Wednesday, 18 May 2016

32% Increase in asking price in Two Years

Wow – what a difference 2 years make.  This 2 bedroom maisonette on Ashdown Drive has just been listed by King & Chasemore at £225,000.  You can view the details by clicking the link:

Back in 2014 I blogged when these types of properties were being marketed for £170,000.  The £55,000 extra on the price of the property is a 32% increase in capital value.  Great news for the current owner but the adverse effect is to reduce the yield for the investor purchaser.   
Ashdow Drive, Tilgate
Rents have increased too over the last two years but not by the same 30%.  We would rent this property for £975 in today’s market, which in itself is a respectable increase of 15% over the last two years but it now means the yield has been reduced to 5.2% from the higher 6% when I published the original blog.  With the banks base rate not moving from its lowest ever position of 0.5% even the reduced yield of 5.2% looks very attractive.  Investors would need to remember the new stamp duty rules will attract a charge of £8750 on this transaction but currently stamp duty costs can still be reclaimed through the capital gains allowance when the property is sold on.    

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