Aylesbury Buy To let –Freehold House or Leasehold Flat?

I wish to answer a question emailed into me from a potential Aylesbury landlord last week. Nice chap ... lives in Broughton, and it turns out, after having a coffee with him, he works in IT, has some available capital (now the kids have flown the nest) and wants to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Aylesbury?

This is the most frequently asked question from those landlords and potential landlords I talk to. Most people will say freehold every time, because you own the land. However, it is not as simple as that. The definitive answer though is to research what Aylesbury tenants want in the area of Aylesbury they want to live in! The tenant is ultimately your customer, if they don't want to rent what you decide is best to buy, then you are not going to have a successful Buy to Let investment. So start with the tenant in mind and work backwards from there, you won’t go far wrong. In short, find the demand before you think about creating the supply.

Leasehold flats and apartments in Aylesbury are excellent in some respects as they offer the landlord certain advantages, including the fact a flat will generally be less expensive to buy. Yields can be good, offering sensible cash flow. The building will already be insured and yes there is a service charge, but it is for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites - there is often no garden to maintain or blown down fences to replace!

However, some Aylesbury leasehold flats can suffer from poor capital growth particularly if they are affected by any of the below mentioned points; Some leasehold properties, in particular the more modern developments will have higher levels of service charges while they are building up a ‘sinking fund’. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there are not many, but some Aylesbury apartments have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out. You need to research your potential purchase thoroughly!

So what do the numbers look like? Since 2003, the average freehold property in Aylesbury (detached, semis and terraced) has risen from £180,346 to £297,342 in value, a rise of 65% whilst the average Aylesbury leasehold property (flats and apartments) has gone up in value from £91,735 to £148,044, a similar rise of 61%. 

It may be interesting to note that of the 8,096 rental properties in the Aylesbury District Council area that the Office of National Statistics state that 32.9% (2,662) of all rental properties are apartments. However, there are only 8,098 apartments in the whole council area (be they owned, council rented or privately rented), which represents 11.7% of the whole housing stock in the area. There is a high proportion of Aylesbury’s leasehold apartments rented to tenants compared to freehold detached, semi’s or terraced.  

My advice to any prospective landlord as it is to you is to do your homework.  I am pleased to say that the potential landlord from Broughton has now agreed a purchase for a freehold property and is very happy with the advice and support he has received. If you would like to discuss your investment plans or a proposed purchase, please don’t hesitate to get in touch. Pop into my office in Temple Street or email me at Ian@mortimersaylesbury.co.uk

You can find similar articles and information at http://theaylesburypropertyblog.blogspot.co.uk/