Friday, 9 February 2018

Ramsgate Private Rents Hit £11.56 per sq. foot

As I am sure you are aware, one of the best things about my job as an agent is helping Thanet
landlords with their strategic portfolio management. Gone are the days of making money by
buying and old Thanet property to rent out or sell on. Nowadays, property investment is both
an art and science. The art is your gut reaction to a property, but with the power of the internet
and the way the Thanet property market has gone in the last 11 years, science must also play
its part on the property's future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a
rental property is what properties are selling for, the average rent, the yield and an average value
per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is that
it is a great way to judge a property from the point of view of the tenant... What space they get for
their money. Now of course, location has a huge influencing factor when it comes to rents (and
hence rent per square foot). Like people buying a property, tenants also have that balancing act
between better/worse location, more vs. less money and the size of accommodation (bigger and
more rooms equalling more money) and where they live (location) verses making ends meet.

Interestlingly, I know there are a lot of you in Thanet who like to see my statistics on the Thanet
property market, so before I talk about the rental figures per square foot, I wanted to share the
£ per square foot on the values. In Ramsgate for example, the current AVERAGE figures are being
achieved (and I must stress, these are average figures, so there will be an enormous range in these
figures), but on average, properties in Rasmgate, split down by type are achieving...

  • Ramsgate Detached Property - £265 / sq ft
  • Ramsgate Semi Detached Property - £242 / sq ft
  • Ramsgate Terraced Property - £224 / sq ft
  • Ramsgate Apartments - £232 / sq ft
So, the rental figures;

The extent of space you get for your rent is replicated in the space you get for your money when
buying a property. The average size of rental property in the Ramsgate area is 745.1 sq ft
(interesting when compared to the national average of 792.1 sq ft)

This means the average rent per square foot currently being
achieved on a Ramsgate rental property is £11.56 per sq ft per annum

So, what can we deduce from this? Well the devil is always in the detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite
clear from data that there is relationship between the average £ per sq ft figures on property
values and average £ per sq ft on rental figures as a property grows in size. However, something
quite intriguing happens to those figures, in terms of what the property will sell for and what it
will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Thanet property doesn't mean you will double
the value of it... in either value or rent. This is because the marginal value increases diminish as
the size of the property increases. In layman's terms... subject to a few assumptions, double the
size of the house doesn't mean double the value... what really happens is a doubling of size gives
only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part...
When it came to the rental figures, double the size of the house meant only a 20% to 45% increase
in rent.

In a future article, I will be discussing the actual added value an extension can bring... but in the
meantime, in an overall and sweeping statement, most of the time it makes sense to extend if
you are going to live in the property as long as the extension is proportionate to the property,
but if you are going to rent it out... Possibly not.

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