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It’s better than Coronation Street you know….The traditional terraced house

13/09/2010

Terraced houses increase in value the fastest, rent out quicker and achieve better yields than other classes of property. But they tend to be overlooked in favour of more glamorous properties such as top-of-the-range houses that photograph well in glossy property magazines, and smart new blocks of flats promoted by huge marketing campaigns.

For the savvy investor, increasing capital value is only part of the equation; the more important aspect is positive cash flow, coupled with historically low interest rates that will without doubt take sometime to increase significantly, the total rental is more important. A typical terrace house in the Wakefield area will yield between 6.5% and 9% whilst also providing positive cashflow of around £200.00 per calendar month.

In the initial boom years of the mid 2000’s, new and experienced landlords were buying up new flats because they cost relatively small amounts of money and they got discounts for buying off-plan.

Detached houses are less popular with tenants because they are more work to maintain, especially if the garden is large. The narrower market can lead to increased voids and the yield, particularly in the North of England is not as proportionate to the capital cost of the property. Therefore, terraced houses appeal to the widest market.

Terraced houses are suitable for many groups, including families, house sharers and students, maximising the pool of potential tenants.

Couples with young families prefer terraced houses with a small, secure garden for the kids. Location is important, too, in a quiet area with good nursery and primary schools and easy transport to work. Good parking is also vital although it is often limited to on-street parking in front of the house.

Changing demographics are likely to reinforce the terraced house’s position as a top buy-to-let investment. The decline of the nuclear, couple-with-2.4-children, family points to increasing demand for smaller properties for childless couples and single parents.

Terraced houses are often also the traditional ‘starter home’ for first-time buyers, many of which are currently unable to buy due to the deposit requirements of lenders.

Up to six million adults are renting not because they cannot afford to buy but because they don’t want the commitment. They are predominantly youngish and expect to move with work. When these people begin to cohabit, they both expect to move for work, with or without their partner.

With the fastest rising values, the best rental yields, an appeal to the widest number of tenants and the potential for refurbishment all paying dividends, the terraced house looks like a good bet for buy-to-let for the foreseeable future.

Terraced houses are ubiquitous in many of our towns and cities and look to offer great value. Is this type of property too good to be true? Terraced houses are the UK’s cheapest private market house type, often making them easily affordable for first time buyers and young families. And their increasing popularity has been matched by a steady increase in value.

In addition to offering great value, this kind of property is easily saleable with this being the preferred property type for residential property investment by landlords therefore, appealing to both the Buy-To-Let and Buy-To-Sell investor.

Terraced houses can be cheaper to run. Most terraced houses have only two external walls meaning that they are easier to insulate and keep warm with heat only escaping through the two external walls instead of four with a detached property. You will also find that older terraced houses are solidly brick built which offers even better insulation properties.

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