Do investment decisions require divine presence?

When speaking to a local landlord recently about buying investment property in the streets surrounded by Rydes Hill, Aldershot Road, Northway and Shepherds Lane he had two questions. The first was why are the roads named after cathedral cities - Canterbury, Durham, Peterborough, Lincoln, Gloucester and Worcester; and secondly would it make sense to buy more investment properties in these roads?

When finding an answer to his first question it did make me wonder. No doubt the streets were named many year's ago but did they have a link to the town having its own cathedral?

Guildford Cathedral, built between 1936 and 1961, is the seat of the Bishop of Guildford.

Guildford Cathedral

Guildford residents have always wondered why the town has not been granted city status. Traditionally this is given to towns with diocesan cathedrals, an association established in the early 1540s when King Henry VIII founded dioceses in six English towns and granted them city status by issuing letters patent and has continued to this day. As of 2014, there were 51 cities in England.

Guildford's 2002 application to be granted the status of a city was unsuccessful, losing out to Preston, the only English town that was formally recognised as a city as part of the Queen's Golden Jubilee celebrations.

No information as to why these streets should be named after cathedral cities in England so one must assume that the local authority named them for no other reason than to celebrate these other cities.

This area attracts landlords because the properties have been relatively inexpensive to purchase and are located within travelling distance of the Surrey Research Park, the University of Surrey, the hospital and the town centre so are suitable for students and young working professionals happy to share their accommodation with others.

Properties in the area covered by Durham Road, Lincoln Road, Canterbury Road, Worcester Road and Durham Close typically comprise 3/4 bedrooms and are currently valued at an average of £337,053. This is an increase of 361% over the last 18 years. Average rents are £1,995 pcm though landlords charging by the room will receive an estimated monthly rental income of between £2,400 and £3,000 depending upon whether they convert a reception room into a bedroom.

Keeping to the theme of cathedrals, Cathedral Close located close to the cathedral and behind the University campus is therefore ideally situated for the tenants living in the roads discussed above.

However the properties located here and in the adjoining road, Ridgemount, are owner-occupied family homes. The average price for a 4 bedroom property here is £840,900 and a typical rental is £2,500 pcm so the gross yield in the roads named after cathedral cities will be nearly three times greater than for the properties in Cathedral Close and Ridgemount.

However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. When compared to the capital growth of 4 bedroom semi-detached properties in the cathedral roads area the properties in Ridgemount have risen by 390% over the same period. Some may say that this is due to divine intervention because Guildford Cathedral overlooks Cathedral Close and Ridgemount but no doubt the reason for the higher capital growth has to be supply and demand.

Nevertheless the landlord would be wise to buy in the roads named after cathedral cities as his objective to maximise gross yield will be realised while gaining capital growth at the same time. History has proving this so there is no need for a miracle to take place.