Last week, a landlord who
lives in Woughton on the Green in one of those
nice executive properties, popped into see me whilst his wife was shopping in the town. He wanted to discuss what
was happening in the Milton Keynes property market, especially what was
happening to returns and the property values in the town, as he owned
various properties around Milton Keynes.
We got talking about the
different areas, such as Fishermead, Monkston and Old Farm Park but it was Netherfield
that created the most interesting result during our conversation. It was a
surprise to find that the property market in Netherfield has outperformed Woughton
on the Green property market. I know it sounds unlikely, but let me explain.
Typical Netherfeild terraced property
This is because an average three
bed three storey town house in Netherfield is worth £109,400 and the average
rent for that type of property, depending on condition, is £694 per month. This
means the yield (or annual return) which could be achieved is around 7.6% per
year. When we compare this to property in Woughton on the Green, those large 4
or 5 bed executive houses, they are currently selling in the £450,000 region, they
rent for £1600 to £1700 per calendar month, (depending on what the property
offers), this would give any investor buying such a property, a yield of only 4.4%
per year, thus making the Netherfield yield of 7.6%, proportionally 72% higher
than the yield of Woughton on the Green.
Typical Woughton on the Green detached property
However, we must remember that
yield is not the sole consideration when investing in Buy To Let properties. Since
2002, Netherfield property values have increased by an impressive 75.4%. However,
more impressive are the value increases in Woughton on the Green, as their property
values have had a much higher rate of growth than Netherfield, rising by an
impressive 101.6% in those same years. I appreciate these are the two extremes
of the Milton Keynes market, it just goes to show you need to do your homework,
because as a landlord, it’s not all about capital growth or yield, as it is
very rare to get both. You must also consider protecting your investment by
selecting the right area and the right tenant.
If you would like some
advice about buying to let, whether you are a landlord with an existing portfolio or
someone thinking of investing in the Milton Keynes rental market for the first
time, please email me on stephen.tunney@belvoirlettings.com or pop into
our office on London Road in Stony Stratford.
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