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.

You should have bought in Markenfield Road 10 year's ago!

One of the most frequent questions asked by those starting out in the world of property investment is "when is the best time to start investing?" The response from experienced investors tends to be "10 year's ago". I suppose this is based on the assumption that properties are assumed to double in price every 10 years. The secondary response is "and if not 10 year's ago, the answer is now!"

How are landlord's properties performing?

One of my more established landlord friends has been investing for 10 years so was interested in discussing how his investments in Markenfield Road had performed during this period. I suggested we look at both the sale prices and rental figures achieved for properties in the street during this time. Then we could determine how the gross yield had changed as a result of these price changes.

Markenfield Road

This is a well established street situated opposite the cricket pitch, where Surrey County Cricket Club have played in the past. This pitch is also home to the annual Guildford beer festival. The street is located within a 10 minute walk of Guildford town centre

The properties in this street were built in Edwardian times, all to a similar design. Most comprise of 2 reception rooms, a kitchen and three bedrooms plus bathroom. Many have been extended by moving into the cellar or up into the loft to provide an extra bedroom plus bathroom. Several houses have been extended out to the rear to provide a larger and more modern kitchen.

Ownership status

The last census suggests that half the properties in the road are owner occupied and approximately a quarter are privately rented, so is popular with landlords. In fact one sixth of properties are occupied by more than 3 people suggesting that they are multi-lets.

The majority of owner occupiers are in professional or managerial roles, between the age of 30 and 44 with many being single. The number of degree educated people living here is also greater than the average number in streets local to Markenfield Road. This might have something to do with the proximity of the bars and restaurants in the town centre plus The Stoke Pub and Kings Head pub, at the top of the road. 

The figures

Returning to the figures the average value of a typical 3 bed semi terraced house on Markenfield Road was £245,250 in 2005. This figure had risen sharply to £360,395 by 2007 but dropped back to £335,950 for two years before recovering in 2010. Prices have continued to rise with the average value now standing at £469,900. A house in the street has recently sold for £524,950, a 214% increase in 14 years.

Then the landlord stated that the rents he had achieved on Markenfield Road seemed to be fairly stable over the ten years. In 2005 the average rent was £1,535 per month but is now between £1,695 and £1,850, dependent on the size and quality of the accommodation provided so rents have risen by just 10-20%. 

This is all great news for the landlord because his investment back in 2005 would have achieved a gross yield of 8% and now that rents have increased he is achieving 8.3% where as a landlord investing at today's current prices in Markenfield Road would achieve a gross yield of only 4% i.e.50% less. If the new landlord were to rent out to sharers he might increase his gross yield to 5.5%. 

The answer

It therefore seems that the maxim that states the best time to start investing was 10 year's ago is therefore true. Just imagine what the yield would have been if one had invested (say) 50 years!

If you would like to have a chat regarding property prices in a specific street and how they compare with prices elsewhere in Guildford or to just talk about investment opportunities in general your call will always be welcome. Phone 01483 320207 or email richard.hodgson@newman.uk.com

Family living in the centre of Guildford

This spacious property is a 3 bedroom detached house and I like it because it is situated within a 2 minute walk of Guildford's historic High Street. It also retains some period features including an inglenook fireplace and wood beams in the lounge area.

Period features and an inglenook fireplace

Delightful conservatory connects the kitchen to the garden

There is a conservatory that connects the kitchen into the spacious, manicured garden which will be a wonderful retreat after a long day out at work.

Our friends at Chantries are marketing the property so why not arrange a viewing at the following website - https://www.rightmove.co.uk/property-for-sale/property-84614432.html

If you would like a chat about property prices in Guildford or want to discover where you will find your next residential or investment property in Guildford call 01483 320207 or email richard.hodgson@newman.uk.com

In the meantime why not visit https://instantvaluation.newman.uk.com/ to perform an online valuation for your home to discover how much it might be worth in today's market.