Slower Broadband Speeds could hinder U.K. house sales

[Vanessa]

For a while now, I have been talking about how the business world is changing and more and more people will be working from home. Speaking as a home worker, we conduct and manage virtually all our business via the web, and we are totally hamstrung without it. I have mentioned at many of my speaking engagements over the last twelve months, how important broadband speed is going to be, and how property investors need to understand this and ensure that any property they buy has good broadband connectivity. This will be an increasingly important facility for tenants, and will contribute towards future-proofing the property in terms of desirability.

The impact that the web is having on society and humanity in general is touching every aspect of our lives, including property investment, and in many different ways and levels.


I was therefore interested to see this article from ISP Review:

Slower Broadband Speeds could hinder U.K. house sales

The results from 721 respondents to our latest monthly survey reveal that 75% of readers would not buy a house, even a lovely one, if the best broadband ISP speed it could achieve was just 1Mbps. In addition, 51% would be willing to pay more for a house with "faster" broadband.

Some 61.7% of those surveyed said that the minimum broadband speed they require would be "More than 4Mbps", with just 20.8% voting for 4Mbps itself, 10.8% voting for 2Mbps and a measly 6.6% saying they'd settle for 1Mbps. Failing that, the most attractive alternative method to a fixed land-line broadband connection was found to be a Fixed Wireless ( Wi-Fi ) service (52.5%).

Would you buy a lovely house if it could only have up to 1Mbps broadband?
No - 75.1%
Yes - 24.8%

What is the minimum broadband speed you require (pick closest)?
More than 4Mbps - 61.7%
4Mbps - 20.8%
2Mbps - 10.8%
1Mbps - 6.6%

Which alternative method to land-line broadband would you consider first?
Fixed Wireless (Wi-Fi) - 52.5%
Mobile Broadband (3G) - 28.4%
Satellite - 19%

Would you pay more for a house with faster broadband?
Yes - 51.3%
No - 48.6%

People clearly place a significant emphasis on broadband performance, so much so that an overwhelming majority would even be willing to give up on an almost perfect dream home in favour of a cosmetically less attractive one that received faster speeds.

Estate agents have long voiced the importance of broadband equipped homes, though few may have recognised that modern demand also requires the service to be fast, affordable and flexible. This highlights the importance of being able to deliver speeds of more than double the current government target, which is committed to delivering a minimum 2Mbps broadband speed to everybody by 2012.

This may now simply end up being too little, too late.

This month's new survey asks "How much do you pay for broadband (monthly)?" and questions whether or not any of our readers intend to change ISP next year and what aspect of a provider is most important to them: VOTE HERE.

[Ahmwaah D Charles]

Vanessa,

I think this is a very good point.

I've long been thinking that availability of the internet will have an impact on the market.

Having practically grown up with the internet I would be one of my main needs when renting. I remember when I was in Uni waiting for the net to be connected to my house - it was hell!!

I agree that you will get more competition for a rented property if you have better facilities (inc. internet) but how much of that would translate into higher rent I'm not sure. I think it's most likely that you'd just have a wider pool of tenants to pick from and thus have a better chance of finding that 'perfect' tenant (if one ever existed).

[Vanessa]

Thanks for commenting Am.

I agree that the rent will not be higher, but it will affect desirability IMHO.

We are in a competitive market and "broadband connectivity" should be added to our due diligence research to future-proof our properties and our rents.

If tenants have a choice between an area with fast broadband speed and slow broadband speed, we know which one they will choose. I want my props to be in the area with good broadband speed!

[REI]

Vanessa,

How do you check on broadband availability when you consider a property? Do you check a specific number so the providers can tell you want they can offer on that specific line or do you just look at the broader coverage area?

Vanessa said:

... "broadband connectivity" should be added to our due diligence research to future-proof our properties and our rents.

A friend was discussing the same thing a number of years ago when choosing a property to rent in San Francisco. He worked out that he could live a bit further out of town and buy in lease broadband for much less than it would cost to live close in. That said the best network coverage normally comes from city centres where the exchanges are the most modern or upgraded. Properties out of the centre can be very spotty with one address being well covered and another address having poor service.

If one is an owner and you are not in the 'sticks' you can pretty much assume the trend is towards having better coverage. Even the cell companies are offering reasonable solutions compared to just a few years ago. Hence a property in a 'poor location' for broadband today could easily be in a much better location with a little more time. If the price difference in terms of the property price is large the marginal difference in terms of broadband can be closed by paying for a higher prices telco service for a long time.

John Corey
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www.ChelseaPrivateEquity.com/blog