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Visionary investors opt for FOGs

18th September 2006 | back to article listings BACK    print this article PRINT

A new type of property, ideal for buy-to-let investors, broke into the housing market last month as rental yields continued to rise.

Landlords saw a good August for two reasons: one, the National Association of Estate Agents (NAEA) reported that rents rose by 1.95 per cent; and two, investors now have the option of buying new potentially lucrative properties – a flat over a garage (FOG).

The NAEA reports that rents have increased at a similar pace since April of this year when HMO licensing came into effect and it is thought that tenants have ended up paying more due to the expensive process of licensing and adjusting properties in order to meet the necessary criteria.

"On the rentals front I am told it was one of the best months of the year", said Colin Girling of the NAEA's Suffolk branch.

FOGs are thought to be ideal for longer term tenants, perhaps with a young family, as they have extra space to store their belongings that they accumulate over the time of their residency and they eliminate the problem of noisy neighbours that so perturbs residents of apartment blocks.

Parking is a terminal problem for flat dwellers but FOGs relieve this problem meaning that tenants do not have to rely on public transport, so their potential commuting distance is widened.

This type of flat would be suitable for property investors looking to cash in on the growing immigrant market that has seen over half a million Poles enter the country in the last year. As many immigrants are in their twenties, in the next few years many may be looking for cheap rental accommodation to be rented over the longer term.

Furthermore, these properties could prove useful to retirees looking to downsize, either because they want a more manageable home or because they aim to release equity on their current accommodation.

If this flat-plus-garage idea takes off, buy-to-let investors might consider building an extension or renovating the building so that this facility can be provided.

The FOG phenomenon may well be another way in which the housing market has adapted to the needs of its participants; the changing nature of mortgage letting deals and types of property available could be a response to the difficulties that first-time buyers are experiencing. And with fewer buyers able to get their feet on the first rung of the ladder, renting demand is sure to stay strong, and as such, many landlords are adapting their properties to the particular expectations of its customers.




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