I love Maisonettes/so should you.
‘Confessions’ of a landlord
I love maisonettes! This may seem extreme sentiment from a hard bitten landlord and investor and I will explain. But first; a maisonette to the uninitiated is ostensibly a flat, with the unusual feature of having its own front door. This building type seems to have descended from no where during the 1960’s and 70’s to inhabit pockets of our urban landscape. The concept I guess arose out the demand for high density small unit accommodation, suitable for a low-rise environment. The result is that they have little or no garden, but in the main have a garage contained in a separate garage court.
Maisonettes were a way of introducing higher density living into the suburbs. This was before the concept of apartment blocks become acceptable in these areas. This type of accommodation was immediately very popular with the middle aged and the retirees, given that it was new & cheap, small and easily maintainable. From this perception springs the image that maisonettes really aren’t cool, especially in comparison to a ‘swanky’ new apartment. Despite this image problem, there are a number of reasons why I would invest in a maisonette rather than a new apartment any day.
Apartments vs. Maisonettes:
1. They are cheap. The fact they remain unloved by many of us means that they remain considerably cheaper than the mass of ‘luxury’ apartments that are littering our landscape. On average they are probably 20-25% less than the equivalent space in a new apartment block.
2. There are no internal common parts. For many landlords there is always considerable risk in buying a flat where you have little or no control over the common parts such as the entrance hall. You can spend a fortune refurbishing a potentially beautiful apartment. However if the communal space remains drab and dingy this will put off prospective tenants and always detract from its capital value. A maisonette does not have this problem and you can upgrade the space safe in the knowledge that your investment will not be undermined by an inadequate management arrangement.
3. There are no service charges. Whilst most new apartments will avoid the problems of poorly managed common areas referred to in 2, the flip side is that you will be landed with a large service charge bill at the end of the year. Even for a relatively modest apartment block you can pay £1000 per annum for maintenance of the common areas. This can easily reduce your net income by 15% or more, without necessarily getting a similar uplift in the rent. In a city centre apartment with a lift and concierge this could easily be 2 or three times this amount. A maisonette typically has none of this. The only expense you will have to pay is a ‘ground rent’ where the property is leasehold, but this is likely to be a few pounds £10-50.
4. Maisonettes come with a garage. In these days when storage space is a premium. For a long term renter all that extra storage space can be a real attraction. It also means that the tenant does not have an excuse to clutter you beautiful space with their accumulated rubbish. This means that the place should be a lot easier to re-let or sell when it comes to that time.
5. Maisonettes have a garden. Most maisonettes have some sought of dedicated outdoor space. This is mostly very limited which means it is easily maintained but also when well designed is attractive feature for prospective tenants to have their own dedicated sitting out area.
6. Maisonettes are generally found in suburban areas. City centres are a risky place to buy at the moment, especially for the newbie investor. It is clear that there has been a huge increase in supply in provincial town and city centres. What is not so clear is whether there is sufficient demand for this kind of accommodation and particular at the level of rents required to make the investment add up. In the suburbs supply has not increased by the same amount and tenant demand in the right location is more established and stable.
7. They represent excellent value. The press is full of conjecture about whether house prices are overvalue or not and whether they are on the brink of crashing. If you are concerned about this, then maisonettes make sense as a low risk investment. Why? Largely because their replacement cost is equal to or more than their acquisition costs. We all know that there is a shortage of housing in the UK and all the figures indicate because not enough is being built, this is set to get worse. In addition, build costs are constantly rising as raw materials and labour costs rocket. If I as a developer wanted to build a two bed maisonette in Nottingham tomorrow; it would cost say £70,000 to build, £35,000 for the land and then £20,000 in finances, profit, marketing and legal expenses. In other words £125,000. Maisonettes in the best parts of town can be bought for as little as £110,000 on a 6% yield making them a real value for money proposition.