If we compare the areas of Winnington and Kingsmead within the town of Northwich to see how the two areas compare in terms of rental return.
The area of Winnington comes with its history as a lot of the residential properties were built for the workers of ICI at the early stages of the last century. Kingsmead on the other hand is a modern development on the outskirts of the town centre with very good amenities.
At the present time there is a 2 bedroom terraced advertised at £112k on Moreton Street – Moreton Street. The likely rental on this would be £550 PCM, which means that the gross annual yield would be 5.9% – which is a very healthy return!
If we look at a 2 bedroom mews property that is advertised on Sandbach Drive on Kingsmead – Sandbach Drive – the purchase price is significantly higher at £139,950 and the expected rental value would be £600 PCM. The gross yield comes in at 5.1%, still relatively healthy but not quite on a par with Winnington.
So what’s the conclusion? Well it really depends on an investor’s motivation for purchasing rental property, is it for yield or capital growth? The reasons for going for a higher yielding property would be if someone relied on the income from month to month, maybe as a pension vehicle. On the other hand the Kingsmead property doesn’t have as high a yield but the scope for the property appreciating in value is the main reason for holding a property such as this. One possible financial reason for holding a property like this is that it may be passed down to future generations within the family.
