Last week one of our landlords with properties in Leighton Buzzard came into our office. He had a couple of hours to pass while his wife was visiting a friend in Dunstable.
He wanted to know how Dunstable’s property market was doing, as most of his properties were in Leighton Buzzard. He previously didn’t want to invest his money in Dunstable as he felt it wasn't a good investment and the properties we managed for him in Leighton Buzzard had performed well over the past few years. He had been reading some of my recent articles and wanted to know more about the current market in Dunstable as it seemed to have picked up recently.
So, just for interest, we looked at Leighton Buzzard’s property market and found out that on average a flat would cost around £140,000 and the average rent is around £750 per month. Property prices had risen by nearly 8% in the last year and in the last 5 years they had risen by almost 28%. He said he knew that and that's why he bought in Leighton Buzzard.
Next we showed him that the average price for a flat in Dunstable was around £130,000 and the average rent was £725 per month. This gives the average yield of 6.7% for flats in Dunstable and 6.4% for flats in Leighton Buzzard, an insignificant difference and we both agreed that at the moment the yield for flats in both towns is about the same.
We then looked at how the property prices had performed. He told me that in my articles I had been discussing the recent increase in demand for property in Dunstable from London buyers that had been pushing up prices. This had been highlighted to me by a local Dunstable Estate Agent called Deakin White. They have established a tie-up with London Agents as this is where most of the buyers were coming from resulting in them becoming one of, if not the most successful Estate Agent in Dunstable over the last 6 months of 2015. As we have found with renters, Ed Harrison one of the Directors at Deakin White told me that the London buyers are finding all of the towns outside of London where they would usually look to buy had now become unaffordable and Dunstable offered them good value property which was still close enough to London to commute to.
We then took a look at the property sales performance of each town by comparing the increases in property prices over the last 5 years. Leighton Buzzard had out performed Dunstable over this time with the property prices in Leighton Buzzard increasing by nearly 28% whereas in Dunstable they had increased by 26.5%.
We then took a look at more recent figures and these confirmed that Dunstable had seen an increase in demand and therefore an increase in prices. The average price paid for all property in Dunstable over the last 12 months was £231,744 and over the last 6 months it was £248,334, an increase of just over 7%. This compared to a drop of nearly 1% on the average price paid in Leighton Buzzard from £276,269 to £275,051.
In his portfolio of properties our landlord currently owns 2 properties in The Wharf in Leighton Buzzard which he purchased because of their location within walking distance to the mainline station. This has made them very easy to rent with London Commuters resulting in no void periods over the last 3 years. With the Busway in Dunstable making the journey to Luton train station and therefore to London much easier and the recent performance of the sales and lettings market this has given him something to think about for his next investment, but I have a feeling that he has a soft spot for Leighton Buzzard. It has, and continues to be a good investment and with its mainline station will always have an attraction for the London Commuter.
We are always told to succeed in business you need to stand out and be different. Therefore should I start charging landlords for rental valuations!
It always mystifies me to see an agent proclaiming ‘Free Rental Valuations’ as part of their marketing strategy and often it is highlighted, in bold print and surrounded by a star shape so that it stands out for all to see. Does a landlord or indeed a potential seller see this amazing offer and pick up the telephone immediately to call the agent ?
There is a possibility that in some areas of the country such as London an Estate Agent might charge for a valuation if property owners are using them to value their properties before they decide if they wish to sell, but with access to Rightmove and Zoopla it is now very easy to gain a guide valuation with little effort by searching online.
What does mystify me is the concept of maybe charging for a valuation. If you require a quote for some work on your house you do not expect to have to pay the builder, electrician or plumber to visit the property, offer their advice and produce a quotation for the work. Why would an Estate/letting agent be any different ? Surely part of the process of visiting the property is to meet the landlord or seller and start to build a relationship with them that will lead to you being instructed to market their property?
Maybe this offer is made because agents feel that if a potential client sees that they are getting something for ‘Free’ they are more likely to call them. This type of marketing isn’t one you can measure as you are unlikely to ask if they called you because of your ‘Free Appraisal ‘ offer in case they feel insulted that you think they were only looking for the cheapest agent.
Let’s look at another service for which you might pay, for example your accountant. You wouldn’t choose an accountant based on the cheapest fee. An accountant doing their job properly will give you the best advice, produce your tax returns on time and in other ways save you money over the cheapest other accountant. Most likely you will also trust him or her and they will become someone you are pleased you chose and will feel comfortable to call and ask for advice.
If we look at products you might buy and something that is very popular at the moment which is Bluetooth speakers. Without going silly you could choose from a Bose for £350, a Sony for £200 or an LG model for £100. All are fairly similar in specification but you know the sound in the Bose will be exceptional but that is a very high price to pay. The Sony should offer good value for a good product and quite likely you would be disappointed with the LG model.
The above is true when you purchase a service from a Letting or Estate agent. You will find those that offer you a very low price but the service you receive in return from them will match that price. You could choose the most expensive in the area because they must be the best, but you are likely to start asking questions when their high bills keep coming in.
This goes back to the start and how a landlord or seller would choose a Letting/Estate Agent. Is it that amazing offer of a ‘Free Valuation’ or maybe 5% managed fees ? Remember you will get what you pay for. The value is in the agents themselves. Can they offer you the right advice, do they know the area and what is happening in that area not just point out to you the road names. Will they sit you down and discuss the market generally, how it is changing and how this could make an impact on your property ?
All Letting/Estate agents do the same basic work, but your decision on which one to use should not be on price with a hope for good service but based on the agent when you meet him or her in person and their reputation. You want that agent to be proficient in what he or she does and also to be knowledgeable and willing to share their knowledge with you. You want them to advise you for the same reason you choose your accountant, because you feel comfortable with him or her and know they are going to offer you the best advice.
Many of the landlords and tenants choose to come to my shop because of the service and advice we give and also because there is a real person in the shop that they can sit down and talk to. I can discuss with them the new developments being planned and why certain developments rent for more than others. This is where we stand out and are different.
There is a lot of hype and advertising by online agents at the moment. No doubt they will save you money and if you call they can discuss your property once they have read your notes because it will be a different person you speak to when you call. They won’t know that your father has been unwell recently which is why it was difficult to contact you or that your son/daughter recently got married. They won’t know that the house you are renting belonged to your parents or that you had a stroke a few years ago and that is why you had to move to a flat you owned in another part of the country, but they will be able to tell you if the rent has been paid.
Choose your accountant, financial advisor and Letting Agent wisely and choose them for the long term relationship because that is what it will be not just a Free Valuation !
Luton Property Investors Network (PIN) Meeting – Tuesday 23rd February – FREE invite to this popular meeting of new and experienced landlords
Can you build a property Portfolio without using your own cash or credit ?
Can you double your rental profits from single let properties ?
The 2 speakers at this months Luton PIN will explain how both of these can be done:
If it is your first time attending a PIN meeting you can use the code below for FREE entry
Click on this link: https://www.pinmeeting.co.uk/luton/
Click “Book using a voucher code”
Insert you contact details
Enter “belvoirluton” into voucher code box and click apply voucher button
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Daniel Bourke is the owner of Belvoir Lettings Dunstable and in his previous career in Architecture he was an Associate in a leading London Architectural practice