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  • Deal Finding

    Anatomy of a property hotspot - 12 indicators

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    Successful property entrepreneurs are people who look for trends and signs and get into an area early, long before others identify it as a hotspot.

    There are a number of proven signs that an area is going to have enhanced capital appreciation and the earlier you buy in the area, the greater growth your property will enjoy.

    1.  Improved transport links

    This includes road, rail, air, and sea.  Anywhere where money is being spent on improving transport links will enjoy increased house prices.  More money can "flow" into the area and people may move into the area because of the improved links.

    CrossRail - affect on property prices

    CrossRail 2 - opportunity for investors 

    Where is cheapest place to buy a property that has the fastest time into London? 

    What are the limits of London's commuter belt?

    Five future commuter hot-spots 

    New property search site based on commuter times is launched. @mapumental

    The debate about a third runway at Heathrow is still on-going by savvy investors may take a chance on this coming to fruition.

    Cheapest property prices within the M25

    2.  Increased broadband penetration & mobile connectivity

    People are becoming increasingly independent on the internet and broadband speed is a big factor when choosing a new home.

    The Housing Futures Report found that broadband and mobile connections are essential to attracting people to live outside of cities and urban hubs. Access to broadband was a key factor for 49% of those intending to move to a village, while 38% highlighted mobile connectivity.

    It stands to reason that, if broadband and mobile connectivity is improved in a more rural area, that it will become more attractive to property buyers.

    Slower broadband speed could hinder house prices and rents 

    In March 2016, David Cameron stated that the number of homes with access to superfast broadband speeds has doubled since 2010, but that more needs to be done.

    He said that a big reason behind why broadband and mobile masts haven't been built has been "nimbyism" - meaning local councils and residents have objected to the masts being erected.

    It is likely the Government will introduce new powers to site mobile masts.

    3.  A school with an improving OFSTED rating

    It has already been widely documented that school catchment areas have a huge impact on property prices.

    According to this article: Moving into the catchment area of a good school was the top priority for 37% of prospective buyers with a child aged 10 or under, according to a study for Santander. That means that 1 in 3 homebuyers regard a good school in the vicinity as a top priority.

    New research gives insights into dramatic effect of good schools on property prices

    How to find good and outstanding schools in your area

    Is proximity to good schools high on your list of BTL due diligence?

    It stands to reason that an improving OFSTED report will make a school more desirable, and more parents will want their children to attend.

    4.   Improving outcomes in relation to other areas of social issues, such as health and crime.

    A new hospital opening up or a reducing crime rate can make an area more attractive.  Hospitals also provide hundreds of jobs, meaning an increase in potential tennats.

    U.K.'s top 10 cities and towns for burglar frequency. 

    5.  Councils offering incentives to landlords

    We are increasingly seeing councils offering incentives to landlords to buy and rent property in an area.  This is an indication of high tenant demand and possible strong yields.

    6.  Empty shops in the High Street

    This can often be seen as a negative sign, but it can also be a precursor to improvement and a town going more up-market.  When all the fast food outlets and other low-end shops can no longer afford the rent, they will move out and more up-market shops will take their place.

    7.  Lots of building and development projects

    Forests of scaffolding might at first engender terrifying thoughts of disrepair everywhere. But a flurry of building activity is often the symptom of a flock of new buyers who’ve spotted the potential of an area early on, and are renovating their new homes. Home-owners willing to invest in tarting up their bricks and mortar are likely to have: 1) A bit of cash to splash; 2) Intentions of re-selling for more money.

    If lots of properties are being done up in tandem, it will also benefit the look and feel of the whole street or micro-area, again adding value to the district.

    Permitted development rights are also being taken advantage of by developers to transform tired old office blocks into smart residential properties.  Watch out for where developers are bringing old buildings back to life.

    8.  Coffee culture

    Quality food outlets like Starbucks and Costa Coffee appear as areas start to improve.  These types of shops can often be an early indicator that an area is on the up.

    9.  The "Waitrose" effect 

    Analysis from international real estate adviser, Savills, in 2013, compared house prices in the postcode district where Waitrose stores have opened over the past five years to the average for the whole county and found that house prices are 25 per cent more expensive. 

    Make a new Waitrose store as part of your due diligence

    10.  Retail and business parks

    Up and coming towns often have shiny new retail parks on the outskirts with quality stores like M & S and Next.

    Look to where retail and business parks are being planned, as these will bring more people into the area and more tenants needing somewhere to live.

    A large employer also moving to an area can have a huge impact on property prices.

    11.  Stamp duty surcharge

    The stamp duty surcharge may encourage investors to look in cheaper areas up North.  Properties under £40K do not attract stamp duty.

    The 10 best U.K. towns or cities to invest in for under £50k 

    Government announces plans to turn North of England into economic "powerhouse"

    12.  Places where there has been no growth for a long time

    If an area has flatlined, then it stands to reason that there is potential for growth, especially if some of the above indicators start to appear in the area.  These areas may also have higher yields, so worth considering as long-term investments.

    Investing in towns not favoured by owner occupiers. 

    HMO's destroying seaside towns as vunerable tenants put in low quality accommodation

    Related content:

    Brand new property hotspot, read all about it!!!!!!

    Unlikely signs that an area is ripe for property investment

    New Land Registry app to find cheapest and most expensive properties in any area

    Spa towns out-perform rest of U.K. property market

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    Some news this morning has prompted me to add another "lateral" indicator:

    Where there is a decline in planning applications or approvals of planning applications.  (The two obviously may be related metrics).

    This might indicate that supply will decrease in the area, scarcity thereby creating value of existing stock.

    ​Any other indicators of potential hotspots that I've missed?! Smile

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    Most points covered there in your list

    Only one missing.

    We look also at demgraphic projections for next 5 years as well as housing strategg y locally house building forecasts ... this info available ftom local councils... all will have a housing strategy paper and demographic projections...

    Then we look into that... there are key demogpraphics whih pre-determine house and rent price inflation... comibine this with low projected house building and sopme of the things you have highlighted you are onto a winner

    David Lawrenson

    Independent property investing advice

    https://www.LettingFocus.com

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    I think that new estate agent branches, particularly upmarket or 'prime' estate agents, can indicate an up-and-coming area.

    To combat its losing profit, Foxtons is opening branches in cheaper areas of London and pushing out into the commuter belt. It's choosing areas that demonstrate much of the criteria you've already discussed – new transport links, regeneration, improving social indicators etc.

    When you're looking at planning applications in an area, see if any estate agents have applied for a change of use permission.

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    Writer: Commercial Trust Limited Follow us on Twitter: @CommercialTrust Please note that anything I write is for information purposes only, and not to be construed as advice. Commercial Trust is regulated and authorised by the Financial Conduct Authority. Registration number 610175.

    In light of the current local elections I wonder if the voting results give an indication to where the quality areas are

    So avoid Labour areas and buy in Tory areas!?

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    On the other hand, since home owners tend to vote tory and tenants tend to vote labour, labour areas will be where the demand for renting is.

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    Yep! perhaps Labour areas for yield and Tory areas for capital growth!?

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    Property Consultancy DataLoft has identified 4 key indicators of a property hotspot:

    These indicators include an assessment of the local economy, best judged through local earnings and job growth.

    A separate but associated factor is the nurturing of new businesses - towns that positively want start-ups and pioneering technology.

    Demographic data reveals a lot about the scale and strength of local rental markets.

    Meanwhile affordability is, perhaps unsurprisingly, another crunch factor for rental demand. 

    Read the full report

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    Almost two-thirds of property investors now rate new and upgraded rail and tram links as providing the most attractive property investment opportunities, especially when it comes to new developments, fresh research shows.

    According to a new study commissioned by Amicus Property Finance, the specialist short-term property lender, 86% of UK property developers say that investors are increasingly looking to capitalise on the government’s £23bn infrastructure scheme.

    Improved road transport links (55%), local authority-sponsored urban regeneration schemes (48%) and airport upgrades (43%) were also ranked highly among property investors in terms of the potential offered by developing adjacent sites.

    Analysis of the government-backed projects on an individual basis shows that 77% of property developers ranked Crossrail and Crossrail 2 as offering the most potential for residential schemes, ahead of High Speed 2, at 51%, Thameslink (47%) and superfast broadband (14%).

    Full/source story

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    Perfect example of indicators of a property hotspot ....

    More than 300 affordable homes to come to Granton Harbour

    Port of Leith Housing Association has acquired a 2.1 hectare plot of land on West Harbour Road, Granton, which will pave the way for 302 affordable homes to be built within the next five years.

    The site acquisition is being supported by over £6 million of Housing Association Grant (HAG) from the City of Edinburgh Council on behalf of the Scottish Government and will include a mix of social and mid-market rent homes.

    It will form part of the Granton Harbour masterplan which will see £0.5bn invested in regenerating the area to build 2,000 new homes as well as parks, local shopping, a healthcare centre, a retirement living complex, a conference centre and hotel, restaurants, offices and Edinburgh’s new Marina.

    Keith Anderson, Chief Executive, Port of Leith Housing Association said:

    “This is an important step towards making Leith an even better place for people to live, visit and do business. We’re excited to be working with the City of Edinburgh Council and the Scottish Government to meet demand for good quality, affordable homes in North Edinburgh and to play a part in the ambitious regeneration plans for Granton Harbour.”

    A spokesperson for the City of Edinburgh Council, said:

    “This significant new development at Granton Harbour is a great example of how the Council and our housing association partners are delivering on the joint commitment to build 16,000 new affordable homes in Edinburgh over the next 10 years.

    “This latest announcement with Port of Leith Housing Association builds on our current success in accelerating house building to provide the increase in affordable homes that Edinburgh so desperately needs.

    ”I can’t think of a better use for the site than providing much needed affordable housing for local people.”

    Kevin Fawcett, Granton Central Developments, said:

    “The provision of quality affordable homes for Edinburgh has never been more vital. Granton Central Developments is delighted to have been able to co-operate with the Port of Leith Housing Association to ensure this land provided these much needed new affordable homes.

    “This proposed development will add further impetus to the regeneration of Granton Harbour which is soon to become Edinburgh’s new marina. The environment where homes are built is as important as the quality of the buildings and in both respects the Port of Leith Housing Association have the boxes ticked. This is very good news for Edinburgh.” 

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    Research by Martin & Co has revealed that three road projects completed in the past two years have driven significant uplift in local property prices.

    Improvements to the intersection at junction 19 of the M1 (at Catthorpe, Leicestershire) boosted property values by 22.5 per cent; the Bedale bypass in North Yorkshire, finished in 2016, added 16.2 per cent; and the new junction at Elkesley off the A1 in Nottinghamshire pushed house prices up by 12 per cent.

    Here are the next set of up-grades:

    Cornwall

    The upgrade of the A30 between Carland Cross and Chiverton Cross to a dual carriageway (£290million, due to start in 2019/2020).

    Kent

    The upgrade of the A21 to a dual carriageway between Tonbridge and Pembury (£69.7million, completed in September 2017).

    Tyne And Wear 

    Improvements to the A19 junction at Downhill Lane (£100million, plans approved).

    West Sussex

    A new A27 bypass at Chichester (£250million, in planning). 

    Full/source article 

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