Vanessa – Welcome along to this Location Spotlight, powered by Belvoir and today we’re on location in Sheffield and I’m joined by Belvoir franchisee Rick Flay, so welcome Rick. Now just give us a quick overview of the buy-to-let scene in Sheffield, because you have been in business for around six and a half years?
Rick – Yes
Vanessa – Has it changed over the years?
Rick – Yes, dramatically. When we first came in I think Sheffield was a little bit behind some of the other major northern cities, like Manchester and Leeds, and didn’t really have a huge amount of flats in the city centre. The first couple years of trading was very much dominated by cranes in the sky, lots of new properties coming onto the market. It’s changed significantly now, if you look around there’s no cranes in the sky, banks have stopped lending and unlike some of the other cities in the country I believe we have a shortage of properties. We’ve recently done a lot of work with a couple of the big blocks in the city centre and the demand has been absolutely astronomical. So I think going forward there is a big opportunity but the thing that’s slowing back the growth in the market in Sheffield is a sheer lack of properties to rent.
Vanessa – So as a letting agent that’s kind of a nice problem to have because you’ve got too many tenants but not enough properties. But you need more landlords, and what sort of properties are you short of? Is it across the board?
Rick – Not totally, I think the major demand at the moment is for one and two bedroom flats within the city centre. But also for your typical…there’s three sectors, the major one is the flats in the city centre, the second sector is traditional Sheffield two and three bedroom terrace houses which will suit primarily the first time…well what was the first time buyer and is not now currently the first time buyer and then the third market is the student market and the four, five bedroom, six bedroom HMO type properties. So there’s three distinct markets, all of which I think are slightly underserviced. So where landlords have money I think there’s a great opportunity for Sheffield to invest at the moment.
Vanessa – It’s interesting you said about the shortage of flats, because many northern cities, like for instance Leeds which is what, 30-40 miles from here, they were absolutely over-saturated with flats. Interesting that Sheffield isn’t and therefore I definitely can see an opportunity. Particularly maybe for first time landlords who want to dip their toe in the water and feel more comfortable with a flat?
Rick – Absolutely, I think from talking to people who are looking to buy-to-let the restriction seems to be the availability of money and not the desire.
Vanessa – Yes, that’s across the whole UK I think, but maybe the mortgage market is easing a little bit and coming back to life. So what sort of tenants do you have in Sheffield, is it mainly private? Mainly LHA? A mix of both?
Rick – We don’t deal with the LHA market from choice, we tend to deal with the sort of middle to upper end if you like. The tenants that we have, some students both local UK students, increasing number of overseas students and particularly the Chinese seem to be very wealthy at the moment. But also a lot of professional people from doctors to lawyers to graphic designers. We don’t as a city have any significant businesses, no major head offices of multinationals here, but there are a number of small to medium businesses fuelling the economy. So it is a mix of both as I say students and professionals. Age range, predominantly probably 21 to about 35 seems to be the core market for the city centre.
Vanessa – Actually that was my next question, who were the main employers. But I think just because Sheffield is a city, it’s got great transport links, it’s got great leisure amenities, there is infrastructure here. That alone makes it an attractive place for tenants.
Rick – Yes, absolutely. It’s got two universities with an approximate population of 50,000 students.
Vanessa – Oh Right!
Rick – Two very very big teaching hospitals. The universities tell us the retention of people who study a degree in Sheffield and then stay on in the city is the highest in the UK, so that obviously fuels population growth. Plus you look at the distances, less than an hour to Manchester, to Leeds, to Nottingham so it is very centrally positioned in the middle of the whole UK. And like you with the transport links, the safety of the city, the greenery all fuel it. It’s a very safe and enjoyably place to live.
Vanessa – What about the crime rate here, is it lower than average?
Rick – I believe so, yes. I mean I couldn’t put my hand on the exact statistic but traditionally it has been one of the lower crime areas in terms of cities centres in the UK, without a doubt. It is regarded as a safe city.
Vanessa – So you’re more than happy to talk to landlords?
Rick – Yes
Vanessa – And potential landlords about how you can help them?
Rick – Yes
Vanessa – If I was a first time landlord just wanting to dip my toe in the market what advice would you give me?
Rick – I think the first thing I’d say is come and talk to somebody like ourselves, we are not going to force particular properties down somebody’s throat just for the sake of a sale. We can offer independent advice, we will give you the warts and all if you like. A lot of mistakes people make are made at the time of buying and I think it’s important to understand not just the Sheffield market but the micro-markets within Sheffield.
Vanessa – Absolutely!
Rick – To understand that you could be two or three streets away and get it wrong. So talk to us before you put pen to paper. We offer free initial consultations and we’ll actually go through right to helping people find properties at the right price. And I think that’s the key at the moment to success.
Vanessa – Well I totally agree with what you and I loved what you said about the micro-markets as well, because that’s true of any city and you can get it wrong by a matter of streets. That’s where specialist knowledge like yours really comes in to help a landlord. And also Nick and I always say find the demand before you create the supply and it sounds to me like you’ve got tremendous demand here.
Rick – Yes, we have. As I say those three sectors I mentioned before, are probably where I would be really focussing on if I was looking to invest. I think the other thing that people could bear in mind is that the purchase price for properties in Sheffield is still significantly lower than other bigger cities. I think the average price at the moment is about £115,000 for a two or three bedroom house, which compared to other areas is still very very reasonable. And you can get 6% up to about 10% on student properties if you’re buying at the right price in the right area.
