298% Rise in Derby Properties since 2000

Derby house prices since the Millennium have risen by 298%, whilst average salaries in Derby have only grown by 51% over the same time frame. This has served to push home ownership further out of reach for many Derby people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Derby has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the city of Derby, roll the clock back 20 years and there were 94,807 properties in the City, whilst the most recent set of figures show there are 105,100 properties – a growth of 10,293 properties.



However, anecdotal evidence suggests that quite a number of those 10,293 were bought by Derby buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 32,524 to 40,043 in the city – a rise of 7519 properties.

Nevertheless, some say this historic growth of the Derby rental market might start to change with the new tax rules for landlords. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

 You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Derby and these are the reasons why I believe that:

Firstly, what else are Derby landlords going to invest in if it isn’t property – the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 298% rise in Derby property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serious shortage of properties to buy at the moment in Derby: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Derby, as supply drops and demand remains the same (although ask any letting agent in Derby and they will say demand is constantly rising) this will create a squeeze in the Derby rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Derby rents will rise as Derby landlords seek to compensate for increased costs, which means more landlords will be attracted back.


Derby Buy to Let sees returns of 12.64%

The other day I got chatting with one of my out of town landlords who was back in Derby visiting his family. To enhance his retirement, he has a small portfolio of four properties in the derby city centre and wanted my advice on where to buy the next property in Derby (as he lives in a college owned flat and anyway, would never dream of buying where he lives in Kensington (where the average value of a flat is £1.62m and a City house £4.1m.  Eye-watering to say the least!!).


Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a Derby property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth from rising house prices over time.  Going forward, Derby landlords will be under more pressure to find the best permutation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.

However, (you knew there would be a however) before we look at yield and capital growth, one important consideration that often many landlords tend to overlook, is the propensity of how likely the rent will increase.  Interestingly, the average rent of a Derby property currently stands at £659 per month, which is a rise of 2.9% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants). Anyway, back to yield and capital growth, the average value of a Derby property currently stands at £179,000, meaning the average yield stands at 4.41% per annum, which on the face of it, many landlords would find disappointing.  That is the problem with averages, so if I were to look at say 2 bed houses in Derby which are the sort of properties a lot of landlords buy, in Derby, the average value of a 2 bed house is £80,000, whilst the average rent for a 2 bed house is £475 per month, giving a yield of 7.12%.

Ultimately investors want to be making gains from both rent and house price growth.   When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our friend.   Return on investment is everything.   So, looking at property values in Derby have risen in the last year by 5.52% …. which means the current annual return on investment in Derby for a typical 2 bed house is 12.64% a year …. not bad.

If you would like advice on any potential buy to lets in Derby , please get in touch.


Derby Property Market after Brexit

Now that we have come to terms with Brexit and turn our attention to other subjects like Christmas shopping and debate about who will win premiership this season  the media are returning to their mixed messages of good news, bad news and indifferent news about the Brit’s favourite subject after the weather … the property market.


The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way. At one end of scale is Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2%. But what about Derby?

Property prices in Derby are 5.52% higher than a year ago

and 3.2% higher than 3 months ago.

So what does this mean for Derby landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone up, yours has gone up.  Everything is relative and what I would say is, if you look hard enough, there are even in this market, there are still some bargains to be had in Derby.

However, the most important question you should be asking though is not only is what happening to property prices, but exactly which property is worth buying? I like to keep an eye on the property market in Derby on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Derby. With interest rates cut to 0.25%, cheaper mortgages on the cards and the undersupply of housing in the Derby area we can expect a steady growth

The next six months’ activity will be crucial in understanding which way the market will go this year after Brexit … but, Brexit or no Brexit, people will always need a roof over their head and that is why the property market has ridden the storms of oil crisis’ in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the credit crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. … there is always a silver lining when it comes to the property market as demand always outweighs supply so property will always out perform any other type of investment.


When purchasing a buy to let property, there are two ways landlords make money through property letting
– capital growth and rental income growth.

A landlord from London, who has a number of properties in both Derby and Nottingham, asked me a few weeks ago about the difference between Derby and Leicester housing markets. He was focused on capital growth but als
o wanted to ensure his yield was relatively fair. I was quite surprised with my findings and wanted to share them
with you.

The average property price in Derby is currently £189,000. In the laderby-eevening-telegraphst 3 months property values in Derby, according to my calculations, have dropped by just over 0.8%. Whilst in Nottingham, average property prices in Nottingham are £184,000, having dropped by 0.4% in the last 3 months. Therefore, is Nottingham the better bet?

Well, not necessarily.

Over the last 5 years, property values in Nottingham have risen by 20.5% and in Derby by 25.1%, meaning over the last 5 years, property values have increased at a 23% quicker rate in Derby compared Nottingham’s. But then there is question of yield, as Derby also normally has slightly higher yields than Nottingham, but Derby’s rental market can be quite fraught.

Each Derby (and Nottingham) landlord will have different needs and requirements in his or her property investment. If you want an unbiased opinion on what (and what doesn’t) make a good property investment. Knowing what has happened to values in different cities, enables us to spot any trends or opportunities for buy to let landlords.

If you would like to discuss my thoughts on the rental markets, feel free to  send me an email to info@arboretumlettings.co.uk

Why do larger properties rent quicker in summer months

Landlords, every year we find that our larger properties in Derby are letting better in the spring and summer months. The proof in the pudding this year was when we listed a substantial 5 bedroom property in DE3 Mickleover, Derby  for £1100pcm at the end of May- it flew20150725_144941_resized out of the door within 10 days.

We have noticed trends in click through rates and portal enquiry levels for these types of properties too. A larger property (4 bedrooms plus) will have a dip in activity in the months between November and February and will notoriously pick up towards the end of March.

There appear to be several reasons for this all of which make very logical sense. Larger properties will tend to let to families with children. They need to make sure schools are all sorted to ensure a stress free move for both parents and children- this means that generally the move needs to happen before the start of September. Larger properties tend to have more garden space which of course looks much prettier and appealing in the spring/summer which does have an impact on the letting.

The other consideration for some applicants is how easy the property is to access and property manage in the winter months- will they get cut off by snow or flooding? Of course this could happen at any time of the year these days but it does seem to be more in the forefront of applicants minds in the colder months. Linked to this is the worry over heating costs- a larger property will no doubt cost more to run and in some cases, if the property is in a more rural location, it may have oil fired central heating which can be expensive. Again these points are always more likely to be thought about when it is cold.

In conclusion, if you have a larger property you are considering letting in Derby it would be a wise move to act sooner rather than later.

Feel free to email me for your free no obligation advice from a local property consultant and property management expert in derby.

Will Derby be effected by a crashing London Market



The increasing property chatter about a stalling London property market particularly in investor fed Nine Elms & Battersea area is going to have repercussions outside of the City as we step through this year. We are hearing whispers from brokers, developers & estate agents that the new luxury apartments planned & now being built particularly in the area south of the Thames towards Battersea Power Station are starting to struggle finding buyers. With much of the stock there sold off plan one or more years ago to largely overseas buyers , particularly the Far East, there is real concern now being expressed as some of these buyers who were looking to sell on as they approach completion wont be able to or indeed will fail to complete their purchases.

With nearly 20,000 homes being built or planned in that one area the current combination of the weaker domestic London market alongside the slowdown in the economy of China , the pressure of the Rouble for Russian buyers & the depreciation of the Malaysian ringgit against the pound in what is a secondary London residential location will have an impact. The current statistics record that prices in London SW8 fell 8% last year & that nearly a third of the stock there has been on the market already for one year .Possible discounts of 20-30% on new homes might now be possible there for keen buyers.

An experienced London developer told us that the largely unplanned regeneration in that one area involving so many different schemes has brought just too much stock to the market at the same time and at prices which ultimately weren’t sustainable. For me it restates again that the key for successful property investing is Location Location and Location. Markets rise & fall, and during rising markets as we are now witnessing in Derby new properties can get built on areas which in previous times might not have been sustainable when the land sat empty or derelict. Sometimes these fringe locations can very quickly become absorbed into the area they sit on the border of or perhaps like parts of SW8 they sit in a mass of new housing that just takes time to become absorbed.

Derby doesn’t have the wall of money that regenerates areas at the speed which you sometimes see in some parts of London. Locations suddenly becoming trendy and seemingly overnight popping up new bars, art galleries with the area catching the vibrancy of urban excitement. Because of this it is important for potential owner occupiers & investors alike that they look properly at every new development they are considering because they too could get caught and isolated if the market here in Derby slowed down.

Going forward as a direct result of this London imbalance we might find development finance backing for these outer locations becoming more difficult if London based funders sense caution in all UK City Centres More immediately I now see over promises in the likely levels of rental return being advertised by certain developers who have schemes coming forward in these hinterland locations of the Derby City Centre. If the steady pace of regeneration slows I sense potential tenants at these higher rentals now suggested to landlords in these particular blocks will easily be tempted into more centrally located properties at those same prices. These outer locations might then see a consequent price adjustment plus possible larger void periods between tenancies.

For investors this means that they need to now open their eyes and look to buy l close to where their tenants want to be not only today but going forward in the immediate years to come. Derby City Centre is moving forward but we recommend you don’t go too far.

Another Renovation Project Completed

We have over looked yet another investment property refurbishment, This article provides landlords with simple and cost effective ideas on how to refurbish a house without spending too much.

Firstly we can have a look at the before video to see the condition of the property when it was purchased. As the house required rewiring to meet current electrical standards a lot more plaster had been taken off the walls


A simple plaster combined with neutral colors gives this old terrace property a modern look. We recommend landlords to laminate the ground floor of the properties as this is easier to maintain between tenancies and does not look too bad either. Wickes and BnQ budget range laminates are the most reasonably priced. Local companies such as The Carpet Stop are very reasonable in providing flooring also.

Another tip is using fire doors, they may not look the best but are very durable and hard wearing will last years.

Howdens Joinery on Ascot Drive for a flat pack kitchen is also great for tenants.


If you have a property to refurbish why not give us a call, i am always here for simple advice on the easiest/most cost effective method of refurbishing a property. The cost of work and decor usually depends on the type of tenant you require.

Is it the right time to buy?


auction 2

An investor that I have been advising over the last few years who herself lives in London has remained interested in the derby property market, because of the success she has had over the last few years.  She is a huge fan of the Graham Penny Auctions in derby, so when she asked me for advice over a few properties she has seen at the current auction this month I gave her my honest opinion, I advised her not to expect too many bargains, I asked her to wait until the next auction to get a better idea of how the property market will react to the new regulations, I predicted that with the new regulations on stamp duty coming in April, people may panic buy which will push the prices up, I explained how that combined with stricter lending rules the price in property can’t change for the better in the coming months.

So it was no surprise to me this morning I received an email from the investor saying ‘thank you, you were right’. The auction was a great success for sellers and the team at graham penny, no doubt they have invested heavily in the auctions and have worked hard to build their incredible brand, the auction had an unbelievable turnout and for sellers it was probably the auction they should have had their property listed.

The table below shows us how this auction compares with the previous two and the same month last year (only comparing properties in derby):

  Feb 2016 Dec 2015 Oct 2015 Feb 2015
Average selling guide price £77905 £66385 £60300 £73450
Actual Average selling price £99048 £78615 £72150 £90175
Increase 27% 18% 20% 22%


Now considering stamp duty tax is set at 3% from April, the price increase when comparing actual selling price to guide price was 9% more than the previous auction, 7% more than the auction before, and when comparing to last year’s figures it was 5% more.  So as you can see the inevitable happened, the prices did fluctuate and the houses did sell an average 27% over the guide price, we know how smart marketing and very low guide prices by the team at graham penny auctions in derby is the key to what has attracted such large crowds. But the prices of actual houses sold and guide prices should not be as high when comparing to previous auctions and future events. So in theory have buyers actually paid the stamp duty tax without knowing.

I know some of you are shaking your head and probably thinking these are only averages of all the properties in Derby and for investors these figures don’t mean anything, well just to put it into perspective I have created another table which will give you a better indication. Now terraced houses are the largest percentage of houses let on most landlords’ portfolios specifically two bed terraces, and in derby the most popular areas are DE22 and DE23 for these types of properties let. So I will compare two bedroom terraces in these areas this auction to previous auctions.

The table below compares the price change of the average two bed terraces in derby, comparing the current auction with previous auctions.

  Feb 2016 Dec 2015 Oct 2015 Feb 2015
Average Guide Price £54000 £55600 £51800 £54000
Average Sold Price £72300 £63800 £65400 £66000
Increase 33.89% 14.75% 26.25% 22.23%


Again you can see from the table above, when comparing average guide price to actual selling prices this auction shows the largest percentage difference, but this is not the most significant figure. When comparing the average sold price between December and October 2015 the difference was 2% which is expected, but when you compare that of December 2015 to February 2016 the average sold price increased to 12%. This figure to me is an anomaly when comparing with previous auctions a result of people panicking as surely house prices have not increased by 12% over the last 3 months, but if they have only time will tell.

Overall I believe when investing in a buy to let property the right price is one that is following current and past trends, I believe the 12% increase was a reflection of people buying with the 3% stamp duty tax coming this April in mind, but without knowing they have actually paid more then what the stamp duty tax will amount to. The future looks bright for investors with capital as I think the market will stall for a while. The house prices won’t fall, but I do think they will increase at a slower rate over the next 6 months when comparing them to last couple of years giving you extra time to save up for a deposit. As always Derby still is one of the most lucrative property markets and there are always properties giving you a healthy return on your investment even at the current sold prices the returns on some of the properties are still around 7%. If you would like to discuss any opportunities further I will happily give my opinion.

Call: 07542 801474

or email: info@arboretumlettings.co.uk

Buy to let Tax changes explained and their implications

stampdutychangesAfter meeting a landlord for coffee this morning we began to discuss the 2015 Summer Budget and Autumn Statement. The Chancellor who we have all grown to dislike introduced several changes that will affect anyone buying or owning a buy-to-let property in the UK. It is important that landlords understand these changes because they may affect the profitability of many buy-to-let portfolios, however small or large they are.

Below is a table summarising these changes

Property Value Current From April 2016
Up to £125,000 0% 3%
£125,000 – £250,000 2% 5%
£250,000 – £925,000 5% 8%
£925,000 – £1.5m 10% 13%
£1.5m + 12% 15%


From 1 April 2016, higher rates of Stamp Duty Land Tax (SDLT) (3% above the current rates) will be charged on the purchase of additional UK residential properties. This means in derby where majority of buy to let investments which were under £125,000 that were attracting no stamp duty will have a 3% SDLT added to it. Terraced houses are the largest percentage of types properties purchased to let in derby, in 2015 the average value of terraced properties sold in derby was £115,000 approximately, these investments had no SDLT, but after April this year you will have to fund an extra £3450 on average to make this purchase in the future.

For example, a property bought now for £500,000 would attract an SDLT rate of 5% or £25,000. But after 1 April it will be 8% or £40,000 if the purchaser already owns one or more UK residential properties.

Also, from 2017 the amount that some landlords can claim in tax relief on their finance costs (such as mortgage interest payments, interest on loans to buy furnishings and fees incurred on taking out and repaying mortgages) is being gradually reduced over 4 years.

When the new restrictions are fully in force from the beginning of the 2020/21 tax year, landlords will be only be able to claim tax relief at the basic tax rate of 20%, instead of 40% or 45% for those in higher or top rate income tax brackets respectively.


How the current rules work


At the moment, you can claim all of the annual mortgage interest you pay against your income from a property, and then only pay tax on the difference. So if your income tax rate is 40% then your tax bill is 40% of this difference.
Here’s an example. Let’s say your buy-to-let property generates a rental income of £10,000 a year, while you pay £9,000 interest on your annual mortgage payments. At the moment, you only pay income tax on the £1,000 difference between the rental income and the mortgage interest.

If you pay the basic rate of tax (20%), you’ll owe £200. Those who pay the higher rate of tax (40%) will owe £400, and if you pay the top tax rate of 45%, it would be £450. In another example, if you receive £15,000 in rent annually and pay mortgage interest payments of £10,000 a year, a basic-rate taxpayer will owe £1,000 under the current rules, while a higher-rate taxpayer will owe £2,000 and a top-rate taxpayer would owe £2,250. These examples assume there are no other deductible expenses for tax purposes.


The new rules explained


From 2017, the way the tax relief is calculated is going to change. Under the new rules, you will owe tax at your personal tax rate on the entire income from a property. From 2020/21, when the rules are fully in force, you will only be able to deduct a maximum of 20% of your mortgage interest payments from this tax liability to calculate the amount of tax due.

This means that if you pay income tax at the basic rate of 20%, you won’t see any change in the amount you owe.

Imagine that your buy-to-let property generates a rental income of £10,000 a year with mortgage interest paid of £9,000. In 2020, when the new rules are introduced in full, you will be taxed at 20% of £10,000 (or £2,000). Then 20% of your £9,000 mortgage interest payments (or £1,800) can be deducted, leaving you with a tax bill of £200, the same as before.

But higher and top-rate taxpayers will pay more. Based on the same scenario, in 2020, higher-rate taxpayers will be taxed at 40% of £10,000 (or £4,000), but will only be able to deduct 20% of their £9,000 mortgage interest payments (or £1,800).

This will leave higher-rate taxpayers with a tax bill of £2,200, compared to £400 under the current system. Those paying the 45% tax rate will owe £2,700, compared to £450 today.

Looking at the example where the annual rent received is £15,000 and mortgage interest payments are £10,000 a year, basic-rate taxpayers would still owe £1,000 under the new rules, the same as before. However, higher-rate taxpayers will owe £4,000 from 2020, compared to £2,000 under current rules, and top-rate taxpayers will owe £4,750, rather than £2,250.

So as landlords around derby are searching for answers, I have a few suggestions, what probably won’t work is simply hiking up your rents to compensate, as most tenants are already paying as much as they can afford. If you think you might be affected, there are a few other things you can try:

  1. You could switch to shorter-term fixed rate deals to get lower rates of interest, although these mortgages carry more risk.
  2. You could place your property portfolio in a limited company structure. You would then pay corporation tax (which is lower) rather than income tax on your profits. A drawback is that your mortgage options will narrow as fewer providers will lend to a company. However I predict these options will open up as most portfolio landlords will turn to this method.
  3. If your spouse pays a lower rate of tax, you could transfer ownership of one or more properties to them (taking care this does not lift them into a higher tax band).

As with most clouds, there is a silver lining. If you’re a landlord with a lower income, you’re no longer at such a disadvantage to those in the big league. This level playing field may in fact help the new wave of ‘silver landlords’ hoping to use their pension pots to buy rental property. Also, if you’re a homebuyer, you may find prices becoming more affordable as the competition from buy-to-let decreases.

Overall, landlords I can’t emphasise enough how important it is to do your research, and to speak to professionals around you for simple advise. It is important to do the math before you begin to search for a property to invest in. As always I’m here to discuss this or any other subject with you, you could either call or email me, or simply follow us at the derby city property blog to stay informed.

Call me on: 07542 801474

Proof2         Or email: info@arboretumlettings.co.uk


The extra bedroom conundrum!

derby 1

If only I had a penny for every time a landlord asked me this question, as a landlord your nature is to explore ways you could increase the return on your investment and to add value to it.

Having extra room in a property is seen as a luxury by the occupier, it is directly correlated with tenants who are willing to pay higher rent and homeowners who are willing to spend more on their home. I am always wary of quoting figures, but for the purpose of this article I am using a survey carried out by the building society and lender nationwide. According to the research conducted by the team at nationwide, if you were to convert a two bedroom terraced house to a three bed the property would increase by 10 percent in value. Whereas, a two bedroom semi-detached house transformed into a three bed would add an impressive 12 percent. Furthermore, to convert a three bedroom terraced property to a four bed would increase the value by 9 percent. Similarly a semi-detached conversion from a three bed to a four would increase the value by 9 percent, and this figure remains the same when comparing detached properties too.

Now these figures do sound impressive, however with a actual example we will explainextension how this method is not worth your time neither your effort. Currently in derby the average two bed terraced in the city centre is marketed at £92000, if I was to add an additional bedroom by means of an extension the price would rise by 10 percent in accordance to the national average to £101,200 approx, a increase of £9200. But as you start to look at planning costs and building costs involved, I think you get the point and I’ll save you the time, you’re not going to get an extension built for £9200, and this doesn’t even consider all the time and effort you put in yourself.

As an investor this got me thinking about rental figures so I decided to delve further into how the rental figures vary between such properties. Does an extra bedroom affect the rent in a way which is worth going through all that hassle?

The table below gives us an indication of the average cost of properties to rent in derby. (Averages taken from properties currently on the market using rightmove and zoopla)

Type of property  2 bedroom 3 bedroom
Terraced 465 525
Semi-detached 550 600
Detached 600 695

As you can see the average two bed terraced house around the city centre has an asking rent of £465, whereas a three bed terraced is asking an average of £525 a difference of 12 percent. So, if an extension costs £20000 and as a result we received an extra £720 a year that would give us a return of 3 percent per year on the £20000 investment. A mere 3 percent is definitely not worth going through all that trouble when you could use that money as a deposit to purchase a additional property and receive up to a 6 percent return on that.

In conclusion, there are various methods you could adopt to improve, add value, and increase the rental income of your property.  From giving the property a paint over, tidying up the gardens, laying down new floors and carpets, a new kitchen is always a key selling point, all means in which you could improve and all costing a fraction of the price of a extension.

As always I am available for any questions or comments you have regarding this topic or anything related to residential lettings in derby, so ask away as I am eager to discuss this topic or any other topic further


Call me on: 07542 801474

Or email info@arboretumlettings.co.uk