Investment decision: Lindfield Gardens v Tormead Road

A landlord came to our office for advice recently asking whether he should invest by buying a five bedroom house in a more affluent area within a short distance of the town centre to let to a large family or to sharers. They were considering the residential area bordered by London Road, Epsom Road, Cross Lanes and Boxgrove Road.

We did some research and found a spacious sized five bedroom townhouse in Lindfield Gardens, with views over Stoke Park and on the bus route into the town centre and then onwards to the Surrey Research Park and Royal Surrey County Hospital.

This property was available for £575,000 and could be let out for £2,750 per month as a family single let to achieve an annual gross yield of 5.7%; or to young professionals (subject to receiving an HMO licence) for £3,850 per month, to achieve an annual gross yield of 8%.

Lindfield Gardens - townhouses

Properties in this area are very popular with families because there are a number of private schools located close by. These include Tormead, Lanesborough, Guildford High School plus George Abbot School so there is great demand from investors and tenants alike, making it a relatively good investment area within a desirable part of town.

Tormead Road is located within a 10-15 minutes walk of the town centre. London Road railway station is nearby, to provide links to both Guildford mainline and all stations to London Waterloo. Spectrum Sports Centre is located on the edge of Stoke Park and Merrow Downs are not far away, so active families are able to enjoy both town and country life here.

A place on which to reflect in Tormead Road

We then compared the property in Lindfield Gardens with a more spacious and therefore bigger five bedroomed detached house on Tormead Road to determine if the landlord would gain more financially, by buying there. The two streets are just five minutes walk apart so provide a useful comparison within the same area of Guildford.

A 5 bedroom detached house in Tormead Road was sold recently for £892,450 with a rental value of £3,350. While a more desirable road and mainly owner occupied it is unlikely to attract sharers as the nearest transport links may be considered too far away.

This means it is likely to be a family single let so while the rental will be £600 per month greater than the single let rental value for Lindfield Gardens it will not attract the premium rental for a shared property. The annual gross yield will be lower than the property in Lindfield Gardens, at 4.5% but the potential capital gain greater having invested more for the property in Tormead Road, will be greater.

Tormead Road

This shows that while properties can achieve a higher rent than others in the same geographical location it does not always suggest there will be higher returns for the investor.

More importantly an investor could purchase an investment property in this desirable area, where there is high demand for rental property, for a lot less than they might have thought possible all because they have done their due diligence on the type of properties available, and at what price, on various roads within a specific area.

In this instance our landlord will have the advantage of being able to offer his tenants the benefit of being located across the road from Stoke Park and on a major bus route, so both parties will be happy.

If you would like any advice on doing your due diligence when choosing properties in a particular area of Guildford or a general discussion on investment opportunities in the area your call will always be welcome. Phone 01483 320207.