I recently went out to visit a first time Landlord who is about to let her 2 bed ex council semi detached home in Headingley after moving in with her boyfriend. She bought the house in 2015 and has been living there until now, so this wasn’t initially planned as a buy to let.
She paid £134,000 early in 2015. Upon studying the comparable sales in today’s market, I could see the range was likely to around £170,000 – £180,000 now. My thought was ‘Wow, that was a great buy!’. Although not looking to sell now, this shows an increase in value of up to 28% in 3 and a half years, which is a very significant up lift in such a short time frame! Researching further I found that the average price for this postcode had increased by 26% over the past 5 years.
Upon visiting the house, it was apparent that the owner, a lady in her mid thirties, has looked after the house very well. Although she hadn’t needed to upgrade the kitchen and bathroom (which are common expense areas) she had finished the house to a high standard having put new flooring and carpets down, re decorating, and improving the roof and garden. The value in my opinion was now approximately £180,000. Still, she agreed the uplift in value was impressive and this was certainly more than she had spent. However, we weren’t there to talk about a sale.
This, like other ex council properties, was very generous in terms of size with each room having plenty of space, as well as good storage. The garden was also larger than you would expect for an average 2 bed house.
I gave a rental valuation of £795 which was in line with her expectations. This gives a healthy yield of 5.3% currently. The property would let very quickly to a professional couple who in all likelihood would stay an average of 2 years or more providing a stable income for the owner. Rents are also rising in the area and she views this as a good long term investment which will continue to enjoy good capital growth.
This growth in capital value still surprised me so I wanted to check this against the nearest semi detached houses that weren’t ex council properties. I ran the figures for a road less than a quarter mile away lined with semi’s, and found that the average value had grown by 25% over the past 5 years on this road (compared with 26% growth on the ex council postcode I visited).
Our usual experience of ex council property values in Leeds is actually different to this and I would like to point that out here. Generally speaking, ex council properties do provide a stable and healthy rental yield. However we usually find that they don’t appreciate in value as quickly as non ex council properties in the same area. As we have seen above, their rate of appreciation can vary with some areas seeing quick uplifts where others see values staying flat, or sometimes even a small decline in value in recent years.
As always, research and in depth local knowledge is key before making an investment. If you would like to talk to me about purchasing a property like this, please come and see me.