Investors back property

PUBLISHED: 15:49 15 June 2006 | UPDATED: 11:01 22 October 2010

Investors are back in the housing marketplace in force, after being noticeable by their absence last year and re-emerging cautiously at the start of 2006. On-going low interest rates and a resurgence in prices have seen a large increase in buy-to-let purchasers, pitching them once again head to head with first-time buyers. Property writer JENNY GILHEANY investigates.

Estate agents in Norwich and the county say recent dramatic fluctuations in the London and New York stock markets are again helping to switch the investment spotlight back to bricks and mortar as a safe long-term hold.

Local investor activity at the lower end of the price scale is involving the considerable amount of new-build apartments and townhouses coming through the sales pipeline in Norwich - and elsewhere in the county - as well as traditional terraced homes and second-hand flats. However, there are growing concerns that first-time buyers might once again start to lose out if prices of cheaper homes continue on an upward curve.

Continuing demand from tenants for well-located and presented rental properties is stimulating the private sector, preferably for homes within easy walking distance of work and leisure facilities. New-build homes for rental also score well on the parking front, many having valuable designated parking.

Long-established Norwich estate agent Chris Hall, right, immediate past president of the National Association of Estate Agents, says investors must focus first on their target clients.

“The most important issue is whether you hope to rent your property to a family, students, professionals or would-be first-time buyers. This question should be answered before 'which property and where?'.”

Mr Hall has recently opened a dedicated lettings and management office at Cromer Road with colleague David Baker because of the high volumes of such business in the city.

“The demand is clear,” he adds. “Around 65 per cent of all our registered tenant applicants are prospective first-time buyers or relocators looking to spend between £400 and £750 per calendar month. They require clean, well-maintained, unfurnished or part-furnished properties with at least one parking space and a shower.

“That said, the single most important criterion they want us to match is location, within a 20-minute walk of the city centre, close to local amenities and within a 10-minute walk of a transport network, either bus or rail.”

He says buy-to-let investors have been 'out in force' locally this year. “The stock market is all over the place, and, in my experience, tenant applicant demand goes from strength to strength. We have a steady flow of applicants outside Norwich, within a 20-30 minutes drive from the city, and an overwhelmingly high daily demand in Norwich for properties between £400-£750 close to the university and hospital.”

Mr Hall believes that yields on well-located and researched rental properties lower down the price scale should be fine in the medium term, initial outlay relatively low, and long-term capital growth prospects excellent.

Giles Hart, right, Norwich-based area director of the William H Brown agency, says investors are looking for a high rate of occupancy, and are therefore carefully selecting homes to buy on that basis. “The hassle-free modern properties close to good employment centres are becoming 'hot property' - areas near the UEA, the hospital and, increasingly, Broadland Business Park are being singled out.”

Mr Hart, chairman of the 30-member Norwich & District Association of Estate Agents, adds: “As ever, the trend for city centre living is still strong, and rental properties in this sector are the most in demand, and continuing to secure the higher rents.”

Ian Harris, left, associate with Watsons Residential in Norwich, says buyers are looking to invest in three sectors - property under £150,000 in city and suburbs; homes with a stronger than normal opportunity for capital growth, currently smart new two-bedroom city apartments; and student lets where excellent yields are still possible.

From an agent's viewpoint, the properties in strongest demand are those beneath the average city rent level of around £630pcm, particularly terraced houses. “I have worked in and around Norwich for just over 20 years, and have never known a time when these popular little Victorian houses at affordable rent levels have not been in demand.”

Mr Harris is current secretary of the Norfolk branch of the National Association of Estate Agents, and says renting has moved from unfashionable in the 1990s to an attractive proposition now.

“Some tenants will rent cheaply so they can save a deposit to buy; some who can't buy what they really want will rent it instead; others wish to retain maximum mobility so they can take up their dream job in London when it is offered. As long as this remains the case, the rental sector will retain its vibrancy.”

He believes unfurnished lets are the way forward. “People tend to have plenty of their own chattels these days, and those who don't will usually be shorter-term tenants, perhaps because they simply require a bolt-hole while they consider longer-term options.”

Roger Lake, right, director of the TOPS Property Services chain with branches in and around Norwich, says investors have been encouraged by the improved climate.

“First-time landlords are very active at the moment, with two and three-bed houses in particular demand and most purchasers searching at the lower end of the market.

“Tenant demand is strongest in the suburbs, with Catton, Sprowston, Thorpe, Dussindale, Thorpe Marriott and Eaton being regularly requested by new tenants. Out into the county it is the commuter villages that have a strong appeal, with those south of Norwich being in particularly short supply.”

However, Mr Lake warns that there is an over-supply of rental homes on Riverside, and adds that some larger city centre flats are also sticking.

Martin Cunningham, chief executive of the Howards Group, Norfolk and north Suffolk's largest independent estate agency, also reports firm and consistent demand for terraced properties in north Norwich, Thorpe Park, Dussindale and the Golden Triangle, with two and three-bed homes achieving £575-£625 per month.

Howards manages a portfolio or about 1000 properties, and Mr Cunningham, left, says there is also strong demand in north Yarmouth, and in Gorleston, Hopton and Bradwell, with mature two-beds achieving £450 monthly and three-beds £500 plus.

“New-build two-bed homes in Gorleston near the James Paget Hospital are achieving £600 plus monthly, and Lowestoft rental hotspots are Parkhill, Carlton Colville, Pakefield, Kessingland and Gunton. Good value purchases include a recently built two-bed terraced house acquired for £114,000, now let at £495 to yield the landlord in excess of five per cent.”

Mr Cunningham says all three Howards branches dealing with letting and management report more demand for unfurnished rental properties, and have a good database of waiting and referenced tenants.

Lack of affordable housing is helping to keep demand for unfurnished rental property high, according to Phil Cooper, right, manager of the Norwich office of Keys Estate Agents.

He comments: “Flats and modern houses seem to be the preferred property choice of investors at the moment, with all of our offices from Norwich to the north Norfolk coast reporting continued activity from this sector of the market.”

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