Moving to a bigger home is something Rotherham people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Rotherham homes are much in demand and it can be a costly move.
If you live in Rotherham in a two-bedroom property and wish to move to a four-bedroom house in Rotherham, you would need to spend an additional £166,180 (or £656.41 per month in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home and then later in life, make the transition from a three to four-bedroom home.
So, after being asked my thoughts on moving home in Rotherham by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for a Rotherham property by the number of bedrooms it has.
I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% – so the mortgage cost could be higher or lower depending on the mortgage taken).
There are some interesting jumps in costs when moving upmarket as a Rotherham buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Rotherham is quite high and therefore financially prohibitive for most families. This helps provide a partial explanation as to why some four-bed properties are currently taking slightly longer to sell.
Advice for buy-to-let landlords
As an aside, there is a lesson here for all my blog readers.
You can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy-to-let. Simply put the monthly finance costs and rents achieved don’t match up so well (i.e. a mortgage for a 4 bed home in Rotherham would cost you 105.03% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that). I don’t wish to be dismissive about the solidity of investing in larger properties because it does depend on your circumstances. Four bedroom properties sometimes offer other advantages. Pick up the phone if you want to know what they are in more detail.
A further look at the stock of properties in Rotherham is revealing.
The most active purchasers are 20 and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle.
For landlords looking to buy within Rotherham, they face stiff competition from these 20/30 something families, making the three bedroom Rotherham home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Rotherham property market. Again, if you are a landlord, call me and I will show you areas with decent returns where you aren’t in so much competition with young Rotherham family homebuyers. Also, keep your eye on the featured property section of our blog – we post some great deals with high yields that are worth taking a look at.
The cost of an additional bedroom can often be too much
The cost of an additional bedroom can be too much for some Rotherham buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.
Nevertheless, that’s the position many homeowners find themselves in with the cost of the additional bedroom being too much to bear.
To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Rotherham property ladder. Thinking about it now will keep you ahead of the game in the future as your number of bedrooms, family property needs and lifestyle wants change.
…and Rotherham landlords – well these changes in the way people live also mean there are opportunities to be had in the Rotherham rental market. Many Rotherham landlords are starting to pick my brain on this, so if you don’t want to miss out – get in touch for my advice. You can also follow us on Twitter or Facebook for up-to-date insights.