Longmead Estate Property market outperforms the Nonsuch Estate housing market by 92%

Last week I had an interesting conversation with a local landlord who lives on the Nonsuch Estate in Ewell. He called in to discuss a property he was looking to purchase in Epsom. We discussed the different areas in Epsom and Ewell and how they have performed. Interestingly, when we compared one of his Epsom buy to let properties (an ex local authority property in the Longmead Estate) with the Nonsuch Estate where he lived, he was quite surprised to find that the property market in the Longmead Estate area had outperformed the Nonsuch Estate development by 92%!

The average price of a 2 bed apartment on the Longmead Estate is £186,700. When you consider the rents that are achieved in the Longmead Estate are an average of £1,100 pm, this gives us a yield of 7.07% per year. So is the Longmead Estate the best investment? Well, in the Nonsuch Estate development, where the the average value of a bay fronted detached property is £803,500 and the average rent for such a property is £2,467 pm, this only gives a yield of 3.68% per year. This makes the yield/ annual return on the Longmead Estate development 92% proportionally more than the yield that can be achieved on property in Nonsuch Estate, so surely it is the best investment, isn’t it?

However, this is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 15 years, property values have risen on average by 121.9% in the Longmead Estate (rising from £84,100 to the £186,700 mentioned above), which is very impressive considering there was a property crash in 2008. However, average property values on the Nonsuch Estate development have risen on average by an impressive 242% in the same time frame.

Now of course, I have shown the extremes of the Epsom and Ewell property market here. High annual yielding property, such as those on the Longmead Estate, do attract a certain type of tenant which can be positive and long term, but also negative to the investment return for capital growth. Every landlord is different and requires different returns. Therefore, if you are investing in Ewell and Epsom property, do you want capital asset growth or annual rental yield or a bit of both? If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market for the time throughout 2015, please come and see me at our office on Upper High Street, Epsom or keep checking back here.

Good buy to let opportunity

Good opportunity to make your own stamp on this one, which once modernised and rented will give you capital growth and gross rental yield of over 5% pa.

Take a look at the link for more details:
http://www.rightmove.co.uk/property-for-sale/property-32570115.html

Previously let property now available

We have previously let this one out for a gross rental return of 5%. Be sure to get in there quickly and even call us first if you might like the introduction.

Take a look at the link for more details:
http://www.rightmove.co.uk/property-for-sale/property-50590922.html

Buy to let opportunity

Lovely studio flat in the college area of Epsom. Always popular on rental and should achieve £750pm giving a gross rental yield of over 5%pa. Go and have a look!

http://www.rightmove.co.uk/property-for-sale/property-33683574.html

Investor Update

I had an interesting chat with a landlord who uses another letting agent in the town after he popped into our offices for a coffee whilst his wife was in the Ashley Centre. We were taking about the Epsom market and thought other landlords might be interested.

You see, whilst I said last week property values stopped dropping in June 2009, since then, it hasn't all been in an upward direction as around the Winter of 2010/11, property values in Epsom dropped six months in a row, albeit only by only 1.5%, but still a drop all the same. However, for the last 23 months, we have had growth although increases are beginning to ease for the first time since the start of 2013. Now it could be said this easing of the housing market in Epsom can be attributed partly to the time of year (in 2013, property values in Epsom only increased by 0.2% per month in the Autumn months), but it is obvious that estate/sales agents in Epsom are wary about the direction of the market as a result of the not as strong demand and fewer house sales.

This is all good news for landlords looking to buy rental property with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Epsom. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn't seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past is questionable. But investing in property is also about receiving the rent – a gross rental yield.

On the one hand going for high yielding Epsom property to rent out seems an obvious choice, but high yielding property often doesn't go up in value that well and in some circumstances doesn't keep up with inflation, meaning in real terms you have a depreciating asset.

So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties tend to be low meaning if you are taking a high percentage mortgage, the rent doesn't pay the mortgage payments.

If you are unsure what to do, be you a first time landlord or a seasoned pro, feel free to pop your head round our door or email me on ian@directresidential.co.uk, or to be kept up to date with what is happening to the Epsom Property market, keep checking this blog.

Buy to let success

We saw this one on Wednesday evening last week and immediately recommended it to one of our investors.  Full asking price and secured! That’s a nice 6.7% return!

http://www.patrickgardner.com/SearchPropertyDetails.aspx?propid=35403_5368509

Epsom Property Market

A number of landlords, who own property in Epsom, have made contact with me recently asking for my thoughts on the future of the property market in Epsom. I always like to talk about the Epsom property market and in future articles intend to share with you my thoughts on the local property market, its history of rents, property values, tenant demand and yields; all important matters for a landlord, but today I wish to discuss what has happened in the last 12 months.

Property values rose by 13.6% (Oct 13 to Oct 14) in Epsom. Good news all round, but when you consider property values in the town have previously dropped by 16.57% between March 2008 and June 2009, this is not as good as the media would have you believe. It should be no great surprise to hear that Epsom property values are starting to slow up as we head in to the New Year. Property values in the town were growing at an impressive 1.8% in July and 2.0% in August last year, but in Autumn months, they slowed down considerably, rising barely over 1% a month.

The reality is we have had a year and a half of decent market conditions in Epsom, but now all that pent up demand is starting to fade. The big question moving forward is whether the Epsom market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Epsom property market.

Looking at the UK as a whole, because we can’t look at Epsom in just its little own bubble, the recent rapid rise in house values in some parts of the UK in the early part of the year (especially in London), along with earnings growth that remain below inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand. This weakening in demand has led to a modest easing in both property price growth and sales. A moderation in growth looks likely into this year as supply and demand become increasingly better balanced.

Now with the General Election on the horizon, whichever Government takes power, they, along with the Bank of England, have a thorny job to do in balancing the expected rise in interest rates with the continued resurgence of the housing market, to ensure the property market doesn't drop and drag down the economic recovery forcing people into selling their property at a loss.

However, back to Epsom, long term property values which track peaks and troughs are more helpful to landlord investors. The questions I seem to be asked on an almost daily basis by landlords are:-

• “Should I sell my property in Epsom, or even buy another?”
• “Is the time right to buy another buy to let property in Epsom and if not Epsom, where?”
• “Are there any property bargains out there in Epsom?”

Many other Epsom landlords, who are with us and many who are with other Epsom letting agents, like to pop in for a coffee to discuss the Epsom property market, how Epsom compares with its closest rivals (Ewell, Ashtead, Burgh Heath and Banstead), and hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion.