Chichester Property News

Thursday, 18 April 2019

How much are Chichester’s landlords spending on property maintenance?

As the tax year recently came to a close, annual account statements were sent out to all of my landlords who employ me on a full management basis. It’s not something I publicise I do (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made (my management fees and any property maintenance costs). It’s similar to what I send each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important at a time when mortgage interest relief for landlords is reducing.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,100pcm, which is 11% higher than the current average rent in Chichester of £995pcm. Plus, they have received all of the rent due to them i.e. there were no non-paying tenants all year - phew!

What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by my average landlord being charged just 9.2% in total for a full tenant find and ongoing management service. One landlord is paying just 6.2% as their property achieves a particularly high rent, meaning my fixed fee proves to be even cheaper for them.

What was also interesting to see is that my landlords are spending £470 a year on average on property maintenance, which is just 4.5% of the total rent they receive.

Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, but my landlords are doing far better than this. I suspect this is partly because I focus on more modern properties, which should inherently have fewer issues, and because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer good value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission. I also often check issues for myself to see if they can be rectified by me, free of charge, before getting in the paid help.

If you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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If you are looking for an agent that is well established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.

E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

Don't forget to visit the links below to view my previous buy-to-let deals and Chichester Property News articles:

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Monday, 15 April 2019

BUY-TO-LET DEAL OF THE WEEK: 5 bed house in Chichester, £315,000, 7.3% yield

Summary:
5 bed house in Chichester
Listed for sale on 09/04/19 @ £315,000
Rent = £1,925pcm
Yield = 7.3%
Last sold for £222,000 in 2006 (+42% in 13 years)

This is fundamentally a three-bedroom semi-detached house in the Parklands area of Chichester, with a garage that has been converted to a bedroom and an extra bedroom made from the downstairs living space. Putting all that together has created a 'five-bedroom' student let property, capable of achieving a rental return of 7.3% based on its asking price of £315,000.

Student lets aren't for everyone and in truth they aren't for me, having run the long-term numbers based on renting to students (albeit at a higher rent) vs a family. To a family this house might rent for £1,100pcm, meaning a lower yield of 4.2%. However, I believe when you factor in the wear and tear on the property (including the extra use of the boiler, kitchen and bathrooms) and the time input of managing students, for me I'd rather keep life simple whilst at the same time not even losing out much financially.

I'd also argue that the demand for students to live in houses like these are declining, when they can instead rent one of many new purpose-built rooms with en-suites and communal areas, often in a better location in regards to amenities for students. Whilst this is actually in a nice condition, you can't escape the fact that five students will share two bathrooms whilst still living a 25 minute walk from the University campus. It's no coincidence to me that quite a lot of former student lets are being sold at a time when additional licencing rules are coming in and student properties seem to be sitting online for rent longer than ever.

But, for those landlords who target student lets, this one is of a good size and in nice condition. It's also priced not much more than it would be based on its bricks and mortar valuation, so you aren't necessarily overpaying for the privilege of having a ready-made student let with its higher than average rental return.

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

https://www.rightmove.co.uk/property-for-sale/property-71029480.html

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Thursday, 11 April 2019

Has the minimum wage helped Chichester's first-time buyers?

The minimum wage increased on the 1st April from £7.83 per hour to £8.21 per hour (for over 25’s). But is this enough to help Chichester’s first-time buyers afford a property and how has their fate changed since the minimum wage was introduced some twenty years ago?

When the minimum wage was introduced in April 1999 (at a rate of £3.60 per hour for over 25’s) the average home in Chichester sold for just £110,598. Whilst the minimum wage has increased 128% since then, the average property price in Chichester has increased by 247%! This means whilst you had to work nearly 15 years in 1999 to afford a house in Chichester on the minimum wage (based on a 40-hour working week and ignoring tax) nowadays it would take over 22 years to do so.

Interestingly though, the greatest increase in property prices came immediately after the minimum wage was introduced. In fact, when the minimum wage was increased for the first time in October 2000 (by a measly 2.8%), house prices in Chichester had leapt by 32.2%! Only once out of the first five times that the minimum wage was increased was it raised by more than house price increases, whereas since then it’s been roughly an even split; with seven minimum wage increases being above house price inflation, and eight falling short of this.

I was quite surprised to see that in the past ten years the minimum wage has very nearly kept up with Chichester’s property prices; since 2009 the minimum wage has increased by 42% (from £5.80ph to £8.21ph) whilst house prices have increased by 43% (from £268,176 to £383,418). Even more of a surprise was that in the last five years the minimum wage has actually grown more than Chichester’s house prices, with the minimum wage increasing by 26% versus a 19% increase in property prices.

So, has the minimum wage helped Chichester’s first-time buyers? Well, unless it’s a coincidence, the introduction of the minimum wage coincided with a strong increase in house prices. The 2008/09 credit crunch brought things back into line somewhat and since then those on minimum wage haven’t actually lost out in the fight to keep up with house prices.

The problem is of course, that buying a property has largely been out of reach for those on the minimum wage in the past, and that continues to be the case now. Based on a 40-hour working week, today’s minimum wage (£8.21ph) equates to an annual salary of £17,077. Even in a dual-income household, which has become the norm, Chichester’s average home would cost some 11 times the joint income of £35,154 from two full-time minimum wagers. Access to a mortgage is therefore out of reach, and that’s before saving for the deposit and other costs associated with buying. It therefore seems a shame that hard-working people on the so-called ‘living wage’ would find it very difficult indeed to buy a home in Chichester.

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^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Monday, 8 April 2019

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £285,000, 4.6% yield

Summary:
3 bed house in Chichester
Listed for sale on 07/03/19 @ £300,000
Now = £285,000
Rent = £1,100pcm
Yield = 4.6%
Last sold for £210,000 in 2011 (+36% in 8 years)

Around a mile out from Chichester's city centre is this well-presented and good-sized three-bedroom house that could make a great buy-to-let property without needing any work to get it ready to let.

The only thing missing downstairs (it has a lounge, kitchen/diner and conservatory - which doubles as a utility room currently) is a cloakroom. Little things like this might not seem important now, but they are being more regularly requested from tenants as new-builds (with a cloakroom, bathroom and en-suite) now offer three toilets throughout a three-bed house! I've said before about ensuring an investment bought now is 'future-proofed', and fortunately in this case I think a cloakroom could be installed under the stairs alongside the kitchen, when such things are seen as a necessity.

Upstairs are good-sized bedrooms - two doubles and a single - along with a bathroom. Now, as the bathroom isn't photographed (not ideal) it's hard to tell if this is an area that does need money spent on it - it's even more important this is right when it's the only one in the house. Beyond this is a garage in a block, which is always useful to increase the rent a little.

I think it would rent for £1,100pcm (assuming the bathroom is modern and including the garage), which would represent a 4.6% return on the £285,000 asking price (recently reduced from £300,000). For a freehold property in good condition in Chichester, that's a decent return. It's also 'only' a 36% increase in the eight years since it was last purchased, which is just about bang on the average increase throughout Chichester in that same timeframe, which suggests it's reasonable value.

The property is on the market with Cubitt & West and full details can be found on Rightmove via the following link:
https://www.rightmove.co.uk/property-for-sale/property-79931195.html

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Thursday, 4 April 2019

How much is a bedroom in Chichester?

Many first-time buyers will start out with a small ‘starter’ home, which is both suited to their needs and matches their modest earnings at the beginning of their careers. But as you get older there’s a tendency for extra possessions to pile up and for extra people to emerge in your life! This made me think; how much is a bedroom in Chichester and how much does it cost to climb the property ladder?

Let’s start with a one-bedroom property (typically a flat). The average price for one of these in Chichester is £189,950. As many will appreciate, the first step is often the hardest and that’s no exception when it comes to buying a property. The income and deposit you’ll require to afford even the most modest of homes in Chichester is probably the greatest barrier to getting on the property market.

Once you do though, and you hopefully rise through the ranks in your chosen career whilst growing your nest, the increase in price to afford an extra bedroom becomes a little easier as time goes by.

The average two-bedroom property in Chichester will cost you £289,950 - a premium of £100,000, or 53%, compared to a one-bedroom home.

The average three-bedroom property in Chichester will cost you £399,950 - a premium of £110,000, or 38%, compared to a two-bedroom home.

The average four-bedroom property in Chichester will cost you £535,000 - a premium of £135,050, or 34%, compared to a three-bedroom home.

The average five-bedroom property in Chichester will cost you £695,000 - a premium of £160,000, or 30%, compared to a four-bedroom home.

The above shows that whilst the outright cost grows, the comparative growth in percentage terms lessens as a property expands.

Of course, the price increase as you climb the ladder isn’t just for an extra ‘bedroom’. As the number of bedrooms grow, so should the size of the other rooms throughout the house as well as the outside space and amenities e.g. garden/garage/driveway.

It does however demonstrate that it’s the first couple of steps that are the toughest on the property ladder, which is why I feel it’s right that government policies and incentives focus primarily on first-time buyers. Having said that, it would be nice if they also considered that the need for an additional bedroom effects the ‘upsizers’ at a time when the financial strain (a new child being the most common) is often at its greatest.

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^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Monday, 1 April 2019

Community Focus: Chichester Falcons Softball Club

The Chichester Falcons Softball Club was formed in 2011 and has evolved into offering softball and baseball to a wide range of ages and ability groups, whilst maintaining its philosophy of having an informal and enjoyable approach to the game.

The younger players (7-11 year olds) now play baseball, which is a fast-paced sport descending from rounders, where players hit the ball and run around a diamond of bases, whilst the opposing team tries to catch or throw them out. The junior squad (11-16 year olds) progress to playing fast-pitch softball, which uses a larger ball than in baseball, making it easier to hit. Finally, the adults play slow-pitch softball, so the ball is pitched underarm, slowing the game down for the older legs, whilst allowing everyone to hit the ball hard!

All formats are played in a co-ed format, so that boys and girls play together on an even field. Whilst light-hearted in nature there is an outlet to get ultra-competitive, as a previous junior player demonstrated; now being part of the GB squad (baseball and softball will both feature in the 2020 Olympics for the first time).

It’s a great sport that is accessible to everyone and, as a club, the Falcons are passionate about getting more people from the community involved. There are no membership fees to be a part of the Falcons - sessions are on a ‘pay as you play’ basis, normally costing £3-£4, to cover equipment and field hire.

The Falcons have an ‘always recruiting’ policy, so there’s a session available for boys and girls of all ages. It’s open to complete beginners, with all the equipment provided and qualified coaches on hand to guide you through the sessions.

JOIN IN:
Slow-pitch softball (16yrs+) - Starts in April on Wednesday evenings
Fast-pitch softball (11-16) - Starts in May on Thursday evenings
Baseball (7-11) - Starts in June on Sunday mornings

You can read more about the club at www.chichesterfalcons.com.
Tel 07890 192 409
Email chichesterfalcons@gmail.com
Facebook @Chichester-Falcons-Softball-Club
Twitter @FalconsChi

Chichester Property News - Issue 37 - April 2019

Featuring the articles:

"Ten years on from Chichester's property price low",
"Where will all the new homes in Chichester go?",
"To renew or not to renew: that is the question"
"Community Focus: Chichester Falcons Softball Club"
and "Buy-to-let deal of the month: 3 bed house in Tangmere, £290,000, 4.6% yield"

➕ Plus, the latest average property values, rents and yields in Chichester!

Welcome to the original blog about Chichester's property market.

Bringing you the latest news, information and analysis that relates specifically to the property market in Chichester.

Each week I'll feature the article I write for the Chichester Observer as well as my 'buy-to-let deal of the week': a property hand-selected by me that I feel could offer good investment potential.

I'm Clive Janes from CRJ Lettings in Chichester. I'm a landlord who continues to invest in local property as well as manage my own rental portfolio. In 2013 I setup CRJ Lettings not only to manage other landlords properties as if they were my own, but also to give some tips as to how to best go about investing in property.

If you'd like to chat about the local property market or see a potential deal and would like a second opinion, please get in touch:

01243 624 599

clive@crjlettings.co.uk