How poor broadband can impact property prices & rents
Guest post by Matt Powell, the editor for the broadband comparison website Broadband Genie
Over to Matt:
What do you look for when searching for a new home? Number of bedrooms, parking, garden, that all important location...but what about broadband? Now that it plays such an important role in day to day life the presence of fast broadband is so important to home buyers it can actually have an impact on the price, with some estimates claiming that slow broadband could lower the value by as much as 20%.
Why does fast broadband matter?
Slow broadband can make some tasks painful, if not outright impossible. For instance, if you need to regularly download or upload large files then outdated internet can mean an extremely long wait, and if you’re doing this for work it becomes a real issue rather than just an annoyance. This could be a complete deal breaker if you’re self employed and rely on home broadband for business critical communications.
Many of us also now use the internet for entertainment, streaming shows and movies to our TVs rather than receiving them over the air. But in order to do this you need a reasonable broadband connection, yet another reason some buyers may be put off properties that lack fast internet.
With property search sites now implementing broadband speed checks there’s an increasing chance that buyers could pass your property over if they think it’s not going to be able to receive a suitably rapid internet connection.
Demographics can come into play, too, particularly if you’re considering a property as an investment. If a property is going to appeal to younger generations, like first time buyers and students, then fast broadband may be a very important factor, while it could perhaps be less critical to retirees. Buy to let purchasers will need to consider that tenants have less flexibility for improving broadband access in their homes so easy access to fast connectivity may be a very important consideration. Renters are often spoilt for choice so anything you can do to make yours more attractive will help that investment pay off.
The need for speed
Having recognised that internet access is fairly important in the 21st century, the UK government is aiming to deliver 30Mb broadband to 95% of the population by 2017. Those speeds are fast enough for the average user, enabling large file transfers, high definition streaming video and providing enough bandwidth for bigger households.
But that’s still some way off so little help if you’re trying to sell or buy right now, and since the target has already been moved once from 2015 to 2017 you shouldn’t bank on this being completed on target! It’s also come under criticism for not going far enough, with some saying we should be investing in a complete overhaul of the telecoms infrastructure that not only brings very fast internet to most of the country, but future proofs it for years to come.
At present the UK’s average speed is 18.7Mb, but many locations are still on much slower connections. This is particularly true of rural areas, with many people stuck at just 1 or 2Mb, which these days is barely enough for web browsing and email.
Improving your home broadband
If you’re in the process of selling your home then you should be prepared for buyers to ask about the broadband, and just like you’d spend some time sprucing up the decor and doing vital improvements to make it more attractive there may be some steps you can take to speed things up.
- What’s your maximum speed?
If you’ve not looked into it recently it’s definitely worth taking a little to find out what broadband services are on offer to your property, because while things move slower than we’d like there are ongoing efforts to improve connectivity right across the country and you may be able to get a much faster connection that you realise. Either use online tools like the Broadband Genie postcode comparison search, or contact ISPs and ask them to check your home. Many areas now have access to fibre optic broadband up to 76Mb and cable internet up to 150Mb. You can also use the tools at SamKnows.com to view details on your local exchange, which will list exactly what services are available in the area.
- Explore the alternatives
If standard broadband using phone lines or cable is not available, or not particularly fast, it might be time to check some alternatives. In some areas smaller ISPs offer wireless broadband using a receiver on the side of the building. While not quite as fast as fibre or cable this can be much quicker than ADSL internet (and it doesn’t need a landline). In rural areas you might want to explore the options for community driven projects, teaming up with your neighbours to invest in an upgrade that benefits everybody. And something that’s available in every part of the UK is satellite broadband, which doesn’t rely on physical cables. This has its own drawbacks and caveats, but is still much better than ancient dial-up internet or slower ADSL connections.
- Is your broadband the best it could be?
It’s not that common but in some cases a slow broadband service can be improved by an engineer visit or updates to the equipment and wiring in your home. First, run a broadband speed test so you know exactly what performance you’re getting, then contact your ISP and check how it compares to their estimate. If it’s significantly different you can look into why, and how it can be fixed. Your provider will have a process for handling these kinds of technical issues, including remote checks on the line and perhaps an engineer visit to investigate further. If they eliminate faulty lines and other external causes it’s time to have a closer look at the lines and phone points inside your house. Upgrading old phone sockets and replacing microfilters can be a simple and cheap fix, but should the problems continue you may need to undergo a more thorough investigation.
When the time comes to sell you’ll be well prepared to deal with inquiries about broadband. If a buyer questions broadband speeds or even suggests a reduction in price due to the lack of availability of a particular service you’ll be able to provide suggestions for alternatives and prove that a certain level of performance is already available. In some cases taking steps to drastically improve broadband capability could even become a major selling point - in one Oxfordshire hamlet neighbours spent £50,000 each to get superfast broadband, both to improve connectivity for themselves and make it more attractive to buyers in the future.
The Property Voice insight:
Broadband speed is becoming an increasingly important factor in both the wider housing market and also within the rental market. People are more media hungry than ever before, with video & music streaming, online gaming, Internet shopping & homeworking all carried out at home, when ten years ago many were not even considered.
Broadband is therefore an essential component of the investment mix than can affect not only house prices but also rents and rental demand too. 'Gen Y' and the 'Millennials' are particularly demanding for such services. For example, I took a holiday with my grown up children aged eighteen and twenty-one over the New Year and the very first thing they asked for in the apartments we stayed in was the wifi access code...their lives are run online.
It is not only the younger members of a household, I too was keen to check emails, surf the web and undertake a couple of Skype calls on this same trip. In other words, there is a high demand not only for online access but fast online access.
As property investors this can be an opportunity (e.g. buy targeting properties with slower broadband infrastructure but with an opportunity to improve it as Matt highlights. However, it could also be a threat, if we are selling a property or more likely in seeking suitable tenants, who are very aware of what they need and know how to check online even before arranging a viewing, via sites like Broadband Genie and Sam Knows.
The message is therefore clear - do not overlook broadband speed when considering an investment and as I mentioned previously when discussing researching our property investment, it is another one to add to our list of criteria right at the outset.
What is your approach to broadband speed when considering a new investment or reviewing an existing one?
Please let us know in the comments box below, or start a conversation via social media and we will see if we can get Matt to join in…
Finally, check our Resources page for links to Broadband Genie and other great property research tools.