I was asked by a landlord recently whether the postcode made a difference to the rents and values of property? After all in the high stakes of the London market a property in SW3 Chelsea costs on average £2.3m compared to £1.6m for SW10, West Brompton Chelsea. What a difference a few hundred metres can make.
Recent Property Price Rises in Hillingdon
So what is the situation around UB3 South Hayes, UB4 Hayes and Yeading, UB7 West Drayton, UB8 Uxbridge, and UB10 Hillingdon/Ickenham? According to Zoopla the postcode with the biggest rise in property prices over the last year has been UB8 Uxbridge with a rise of 9%, compared to 8.5% in UB4 Hayes/Yeading and Hillingdon/Ickenham. West Drayton has risen by 8% and Hayes/Harlington by 7.6%.
The Longer View
Going back a little further for five years, the improvements in prices are quite similar across the area with rises of 29.6% for UB10 Hillingdon/Ickenham the highest and UB8 Uxbridge rises of 27.9% the lowest in the south of the borough which is still an average increase of 5.5% over the 5 years.
Local Yields
But for a landlord property prices are only half the story, as the rent will cover the day to day cost of the mortgage, service charge, ground rent and maintenance etc. The yield which is the annual rent divided by the property purchase price gives a percentage return on the investment. The average yield based on property values and current rental asking prices are 4.8% in the Hayes areas of UB3 and UB4, in Uxbridge UB8 it’s 4.7%, and 4.6% in West Drayton.
Why is the Average Yield Lower in Hillingdon/Ickenham?
The lowest average yield for the area is UB10 Hillingdon/Ickenham with a yield of 3.4% but the average property prices here are higher than the surrounding area and most of the property to rent is two and three bedroom property so we have a bit of a mismatch between average values and what is available to rent which is frequently smaller than average property. This highlights the need to look at each individual deal on their merits. It’s still quite posssible to get a reasonable return on your two bed flat in the area.
