Where should I buy my next property? Brixton or Clapham? How many bedrooms? House or flat?

So, another profitable year draws to a close. We all know that very little happens in the property market in these last few months of the year, so now is probably a good time to recap on what’s happened locally. It’s also a brilliant time to set your goals for 2016. How many properties are you planning on buying? Refinancing? Refurbishing? Adding value to?

Let’s look at some numbers I’ve compiled, courtesy of Zoopla. My main aim is to point out areas of good growth for you, the investor.

	Brixton SW2	Clapham SW4
Average Value	£496,886 up 5.22%	£843,777 up 6.74% (12m)
Flats	£405,081 up 4.96%	£566,979 up 5.36% (12m)
Terraced	£738,939 up 7.41%	£1,344,463 up 7.95% (12m)
Semi D	£914,410 up 0.66%	£1,808,612 up 0.66% (12m)
Average Rent	£1,822pcm	£2,141pcm
Average gross yield	4.4%	3%
Number of transactions	542	445

This table certainly makes interesting reading. On the face of it you’d be inclined to buy in Clapham straight away (average values up), but there are certainly advantages to both areas. For one, you can see that the average gross yield in Brixton is nearly 50% more than in Clapham! So rents are much greater in relation to the purchase price. That’s a good thing, because that will make up for the slightly slower house price growth we’ve seen compared to Clapham over the last 12 months. Also interesting to note is that terraced houses are absolutely unaffordable as a buy-to-let, with vastly diminishing yields, only made good by the increase in capital value.

Should I buy in Brixton or Clapham?

Well that depends. Historically we can see that both are good bets. But decide what you are going for: capital appreciation, on the face of it, looks stronger in Clapham but rental yields are definitely better in Brixton. But let’s compare over a longer period. Queue a beautiful graph again courtesy of Zoopla. Now look at how SW2 prices are keeping pace with SW4. There is a difference. But the gap isn’t widening. So as far as investment goes I think Brixton has more to offer in terms of house price growth as gentrification increases and “Brixton Villaaaage” becomes even more popular.

So we’ve decided that Brixton has the best yields and best potential based on historic data and trends. Which property is doing well? 1beds? 2beds? No, it’s actually 3beds which are doing the best. They are still relatively affordable (a big word in London of course) and command the best rents as a percentage of purchase price. Also personal experience tells me that they are ALWAYS in good demand.

   

SW2		1 bed	2 beds	3 beds	4 beds	5 beds
Houses	Value	£385,000	£517,492	£705,702	£1,073,638	£1,238,325
	Rent	£901	£1,807	£2,440	£2,977	£3,398
	Yield	2.81%	4.19%	4.15%	3.33%	3.29%
Flats	Value	£372,569	£512,683	£595,585	£514,544	-
	Rent	£1,280	£1,652	£2,970	£2,743
	Yield	4.12%	3.87%	5.98%	6.40%
All	Value	£372,958	£513,387	£635,820	£929,871	£1,238,325
	Rent	£1,263	£1,661	£2,872	£2,919	£3,398
	Yield	4.06%	3.88%	5.42%	3.77%	3.29%

SW4		1 bed	2 beds	3 beds	4 beds	5 beds
Houses	Value	£499,950	£873,000	£879,988	£1,456,663	£2,506,250
	Rent	£1,077	£2,136	£3,656	£4,444	£4,695
	Yield	2.59%	2.94%	4.99%	3.66%	2.25%
Flats	Value	£508,714	£702,250	£762,349	£1,071,000
	Rent	£1,581	£1,970	£2,321	£3,049
	Yield	3.73%	3.37%	3.65%	3.42%
All	Value	£508,412	£713,195	£787,115	£1,360,248	£2,506,250
	Rent	£1,564	£1,978	£2,714	£3,921	£4,695
	Yield	3.69%	3.33%	4.14%	3.46%	2.25%

Interesting to see that 3 bed flats are offering a near 6% yield in Brixton. Tell me it isn’t so, my chants in April of three bed flats in SW2 being a good bet were fairly accurate.

So if you want more advice on what to buy, where to buy it and when – just drop me a line on jeroen@claphampropertyblog.com. Helping landlords make wise investments now and in 2016. 

The ideal tenancy length for your letting in Clapham, Brixton and Surrounds?

The news

I read the news of the most recent DPS survey and I was surprised to hear that most tenants wanted a short tenancy. Surprised was actually an understatement. I fell off my chair. It's certainly not often that I hear that from would-be renters in my agency. More often than not they ask for longer term because of the costs associated with moving, the security they are after and so forth. In turn landlords generally prefer those tenants who can commit for longer and as a result I turn away people that only want to rent for a short period (12 months or less). Client's preferences, you see.

Long-term vs Short-term

To my surprise The survey, taken by 39,855 tenants who have their deposits protected by DPS, revealed that 80.1% of them wanted tenancies that lasted no longer than 12 months. 34.60% of the total stated a preference for contracts of 6 months or less. That's amazing. Especially this time of year. I can honestly say that a good majority of my landlords would want their property back during a busier time of year so they have the pick of the applicants and tenants bidding up against each other in order to stand a chance at getting their pick of the hot flats in Clapham and Brixton. Why go long? Well here's why... Tenants that are ABLE to offer longer term, in my experience, are a better long term bet. They are confident they don't want to move around (if they can help it). They prefer stability in their lives (they may have had a landlord sell up or move back in previously) and they will take care of your property like a home ( much like you would I'm sure).

Short term AirBnB style

I hear a lot of landlords thinking "I want to raise the rent every opportunity I can." That's right, you can't do that as frequently if you opt for 18 or 24 month tenancies. So match your approach to your situation. Ask yourself whether you can handle a void in order to get things repaired that tenants have failed to mention to you for ages, only discovered by your letting agent after you've given them notice. Can you afford these repairs? Can you afford the new furniture you're going to have to buy (because to attract top rent you're going to have to up your game to stand out). Having said that, some of my investor landlords have turned to AirBnB and are making handsome profits despite their 15% commissions. Do note however you have to be running the operation with military precision, changing sheets/linen, supplying fluffy towels, paying the council tax, WiFi, water, gas, electricity. And voids - it's going to be empty 20% of the time. I would say it's harder work than most envisage. I've even been approached by various management companies who can do this all for you. But... once you've paid everyone are you really better off? Add in the fact that most mortgage companies don't like these short term lets and you're back to where we started...

When is the best time?

For those of you that read my blog religiously you'll know that the best time to let your property in Clapham, Brixton and Surrounds is definitely the summer. The demand peaks in August. So if you are letting today I would most certainly opt for a tenancy length 18 months or even a shade longer to try and capture that peak demand.

If you are looking for advice and help with your property investments, be it in Clapham, Brixton or further afield then please get in touch. I source properties regularly and carry out due diligence reports for a number of investors and if you are looking to expand your portfolio profitably then talk to me. Drop me a line on jeroen@claphampropertyblog.com today.