I spotted this 3 bedroom, 2 reception room terrace come onto the market towards the end of last week but I've only just got round to doing the blog post now - and in the few days that have passed it's Sold STC! I thought it worth posting nonetheless to show what can lend itself to the professional Multi-Let described in the recent article
Firstly it's in a great location in the 'nice part' of Roker, near the park, a short walk to the seafront and close to both the Seaburn and Stadium of Light Metro stations
It's also in great condition so needs no work
It has 2 double bedrooms and a 2nd reception room that could be used as the 3rd double bedroom - the real 3rd bedroom (a single) could be used for storage or a study
The kitchen and outside space look really good too
Priced at £15,4950 it wouldn't work as a family let, this would be the sort of property to get better-than-average capital growth but the yield would be a disappointing 5.8% based on an ambitious but achievable £750pcm
Do it as a Multi-Let based on 3 lettable double bedrooms at £100pcm (bills included) and it will return 10% Gross Yield
Click here for details http://www.rightmove.co.uk/property-for-sale/property-48473680.html
Don't call me to discuss this one! It's gone! But do call to discuss this type of investment or any aspect of the Sunderland property market - call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
Investors who buy well in Sunderland can achieve consistently better Gross Yields than in many parts of the UK but what if that isn't enough? How do you make +10% Gross Yields in Sunderland without entering the risky Student market or the potentially more traumatic & costly Housing Benefit sector?
Renting a property out on a room-by-room basis to non-students is not new in the UK (I first became aware of the growing trend in the Southeast & Midlands back in 2010 and spoke about it as a possible strategy to get better yields at the 'Future of BTL in Sunderland' event in 2011) but it does seem to have taken a while to take hold in Sunderland
The benefits are obvious - taking this approach with a 3 bedroom, 2 reception room property in Sunderland that would return around £600 - £650pcm rented to a family could return £1,560 if rented out at just £90 per person per room per week to 4 tenants (using 1 of the reception rooms as a bedroom)
There have been early-adopters who've had success in Sunderland - I've personally been involved in finding professional tenants for Multi-Let properties in Thornhill and Roker and both Landlords have continued to have success with this approach
There are dedicated websites such as www.easyroommate.com or www.spareroom.co.uk which I've successfully used in the past and are used by agents, private Landlords and also tenants looking to fill a gap (or to find a new tenant to take over their tenancy)
You need to tap into the tenant mindset that they'd rather pay around £400 for an ensuite room in a very good shared house (with all bills included) in a decent area than £400 on a not-too-great 1 or 2 bedroom flat on their own
With this in mind this isn't a low cost strategy - to work out the property will need to have at least 3 double bedrooms and given decent working tenants will want some shared space, if there isn't a good sized dining kitchen as a minimum then it will be necessary to retain a reception room (rather than succumb to the temptation to "stick another bedroom in")
Ensuite shower rooms and wall mounted TV's in each bedroom (with the cabling chased into the wall rather than hanging down to a plug socket!) will increase appeal and rental return and you shouldn't overlook the outside space - an attractive, useable (but low maintenance) garden or yard will extend the living space and make the property feel that little bit more homely
I often hear this approach being described in investor circles as "Boutique HMO" and whilst I personally dislike the 'Boutique' term it does serve to correctly position the sort of quality approach that will be required in the decoration, fixtures & fittings, furniture and the 'service' provided (Landlords paying for and arranging regular cleaning is very much the norm)
On the subject of HMO's you'll also need to be aware that the property will be classed as an HMO (House of Multiple Occupation), with all the additional paperwork & regulation this entails (but the worst of this is reserved for HMO's with 3 or more useable stories and 5 or more bedrooms), so going for 3 or 4 rooms will minimise the impact of this and is certainly what I'd advise for the novice or relatively inexperienced Multi-Let Landlord
It won't work in all areas & with all properties - infact the outlying ex-council areas I regularly suggest Landlords look to in order to secure long term working family tenants are exactly the wrong areas for this approach!
You'll need to look to the 'better' areas, near the Hospital on the Chester Road rather than the Hylton Road side will be good (High Barnes & the 'ABC Streets'), near the Metro will be a bonus (as you may be appealing to cost-conscious tenants who may work further afield) so around Thornhill, Roker and Seaburn could also work well - but this will increase the property price
With that in mind it's not a cheap or easy solution for the student Landlord who's suffering due to students turning to self contained 'Student Pods' en masse
It will be interesting to observe what happens as I can already see that some student Landlords in Sunderland are trying this on the cheap and ending up with a not-much-better-than-a-student-property, and I see it staying empty as a result...
There are other downsides
You'll need to work out your returns based on 100% occupancy being a rarity, given tenants will be coming and going at different times (but the upside for a stressed out student Landlord is that there won't be the manic annual obsession with securing tenants for September 1st each year)
The upside of this is if you do it right you'll benefit from word-of-mouth and could find that you have a waiting list ready to take a room when one becomes free
There will be more wear and tear
You'll need to do it Bills Included and take the hit on the excessive use of utilities or introduce a Fair Useage Clause (which may be accepted by students but less so by professionals), you'll also need to throw in a tip top broadband & Sky or Cable TV package
Overall this is a big leap from the run-of the mill letting to a single person, couple or family and it won't be for everyone...but for those willing and able to make the leap it could be a lucrative way to diversify
Give me a call if you'd like to discuss this investment strategy in more depth, call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This 2 bedroom ground floor Moorside flat has just been reduced by £7,000 to £63,000 and at that price looks to be a bit of an investment bargain
Regular blog readers will know that Moorside flats are popular with Doxford International workers and that ground floor flats are the most popular due to the private rear garden
This one doesn't have gas central heating so investors would be advised to consider and budget for this, as it will increase popularity and the chance of tenants staying long term (we do find tenants in the flats with only electric heating don't stay to endure 2 winters...)
As they've knocked £7,000 off the price the owners may be resistant to reduce it further so think worst case and add £5,000 onto the asking price to install GCH and redecorate following this and it will still return 7.9% Gross Yield based on a very realistic £495pcm (it could achieve the upper end of what's achievable in Moorside given it has a conservatory and with GCH, especially and if you also gave the bathroom some attention whilst you were at it)
Click here for details https://www.onthemarket.com/details/1553274
Ignore the 'Help to Buy' sticker...annoyingly Andrew Craig put this on every pic, you aren't forced to buy using this scheme!
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com to discuss this or for a free, no obligation chat about any aspect of the Sunderland property market
I've previously updated the blog with details of the success one of our Landlords had buying a similar property to this (which was highlighted on the blog), getting our trusted contractor to do it up and letting it out earlier this year
This is a similar property in a block just round the corner and whilst it's not the absolute steal that the Cragside House property was it still looks likely to deliver a very healthy 8% Gross Yield
Priced at £55,000 it may need a couple of thousand pounds worth of work to freshen it up so based on reasonably knocking this off the price it will deliver the 8% Gross Yield based on £400pcm rent
Click here for details https://www.onthemarket.com/details/1782943
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com to discuss this or any aspect of the Sunderland property market
This 3 bedroom is in a sought after row of Georgian style semi's that everyone in Sunderland will immediately recognise and with a little bit of TLC will be popular with family tenants
It's on the market for £110,000 but needs decoration, flooring and the kitchen looks a bit tired & dated
It's relatively cheap for this street (the last one sold for £140k in April, the one before that sold for £117k) but this reflects the need for work and if you could negotiate the price down to £100,000 (knocking off the £10k it will cost to do it up) it will return 6.5% Gross Yield based on a very realistic £595pcm rent
Click here for details http://www.rightmove.co.uk/property-for-sale/property-34298031.html
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com to discuss this in more depth or to speak about any aspect of the Sunderland property market
The Chancellor George Osborne sprung a rather unexpected and nasty surprise on Landlords in the recent budget, by restricting interest rate relief on Buy to Let mortgages - now the dust has had time to settle I thought it worth taking a look at what it may mean for Sunderland Landlords
The Chancellor has cut the tax relief that private landlords receive on their mortgage interest payments, cutting it from 40% or 45% for higher rate taxpayers to 20% by April 2020
The new restrictions start in the 2017-18 tax year on a sliding scale, and become fully effective in 2020-21
The changes will only affect higher rate tax payers, so Landlords who only pay the basic 20% rate of tax will not be adversely affected
This phasing in will mean that 25% of this extra tax will be payable on profits made in the April 2017- April 2018 tax year, 50% in April 2018-April 2019, 75% in April 2019-April 2020 and 100% in April 2020-April 2021 meaning that the full effect of this wont be felt until your January 2022 personal tax bill is due
On a property worth £100,000, a landlord in a higher tax bracket with an 85% loan-to-value mortgage and a mortgage interest rate of 5% would end up losing £100 a year. When the rate reaches 5.5%, the burden on the landlord's finances will jump again, triggering a loss of £440, and then to £780 when the rate reaches 6%, according to financial experts
Industry professionals say George Osborne's Budget move is likely to hit people who have sunk their money into property because they were getting no interest on their savings in the bank, or following the financial crisis, no longer trust the pension model, and are relying on rental income
Ultimately this change in tax relief for Landlords will not only affect landlords, it will also be detrimental to Tenants because ultimately, if Landlords' margins are squeezed, they will be forced to increase their rents to make their investments work, or sell up
It is still early days and we need to see how HMRC will implement some of these changes but here are some initial thoughts on how we could tackle this change
This change only seems to affect individuals and partnerships/LLPs. Ltd companies seem to be excluded. Landlords could potentially look to purchase their future properties into Ltd companies (if this works Buy To Let lenders will become more open to this-otherwise commercial lenders will already facilitate this)
For those who already own properties personally or in a partnership/LLP they may want to transfer them to a Ltd company (but they will be subject to capital gains tax and stamp duty)
An easier way to do this if you want to keep your current mortgage would be by using a deed of trust, which would transfer the beneficial ownership to a Ltd company
A good solicitor can draw one of these up for you but please seek professional financial advice before doing so as it will affect the way you get your money out in a tax efficient manner (you will either need to take the money out on the form of dividend, salary or bonus, none of which are tax efficient) and furthermore tax on gains will always be payable at some point (capital gains tax stops being payable when you die but Ltd companies are immortal!)
New analysis from accountants PwC featured in an excellent Daily Telegraph article has shown that if a private landlord transfers one or more properties into a company structure, known as incorporating a business, the total tax rate is greatly reduced.
"This is because a company is paying tax on the actual profit and therefore the rate does not fluctuate wildly. If the profit reduces, so does the tax," said Paul Emery, a tax partner at PwC.
"If the rental property is run privately, there is a scenario where because you no longer get full tax relief for your expenses, you can pay tax even if there is no profit," he added. "That means potentially enormous effective rates of tax."
By 2020, when interest rates are likely to be higher, the levy on a property worth £100,000 to a private landlord in a higher tax bracket - with an 85pc loan-to-value mortgage and a mortgage interest rate of 5pc - would be 106pc
As a result they would expect to suffer an annual loss of £100
If the same property were run as a business, the landlord would pay a tax rate of just 49.2pc and bank £888.
If mortgage rates go up further, the contrast becomes more stark
If rates hit 6pc, a property owner operating under a business umbrella would again pay 49.2pc, but the private landlord would pay 186.7pc tax, and make an annual loss of £780, according to the PwC model
"Other taxes such as stamp duty and capital gains tax could affect profits from a rental business, especially for a landlord with only a handful of properties," warned Mr Emery
If the owner is a sole trader, he would pay stamp duty again on the "incorporation of the business" based on cost of the property
But if the owner is in business with a partner, they could enjoy some stamp duty relief
Alternatively, if a sole trader or business partners own more than six properties, it is classified as a commercial property business and they will only pay a flat 4pc stamp duty on the sale
"The big tax difference is capital gains tax when the company finally comes to sell and dividend the profit to the owner at 49pc compared to 28pc for a private landlord - but at least you would know what your effective rate of tax is, and if you are reliant on the income rather than the appreciation of price, it may be a hit worth taking," said Mr Emery
"Although incorporating your business helps you guarantee your monthly tax bill, it is not a magic solution. Tax is only one consideration when forming a company. For example, audited accounts might need to be filed," he added
Savvy landlords will look to purchase more properties that need refurbs
Whilst another change to the is that Landlords can no longer claim 10% tax relief for wear and tear (and instead must claim back the actual amount spent) as long as the property is in a lettable condition when you buy it (but still needs redecoration) and comes into the lettings market before the refurb is done most repairs/replacements such as kitchens, bathrooms, paint etc can be offset against all property income from your whole portfolio
This means that a £7,000 refurbishment could potentially come off all of your other rental income profits
So the solution for those most heavily affected by this tax change could be to buy a few properties that need a refurb every year
Given the changes will only take affect between 2017 and 2020 there's plenty of time to prepare and undoubtedly there will be further advice and guidance over the coming months with strategies being developed to mitigate against the losses
As always my advice would be to consult an expert on such matters - the above are just a few pointers I've picked up from reading exhaustively about this since the change was announced
If you'd like to discuss what impact this change may have on your rental income speak to an accountant or tax adviser (I can recommend one if you wish) or to discuss any aspect of the Sunderland property market please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This 2 bedroom end terrace in Hylton Castle has been renovated internally to a superb standard and when combined with the large rear garden and off-street parking it's bound to have a queue of tenants lining up to rent it
It's being advertised at OIRO £80,000 and will easily achieve £495pcm (over £500pcm may even be possible but it will probably take a bit longer to let and therefore make little commercial sense) which will deliver 7.4% Gross Yield
Click here for details https://www.onthemarket.com/details/1298217
Call me to discuss this one or email neil.whitfield@belvoirlettings.com but be quick - this will appeal to both investors and owner occupiers (first time buyers) so I'm pretty sure it won't be on the market for long!
This 4 bedroom mid-terrace in the popular Eden Vale area is walking distance to Sunderland University and the City Centre and has tenants secured for the 2015/16 academic year
It looks to be in a good condition with the kind of modern kitchen students expect nowadays
It has 3 upstairs bedrooms (2 doubles and a single) with the ground floor rear reception room being used as the 4th bedroom - it also has a decent sized lounge
The selling agent advises 10% Gross Yield is being achieved, which based on the £110,000 asking price means they're basing this on it being occupied for 9 months of the year (Sept - May)
Competition for students is getting increasingly fierce so whilst it would have been normal to expect students to sign up to a 10 or 11 month tenancy in recent times (and this may still be possible in certain circumstances) you may be wise to work on the worst-case 9 scenario of the month occupancy suggested above
I'd also suggest that as the student market is getting increasingly tough in Sunderland (which may explain why this owner is looking to sell it) it would be worth a frank & honest discussion about the medium to long term prospects before proceeding with a purchase such as this
Click here for details https://www.onthemarket.com/details/1641659
Call me on 0191 567 8577 if you'd like to discuss this property, the student market in Sunderland or any aspect of property investment in Sunderland
This three bedroom terrace in Castletown (SR5) looks to be in reasonable condition but would benefit from updating the dated kitchen and bathroom
It's being offered for sale by a Manchester based online agent and they're giving all the signals the buyer may accept a cheeky offer, given the description states that "it is an ideal opportunity for buyers who are in a position to buy fairly quickly"
Sounds like they may be desperate...
It's being offered at 'Offers Over' £75,000 but I'd suggest trying to knock the £10k off that it will probably cost to update the kitchen, bathroom, replace the dodgy carpets and give it a lick of paint throughout
Based on a total cost of investment of £75k and an achievable £495pcm rent it will return a healthy 7.9% Gross Yield
Click here for details http://www.zoopla.co.uk/for-sale/details/37437105
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com if you'd like to discuss this or any aspect of the Sunderland property market
Following the recent blog post highlighting the higher than average level of tenant demand for properties in SR6 this new instruction in Westburn Terrace, Roker looks worthy of investigation
It's being advertised with no internal pics and by the selling agent's own admission it 'requires general updating and refurbishment' so I'd work on a worst-case scenario of a new kitchen, new bathroom, new flooring and redecoration throughout - £15,000 should do it
Adding this to the OIRO £54,950 asking price will bring the total cost of investment to £69,950
In it's newly decorated, tip-top condition it should be possible to achieve £475 - 495pcm which will return a very healthy 8.1% - 8.5% Gross Yield
Click here for details http://www.rightmove.co.uk/property-for-sale/property-50735071.html
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com for more information about this opportunity or any aspect of investing in property in Sunderland
A well established tactic for making short term gains from property investment is to buy a property then sell it on at a profit a short time later - a process known as 'Flipping'
I've been looking into recent sold prices in Sunderland and I was quite surprised by just how few 'Flip' successes there look to have been in Sunderland in recent years
When looking for 'Flips' you'd typically expect one sale to be followed by another within 6 - 18 months of the initial transaction, depending on the timescale to complete any improvement work required (and sometimes if there is a mortgage the lender may have penalties for cashing in or remortgaging in within 6 or 12 months)
So why have there been so few Flips in Sunderland?
Sunderland has seen pretty much static house price growth in recent years, and at £137,650 the average sold price in Sunderland is still much lower than at the peak in 2008 when it was £180,210
This will make it harder to profitably Flip a property, certainly compared to doing so in the Southeast where it is possible to make significant profits simply from the increase in value accrued during the few short months of the buying (and/or renovation) process!
In a market like Sunderland that's not enjoying double digit house price growth the secret to profitable Flipping will be to buy well (typically a run down or dated property, or a distressed sale) and building in capital growth that beats the normal sluggish organic growth rates through the improvement works, or at the very least brings the property back to the 'normal' market value
It may be that with relatively low valued properties in Sunderland, there just isn't the same scope for negotiating a big enough discount to fund the improvement works and then make a worthwhile profit
As an example, assuming a £70,000 purchase price, a healthy £15,000 budget for renovations and a final sale price of £100,000 leaves £15,000 profit? Or does it?
Naive investors often forget to factor in transaction costs (assumed to be 10% of the final sale price when buying and selling) and the holding costs (interim mortgage payments, insurances, loan interest etc) that can easily eat into the profit and mean investors can actually lose money!
This may suggest that to profitably Flip a property in Sunderland investors, may need to look at higher value properties (where they are likely to make larger returns), which may make funding such a venture prohibitive or less attractive than other investment options
It may also be that given Sunderland allows investors to get better-than-average monthly Yields, the majority of investors consider it better to get 6% - 8% Gross Yield over the medium to long term (and get a bit of capital growth into the bargain) rather a than make a one-off 10%-15% from a short term but risky Flip
Unfortunately what we see in Sunderland is lots of 'Flops' - this is the opposite of a Flip where a property is sold at a much lower price than the previous transaction - Flatlining house prices don't help this but many Flops are distressed sales where personal circumstances, rather than market forces, dictate the sale and the sale price
But today's Flop could turn into a future Flip - if the most recent sale was significantly below the prevailing market price
It may be possible to make short term profits from Flipping in Sunderland but the value of getting local expert advice can't be underestimated to ensure you buy the right property, in the right area, for the right price, along with carrying out detailed analysis of the likely returns and factor in all costs involved
If you'd like to have a chat about anything contained in this post or any aspect of the Sunderland property market give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This three bedroom Ryhope mid-terrace could let as-is for a decent Yield or alternatively could offer a more substantial project to alter the layout to improve upon the small kitchen and ground floor bathroom
Looking at the floorplan (below), the kitchen and bathroom are very small, so it may make sense to sacrifice the smallest bedroom to move the bathroom upstairs and using the room this frees up to provide a much larger kitchen - this would make it a much more attractive 2 bedroom property - you'd probably get the same rent and are much more likely to have happy, settled long term tenants
Major works such as this would need to be costed out and full analysis of the cost and benefit would need to be carried out, so I've just worked on the simple £495pcm in it's current 3 bedroom layout and the £80,000 asking price
Click here for details http://www.zoopla.co.uk/for-sale/details/37307764#6RA8lkvayXQ8mX8H.97
Call me if you want to chat about this in more depth or would like to discuss any aspect of the Sunderland property market - call 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This attractive 3 bedroom mid terrace property in Downhill should be popular with a range of tenants and needs no major improvements prior to letting
It has a lounge & separate dining kitchen, a conservatory and off street parking
Based on a realistic £495pcm rent (it may be possible to get a little more, but there's a risk of going over the 'magic' £500pcm ceiling) and the 'Offers Over' £85,000 price it will return 6.9% Gross Yield
Click here for details http://www.rightmove.co.uk/property-for-sale/property-30783441.html
Call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com if you want to chat about this or any aspect of the Sunderland property market
It's not often you see a house for less than a new family car in Sunderland!
We manage a couple of 1 bedroom cottages in Millfield and usually get £350 - £375pm - this one is located near the new Persimmon Alexandra Park development on the old glassworks site so the area is OK
There's no internal pics and the frontage really does look tiny, so being overly pessimistic and working on only £300pcm rent and the £19,950 asking price it will still return a massive 18% Gross Yield - £350pcm will get you 21% Gross Yield!
Clearly you won't get a mortgage (and the Help to Buy sticker is misleading...but Andrew Craig put it on all of their ads for some reason) so it will need to be a cash purchase (or you could even stick it on a credit card if you have a healthy credit limit or a few 0% balance transfer offers!!!)
Click here for details https://www.onthemarket.com/details/1744690
Call me if you're intrigued about this one or would to chat about any aspect of the Sunderland property market
This immaculate 3 bedroom semi in popular Town End Farm is new to the market and is likely to get significant interest from both owner occupiers and investors
It's being advertised at 'Offers Over' £89,950 and based on paying this and an achievable £550pcm rent it will return 7.3% Gross Yield
Furthermore it shouldn't suffer significant void periods as tenants are likely to be very keen to secure it and stay long term
Click here for details http://www.rightmove.co.uk/property-for-sale/property-35252670.html
Call me if you'd like to discuss this property or any aspect of the Sunderland property market - call 0191 567 8577 or email neil.whitfield@belvoirlettings.com
This immaculate 3 bedroom mid terrace on Cleveland Road is ideally placed to appeal to those working at Sunderland Royal Hospital. The price of £125,000 makes it at the very bottom end of acceptable returns as a family let (5.7% Gross Yield) but it may lend itself to being let out on a room-by-room basis and if so, would be significantly more lucrative
It's got 3 bedrooms (2 doubles and a single) and 2 reception rooms - there may be a temptation to use one of the ground floor reception rooms as a bedroom if renting it room-by-room but I'd suggest this may not be the best idea...
I say this as is there is only 1 bathroom and whilst this may just about work with 3 people sharing it's unlikely to work with 4...and I can't see an obvious way to add a further bathroom or w/c
With such a let you'd need to do it as 'bills included' so you'd be looking at around £80prpw for the two doubles and £65prpw for the single - this equates to £975pcm and would return 9.4% Gross Yield
With a let of this nature you wouldn't fall foul of HMO mandatory licensing requirements but it would still be classed as an HMO, so there would be more red tape and hoops to jump through than renting it as a property as a whole
Click here for details https://www.onthemarket.com/details/1733632
Give me a call if you'd like to chat about this property, renting properties on a room-by-room basis or any aspect of the Sunderland property market - call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
Last month I observed that the supply of properties coming onto the Sunderland rental market had the expected post-Easter boost, but without a corresponding increase in the number of tenants searching for properties. Looking at the June figures this trend appears to be continuing but further analysis throws up some interesting data suggesting Investors should think again about SR6...
As always, the available property stats I've used are pulled from Rightmove data & given Rightmove is the most popular site, whilst this doesn't include Zoopla, OnTheMarket etc it would be fair to expect Rightmove trends to reflect the wider market
Looking at the above table, there has been a 9% increase in available property since May (which itself was up 17% on March)
It's widely accepted within the industry that at any given time 5% of the total rental stock should be available to rent, so based on the above, with only 4.1% of the 10,572 total rental properties in Sunderland being available to rent, even with the 9% increase there is still a shortfall
Everywhere but SR1 shows a shortfall - the SR1 figure will skew the overall shortfall figure significantly
But is it an issue that fewer than the expected 5% of properties are currently on the market to rent?
Simple economics dictates that it's the relationship between demand and supply that determines the health of a market, so let's turn our attention to tenant demand
As I mentioned on previous posts this is not an exact science as whilst Rightmove allows analysis of tenant searches to be further broken down by named area, it doesn't do so on a postcode basis, so the following table isn't going to exactly match the postcodes on the Supply table above, but it should be pretty close...
Immediately you'll notice that there were 19% fewer Rightmove area specific searches carried out by tenants in June compared to May (and you may recall that I observed that anecdotally May "felt" quiet on the tenant front)
This is a slight concern, however experience tells us that the busiest months for tenants looking for properties are July, August and September so we would expect a very different situation when we look again next month
Recalling my economics degree from decades ago, having a situation of reduced demand is not the worst thing in the world if it is also matched by correspondingly restricted supply, markets tend to operate better where there is near equilibrium between supply and demand - it leads to more predictability than having massive shortages or surpluses
That said, from a Landlords point of view moderate shortfall in the availability of properties with healthy demand may open the door to rent increases not seen in Sunderland for many years...and the above figures suggest that the market would not support any increases at the moment
I thought it may be interesting to break the above figures down further to show the areas that are receiving the greatest number of searches - it makes interesting reading and some of the results may be surprising to you!
The first thing that immediately strikes me is that 4 of the top 10 tenant area specific search areas are within SR6, which is not traditionally seen as the best place to buy an investment property in Sunderland
Taking the top performing Roker aside (as this is the more affordable end of SR6), Seaburn, Fulwell and Cleadon are the more expensive areas that don't tend to offer as good Yields as elsewhere in Sunderland, so tend to be overlooked by Landlords & Investors
The above information would indicate to me that a rethink may be required to tap into the clear demand for rental properties in the above areas
The fundamental barriers to investors buying in the more expensive SR6 areas will be cost and the knock-on effect it will have on Yield (as rents are typically higher than elsewhere in SR6...but not that much higher) but the better areas of SR6 have traditionally delivered better capital growth potential than elsewhere in Sunderland
It's also worth looking back at the first table to note that SR6 has the second fewest rental properties out of any Sunderland postcode area (only the City Centre has fewer), suggesting that when matched with the strong demand a good rental property in this area is likely to be popular
I would also suggest given the type of tenant willing & able to pay more for a Seaburn, Fulwell or Cleadon property and also the property type & size, you are more likely to attract longer term tenants
It may be that consideration of the above leads investors who have the means to do so to diversify and develop a more balanced portfolio by including SR6 properties to tap into the strong demand in addition to properties delivering great Yields elsewhere in Sunderland
If you'd like to chat about anything this analysis has highlighted or any aspect of the Sunderland property market please call me on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
