Bath Christmas Market 2011

Passing through on viewings and couldn’t resist a snap or two of the opening days shoppers!

Bath property market – August update

Estate agents normally expect a little less activity in August, given most of our clients are amusing the children, watching the cricket or taking a well earned break. This has certainly been true in Bath, with footfall, phone calls and website leads down significantly. The local property paper also shows a change, having become considerably thinner in the last two weeks.

However, REAL activity (ie offers and sales) has been brisk to say the least. We have sold twice the number of properties compared to the same time last year, gone to multiple bids on two homes and sold another before we could blink twice let alone advertise. It seems that serious buyers have stayed behind whilst others have flown south! Could this be due to the lack of quality stock on the market at present? Buy to let interest (already major) has become frenetic on the south side of the city, whilst Northern slopes family homes are few and far between.

To add to the good news, agreed sales have been consistently completing in reasonable timescales. We have already exceeded our exchange projections for August (by the 12th!) and have three more homes to go next week.

Lettings business is, as always, soaring to new heights. Student lets have been snapped up within days of marketing, we have no available professional lets and hundreds of registered prospective tenants.

So, what’s the bad news? Well, for us it’s lack of new property to sell or let. Sales and tenancies are lovely but, if there’s no new instructions to top up the stock, we could be quieter towards the end of the month. Valuations are down by over 40% but we would expect a rise towards normality after the Bank Holiday. Owners and landlords would be much better off instructing an agent in August and preparing for a launch in the first week of September but I suppose it’s difficult to countenance that when lying on a sandy beach under azure skies!

Buy to let investment – local advice notes

Headlines in the last week show rental demand at an eight year high and rising. We released a “to let” property on Monday and booked 16 viewings in 2 hours by Saturday – for a standard 2 bed Oldfield Park house, this is way above normal activity. We’re about to enter the season for student housing for the 2011 academic year, yet there are still first year students from August 2010 without accommodation.

All this evidence adds up to one clear recommendation – if you have finance to invest, you could do far worse than a property for your pension fund. Yes, the returns won’t be stratospheric but interest rates will remain low/static for some time, between 5 – 7% gross is achievable and we have just sold a 7 bed student house in Lower Weston that generated an 8.8% gross return. So, what type of property do you choose to sink your money into?

As far as we can tell, there are three main schools of thought locally. They are;

1) Student housing – typically central Oldfield Park (as close as possible to Moorland Rd) or Lower Weston (next to Orange bus route). Many investors overlook the smaller 3 lettable room houses (available for around £215,000 – £235,000) but our experience shows huge demand for these. 6 and 7 lettable room houses (£275,000 – £300,000) are hard to come by but will let instantly as students are forming larger groups over the last two years. There have been planning changes in the last 6 months that bear investigation but the local council have no current plans to enforce change of use regulations.

2) Family houses – if you don’t fancy the ongoing maintenance associated with student lets, try letting to those first time buyers who can’t afford the deposit to buy. Many of our clients in this bracket are looking to rent for several years and will look after the houses as if they are their own! Expect to pay £175,000 – £250,000 depending on how close to town you want the house to be but don’t overlook the modern houses at £175,000 as the rental return won’t differ much across the price range. As an example, a Blackmore Drive 2 bed 1960′s terrace will rent for £725pcm, whereas a Maybrick Rd 2 bed Victorian terrace won’t achieve much above £750pcm (but will cost you 70k more to buy!).

3) Flats – tap the bottom end of the market to attract the broadest range of tenants (and buyers if you want to sell on at some point) but watch out for the management charges. Always factor in the yearly service charge into the rental return. Expect to pay circa £150,000 for a quality 1 bed in the city centre or a 2 bed in Oldfield Park. The rental return will be the same for each, around £700 – £725pcm but you’ll expect to pay £600 – £1200pa in service charges. The up side with these homes is the largest pool of tenants and lack of responsibility for maintenance.

With all examples above, make sure the accommodation is good quality, clean, tidy and as spacious as possible. Gardens and garages are attractive but not entirely necessary and can be tiresome to maintain if the tenants don’t want to.

 Madison Oakley are an independent estate agent and letting agent in Bath. We are a small director led firm with over 50 years combined local experience.To find out more about us, do visit our website. We would always be delighted to receive comments via our blog or do feel free to call us on 01225 466525.