How Sky studios will change Borehamwood’s letting market

Sky studios in Borehamwood

What great news for Borehamwood & Elstree.

Another media giant building a super studios in the area, potentially creating over 2,000 jobs for people within the local community.

So what does this mean for Borehamwood’s buy to let market?

In my opinion it will boom like it did in 2014.

About the writer

I’m a local Borehamwood resident with unparalleled experience in the sales & lettings market and my aim is to educate homeowners on the local market.

As someone that wants to help in their community, I want to share my knowledge to ensure everyone in the area makes the best decision possible when either selling, or letting their property.

My goal is to to provide landlords & sellers up to date information on the Borehamwood sales & lettings market, including details on house price & rent fluctuations, insights on market data, local demographics and much more.

Over the past few years Borehamwood’s buy to let market has struggled.

With the changes to stamp duty in 2016 and the uncertainty of how the change to mortgage interest relief would adjust their profits.

Borehamwood’s investment had been impacted substantially.

Since 2017 buy to let has really struggled in Borehamwood and there was a huge decline of almost 70% in landlord property purchases.

This resulted in 2 major things between 2017 & 2019 in the local area.

Due to the lack of buy-to-let purchases in Borehamwood during this period, there was a huge decrease in active buyer levels.

This resulted in house prices declining (as seen in the below chart).

As there was a lack of buy-to-let investment in Borehamwood it created a shortage of available properties.

And obviously this shortage resulted in rents going up.

However the lettings market strangely remained flat during this time.

Surely a shortage of landlord purchases would create a supply and demand problem?

But no it didn’t!

This was down to Brexit.

As Brexit caused a huge amount of uncertainty within the EU, tenants decided to hold back from moving in to new properties.

Which then caused a shortage of quality applicants.

The effect of Brexit!

It was the perfect balancing act.

If Brexit wasn’t on the table and we had this shortage of investment at an earlier date.

Rents would have inflated at a rate unseen in decades!

However a shortfall of tenants and a lack of property kept rents flat.

Borehamwood rental index January 2017 to April 2019

This is where Sky studios improves the rental market in Borehamwood.

Property prices declined in Borehamwood between 2017 & 2019 and this has resulted in yields coming back to the market.

With apartments selling at £400,000 in 2016 and rents achieving circa £1,250pcm, there was no decent yield available.

This scenario resulted in the landlord achieving a return of 3.75%.

Which was before paying service charges, maintenance costs and letting fees.

I wouldn’t say this was a great yield to achieve!

As property prices have dropped since 2016.

The same apartments in Borehamwood are now in the region of £350,000.

This is a return in excess of 4.2% which is still not great.

However, in the past 3 years it has been very hard to find a modern apartment in Borehamwood which offers a yield over 4%.

So there is definitely a momentum change in yields.

Borehamwood was also filled with accidental landlords who purchased their properties between 2010 & 2014.

These are homeowners who had huge capital gain growth and decided it was a good idea to refinance their properties and buy a 2nd home.

Obviously, this also increased the issue of too many properties vs tenants.

However due to the 2016 stamp duty changes, the level of accidental landlords declined drastically. This resulted in Borehamwood rents increasing by over 6% in 2019.

With Sky studios potentially bringing 2,000 new jobs to Borehamwood.

I think rents will increase substantially (along with house prices) and yields will be at 5% plus again.

The verdict:

Sky studios will be great for the local landlord.

However, if you are looking to purchase a new buy to let. I would do it sooner rather than later.

As if I’m correct.

Borehamwood house prices are going to increase on a massive scale over the next 5 years.

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