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2022 GUIDE TO INVESTMENT PROPERTY – STOKE ON TRENT & STAFFORDSHIRE

Introduction from our Director

“For the majority of investors I encountered in 2021, I think it would be fair to say they were ‘frustrated’ and to some extent motivated. The boom following the first Covid lockdown was still in full force and seeking a typical Buy-To-Let property was proving to be almost impossible via the usual advertisement streams.

Is 2022 going to be another year of frustration? Well, I am not going to publicly forecast as it is somewhat a fool’s game, however, the sales market was cooling from white-hot to red-hot at the back end of 2021. Was this due to a shift in supply and demand or was it due to the typical winding down nature of the festive season? We will have to wait and see…” 

So without further ado, let’s get into this Guide to Investing in Property in Stoke on Trent 2022

First glimpse of how a new 3,500-seater arena in Hanley could look.

1) Is Stoke on Trent Still A Good Place To Invest? 

 The landscape has changed since my last annual forecast in 2021 but only slightly and if you are still considering WHERE to invest in Stoke on Trent then open my previous article ‘5 Places to Invest in Stoke & Staffordshire 2021’ in another tab and take a look once you’ve finished here. My thoughts on the BEST AREAS TO INVEST have not significantly changed in the last twelve months. Perhaps that shows they were good calls in the first place, who knows but the barriers to entry have increased and remain ever prevalent. 

 The recent announcement during the budget of £56 million being awarded to Stoke on Trent to promote regeneration and new homes in the area provides a glimmer of what could become of the city and the potential increase in rental housing demand and capital growth.

Stoke is Still Cheap & Rents Continue to Rise 

With an average house price in the city being in the region of £146,000 it is still relatively cheap to pick up a property in the area compared to nearby towns Stafford £219,000, Wolverhampton £201,000, Shrewsbury £276,000 and so on. 

The housing market still remains buoyant however it is undergoing the long overdue correction following the house price spike off the back of the first Covid lockdown. The last twelve months has seen house prices increase by around 3% on average, a significant decrease from the twelve months prior to that 4.5% and the period before that 5.1%. 

 It’s a different story when it comes to the rental market as it continues to be in high demand. We expect this to cool down with delayed response to the sales market. 

‘Stop The Stink’ protestors situated at the entrance to Walleys Quarry.

2) What areas to avoid (or be wary of!) investing in Stoke on Trent?

Take this section as you will, some will look at these areas as potential future prospects where they can pick up a deal. Every investment strategy should be subject to what results are desired, there is no right or wrong. 

For the benefit of those out of area, here are a few locations where properties are regularly coming to market and at a first glance may seem like a juicy investment. We advise you to do further due diligence if you land in one of these spots to fully understand what it is you are buying. 

Longton and Surrounding Areas 

Investors are typically attracted to this area due to the low price tags put on properties.

Although there is nothing significantly wrong with this area, it does appear to be experiencing an element of decline and dilapidation and this has been consistent over the last decade. There are no significant plans in the pipeline (that I know of to regenerate the area or bring significant employment).

Rental yields may perform okay but be aware that there is very little room to ‘add value’ and capital growth will be minimal. 

Silverdale (Walleys Quarry) 

Now if you live in Silverdale, have a friend who lives in Silverdale, or have ever driven within a 1 mile radius of Silverdale, you will know exactly what this is about. 

Walleys Quarry is a landfill site situated between Silverdale, Newcastle and Keele and has recently made national news headlines due to the ‘STINK’. 

The issue is being taken to the High Court after local residents are experiencing adverse health effects due to the gases being emitted. 

You may look at this issue as one with a timeframe and therefore a good opportunity to pick up a cheap property while the problem is present. As it currently stands though, homeowners and investors are looking to clean their hands of the area as the smell can be unbearable on a still morning.

Shelton – Staffs University (Accommodation Areas)

The next two topics are not necessarily areas to avoid, similar to the above but more so areas you really want to be comfortable with and have an end user in mind. Shelton has previously been under scrutiny as an Article 4 area (this essentially means your permitted development rights are restricted to prevent over development, in this case, HMOs). 

The area is rife with student property a lot of which is sitting void due to the change in culture COVID has brought. You will find properties popping up for sale here as Landlords get cold feet from missing an academic year. If investing in this market, my advice would be to either GO LARGE or GO HIGH END, there will always been an abundance of poor to mediocre quality student accommodation and you need to stand out from the crowd. 

Keele University (Off-Campus Accommodation Areas) 

Stoke has two major universities, both of which we have touched on here. The reason Keele makes the list is slightly different to why Staffs university features. Keele university is a campus university meaning it is relatively self sufficient and the only reason you need to leave the campus is to head into Newcastle town centre OR if you decide to rent a house with your friends. 

The campus is undergoing heavy investment and development with a new state of the art building popping up every few months, some of which are accommodation blocks. The university is preparing for a higher influx of students and is therefore building to the demand, will this attract students away from private rental accommodation and back onto the campus? Potentially, however, we still find second and third year students prefer to rent a house together off campus where the individual costs are significantly reduced compared to living in a purpose built accommodation block. 

Similar to the above section, good quality accommodation in the best locations will always rent first but expect to see those on the outskirts with tired properties struggling. 

A non-standard construction property.

3) What types of properties to avoid/ be aware of in Stoke on Trent?

The rules here are not any different from anywhere else in the country however there are a few anomalies that you will want to be aware of. 

Red Ash

You can read a detailed breakdown of what red ash is by visiting the following blog ‘5 Stages to fix red ash property’. 

In short, it means the floors of the property need to be removed and replaced to modern standards. This typically costs around £10,000 and the remedy will cause damage to the interior of the property. When red ash has been identified, the property is usually unmortgageable so it needs addressing. 

Non Standard Construction 

Similar to many other cities, there are pockets of properties in Staffordshire that are considered ‘non-standard’ construction houses, again making mortgages and finance very difficult. These vary and come in all sorts of forms, if you know what you are looking for then they are quite obvious. Alternatively be wary when properties have flat roofs, external render, external insulation or unusual brick bond patterns. 

Energy Inefficient Homes 

This is one you really have to budget for rather than avoid altogether. The pressures to provide energy efficient homes are vastly increasing and rightly so. Currently your property needs to be a minimum E rated EPC for it to be rented, this is set to increase to a C rating by 2025. 

Regardless of what the laws stipulate, poorly insulated and expensive to run homes are going to become more and more obsolete with tenants opting for a warmer and cheaper to run home. 

Apartments 

With house prices increasing, many investment budgets are limited as to what they can buy. Apartments can appear to be an excellent investment especially as they can command such high rents and achieve good yields. If you are considering purchasing an apartment, I strongly advise you research the conditions of any ground rents or service charges. It is not uncommon for these annual charges to increase year on year and can soon become crippling for Landlords who are set on making a profit. 

A relatively new build property which was a ready to go product and will perform for the next ten years without significant investment.

4) What Investment Strategies work in Stoke on Trent in 2022?  

So now we are in 2022, where do we stand on investment strategies and what is performing best? 

Of course, as I previously mentioned, each investment strategy serves different purposes and there is no one size fits all. Here are two strategies I feel have been most significantly affected coming into the new year. 

HMOs 

It is no secret that the professional house share market has been over-saturated for some time now following the recent influx of properties in the last five years.

Landlords who were struggling with voids are now being DOUBLE WHAMMIED by the sharp increase in utility prices. The oversaturation has driven the market rates down and we, therefore, expect the professional HMO market to continue having a rough time. Perhaps following an initial correction this market will bounce back as tenants seek to avoid utility costs and opt for an all-inclusive bill.  

Expect to see more HMO landlords putting their part filled properties on the market this year. 

BRRR (Buy, Refurbish, Rent & Refinance)  

Has been a bomb-proof strategy for recent decades and a prefered method for those looking to reinvest and grow a pension portfolio fund utilising generally upwards market trend.

Does this strategy still work?  Yes 

Are opportunities easy to come by? Absolutely not. 

We are typically finding that properties requiring work are not receiving an appropriate discount to reward those willing to take on the task of improving the property. 

As an example, there are properties on the market for £100,000 which require £20,000 worth of improvement works to only be worth £115,000 once complete. These properties do often sell in the current market as homeowners go above the odds to secure a place on the ladder or amateur investors underestimate the overhaul works.

My Preferred Strategy? 

It’s not a glamorous one but it does seem to make sense in the current market, for the right investor and that is willing to leave a little more cash in the deal. 

If you want to invest in the first part of 2022 and you are struggling to find a good BRRR, look towards a completed article, rent it out straight away and save yourself the hassle of an expensive refurb.

It may not sound as impressive in the pub or scratch the same itch a ‘Homes Under The Hammer’ style property would but when you compare your time, money, stress and effort, buying a turn-key product makes a lot of sense. 

Pro’s to buying a turnkey investment property

  • You do not need masses of cash to carry out a refurb.
  • You don’t need as much cash as there’s no refurb, just the deposit.
  • Void period kept to a minimum, make use of a hot lettings market, get it LET and cash flowing.
  • There’s a good amount of opportunities available, you don’t need to do hours of searching and 20+ viewings.
  • Don’t forget, there’s also less risk of you going over budget. Refurbs always go over budget and this risk is mitigated.
  • You can still get a discount, just by knocking £5,000 off the asking price you could be achieving a healthy ROI.

Con’s to buying a turnkey investment property 

  • There’s less opportunity to ‘add value’ and therefore you won’t be recycling your cash quite as effectively.
  • Just make sure the property is still in sound condition. Ensure the boiler, wiring, roof etc are going to last another 5 years minimum.

 

 

5) Where can you find a good property deal? 

If you are looking to stumble across a property on Rightmove or Zoopla that lights up your spreadsheet then I feel you could be looking for some time. 

Rather than the old ‘you make your money when you buy it’, I feel investors are shifting their focus to adding value and sustainability. If you are in property for the long game, this mindset is always the best route to success.

The environmental and energy efficiency market is moving fast and I feel a lot of Landlords are going to be left high and dry if they are not anticipating this change.‘ 

A long term strategy with energy efficiency at the forefront of your mind is no doubt, going to be a solid move. Whether you purchase a property, take it back to brick and refurbish it using modern methods or you simply look towards purchasing newer stock, it needs to withstand the next ten years of rising standards. 

In Stoke on Trent in particular, the end values are not high usually enough to make a build to rent scheme work and I would therefore recommend large investors and developers look towards converting existing properties whether they are large residential into multi unit or retail which is becoming less and less desirable as the high-street culture changes. 

For those with a smaller budget, I would look to be picking up properties which will be on the doorstep of developments in planning. This way you can achieve added value and increased capital growth over the next five to ten years at higher rates than the average. 

Ofcourse, the above is merely an opinion which I have concluded from the projects I have experience with and exposure from. Every seasons investor we speak to has their own stance on what they think is a successful strategy and what they tend to avoid. Before making any property purchases you should carry out your own due diligence and seek your own professional advice. 

Written By:

Alistair Trippett

I hope you enjoyed this article and found it informative. I have been investing in the area for over 7 years and experienced significant shifts during this period. If you are looking to invest in the area and would like a second opinion then please email, alistair@habitanslettings.co.uk and we will get a call booked in.

A lot of the data and graphs supplied in this article have come from ‘PropertyData’. This platform provides excellent value for money and the data at your disposal is so powerful. You can receive a discount on your subscription by following this referral link:

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