From 2012-2016 rental prices of studios in Leighton Buzzard rose 6% but in Dunstable they rose a staggering 25% however 3 bed semi rental prices in Leighton Buzzard rose 35% against 30% in Dunstable in the same period. Why ?
A couple of weeks ago I focused on the Dunstable rental market from 2012-2016 and showed studio rental prices had risen 25%, 2 bed houses and apartment rents had risen 20% and 3 bed semi-detached house rental prices had risen by 30%.
Following this a landlord with a mixture of properties in Leighton Buzzard called me to ask why he had not seen the same growth for a couple of studio apartments he has in Leighton Buzzard ? He had other larger properties where he had seen the rents rise over the years, but the studios were performing poorly when compared to these.
With a bit of research I was able to produce this table which backed up what he had suggested about the studio apartments. From 2012 to 2016 studio apartments in Leighton Buzzard had only seen a very small increase in rental value of about 6% compared to 25% in Dunstable. 2 bedroom apartments and houses were closer to the growth figure we found in Dunstable seeing growth of 22% but not as well as Dunstable which had seen 25% growth. However the 3 bedroom semi-detached houses told a different story with rents in Leighton Buzzard increasing by 35% outstripping Dunstable’s 30% rise in the same period.
The reason for the big difference between the price rises in Dunstable and Leighton Buzzard is easy to understand. With the large growing workforce in companies such as Amazon, Superdrug distribution and Signature Flatbreads in Dunstable there are a large number of single or young couples from the EU moving to the area for work. They all live and work locally and many are looking for Studios and 1 bedroom apartments. Amazon are about to open another very large warehouse in Dunstable and this is bringing even more workers to the area.
Although we have seen many families requiring 3 bedroom family homes moving from London to Dunstable there is obviously an attraction for these families to move to Leighton Buzzard with its train links to London should they still be working there. This has pushed up the demand for family homes in the area which is why we can see a 35% increase in the rental figure.
Although this landlord had managed to buy his studios for a very good price at the time the demand from tenants for this type of property in Leighton Buzzard is very low. He hasn’t seen the rents or the value increase by very much in the last 4 years and it is difficult to find new tenants leading to void periods.
This just shows that when investing in property no matter how good a purchase might seem at the time you need to carry out due diligence to make sure you are buying the right property in the right area so that you will see growth in both rental yield and capital yield. Luckily for this landlord his other properties have performed well but he now has to decide if the studios are a worthwhile long term investment.
Daniel Bourke is the owner of Belvoir Lettings Dunstable and in his previous career in Architecture he was an Associate in a leading London Architectural practice