 2000s, more and more are being replaced or are simply not habitable.
But demand for these characterful properties remains high, so investing in a good one could mean standing out from the crowd in a busy rental market.
Cons of buying an older investment property: Hidden surprises
As we mentioned above, period homes have often withstood more than 100 years of being lived in and battered by the wonderful British weather.
So, if you buy one as a buy-to-let property, don’t be too shocked if you find a surprise or two.
That could mean unsafe wiring, structural problems or a dodgy roof.
When buying an older home as an investment, be sure to have a full structural survey undertaken – it really is worth the money.
Bringing it up to scratch for renting
As a landlord, you face a raft of obligations and legislation surrounding the health and safety of your tenants.
So, bringing an older home up to rentable standard can sometimes be a costly affair.
It can also be time consuming, meaning no rental income while you work to make your property habitable.
You’ll need to consider things like Minimum Energy Efficiency Standards (MEES) that mean no property with an Energy Performance Certificate (EPC) rating below E can be legally let.
If you purchase an older property and this is the case, you could be looking at a substantial spend to bring it up to MEES levels.
Higher insurance costs
When buying an older property as a buy-to-let, consider that your insurance premiums could be higher.
There are more risks associated with older homes so make sure you take this potential additional cost into account before committing to a buy-to-let purchase.
Deciding whether to invest in an older buy-to-let property or spend your money on a more modern build will come down to personal circumstances and aims.
If you’re targeting the younger end of the rental market, young professionals and commuters, you might be better investing in a city centre apartment with good transport links.
But if families and older tenants are your aim, consider a property with character, but bear in mind the pros and cons outlined above.
If you’re looking to invest in a buy-to-let property, the team at Martin & Co Chelmsford can help.
We’ve got unrivalled knowledge of the local rental market and would be happy to advise.