A Look Back At The Birmingham Property Market In 2021
A Look Back At The Birmingham Property Market In 2021
At the beginning of November, Kirsty Cove, our Sales and Lettings Director, spoke with Property Hub Magazine about the current state of Birmingham’s thriving residential property market.
From supply and demand to the year’s hottest trends, Kirsty explored a wide range of topics that both active and prospective investors will find very useful.
You can read a full transcription of the interview below:
Q: How has the local property market performed this year?
The lettings market rebounded incredibly quickly, with rents back to pre-Covid levels by August 2021. The majority of FleetMilne’s residents had remained in their homes during the period March 2020 – May 2021, so when the new influx of residents arrived, in the summer of 2021 stock levels quickly depleted. This had a knock-on impact on rental pricing, and Landlords’ appetite to increase rentals for current tenants. The biggest challenge in the city remains low stock, so we are encouraging developers to build and investors to buy!
The leasehold sales market in Birmingham city centre continues to demand good quality brand-new stock; there was a surge of enquiries and instructions around the stamp duty holiday period. The Covid-effect saw some people relocating to the suburbs, but many others moved into central Birmingham from more expensive areas such as London, aiming to benefit from ‘more for their money’ after working-from-home became more of a permanent arrangement. Buyers (both investors and owner-occupiers) are showing great interest in new, more expensive schemes which offer an array of facilities such as well-equipped gyms, meeting rooms, cinema rooms, landscaped gardens and business centre spaces.
The city centre residential neighbourhood footprint continues to expand as developers seek affordable plots, bringing in areas such as the Gun Quarter and more of Digbeth. Years of planned regeneration are coming to fruition, offering a wider choice of location and product to the market will suit a variety of budgets and requirements.
Although we’ve recognised the enhanced offering of OMS (open market sales) properties, it hasn’t been plain sailing. A myriad of stumbling blocks gets in the way of sales transactions, including:
Residential buildings must be in possession of an A1 EWS1 (External Wall Survey) in order for mortgage providers to confidently lend; remedial works will have to be at least nearing completion before we can realistically accept the instruction. A lot of education is required around this point, with many clients not fully understanding the impact of owning a property that cannot easily be sold.
Some Headleases feature ground rent increase clauses which the mortgage companies deem to be ‘onerous’. This results in either seeking cash-only purchasers or in more extreme cases, the requirement for a Deed of Variation, whereby an owner buys their way out of the future increases. These Deeds can cost anything from £5,000-£20,000.
And as developments head for 20 years old, major works will be required to ensure the scheme remains in good order. Section 20 Notices are increasingly being served on the Leaseholders, impacting appetite to purchase in these schemes until the works are done, or at least paid for.
The result? The time between agreeing to a sale and the final transaction has increased by an average of 40% where the property is affected by any of the above.
Our advice? Speak to an experienced local sales agent to discuss the best course of action to suit your needs and situation. Every seller and property is unique and it’s important to understand the options.
Q: Are there any areas of Birmingham city centre which achieve noticeably punchy gross rental yields or particularly low void periods?
A: Some neighbourhoods perform better than others, but even within the micro-location, schemes perform differently. The target audience will often impact these figures, for example: attracting more students than professional tenants will see a peak in demand, and therefore rental pricing, in the summer months. But attracting professionals may see a more long-term community, though at less extreme rental prices.
As a rule, properties where the Landlord regularly invests in the quality will perform best. We determine individual rents by considering a variety of factors: current demand, local competition, time of year, audience, interior fit-out, investment quality, and timeframe available to find tenants. Our advice results in minimum voids and the best possible rent.
An example of this was a 300ft2 studio in the city core achieving £900pcm resulting in a 7.4% gross rental yield and 3-day void period. Every area and development performs differently (presentation remains a key factor), so it’s important to heed your Letting Agent’s advice when it comes to improvements you can make.
Birmingham has successfully attracted a multitude of companies to the city centre; Goldman Sachs and BT are 2 such employers currently placing a heavy demand on city accommodation, and as these employees tend to have high standards, the better properties are always the first to go. The older units are starting to fall behind in terms of both quality of tenant and rental pricing, so improvements are becoming an absolute necessity in the city. A two-tier system is already in play because of the BTR (Build to Rent) schemes, but if Landlords don’t invest, a third-tier will appear.
Invest in the Birmingham Property Market
With the current regeneration that’s taking place in the Second City, it’s no surprise that buy-to-let property investment is booming in Birmingham.
Invest in Birmingham with the city’s favourite lettings and estate agent and enjoy a healthy source of income for many years to come.
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