Property news from PWR Letting Agents Nottingham and Mansfield

With mortgages still hard to come by and the housing market said to be bottoming out some time next year, demand for rental property has never been higher, with rents increasing in some areas. This all bodes well for investment landlords as gross rental yields of between 8-10% can now be achieved on some properties and a strong rental income often indicates where good value lies.

Unreasonably high yields on an asset class as a whole can tell you where future capital gains are to be found but doesn't necessarily predict the timeframe. We have seen this in the student accommodation sector where, a relatively unknown asset class until 10 - 15 years ago, student accommodation has become better known and prices duly rose driving down yield percentages. Nonetheless, even as yield% fell, rental income in student accommodation rose strongly meaning that the capital growth was doubled up in some situations.

A high yield % on a specific property can also tell you whether you have achieved a genuine discount to open market value on a property against similar properties that have similar rental income but are higher priced. In these cases the timeframe for your property being worth more than you paid is normally very short as you are just buying well and not trying to pre-empt a market shift in valuations.

The quality and strength of the rental income is everything when making these valuation judgements. If there is poor rental demand the yield may evaporate. The UK housing market is one market where the rental demand is currently stunning, the supply is disappearing and letting agents in general are crying out for more good quality stock. We see it in the newspapers every day now and savvy investors have known this was coming for a while and they are all buying as much stock as they can whilst times are this good.

With this in mind we have clients who have recently bought properties at a gross yield of between 8-10% and others are available if you know where to find them. Two examples are as follows :

1. Newly converted first floor 1 bedroom apartment with fully fitted kitchen finished to a high specification in Sutton in Ashfield, bought for £50,000, rental income will be £395-£425 pcm. That is over 9% return !

2. 1960's build 2 bedroom ground floor apartment on the edge of Mapperley Park in Nottingham bought for £53,000, needs £3,000 spending on it. Rental income will be £495-£525 pcm. That is over 10% return !

If you are interested in this type of opportunity, please contact me directly or speak to Stephen Barnes at our Mansfield Office or Adam Kingswood at our Nottingham Office.Kind Regards