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  • In the Spotlight

    Location Spotlight: Liverpool

    I run a managing agency and personally invest in Liverpool.  Most of my comments are based on what I buy and what my company manages.

    What are the pros and cons of investing in Liverpool?

    The pros.  Multiple universities gives liverpool a good number of areas where student lets work well.  You have areas that will see good capital growth but houses still rent for a reasonable yield and will resale to families, and areas where its pretty much all investor driven but give fantastic yields. 

    There are also areas that will continue to improve and have a great atmosphere and will be rentals with OK yields but superb demand in the private market (Lark Lane, for example).  The city is also seeing huge investment and regeneration.

    Cons.  Crime in certain areas (especially theft of copper/boilers on vacant units) and a certain type of LHA tenants (not all!!!) which most cities have.

    Is it mainly private tenants or LHA tenants, or a mixture of both?

    I buy student lets mainly, and my agency manages students, private and a very small number of LHA properties.

    What yields do you achieve in Liverpool?  

    Student lets can range from 9% up to around 20% for larger HMOs.  My current purchase is around 14% (4 bed student house) and the last one was 16% (24% if I cheat and base it on the purchase price and don't include the refurb).  It rented within 2 days of the sale completing which highlights the demand.  12-14% is more typical and very achievable at the moment.  Family rents are a solid 10%  in certain areas as are LHA rents, although these houses are not in the great areas. 

    Rents for student properties have been increasing steadily and although lower than areas like Leeds and Manchester there is still potential for growth.  One of my early student properties (purchased in 2007) rented at £50 a week per person - 5 years later its more like £70 so the rents have increased significantly although that property is still worth roughly the same as when I bought it!

    What kind of properties are in demand?

    Student properties vary - 3 beds are extremely popular as are 5 beds and above in certain areas.  Private properties work well - 2 and 3 beds being popular.  Converted apartments seem to do well too but we don't buy these and only manage a few. 

    City Centre apartments are extremely popular with overseas students (as are two bedroom apartments for the private market) but the service charges pretty much kill any cashflow unless bought extremely cheaply.  Some parts of North Liverpool (towards Aintree, for example) give strong rentals with high single digit yields but very strong demand from private tenants.

    What kind of properties are over-saturated and should be avoided?

    City centre apartments, like in many large cities.  Service charges would be a major problem for me as they will reduce the cashflow considerably.

    Any areas that you would avoid like the plague in Liverpool? 

    I personally steer clear of Norris Green, Croxteth (I used to live there!), Frogmore and Huyton.  Areas like Anfield and Dingle give fairly good LHA rentals with strong demand (everyone needs a house) but I tend to stay clear although I do manage a few in Anfield.  

    What is your favourite networking event in the Liverpool area?  

    I often go to the North West Property Owner Association meetings as I get to catch up with landlords I know.  The last PIN meeting I went to was good.

    Does Liverpool suit novices, or should only seasoned investors get involved there?

    It does - although HMOs should be avoided by beginners the barrier to entry is quite low and its not difficult if you have someone to help you through it.  You just need to be aware of what standards are and be prepared to spend the money in the areas that are needed as the student market is changing - students want much more these days and landlords need to be able to react.  Having said that, the area we find most popular is getting oversaturated with new investors coming in and driving up prices. 

    There are some real sharks out there so any auction catalogue should be taken with a pinch of salt (errors and ommissions by the auctioneer are only part of it - dishonest current rental claims are common in the local auctions).  If you do invest it is difficult to do remotely - you need to be up here and viewing properties regularly to build the relationships with agents and secure the properties.

    Anything else investors should know about investing in Liverpool ... threats & opportunities?

    For student landlords, Liverpool Hope is 4th in the list of top universities that have seen a drop in applications this year (12% down year on year, according to the Guardian a few days back), and one of the major campuses is relocating to the city centre in the next few years which will affect student properties in Aigburth. 

    Having said that, numbers are still high and good quality property is always welcome as there is a lot of low quality stock out there - if you compete with that at the right price, your property will always rent.  The new Peel Holdings multi billion pound development may depress the apartment market (as if there are not enough apartments already) giving another reason in my mind to avoid city centre apartments.  Plenty of landlords are still going bankrupt (not good news for them) but this creates bargains if you do not mind being outbid a day before exchange.

    Is the future bright for Landlords in Liverpool?

    Yes!  I continue to invest and am confident prices will start to recover a little.  

    Do you offer any services to investors in the Liverpool area?   

    My company ([link]) offers full management services for student and residential lettings and I'm happy to meet up with other landlords or investors for a coffee or have a phone chat.  It's how I got started up here and I like to help people get started.

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    Professional student and residential lettings in Liverpool.
    http://www.topproperty-services.com
    Twitter: @ToppropertyUK

    Thanks for starting this Simon.  Fantastic info.  As Liverpool has an airport does that have any bearing on properties i.e people wanting property close to the airport?

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    her indoors is from Huyton - she wont be happy with u!

    Remember having a drink in a local boozer there - strange mix - about 20 old geezers sharing the same pair of glasses for the racing times - then about 20 younger lads all snorting white stuff in the toilets! oh and the pub had a bowling green - although i dont think bowls had been played for a long time!

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    Ha I'll apologise when I see her next Smile

    We've only got one property in Huyton, took it on last week... already an absolute nightmare Sad

    I walked into my local boozer in Croxteth and it was very similar!  One got closed down and even though it was a (grade 2?) listed building was knocked down due to the problems.  Apparently they were storing firearms in the ladies (guess they were never used).

    Suncoast said:

    her indoors is from Huyton - she wont be happy with u!

    Remember having a drink in a local boozer there - strange mix - about 20 old geezers sharing the same pair of glasses for the racing times - then about 20 younger lads all snorting white stuff in the toilets! oh and the pub had a bowling green - although i dont think bowls had been played for a long time!


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    Professional student and residential lettings in Liverpool.
    http://www.topproperty-services.com
    Twitter: @ToppropertyUK

    By the way im in town 19, 20 and 21st April - aim is to pick up 1 or 2 houses - so if there is anything that u and peter are not buying - please let me know!

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    I'll let you know when you are up!

    Its getting very tight to buy now and refurbish - our builders are going to be flat out on getting my one in L7 finished.

    There is a cracking on in l15 if you want to venture away from the city centre - figures stack up well (purchase at 75 - 80k ish, refurb around £23-25k, rental will be £75 per room x 4, so poss around 14% yield.  Its got a rear extension which is currently used as a bathroom but which I'd re purpose as a kitchen and pull down the current kitchen wall.  layout is similar to one I have in l15 - the bonus you get with this one is the extension.  I'm passing but have not got round to running the figures properly.  Small bit of a punt as L15 numbers are down 12% this year but done to a good standard it will go (ask Peter!)

    Forgot to add - these valued up solidly to £135k in the peak (I know of a 3 bed that hit £145k but that was just daft) - most recent revaluation was about a year ago at £120k but they have been known to downvalue to about £110k - £115k.

    Suncoast said:

    By the way im in town 19, 20 and 21st April - aim is to pick up 1 or 2 houses - so if there is anything that u and peter are not buying - please let me know!


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    Professional student and residential lettings in Liverpool.
    http://www.topproperty-services.com
    Twitter: @ToppropertyUK

    Local Housing Allowance Rates for Liverpool as at April 2012

     

    • Shared Accommodation Rate:…..£55.50 per week
    • One Bedroom Rate:………………£92.31 per week
    • Two Bedrooms Rate:……………..£109.62 per week
    • Three Bedrooms Rate:……………£121.15 per week
    • Four Bedrooms Rate:…………….£160.00 per week
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    We have just bought our first student house in L15 and are up there this weekend to start the refurb.  Interestingly we are getting enquiries already from students from all the unis - not just Hope which I think is closest.  RICs was £120 in current condition so you are spot on with values.  Our local contact has urged us to refit to a highish standard as students are getting pickier and the poorer properties tend to sit on the market longer.  He has also told us that only double rooms really rent out so lots of the terraces with tiny 3rd bedrooms actually only fill 3 of the 4 rooms.  Anyway this is a new venture for us so only time will tell - figures look promising in theory though and it's nice to hear you reinforce some of what we had already figured out.

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    My offices are in L15. yes student market is very competitive and the standards are getting extremely high. Students are being attracted to the new city centre studio developments which we have seen 10,000s built in the last few years. It maybe worth considering young professionals who also stay through the summer months limiting void periods and are working and can provide guarantors.

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    Paul Nicholson

    Chief Executive Officer

    Luxor Group

    http://www.luxor-estates.com

    Twitter: @LuxorEstates

    Luxury Landlord & Developer with over 150 rental units across Merseyside

    Glad to hear!  We are finding L15 a little quiet, but once it kicks in (another week or so, after easter) it will be manic until September. I have put a hold on buying in L15 for the moment but will probably resume next year (L7 and L6 are my current stomping grounds!).

    You will tend to find students from all universities like L15 - the atmosphere is different to L6 and L7 (a little more social, more to do locally) but L6 and L7 have the edge in terms of quick rentals.  L15 is very similar to L17 and L18 in this way.

    Your contact is spot on regarding double rooms - some of the houses in L15 have two bedrooms at the front (notably Cranborne Road, Granville Road, Alderson Road) of which one is too small.  Some landlords adjust these (including me) but you have to be very careful to maximise usable space in both rooms otherwise it does not work.  Things like building a wardrobe over the staircase, having desks tucked away, etc, work very well.  Ripping out the chimney stacks can also be useful if trying to maximise the bedroom space at the front.  Obviously the cost shoots up then but if you take the long view (and bought at a sensible price) it should not be an issue.

     

    Good luck with your new property - if you ever want an unbiased chat with a local agent we are based on Picton Road, Wavertree (Topproperty Services).  You may possibly have seen our signs! 

    Nikki Parsler said:

    We have just bought our first student house in L15 and are up there this weekend to start the refurb.  Interestingly we are getting enquiries already from students from all the unis - not just Hope which I think is closest.  RICs was £120 in current condition so you are spot on with values.  Our local contact has urged us to refit to a highish standard as students are getting pickier and the poorer properties tend to sit on the market longer.  He has also told us that only double rooms really rent out so lots of the terraces with tiny 3rd bedrooms actually only fill 3 of the 4 rooms.  Anyway this is a new venture for us so only time will tell - figures look promising in theory though and it's nice to hear you reinforce some of what we had already figured out.


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    Professional student and residential lettings in Liverpool.
    http://www.topproperty-services.com
    Twitter: @ToppropertyUK
    Updating this thread with the following news:

    Short Term rentals increase as Liverpool Becomes Starting Point for Cruise Liners

    Liverpool council received £ 9 million of central Government Grants (2007) in order to be able to develop the Pier Head Liverpool port. The reconstruction has now been completed and the European Commission will soon give approval for the Pier head to be used for International cruise start and end of journey points.

    What is particularly significant about the port opening to cruise liners is that it will be given permission to open as a Stop and Start point not merely an overnight port which means that visitors will probably stay in Liverpool for a couple of nights before or after making their onwards journey according to research from the European commission.

    “The Long run occupancy on serviced apartments being 5.8 percentage points higher than hotels but with almost double the operating profit margin, serviced apartments clearly offer an attractive alternative to hotels.”SaysAdrian Archer, Savills Hotels and Healthcare

    There were only 207 serviced apartments in Liverpool City Centre, out of the total of 4447 rooms, available according to the June 2011 Hotel review. The average occupancy level of serviced apartments was higher than at 76% than Four Star Hotels 73.5% and Budget Hotels at 74.5% based on 2010 figures.

    Read the rest of the story here.

    One of the key initiatives of the Merseyside 2011 Economic Review is to develop Liverpool as a visitor economy. Boosted by the Capital of Culture Award and significant investment over the past 10 years it is already by viewed by overseas visitors as a destination of great sporting and musical significance. People are drawn to Liverpool by Iconic names such as The Beatles and Liverpool Football Club.

    The visitor Economy Strategy 2020 targets are;


    • To increase Tourism related employment is targeted to grow from 41,000 to 55,500 by 2020
    • A top 5 UK destination for short breaks and conferences.
    • A top 20 European city to visit.
    • A top 50 ICCA conference city.
    • An increase in staying visitor nights in Liverpool from an estimated
    • 4.1m in 2010 to a target of 5m by 2020, representing a 22% increase, equivalent to an average annual growth rate of 2.2%. 5m nights are the requirement cited in the Destination Management Plan required for Liverpool to be in the top 20 European cities.
    • Hotel occupancy always over 70% and increasing to 76% by 2020; a continued growth in room yield.
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