investment

I have been contacted by an investment company that is interested in taking long-term leases on houses or apartments in WGC. Actually the investor is looking invest in Ware and in other locations outside of our region.

The objective is to rent long term to provide apartments for corporate clients who want to put up employees from a few weeks to many months.

The lease will have to permit sublettings, but otherwise will be fairly standard. Rents are at or above market rents. Demand from short-term tenants is strong so this is a very viable business.

An audit by Commission for Architecture and the Built Environment (CABE) on housebuilding in the UK has condemned the majority of new developments:

A staggering 82% of new homes built over the last five years aren't well-designed and fail to measure up to the building industry's own benchmarks, says the first national audit of new private housing design. Nearly a third are so poor they wouldn't have got planning permission as they stand.

See The BBC News Magazine for more details.

This story, published by the FT shows the benefits of letting to tenants who have arrived from the recent accession countries to the EU.

Published: January 6 2007 02:00 | Last updated: January 6 2007 02:00

Davina Tanner (above) has built up a portfolio of around 75 properties in East Anglia that she lets to immigrants. She now operates these professionally and has also set up a lettings agency to run properties on behalf of other landlords.

Price of new flats falls 0.9% as rest of house market soars

By Jim Pickard, Property Correspondent

Published: January 20 2007 02:00 | Last updated: January 20 2007 02:00

The price of the average new flat in the UK has fallen 0.9 per cent in the past three years, even as the rest of the housing market has risen 31 per cent.

The news will make alarming reading for the tens of thousands of investors who have bought new apartments in recent years in the hope of rapid capital growth.

The Financial Times has analysed data from the Land Registry and found a vast discrepancy in capital growth between different types of housing.

The average home leapt in value 31 per cent from £161,665 in September 2003 to £211,453 in September 2006. But the typical new flat fell slightly from £191,223 to £189,564 during the period. The figures are the Land Registry's most recent detailed breakdown of the market.

The data should be treated with caution as they could reflect developers building smaller flats or in cheaper areas. But theyshow a striking trend.

"It is straightforward supply and demand. The housebuilders keep on repeating, parrot fashion, that there is a massive undersupply of housing," said Alastair Stewart, a construction analyst at Dresdner Kleinwort. "The undersupply is not in flats, but in houses, which they are not building in large numbers."

Housebuilders have built an increasing proportion of flats in recent years as a result of government policies that encourage high-density, brownfield sites. More than half of new properties are now flats compared with20 per cent in the late 1990s.

There is an oversupply of flats, especially in larger regional cities such as Manchester, Bristol and Birmingham. To the east of London, where the government has earmarked hundreds of thousands of homes in the future, there are also fears of a glut.

A recent report by agents Savills showed that property prices in Docklands rose just2.2 per cent between September 2002 and June 2006,when much of central London enjoyed a boom.

Demand has so far been sustained by buy-to-let investors, who account for more than half the units in any typical scheme. But experts believe rising interest rates could sap the appetite of many investors for more buy-to-let purchases.

The typical net "yield" on a residential property has fallen to about 3.5 per cent - taking off30 per cent costs from the 5 per cent "gross yield" - way below the cost of borrowing. For new flats, the yield is often lower.

Mr Stewart said many investors were finding it hard to attract tenants. "These are often yuppie pads in towns like Nottingham and Leeds where there aren't enough yuppies to fill them up," he said.

Copyright The Financial Times Limited 2007

Housebuilders have more to fear from flats' price fall

By Charles Fairhurst

Published: January 25 2007 02:00 | Last updated: January 25 2007 02:00

From Mr Charles Fairhurst.

Sir, The oversupply of new flats (report, January 20) can hardly be a surprise to those that organise buy-to-let syndicates; as they are unregulated, I suspect they are not required to advise their investors of these poor returns. Oversupply of flats is clearly a problem but all new developments have a "stabilisation" period when short-term owners become sellers; what has changed over the past three years is how many of these investors and owner-occupiers have become short-term investors and so the "stabilisation" periods have lengthened.

Housebuilders perhaps have even more to fear from this news; as many have become dependent on buy-to-let syndicates for off-plan sales and both the increase in short-term investors and the oversupply flats of new developments are combining to hold back values. Equally concerning may be that owner-occupiers have become particularly disenchanted with ever smaller flats in far from attractive new developments, built on brownfield land; the government's planning policies are responsible for this but the housebuilders now have to build and sell them.

The good news for long-term investors is that whilst a longer "stabilisation" period has provided very little short term capital uplift, these properties will revert to mean as they become "second hand".

Charles Fairhurst,

Chief Executive,

Fairbridge Residential Investment Management,

London W1U 2RE

Copyright The Financial Times Limited 2007