THERE seems to be nothing extraordinary about Jo Lench, 18, and Scott Davies, 19. Both are students of musical theatre at Bristol Academy of Performing Arts (Bapa) and they are friendly, puppyish, with a tendency to say “really” a lot — just the kind of bright young people you could find in any student union refectory. It’s only when you see their shared student flat, which they rent from Bapa in Shepton Mallet, Somerset, that you realise they are extremely lucky.
Forget sticky carpets, stolen road signs and junk-shop furniture, the interior of this pair’s flat is a pristine slice of Ikea showroom chic. It’s a spick and span, furnished, modern apartment, with laminate floors throughout and blond beech surfaces in the kitchen, which has, of course, a brand-new electric oven and hob, together with a washer/dryer and a dishwasher. The furniture is all flat-pack new and it even includes a plasma screen. “The remote to the plasma is the only thing we’ve quarrelled over so far,” says Davies, who, incidentally, as the only male in the flat-share of three has the extra luxury of his own en suite shower room.
If you think this has all been provided by over-indulgent parents, you’d be wrong. In fact, these lucky students, who pay just £250 a month each in rent, are simply benefiting through being the tenants in an imaginative buy-to-let scheme. Bapa, which has been in existence for only eight years, was formerly based in a converted cigarette factory a mile from Bristol’s centre. But its burgeoning popularity and doubtless the booming property prices in Bristol, prompted a 20-mile move this year to Shepton Mallet, where the academy has become part of the town’s regeneration scheme. Bapa has made its headquarters at the Amulet Theatre in the centre of town, and the decidedly unstudent-like flats where Lench and Davies live are adjacent to the theatre. The flats are owned by private investors, who then let them to Bapa, each with a restrictive covenant stating that both present and future buyers, in the case of a flat being resold, have to let to Bapa. The ten apartments in this block cost from £108,000 for a one-bed apartment of around 409 sq ft to £135,000 for the largest two-bedroom apartment at 581 sq ft. Another similar block of ten more flats will be ready for sale next year and a further 18 will be for sale in 2008.
“The main attraction of the deal to me is that the yield of 5.1 per cent is virtually guaranteed,” says Louise Jenkinson, who has recently bought a two-bed. “It’s not a huge profit, but it’s low-risk and it’s minimum hassle. Bapa furnishes the flats and supplies the tenants and it also oversees the maintenance. So I don’t have to worry about periods when the flat is empty or about the place being trashed.
Normally I wouldn’t dream of letting to students, but this arrangement suits me well.”
On the face of it, this appears to be a win/win scheme. Good-quality housing is a serious issue for students; the National Union of Students says that grotty accommodation is one of the main reasons why students drop out. So for Bapa to be able to offer good-quality flats is a big selling point for its courses. The students are happy. “My sister is at a university where she’s sharing a bathroom in a hall of residence with five other people,” says Lench. “She couldn’t believe it when she saw this place.” And the small investors are pleased because they are getting into a form of buy-to-let that has previously been associated only with institutional investors.
The only doubt is their resale value. The town’s potential as a property hotspot is open to debate. Shepton Mallet, it must be said, is not a picture-postcard town. Homes are reasonably priced, by southern England standards: you can buy a two-bedroom cottage for £140,000 and a four-bedroom detached for £280,000. But there’s something of the 1950s about the town, with its steamy, old-fashioned café s, charity shops and old men’s pubs. An ugly concrete precinct scars the centre, and the prison does nothing for the townscape at all. You half expect a jazz saxophone to bleat a solo to complete the air of film noir melancholy.
But the planners have a renaissance in mind. There’s a highways improvement scheme planned which is designed to brighten the High Street. Large new retail developments are proposed for the town, and the Amulet Theatre, the centre for Bapa itself, is being reopened for live performances. A group of business people, residents and councillors is working on several projects that will give the place a facelift.
“I think this regeneration is going to draw more commuters for Bristol and Bath to Shepton Mallet,” says Rob Beard, the manager of the estate agent Alder King. “Tesco is building here and the buy-to-let market is already picking up. This is a town with a future.” However, Philip Selway, of the Buying Solution, a consultancy working for buyers, says: “The problem with Shepton Mallet is that it’s currently a town without an identity. Perhaps it’s the presence of the prison . . . From time to time developers try to hype it up, but it doesn’t work. I hope it does change and becomes more fashionable but, as a local, I’d advise investors not to get too excited.”
Flats at 10 Town Street, Shepton Mallet, are for sale with Cluttons (01225 469511).
EU MIGRANTS DRIVE PRICES
THE influx of migrant EU workers is great news not just for those looking for a reliable plumber. Buy-to-let landlords are benefiting, too, as demand for affordable rental accommodation rises. Indeed, some commentators believe that EU immigration rather than interest rates will drive house prices over the medium term.
“High levels of immigration into the UK, driven by expansion of the EU to include additional countries such as Bulgaria and Romania, will be the main source of house price growth in the coming years,” says Stuart Law, managing director of Assetz property investment company.
The recent Accession monitoring report from the Home Office, which covered May 2004 to March 2006, showed that there were 392,000 applications to the Worker Registration Scheme during the time covered. Workers are young, single, and most have no dependants in the UK. They are, for a landlord, ideal tenants.
The estate agent Ludlow Thompson says that nationals of the ten new EU states now account for more than 10 per cent of new demand for rental accommodation in London. Another driver for the affordable rental market is home grown. Rising student numbers, and the subsequent rise in the number of graduates saddled with significant debts, is likely to strengthen demand for cheap rental accommodation in years to come. The latest NatWest student survey of sixth-formers entering university this year reveals that they expect to pay around £34,000 for a three-year degree course and are expecting to leave higher education with debts of about £14,000. That level of debt, combined with high property prices, will mean that many graduates will postpone house purchase until they are well into their thirties; in the meantime they will be renting.
Investors keen to tap into this market but who have insufficient funds or are simply not interested in becoming full-time landlords can do so indirectly. Braemar Group, a property investment company, recently launched the Coronation IV limited partnership, which will invest in vacant property above shops and commercial premises, and then renovate that space into affordable housing. The advantage of investing in this way is that it is very tax-efficient.
PAULA HAWKINS
Assetz: 0161-456 4000, www.assetz.co.uk
Braemar Group: 0161-929 4969, www.braemar-group.co.uk
