Can a 4 bedroom home on Glastonbury Close be a Spennymoor investors dream?

In recent weeks I have seen more of a trend in the Spennymoor rental market for 2 bedroom homes to be available. This means that there is quite some competition for landlords looking to rent out a 2 bedroom home and there is some downward pressure on price starting to appear. With this in mind, I'm starting to look away from 2 bedroom properties at something a little larger for the family.

I have come across the following property from an estate agent outside of the town-

4 bedroom detached house for sale on Glastonbury Close, County Durham , Durham, DL16 6XP

PrevNext

Prev 

It is for sale by a company called Springbok Properties, who are based in Manchester. Their marketing blurb says -

"Springbok Properties offers a market-beating alternative to the traditional way of selling property. 

We have grown from selling 4 properties a month in March 2012 to selling 200 properties a month in March 2015. How have we grown so quickly? Simple: our entire organisation is aligned to one mission, and only one –providing the best customer service humanly possible."

There probably is long overdue a real shake up in the estate agency industry with better customer service and lower costs starting to come through, especially from online-only estate agents.

On to the property in question. It is available at an asking price of Offers In Excess of £140,000 and is a 4 bedroom detached house. It lies on the Yuill Estate so is very popular and has great transport links, being close to a bus route and close to the town centre.

The description and photographs are of a generally well maintained property that wouldn't need much work to turn around and start renting out. Whoever decided that it was a good idea to include those photographs of the bathroom need to start thinking about their future in estate agency though.

I think that there is a demand for four bedroom properties in the Spennymoor area and, as I said before, there is a glut of 2 bedroom property at the moment. In terms of rental potential, I can see this one going for somewhere between £575 and £650 per month. This equates to a gross annual return of between 4.9% and 5.6% based on the asking price.

It really has become decision time for many landlords with the changes in buy to let rules occurring in April 2016 so if you want to make a move before then this may be the time


.

St. Andrews Road in Spennymoor could be an investors delight

I've been taking a look at what has become a growing Spring property market in Spennymoor. There are several auction entries this week, but it's this property below that's caught my eye as an investor-

St. Andrews Road, Spennymoor

http://www.rightmove.co.uk/property-for-sale/property-34358373.html

It's a 3 bed terraced house on St. Andrews Road Spennymoor with an asking price of Offers In the Region Of £69,950. It's on the market with Harringtons and they've got into this habit recently of listing property on Rightmove and using a photo of the interior as their lead photo. I would say that approximately 99% of properties on the property portals have a photo of the exterior as their lead photo - and for good reason. Being able to see the outside of a property gives the potential buyer a good idea of the size of the property, the parking and garden space and whether they perceive it to have kerb appeal. Photos really do paint 1000 words and I think that Harringtons have really missed a trick here. Especially with this property, as the interior is in need of some work and the room they have chosen is small, devoid of furniture and badly presented.

The agent describes it as-

"An ideal first time buyer purchase offering spacious living accommodation and in need of some cosmetic modernisation."

I see it as a property with much potential. From reading the description and looking at photos, the work needed here looks like redecoration rather than structural. It looks to have a big enough kitchen to fit a dining table in, which is a big bonus in today's market. People are seeing the kitchen as becoming more and more the most important room in the house. The house builders have tapped into this and now pretty much provide it as standard in new builds.

So, there's potential if you can spend a little money on it to bring it up to scratch. I see a monthly rental of somewhere between £395 and £475 for this property, after looking at what else is on the market. This equates to a gross annual rental of between 6.7% and 8.1%, based on the asking price of £69,959.

Even this level of refurbishment may put off some residential buyers, so there can be potential in this for the investor.

Semi-detached property in Deneside has investment potential

There seems to have been a small exodus of Spennymoor estate agents from Rightmove. There's nothing showing uploaded for the last three days. I've gone to the new estate agency property portal called On The Market, and found this property-

https://www.onthemarket.com/details/1198345/

It's a 3 bedroom semi-detached house on Deneside with an asking price of £69,000. The estate agent in question is a Spennymoor Property Blog regular, Dowen. As an agent with a presence in Spennymoor town centre, Dowen get their fair share of properties.

They describe this on as spacious, in a quiet location with pleasant views to the rear. And they're right! The property itself looks lived-in and well-looked-after but is obviously quite dated. To buy and let this out to potential tenants, you will probably want to update the kitchen and possibly the bathroom. From the photos and description alone, everything else seems a lick of paint away from going to the rental market.

According to the nethouseprices website, the average selling price for a property in Deneside is £57,984 -

http://m.nethouseprices.com/soldprices/property_results?street=DENESIDE&town=SPENNYMOOR&outcode=DL16

The most recent, and possibly the most relevant sale is that of number 65 in March 2014 for £70,000.

Regular readers of my blog will know that this is the point at which we loom at the numbers. I would expect this property to achieve somewhere between £395 and £450 per month. This equates to an annual return of between 6.9% and 7.8% based on the asking price. Taking into account the fact that you may have to update the kitchen and bathroom, this is a reasonably healthy rental return for an investor.

It's probably well worth a look and an offer, based on the information you can gather from the estate agent on the On The Market website.

A property on Rightmove from Spennymoor's newest agent

A new property from Spennymoor's newest agent has come onto the market this week. It's a 3 bedroom house on Durham Road-

DURHAM ROAD, Spennymoor, DL16
http://www.rightmove.co.uk/property-for-sale/property-47461492.html

It's on the market for £119,950. The average sold price for properties on Durham Road is £72,996, according to nethouseprices -

http://m.nethouseprices.com/soldprices/property_results?street=DURHAM+ROAD&town=SPENNYMOOR&outcode=DL16

The description put on Rightmove by Harringtons is hugely wordy and it can be difficult to sort the wheat from the chaff. The photograph of the front of the property is something I've never seen before - it includes the front of 7 properties!

Durham Road is popular for buyers and renters, so if the figures stack up them there's potential for a landlord. It looks in a really good condition from the photos, so hopefully there's no work that needs doing.

I wpuld expect a rental return of £500 per month for this property, so based on the asking price this wpuld generate a gross rental return of 5%. This is a little lower than the standard expected return of 8% but is obviously higher than you'd get in a bank account.

There will probably be some competition from people looking to buy the property to live in so investors will probably need to look at the property soon and make their mind up.

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.

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.

Christmas gift ideas from Amazon