Sunday, 22 January 2023

BUY-TO-LET DEAL OF THE WEEK: 2 bed flat in Westhampnett, £245,000, 5.4% yield

2 bed flat in Westhampnett
Listed for sale on 28/12/22 @ £250,000
Now = £245,000
Rent = £1,100pcm
Yield = 5.4%

The property is on the market with White & Brooks and full details can be found on Rightmove via the following link:

Thursday, 19 January 2023

An article about house prices in Chichester

Chichester, located in West Sussex, England, is a historic and picturesque city that has seen a steady increase in house prices over the past decade. According to data from Zillow, the median home value in Chichester as of 2021 is £366,928, which is an increase of 5.5% over the past year.

One of the main reasons for the increase in house prices in Chichester is the city's strong economy. Chichester is home to several large employers, including Goodwood Estate and Chichester College, which provide jobs for many residents and attract new residents to the area. Additionally, Chichester is a popular tourist destination, with many visitors drawn to its historic cathedral, Roman walls, and beautiful beaches.

Another factor that has contributed to the increase in house prices in Chichester is the limited supply of homes on the market. The city is surrounded by beautiful countryside, which has made it difficult for builders to construct new homes. As a result, many residents are competing for a limited number of homes, driving up prices.

Despite the high house prices, many residents are willing to pay a premium to live in Chichester due to its excellent quality of life. The city is home to many excellent schools, including several top-performing primary and secondary schools. Additionally, Chichester offers residents access to a wide range of cultural and recreational activities, including theatre, music, and sports.

Overall, house prices in Chichester are likely to continue to rise in the coming years, due to the city's strong economy and limited supply of homes. However, many residents will continue to be willing to pay a premium to live in this beautiful and historic city, due to its excellent quality of life.

Monday, 9 January 2023

Thursday, 5 January 2023

What’s in store for Chichester’s landlords in 2023?

There were mixed fortunes for Chichester’s landlords last year. There was strong rental demand alongside rising house prices and increasing rents, despite the cost-of-living crisis that came about due to soaring inflation. Interest rates, however, rose far more rapidly than anyone had predicted, which has already caused concern and financial stress for many landlords with buy-to-let mortgages. The financial landscape is likely to be the main ‘thing to watch’ for landlords in 2023, with a sprinkling of legislative announcements due as well:

Delay to Making Tax Digital - confirmed

HMRC’s Making Tax Digital scheme was due to be introduced in April 2023, but has now been delayed until 2026. The proposal is for landlords with an income in excess of £50,000 to use software to keep digital records and submit these on a quarterly basis, rather than once a year via their self-assessment.

Tax increases - confirmed

The personal tax allowance bands have been frozen until 2028, meaning as incomes increase (due to inflation) more of it will be taxed at a higher rate. From April 2023, the top rate of income tax (45%) will come into effect from £125,140, rather than £150,000.

There have also been reductions in dividend allowances (from £2,000 tax-free currently, to £1,000 from April 2023 and then £500 in April 2024) as well as a cut in the Capital Gains Tax allowance (from £12,300 tax-free annually now, to £6,000 from April 2023 and £3,000 from April 2024).

The unfairness of how Section 24 changed mortgage relief for landlords will also become more notable as incomes rise, the bandings are frozen and mortgage payments increase (without being able to fully offset them, whilst first paying tax on income rather than profit). 

Rental reforms to be formalised - highly likely

The long-awaited white paper was finally published in June 2022, outlining the governments 12-point plan for ‘a fairer private rental sector’. It was subsequently announced that the Renters Reform Bill will be introduced during the current parliamentary session (which should mean Spring 2023). It will likely take another year to come into effect, but it should mean we have greater clarity this year on the proposals, some of which are likely to include: 

- scrapping Section 21.

- scrapping Assured Shorthold Tenancies and bringing in universal ‘periodic’ tenancies, which will enable tenants to leave with two months’ notice at any time.

- extending the ‘Decent Homes Standard’ from the social rented sector to private tenancies.

- introducing a compulsory digital platform for landlords (effectively a landlord register).

- introducing an ombudsman scheme for the private rental sector to resolve disputes.

- requiring landlords to accept tenants with pets, unless there is a good reason to refuse.

Interest rates to rise - highly likely

This time last year the interest rate set by the Bank of England was 0.25%, with the financial markets pricing in an increase to 0.75% by the end of the year. Instead, the base rate now sits at 3.5%. It is expected this will continue to rise early in 2023 in an attempt to stave off the persistently high level of inflation.


Mortgage rates to settle - likely

It seems illogical to suggest mortgage rates will settle (or even fall) this year, alongside a forecast of higher interest rates. However, the financial markets got so spooked by the ‘mini-budget’ back in October that the kneejerk reaction was to increase rates sharply ‘just in case’. The average two-year fixed rate buy-to-let mortgage has fallen from highs of 6.9% in October to 6.3% now, despite the base rate continuing to rise during that period. Mortgage rates are typically between 1 and 1.5 percentage points higher than base rates, so if the base rate does not exceed 5% it is likely mortgage rates will settle, or even lower fractionally. 

Despite this, mortgage rates compared to a year ago are far greater now and are unlikely to revert back to those levels (the average two-year fixed rate buy-to-let mortgage a year ago was 2.9%). Those on tracker mortgages will already have started to see the impact of this, whilst those whose fixed-rate mortgages are set to expire will soon see a sharp rise in their monthly interest payments (typically more than doubling).

House prices to drop - likely

The general consensus amongst market commentators is that house prices will drop between 5% and 15% in 2023, due to the aforementioned cost of living crisis and increase in mortgage rates. The Government’s official forecaster (the Office for Budget Responsibility) predict a 9% fall in house prices.

Whilst this could lead to some ‘bargains’ for those looking to buy, it will decrease the paper value of landlords’ current portfolio, which may impact the availability of mortgages if the level of equity falls too much.

Rents to rise - likely

Since 2016, almost 250,000 more homes have been sold by landlords than have been purchased by them. Demand from tenants for rental property is, however, stronger than ever and is only likely to continue to grow as would-be homeowners simply cannot afford to get onto the property ladder due to increased mortgage rates. Reduced supply and increased demand has caused a continual increase in rents, with particularly sharp rises last year as matters started to come to a head (rents were up 11% nationally in 2022). 

Whilst forecasters do not expect rents to continue to increase as strongly as they have been (as they would ultimately become unaffordable to tenants) they do expect a further rise in rents of between 4% and 6.5% in 2023.


More tenants will struggle to pay the rent - likely

It is reported that 6.4% of tenants missed a rental payment last month. With budgets squeezed further by pay cheques that do not keep up with inflation, tenants may struggle to meet their rental payments in 2023. With many landlords also increasing the rent to offset the additional mortgage costs and tax liabilities, this situation is likely to be exacerbated further. 

Monday, 26 December 2022

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £385,000, 4.7% yield

3 bed house in Chichester
Listed for sale on 16/12/22 @ £385,000
Rent = £1,500pcm
Yield = 4.7%

The property is on the market with Bellway Homes and full details can be found on Rightmove via the following link:

Thursday, 22 December 2022

House prices up 14,344% in seventy years

In 1952, the average UK home cost just £1,891. Seventy years later and the average property in the UK is now worth £273,135 - an increase of 14,344% (meaning you could have bought 143 homes in 1952 for the same money as you can now)!

Back then the UK was mostly an island of renters though, with only around four million owning their own home, compared to 15 million homeowners today. Buyers in 1952 were typically paying four times the average salary for a home, compared to eight times today’s average salary now.

It’s not just property that has increased in price though; with a pint of milk costing 4p and a pint of beer costing 9p back in 1952. That does mean though that property prices have outpaced the wider rate of inflation by some margin.

Of course, that meteoric house price growth has not been linear, as the below chart shows:

It seems unlikely we’ll ever see such extravagant house price growth again. To do so would mean the average UK home costing close to £40million in the year 2092! Then again, the way the financial markets have swung about this year, hyperinflation some time in the next seven decades could well make that impossible looking figure a reality. 

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Chichester rental valuation

Monday, 12 December 2022

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Fishbourne, £275,000, 5.2% yield

3 bed house in Fishbourne
Listed for sale on 26/08/22 @ £325,000
Now = £275,000
Rent = £1,200pcm
Yield = 5.2%

The property is on the market with Hawkins and Smith and full details can be found on Rightmove via the following link: