Investment potential on Chestnut Avenue

Although there seems like a lot of refurbishment work to be done to this property, it looks as though there may be some investment potential in this ; bedroom Spennymoor property-

 CHESTNUT AVENUE, SPENNYMOOR, SPENNYMOOR DISTRICT

http://www.rightmove.co.uk/property-for-sale/property-48540317.html

Priced at £55,000 for a 4 bedroom semi detached house, there is and always will be a strong rental demand for family homes in the Spennymoor area from private and housing benefit tenants.

The property itself looks like it needs some TLC, but offers a good size of accommodation and would present any investment landlord with a good potential for rental return.

I'd expect a rental return of between £425 and £475 per month, which wpuld give a gross rental yield of between 9.2% and 10.3%, based on the asking price of £55,000. This is a good rate of rental return for an investor, with 8% always quoted as an industry benchmark.

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Robinsons office on 'Estate Agents On The Job.'

It's going back a little while but remember Robinsons Estate Agents office in Spennymoor and their recent appearance on the BBC series Estate Agents On The Job (series link here - http://www.bbc.co.uk/programmes/b040tlwh)

They probably thought it would be a great idea to get exposure for their brand by appearing on the programme but it had created somewhat of a local backlash, as the programme-makers wanted to highlight the divide between North and South. The programme saw a Chelsea estate agent selling homes at tens of millions of pounds and opposed this with pictures of run down areas and talk of "starting price at £1."

The feedback from the local community was scathing, with several letters to the local newspapers, people taking rental properties from them and reports of death threats.  Now the level of overreaction has been quite appalling, but the message is very clear - Use marketing campaigns where you control the content.

The programme-makers have their right to make their point and have their story to tell. There is a housing price divide between London and County Durham based on factual evidence.

What could they do differently?
As with any marketing or publicity, they needed to sit down as a business and decide what they would get out of it.  If they couldn't control the outcomes then they may have needed to think twice about their involvement. There are so many ways to reach an audience now, and the cost of many of these has reduced greatly. Social media marketing campaigns are very-low-cost and they would have complete control of the content. Their website should have a section for a blog, latest news and views, marketing and advertising. Advertising in the local newspaper or on local radio has decreased in cost significantly over the last 10 years, so can also be considered when distributing a marketing budget.

Is there alternative outside help?
If they didn't have the time or resources to continually refresh and update marketing content then they may look for outside help to assist.  This can take many forms, such as tapping into creative talents at local colleges and universities to hiring a local PR or marketing consultancy firm.  Networking via places such as breakfast clubs will give a great link into local talent that can be both a useful contact for business and a referrer to their own business.

Overall, a rounded marketing strategy that takes in online and offline sources as well as rewarding existing customers and being creative with content will lead to a more satisfying experience business and clients alike.

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What's happening with Surtees?

A short post today. I've just driven past Surtees office and there's a makeover going on. The front is being painted purple. It's a striking shop front, and the colourful boards are still in the window, as though they may be marketing properties.

It would be interesting to have a bit more genuine competition in the town amongst estate agents, although it would be nice for someone to be really different to the established agents and provide a genuine choice.

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Why new build properties are distorting the Spennymoor property market

There are still 41 new build properties showing on Rightmove for the Spennymoor area.

From this at £441,500

Whitworth Road, Spennymoor, DL16 7LN

http://www.rightmove.co.uk/new-homes-for-sale/property-24192879.html

To this at £89,995

Coulson Street, Spennymoor, DL16

http://www.rightmove.co.uk/new-homes-for-sale/property-29549649.html

Now the impact that new builds have had on the Spennymoor property market has been large. It comes in more than one form, but let's take a quick look at where things have been impacted-

Mortgage demand

The government has put in incentives in the past that have incentivised the buying of new build homes. Nationally, this makes sense, as the country isn't producing enough new homes to satisfy demand and keep house prices on an even keel. But the majority if new homes are needed in and around London, where demand and house prices have soared.

The incentives have included low deposits for buying new homes (one if the earlier incarnations if Help To Buy) and this has made new build properties easier to buy than pre-owned properties in Spennymoor. Add to this the incentives that the builders offer and part-exchange then the desirability if a new home goes through the roof, financially.

Part-exchange

This is a marketing tool used by the builders to ensure that they can shift their properties quickly, and not be involved in lengthy chains. The downside it has had on the Spennymoor property market has come when the part-exchanged property is then sold in. The builder doesn't want to hang into this asset for long, so sells it at a price lower than market value. This makes other nearby properties look poorer value and subdues the asking prices. Add to this the valuation a surveyor puts on a property for mortgage purposes, and they take recently sold properties as a comparable and a benchmark, then even properties with an agreed sale may fall foul of the mortgage lender when they disagree in a true valuation.

Loved and lived in

One if the advantages the new property builders have, and use, is the show home. They are able to produce a property that looks fantastic and appeals to buyers by spending a bit of money on it and by having the show home kitted out with all the 'optional extras.' Someone living in their own home doesn't have the luxury of doing this. They have to live there every day and this creates dirt, objects and time-constraints that the show home doesn't have to deal with. Immediately, every pre-owned home in Spennymoor looks in some way inferior to these carefully stage-managed versions of the truth, and selling a pre-owned home becomes more difficult.

Now, you may say that these above would be the case anywhere, but I disagree. The fact that Spennymoor has had SO many new build sites in a short period of time, plus the fact that the high demand for property probably lies elsewhere means that the effect will be amplified here.

A talk at the Durham Book Festival on the future of social housing

Notes from a talk about the future of social housing

house prices,estate agents,housing crisis,Housing,Social housing,right to buy

First speaker, female, book about growing up in social housing and how this is intrinsically linked to class. Once I have a house with a bay window and a tree outside, I've made it!

Second speaker, male, about the effects of Right To Buy, and the privatisation of the UK's housing stock in the Thatcher years. New public housing production fell off a cliff and the Conservative government expected the free market to step in. It didn't. We still haven't addressed this since and it runs to the core of the current issues in our housing market. The government wants a huge number of homes to be built, without issuing any incentives or subsidies to do so.

Third speaker, male, about housing associations. He sees them as the "least worst option." There is no such thing as a UK housing market. There are a series if regional markets. I'm terms of the North East of England the main concern is that economic activity and growth have been low for a sustained period - thus subduing the house-building market.

Opened up to the floor, for questions or reflections from the audience.

Your thoughts on Right To Buy?

It's fine, as long as there is something in place to replace the social housing stock. It strikes through to the British psyche of home ownership and being a nation of homeowners.

What is your opinion of Right To Buy as Buy-to-Let?

The realisation of the asset may come much later than the purchase. Second or third generation Right To Buy owners may not see the house in the same way as their parents or grandparents who initially bought the home from the council.

Comment on the floor

The future of the housing market will not succeed by leaving the free market to resolve private and social housing needs. There needs to be incentives and interventions by government to produce a different response from the house building companies.

Has Rightmove had it's day in Spennymoor?

I'm just looking at the Rightmove page for estate agents in Spennymoor, and there are only 5 listings-

http://www.rightmove.co.uk/estate-agents/find.html?locationIdentifier=REGION%5E1241

There are Dowen and 2 listings each for Robinsons and Livin.  Livin have no sale properties at all and no lettings properties in Spennymoor, as of today, 16th October 2014.

So this leaves 2 residential sales estate agencies advertising on Rightmove in Spennymoor.  Which leads back to the main question - has Rightmove had it's day in Spennymoor?

There are a handful of outside agents, particularly operating at the top end of the market in Tudhoe Village, but the bulk of the everyday market is dominated (on Rightnove at least) by Robinsons and Dowen, as you would expect.

So, I'll have a look at the reasons for the relative lack of estate agents in Spennymoor, compared to other similar-sized towns.  Since Martin Currington went, and Reed Rains closed their last office, the town has seen a duopoly in terms of the majority of sales of the everyday market - the bulk of properties that lie within Spennymoor.  This has come about due to a number of reasons.  There has been widespread dismay and negativity towards the town centre in Spennymoor, particularly the precinct.  This will have put off potential estate agents from opening a High Street office in the town, as the footfall drops off and people begin to move their shopping trips to the edge of Spennymoor - Asda, Home Bargains, Lidl and Aldi.  There is also competition from the new out-of-town shopping park at St Helen Auckland and a more wholesome shopping experience in Durham City Centre or one of it's out-of-town retail parks.  This immediately reduces a potential investment from a new estate agent, where they may spend a lot of money to establish a presence and then find that the footfall is not there.  Add to this the general low growth in house prices since the end of the recession, and a large Reed Rains office still standing empty, and you can understand a reluctance to locate here.

Bishop Auckland is showing 10 sales estate agents, and 15 agents in total, Shildon is showing 2 agents, Barnard Castle shows 4 estate agents, Darlington has 31 and Durham shows 34.

Now choice doesn't necessarily mean that you will get a higher standard of service; and the fact that there are fewer estate agents doesn't necessarily mean that the agents are of a lower standard.

As a standard seller and buyer of property you will probably only experience the services of an estate agent every few years.

However, 2 estate agents taking the majority of the business is probably not in the very best interests of sellers of property in the town.

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Is there still value in this 2 bedroom terraced house on Durham Road?

Is there still value in this 2 bedroom terraced house on Durham Road?

http://www.rightmove.co.uk/property-for-sale/property-32624286.html

It was for sale via auction earlier this year and the "guide price" was around £25,000.  Now there has obviously been a lot of work put into the house.  From the outside it looks as though there has been new windows, probably re-plastering and a lot of decoration, and that's without and unseen improvements, such as rewiring or any work on the central heating system.  The agent leaves a lot of information and images out off their Rightmove listing and have only 2 photos included in the brochure, which could be a worry for a house that they describe as "superbly refurbished." And they also make the age-old faux pas of describing the distance from the town in how many minutes it takes to walk there - surely that depends on how fast you walk?

Now, my question - is there value for any potential buyer?

Well, at the right price, there is.  As an owner-occupier, the average price paid for a property on Durham Road over the last year is £80,068 and prices have appeared static in that time -

http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=DURHAM+ROAD&locality=SPENNYMOOR&town=SPENNYMOOR&cCode=EW&year=last_three_years&house_style=All&house_age=All&search_radius=&outcode=DL16&incode=6JU

As a 2 bedroom house, close to the Town Centre, with a recent renovation, the asking price of £67,950 is a reasonable starting point for negotiations, especially given the average figure above. Durham Road has always been reasonably desirable and will provide a good starter home for a first time buyer.

As a landlord, looking to buy this as an investment property, there is potential there too. I'd expect a rental return of £400 to £500 per month, so an annual; return of £4,800 to £6,000 - a gross rental return of between 7% and 8.8%, based on the asking price.

It's one of those properties where everyone can be a winner - the current owner who has bought and renovated and the potential new owner, who can get a recently-renovated house without paying a new-home premium.

Is this Green Lane home country living?

This property has sparked my interest since it first came onto the market-

http://www.rightmove.co.uk/property-for-sale/property-44800045.html

On first look at the photo of the front elevation of the house, it looks imposing, large and looks as though it's set on it's own in perhaps a country or village location.

Now I'm sure it's a lovely house, but the initial photo can be a little deceptive, as the property is quite a bit closer to the road than it appears on the photo.  It's on Green Lane, almost opposite the Council Offices, near the new developments and on a fairly busy road, backing on to a council estate.

There's nothing wrong with any of these things, but they are probably not quite what you expect when you see the initial photo.

The house is decorated in a grand style, with high ceilings and it looks spacious.  The estate agent is Agency Express, who quote "Sell your home in days or weeks not months or years - most of our sales are around 6 weeks." However this particular property has been on the market for far in excess of that.  They also state on the particulars that "the property has the potential to be converted into two separate dwellings" but with a guide price of £330,000, I doubt that would be what any potential buyer would have in mind.

I have worked in the property market in several parts of the country, and this property brings forward a question that I have asked myself time and time again, since moving to the North East.

Are prices like this sustainable in an areas that has low economic growth, lower wages and higher deprivation than area within commutable distance to London?

I know that;'s quite a long-winded question, but it has struck me as odd that a property like the one above is commanding a similar price to a similar property in Essex, for example, where the owner could easily hop on a train to London and bring home £50,000+ with one of hundreds of employers.  It brings finance and debt into the purchase decision of a North East worker, that would be easier to obtain, and less of a worry for someone on a London salary.  I know that there are people in the North East that will earn a lot of money, but statistically there are fewer of them, so the potential market for this home on Green Lane, Spennymoor is naturally more limited.

Get In Touch

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Introduction to my blog on the Spennymoor property market.

This is a blog about the property market in Spennymoor.  I have lived in Spennymoor and operated from Spennymoor for some time now and I will be looking at the market in general, specific properties that catch my eye and offering tips, advice and analysis on property in the Spennymoor area.

I'll look at property from all the agents that sell property in Spennymoor.  Check out my Get In Touch page if you have any questions or ideas.

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