I got talking to one of our Landlords the other day, and he asked me this question. It’s an interesting
one and worthy of elaboration here. But this is essentially what I told him.
Flats in Leeds generally rent very well and they do get healthy yields. As usual location is key. For
example. flats in the city centre – whether they be 1 bed or 3 beds – let like hot cakes and voids are
pretty much non-existent. Maintenance costs are generally low and depending on the level of rent,
tenant calibre is generally high. They may attract young professionals, or possibly students
depending on the location and proximity to their university. Flats therefore are generally a relatively
The other positive is that you can usually pick up flats for a decent price nowadays. Which leads me
on to me next point, price…
Between 2000-2008 (when the crash hit) developers were taking advantage of the economy and
rising property prices and they were building flats like they were going out of fashion. This was
especially the case in Leeds and other cities. Leeds city centre in particular saw a raft of large new
developments of flats, but this building spree also spilled out into the suburbs. Headingley,
Horsforth, Chapel Allerton and many other suburbs also saw their fair share of this type of
development. Theses flats were largely sold off plan and unfortunately for more money than they
were worth (warning – developers are very good at this and new build usually depreciates after the
Then the crash hit and this saw between 20% to an eye watering 40% wiped off the value of these
flats over the next 12 months or so. To make matters worse the sudden over supply meant that
some of the flats, especially in the city, couldn’t find tenants. As a result, some landlords couldn’t
keep up with mortgage payments and re-possessions rose sharply. The large Clarence Dock
development was initially a massive flop and it felt like a ghost town for a couple of its early years.
At the time of writing in August 2018, most (but not all) of these developments have just about
recovered in price and the landlords that were caught up in this, are just starting to poke their heads
out of negative equity 12 years later! Some of the owners of the flats have had to sell in negative
equity and take the hit due to changes in their personal circumstances.
What’s the lesson here? Well, we need to know that these things to work in cycles and people have
short memories. Keep an eye on the cranes in the distance and be wary of the past.
Whether or not you should buy a flat in Leeds also depends on the usual supply and demand.
As always it will also depend on the balance of yield and capital growth you can get. A mistake some
landlords make is that they look at the gross yield in making their buying decision. It would be wiser
to use the net yield since leasehold properties come with service charge which covers maintenance
of the building, insurance, cleaning of communal areas and windows etc, as well as ground rent.
The other thing to bear in mind is the term of lease remaining when you purchase. If this is less than
around 70 years mortgage ability may become difficult. Remember when you buy a leasehold
property like a flat, you are purchasing the lease not the actual property itself. Therefore you have
less control over your investment compared to when you buy a freehold property like a house, when
you have complete control.
It should also be noted that flats don’t typically appreciate as well in value as houses. In addition, re-
sale of flats is generally more difficult than re-sale of houses. Flats are generally regarded as a more
of a temporary home for younger people – for example families would usually prefer more space, a
garden and so on. For these reasons flats can be favoured by tenants, and conversely are favoured
less so by home owners.
If you like to discuss anything property related, it would be great to hear from you.