Moving from a 2 bed Rugby Property to a 4 bed will cost you £833 pm

Moving to a bigger home is something Rugby 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 Rugby homes are much in demand and it can be a costly move.

If you live in Rugby in a two-bedroom property and wish to move to a four-bedroom house in Rugby, you would need to spend an additional £210,796 (or £833.64 pm 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, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Rugby 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 Rugby 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 Rugby 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 Rugby 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.

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 Rugby would cost you 60.83% 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 Rugby 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 Rugby, they face stiff competition from these 20/30 something families, making the three bedroom Rugby 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 Rugby 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 Rugby family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Rugby 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 Rugby 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 Rugby landlords – well these changes in the way people live also mean there are opportunities to be had in the Rugby rental market. Many Rugby landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line.

If you would like to read more interesting articles on the property market in Rugby please check out the Rugby Property Blog – http://www.rugbypropertyblog.wordpress.com

kindest regards

Iain Havell

iain.havell@newman.uk.com

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