Private Rented Sector Now The Largest
It has been reported this week that for the first time since the 1960s, there are more people in England renting from private landlords than from councils or housing associations, 3.84 million compared to 3.8 million in social housing.
So from an investor’s point of view what is the attraction in buy-to-let ownership? Well in the same week it was reported that average interest rates on cash ISAs was at its lowest ever level. There also seems to have been an ever growing distrust of the pensions industry, despite the obvious tax advantages. But perhaps the limit on annual allowances permitted to be saved into pensions is also making investors look at alternatives?
Let’s face it if other forms of investment were more attractive this would probably reduce the private rented sector in numbers but this would have severe consequences for the rented sector in general – as demand for rented homes from a rising population and those locked out of home ownership will further outstrip availability with a lack of public sector stock being built. Result? Higher and rising rents…
So with the ever increasing boom in private rented property what about commercial investment property? Barker Storey Matthews now part of Eddisons continue to transact investment properties from retail to offices, industrial property to warehouse space throughout Cambridgeshire and East Anglia. Often the yields are very attractive to investors and can be from 7-12% ! Clearly riskier properties are the ones let to shaky covenants with short leases and limited prospects or re-letting. However there are bargains out there. Cambridge property investments will show lower returns as the demand often outstrips supply. As an example a prime shop property let in the city centre to a good tenant on a long lease will command a high price reflecting a low yield- yields of 4-5% are typical. Conversely an industrial unit in Huntingdon let to a local occupier will command a price reflecting a much higher return on capital – typically 9-11% and [possibly more for poorer quality buildings.
If you are looking to diversify your property portfolio and would like to discuss feel free to call one of our offices at Peterborough, Huntingdon, Cambridge or Bury St Edmunds for an informal chat.