Fast internet access adds massive value for property investors
When we research opportunities for property investors, we look at the factors that make that property attractive in the short and long term. Today, you might be surprised at what is more important to buyers and tenants than even parking spaces, extra bedrooms, and good neighbours.
In this day and age, with greater numbers of people working from home and everyone more connected, broadband access is becoming a key factor in the criteria of deciding where to live.
London off-plan property investors have a distinct advantage here: London is, of course, a key ‘internet hub’, but a story I’ve just come across shows how important it is for property investors to dig deep when they’re researching what and where to buy.
According to a 2015 survey commissioned by Hyperoptic, people will spend an average of £14,000 more to buy a home with superfast broadband. That’s 8% more than they would spend otherwise. And for property investors who have a buy-to-let strategy, the survey also found that almost two thirds of renters check broadband speeds before signing a tenancy agreement.
Properties with less than 6Mbps are a big turn-off for buyers and renters, and with the average speed in the UK around 22Mbps most people consider 14 Mbps a bare minimum.
Fast broadband is rising on the list of must haves for buyers and renters
Maybe it’s a sign of life being lived in cyberspace and with more friends on social media than to be found in the local pub, but superfast broadband is now considered to be at least as important as:
- an extra bedroom by 58%
- living next to good neighbours by 58%
- off-street parking by 32%
Given these findings, you might find it hard to believe that anyone would snub the opportunity for faster internet access. But that is exactly what has happened in Yelverton, Norfolk, where 86-year old Raymond Moreton is stopping others in the same street from benefitting from high speed broadband.
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When faster broadband is denied, investors will suffer
BT need only to make a few simple changes to a connection box in the street to ignite download speeds that currently languish at around 2.7Mbps, but, every time that a BT engineer arrives to make the necessary changes, Mr Moreton claims that his land is being invaded. The engineer is forced to retreat, and broadband remains agonisingly out-of-reach.
This means that all the residents in the street that currently don’t have high speed broadband can’t be connected. Meanwhile, a few that have been connected (from a different box at the other end of the street) might find their homes are valued more highly. Imagine being a property investor in this rural part of Norfolk, and finding that tenants don’t want to move in because of broadband issues!
London and the off-plan property advantage
Most – but not all – properties in London either benefit from higher than average broadband speeds or could be connected to a faster service. If you purchase an older property that could be connected to superfast broadband in the near future, it’s important to make sure that there isn’t a Mr Moreton who will scupper these plans. You could be left with a less desirable property that suffers with lower than average rental income.
London off-plan property investors benefit from knowing that fast internet access is a given. New developments, yet to be completed, don’t suffer with the Mr Moretons of the world. There will be more competition from prospective tenants, and if the investor wants to sell, he or she will be able to ask a higher price.
When Gladfish research London off-plan property developments, we look at every factor that shapes the investment return. And that includes internet access. (Click to discover more about our research and due diligence processes).