Chelmsford City centre property market outperforms the Chelmer Village housing market by 10%

Following a discussion with a local landlord who has been reading the Chelmsford Property blog and wanted to know where he should be buying his next property, he has seen lots of nice properties in the City centre on roads such as South Primrose Hill, Rectory Lane & Rainsford Road, but he owns a couple in Chelmer Village already, so wanted to know what the benefit would be of buying in the City centre, if any at all. I did a bit of research into the matter for him and these were my findings.

The average price of 2 bed house in Chelmsford City centre is £236,479. When you consider the rents that are achieved in this area are an average of £975 pm, this gives us a yield of 4.9% per year. So is Chelmsford City centre the best investment? Well, in the Chelmer Village development, the average value of a property is £249,356 (for a 2 bed) and the average rent is £926 pm, giving a lower yield of 4.4% per year, making the yield/ return in Chelmer Village 10% less than property in the City centre, so surely City centre properties are the best investment, right?

This, however, 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 11 years, property values have only risen on average by 15% in the City Centre for 2 bedroom houses, which isn’t too bad considering there was the 2008 property crash). However, average property values for 2 beds on the Chelmer Village development have risen on average by 34% in the same time frame!

So, if you are invested in Chelmsford property, do you want capital value or yield?  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, please come and see me at our office in Duke Street, opposite County Hall in Chelmsford.

Merry Christmas!

I would like to wish everyone a very Merry Christmas, thank you for reading our little blog, we hope that you have found it informative. 

Enjoy the festive season, eat way too much and laugh lots!

We'll see you again soon

Steve and all the team @ Martin & Co

1 bed maisonette in Chelmer Village with a 5.5% yield!

Good morning folks, are we all getting ready for the Christmas countdown? Believe or not, people are still wanting to view property at the moment, so no rest for the wicked!

For those of you who are still property hunting, this little number caught my eye. It has the potential to snare you a fairly decent annual yield of 5.5%!

It is located in Chelmer Village, great for main road links, properties always rent really easily in this area. We just put a 1 bed flat on the market last week on the Wednesday, it was let by the Friday, very telling stuff. 

http://www.rightmove.co.uk/property-for-sale/property-38597748.html

Now, the details say that the property is in need of some improvement, I can see that the kitchen is a little dated, but there is no picture of the bathroom, this could mean that it is one of those colourful suite's, which may need to be addressed. Saying this though, the asking price does seem reasonable at £145,000. When you look at the rental price of £675 pcm, this is where we could be looking at a 5.5% annual gross return!

If you would like to pop in for a chat to discuss the property market at all and what you should be buying for investment, let me know when and I will get the kettle on!

What will the property trends be in Chelmsford in 2016?

I had an interesting chat with a landlord who uses another letting agent in the City after he popped into our offices for a coffee whilst his wife was doing some last minute Christmas shopping in . We got talking about the Chelmsford property market and thought other landlords might be interested.

You see, property values didn’t start leaping forward in Chelmsford until early 2013. Throughout the remainder of 2013, prices steadily increased. In 2014, property prices really rocketed. Several factors were in play here which caused this ‘property price bubble’. The public had more faith in the property market, having seen the activity from the previous year and also news headlines were encouraging, mortgage products became more available to first time buyers and also people who hadn’t been able to sell in previous years due to negative equity or just the property slump, suddenly were coming to market.

In 2015, whilst we have still seen a reasonable increase in property values. The start of the years was a bit slower, with the general election looming and people ‘waiting and seeing’ what was going to happen, however it did pick up almost straight away afterwards. We have also had the change with pensions this year, allowing people to have access to their money, which has brought out some new buy to let Landlords to the market.

As I mentioned in last weeks article, the Chelmsford market has become a lot more stable, with the increase in property values being more sustainable. This is due to the balance between supply and demand being closer together, (although still more demand than supply). This should mean that the Chelmsford property market will continue to steadily rise for the foreseeable future.

However, we have got the possibility of a possible Interest rate rise on the horizon. This could stem the flow of buyers if the interest rates go crazy whilst they wait to see what happens with them.  This could potentially flip the balance between supply and demand the other way. This would of course be worse case scenario, if the interest rise is done slowly and in small increments as it has been reported it will happen, then it should make that much of an impact on the Chelmsford property market.

The advice I would give to landlords is, as always, don’t just buy any old property in Chelmsford. 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 are questionable. But investing in property is also about receiving the rent.

On the one hand going for high yielding Chelmsford 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 (in areas such as Old Moulsham, Beaulieu Park & Chancellor Park) tend to be low, meaning if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.

As always, my door is always open for both current and new landlords alike. If you want to pop in for a chat about investing in Chelmsford, I’m always happy to give my honest opinion.

May I take this opportunity to wish you all a Merry Christmas & a Happy New Year.

What will the property investment market be like in Chelmsford in 2016?

A number of landlords, who own property in Chelmsford, have made contact with me recently asking for my thoughts on the future of the buy to let market in Chelmsford. In previous articles, we have talked about Chelmsford’s history of rents, property values, tenant demand and yields; all important matters for a landlord, but we haven’t discussed the future.

Property values rose by 6.22% in the last 12 months in Chelmsford, (Nov 2014 – Nov 2015). Good news all round. When you look back at previous years, the figures show that between Dec 2013 & Dec 2014, there was a 6.37% increase, between Dec 2012 & Dec 2013 an increase of 6.12%, between Dec 2011 & Dec 2012 a increase of 0.67% and finally between Dec 2010 & Dec 2011 a decrease of 2.11%!

This is showing that for the last 3 years, the Chelmsford market has been fairly stable overall, with similar increases in value for each of the years. With demand for property still high and the levels of property coming to market not quite matching this demand, (albeit, becoming a bit more balanced than early last year, when we saw the property market rocket into the stratosphere!), the signs are indicating that this steady increase in property values in the Chelmsford area should continue for the foreseeable future.

Looking at the UK as a whole, because we can’t look at Chelmsford 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 next year as supply and demand become increasingly better balanced.

However, back to Chelmsford; 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 Chelmsford, or even buy another?”

“Is the time right to buy another buy to let property in Chelmsford and if not Chelmsford, where?” 

“Are there any property bargains out there in Chelmsford?” 

If any Chelmsford landlords, both who are with us and many who are with other Chelmsford letting agents, like to pop in for a coffee to  discuss the Chelmsford property market, how Chelmsford compares with its closest rivals (Colchester, Ipswich, Brentwood etc.), 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. Please email me at stephen.frost@martinco.com or call me on 01245 330500!

In the meantime may I take this opportunity to wish you all a very Merry Christmas and a prosperous 2015.

5.8% Yield in Springfield, Chelmsford

I couldn't let today go past without posting this property for you all to see, just in case it gets snapped up quickly! http://www.rightmove.co.uk/property-for-sale/property-38228109.html
The property is very nicely presented and looks as though it would appeal to a lot of potential tenants. 

It's a 'ready made' investment, being sold already with a tenant in situ, paying £660 pcm until April 2016. Compare this against the asking price of £134,995 and you could be looking at a potential yield of 5.8%. This is of course before taking into account any service charges or ground rents, so make sure you do your homework before jumping in feet first.

These properties in Springfield are really quite popular little units, there is always demand for them and if you have the option of having a tenant in place already, that's half a job already done. Make sure that your solicitor makes inquiries into their referencing & rent payments etc to make sure that you're not buying a whole heap of trouble!

If you would like to have a chat about the property market and buying to let, feel free to pop in for a coffee. 

In Chelmsford, semi’s account for 30% of property sales. Is that good?

Chelmsford attracts all sorts of property hunters seeking a home in our city and strikes a wonderful balance between old and new. Fortunately, just about every accommodation preference can be catered for, from highly desirable detached houses , as well as popular 1930’s bay front semi detached houses, late Victorian terraced houses and modern luxury apartments dotted around the City.

However, with newspapers and the media giving mixed messages on what is exactly happening in the City, let us have a look at what has happened over the latest 6 month data for between February 2015 & July 2015, in particular, what type of property is actually selling.

Between February 2015 and July 2015, 487 of the 69,667 properties in Chelmsford actually sold. The best performing type of property was, the semi detached house. 148 semi’s were sold within this period, with an average sale price of £299,696, representing 30% of the property sold in Chelmsford (which when you consider only 31.5% of Chelmsford property is semi detached, this means they have done well).

In very close second are terrace houses. They represented 27% of the sales, giving that terrace houses only make up 20% of the property in Chelmsford... this is fantastic news for all terrace house owners.

Of the 11,610 flats / apartments in Chelmsford, 106 changed hands between Feb & July, showing that whilst 16% of properties in Chelmsford are flats/apartments, they very respectably, represented 21% of the sales.

However, it is the detached houses that seem to have performed the worst. Whilst there are 20,907 detached houses in Chelmsford, (representing 30% of the housing stock), only 97 changed hands in the 6 month period, representing just 19% of the sales.

What does this mean for the property owners of Chelmsford? It means that there is a fairly even property market in Chelmsford. Most homeowners start with a terraced, aspire to move to semi detached houses, then as finances allow, they move to a detached property, which is where they will generally stay put.  The majority of apartments, especially in the city centre, may have been purchased by landlords to rent out to tenants, so they have no need/want to trade up on the property ladder, which is why these sales are a lower percentage compared to the others

In general, the Chelmsford property market is in full swing and ‘negative equity’ is becoming a long, distant memory. We are seeing some good sales and if you look hard enough, you may chance upon a "hidden property gem" in the most unlikely of places.

If you would like to discuss anything further then please pop in and see me in our office on Duke Street

Lovely 2 bed apartment in Chelmsford for Buy to Let...

I saw this property this morning and thought it looked a little bit tasty, so I wanted to share it with you all. 

It's a modern apartment at the bottom of Moulsham Street, big ticks on the location front. Looking at the photos, the condition looks to be pretty good and well presented, another big tick on the letting front!

I would expect a property like this to be let for at least £850 pcm, which if you calculate it against the asking price of £200,000, could potentially generate you an annual yield of 5.1%. As with any leasehold property, make sure you check out what the service charge information is as this will have an effect on your overall return. 

If you would like any advice on a particular property you have seen and wanted an honest opinion on what it would rent for, feel free to pop the web link on an e-mail to me. stephen.frost@martinco.com

Happy hunting!

Why should you consider buying to let in Chelmsford?

 

We have mentioned in previous articles about the difference between Chelmsford and the surround towns, such as Witham & Braintree, this always gets a response from people asking me lots of questions. This time, I wanted to highlight, why you should be looking at buying a property to let in Chelmsford.
Many people in our part of Essex, over the last few years, have seen the buy to let market become all about nest egg investment. It has been fuelled by pitiful interest rates on building society savings and reflects the fact that building society savings accounts are paying half a per cent interest and pension returns are struggling to match expectations, turning more and more people into landlords to secure their future.
So what can you expect from your rental property investment? In the short term, rental yields are important, and in Chelmsford, the average annual yield is in the order of 4.5% per year. However, that is based on averages, and as most landlords in Chelmsford tend to buy starter home homes, apartments and terraced houses, the majority of which are achieving 5% to 6.4% per year depending on location and price in the City.

In the long term though, the question of capital growth is as important, if not more important (because if you have great short term yields, but the value of the property doesn't keep up with the rest of the market, you will have an asset that in real terms is dropping). As we mentioned in a previous article, average property values in Chelmsford currently stand at £337,324. Property values in Chelmsford have risen by 19.4% in the last 5 years. On the other hand, property investment is a long term game, so I wanted to share with you the research I did for a couple of Chelmsford landlords.
Roll the clock back 10 years to 2004/2005 when the average value of a property in Chelmsford was £177,700. 15 years back to 1999 makes really interesting reading, as the average Chelmsford property value was only £107,800.  30 years ago was around £50,000 and just for a bit of fun, we looked at 1974 at it was around £14,800!
So, not only can you get a better return on your investment with regards to the annual yield, compared to savings accounts at the moment, you also have got the additional capital growth with a property. Chelmsford is also still developing, with more properties and industry being built, this should make for a stable market, bringing new people to the area. This will also keep the demand for property high, which will maintain and grow the property prices further.

5.5% Yield on this 1 bed apartment in Springfield, Chelmsford...

http://www.rightmove.co.uk/property-for-sale/property-49825087.html

Good morning! on my morning Rightmove travels, I came across this little 1 bed apartment for sale in North Springfield, with a guide price of £115,000 - £125,000. This type of property is exactly what the market needs at the moment. With the influx of brand spanking new 1 & 2 bed high spec apartments coming to market, the lower end of the market is in need of supply!

These apartments are quite basic, but they are good sizes and the location is quite popular for renters. This particular one looks as though it's got radiators, which means that the heating may have been upgraded to gas, which is a bonus. Most of these have still got the original storage heaters. Of course you will need to double check this with the agents to make sure this is the case. 

1 bed apartments in this area, easily rent out for around 575 - 595 pcm at the moment, so even if we are conservative and base our calculations on the bottom figure, you could still be looking at an annual return of 5.5%, which is pretty good. 

Before you go jumping in feet first, check out how many years are remaining on the lease, a lot of these properties in this area have short leases, this could cost you money in the future when you come to sell it to extend. When buying an investment property, you need to make sure you have your eyes wide open. 

If you would like any advice on buying a property to let, feel free to givr me a call 01245 330500

Brilliant rental property in Chelmer Village, Chelmsford

Brrrrrrrr.... bit chilly out there isn't it!

Thought I'd warm the 'ole cockles up with a tasty property treat this morning. Just check out the link below.
http://www.rightmove.co.uk/property-for-sale/property-38018889.html

This house looks really lovely and in pretty good condition as well, perfect for what tenants are looking for. It's also located in Chelmer Village which is again a bit of a lettings 'Hotspot'.

It has just come to market with William H Brown with an asking price of £200,000. Which to me, doesn't seem to be too unrealistic, given the condition. Similar properties to this have rented in the area for around the £900 pcm mark. So when we do our calculations to get our annual yield, you could be looking at a gross return of 5.4%.

This is a pretty good return for an investment property, I suggest that if you are interested, you better get yourselves an appointment booked pretty sharpish so that you don't miss out.

As always, my door is always open. If you would like a coffee and a chat, come on in, my office is on Duke Street

Interest rates set to rise – How will that affect the Chelmsford property market?

 

There’s been a lot of talk in the press recently about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 27,282 homeowners in Chelmsford, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 8,349 rental properties in the City, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of. 

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Chelmsford

 would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.

Those Chelmsford landlords who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It’s easy to say you will look at your mortgage next month, then, before you know it, Christmas will be here!  Don’t forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Chelmsford and seriously consider fixing your mortgage rate now.  You didn’t buy your Chelmsford buy to let property for it to become a millstone around your neck. It’s all about mitigating your costs and maximising your income to make your Chelmsford buy to let property the investment you want it to be.

However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I’ll explain why. Chelmsford landlords have see their return on investment for their Chelmsford buy to let property, over the last 5 years, perform very well indeed with Chelmsford property values rising by 19.44%. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Chelmsford! 

5.6% Yield in The Village, Chelmsford...

Well, we're here again at the end of another week... soon be Christmas!!

I thought I'd take a bit of a risk with this one. It's an apartment on Parkinson Drive, in a development known as 'The Village' which is very popular with landlords and tenants alike.  The reason I wanted to point this one out is because of the price, it seems to be on the cheap side with a guide price of between £155,000 - £165,000. There are other properties in the area coming on and selling for nearer the £170k - £175k mark, so make sure you go in with wide open eyes on this one, there's probably a reason! Another telling fact is that there are no internal photos on line, another warning. But if you manage to get it cheap enough, it doesn't matter if you need to spend a few quid on it.
http://www.rightmove.co.uk/property-for-sale/property-53559197.html

Similar properties in this area are renting for around the £775 pcm mark at the moment, therefore you could be looking at a gross yield of 5.6%! not too shabby is it.

It's definitely worth doing a little bit of research on this property to see what the situation is, because you could end up with a corking little buy to let property. 

If you would like any pointers on where to start your property search, give me a call and I'll point you in the right direction

Chelmsford Property Values 8.9% higher than year ago

Chelmsford property values rose by 1% last month, meaning they are 8.9% higher than 12 months ago. Overall, I expect future property price growth to remain firm, built on the foundations of an improving market, strengthening economy and very low mortgage rates. In fact, talking to a number of other agents in the city, mortgage arrangers and solicitors (all of whom have their direct finger on the pulse of the Chelmsford property market), the steady long term growth in Chelmsford property prices tied in by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment, means the slow but steady upward momentum of the Chelmsford property market is likely to continue. 

However, there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Chelmsford property market.

Interest rates first – It has been announced that the Bank Of England will be seriously considering raising interest rates around Christmas time. An increase in interest rates will temper demand & result in a marked slowdown in house price growth. Now I am not a mortgage broker and can’t give advice, but rates are only going in one direction, so, landlord or homeowner, this might be a time to consider fixing your mortgage rate?  Don’t say I didn’t warn you!

Tie this in with the stricter mortgage lending rules which were introduced in 2014, this means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore, when mortgage rates rise, the affect on home movers sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth.

Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Chelmsford is at an all time low. One reason is the large number of buy to let landlords who have bought Chelmsford property over the past 15 years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties longer, meaning there are less properties coming onto the market, thus restricting supply and sales. In fact over the last 3 months, only 5,903 properties in the Essex County Council area have changed hands and sold, compared to 6,720 in the same time frame in 2014, a significant drop of 13%!

If you are planning on investing in the Chelmsford property market, or just want to know more, things to consider for a successful buy to let investment, drop me a note to stephen.frost@martinco.com