Chichester Property News

Monday, 24 June 2019

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Tangmere, £250,000, 4.6% yield

3 bed house, Middleton Gardens, Tangmere, Chichester,

Summary:
3 bed house in Tangmere
Listed for sale on 13/06/19 @ £250,000
Rent = £950pcm
Yield = 4.6%
Last sold for £100,000 in 2016 (+150% in 3 years)

We're heading back to Tangmere again, which so often throws up good-valued properties that feature as my buy-to-let deals of the week.

This three-bedroom house has been listed at a competitive £250,000, which is not much more than the nearby two-bed houses have been creeping towards of late (having been under £200,000 when I first started highlighting them a few years ago).

It appears to be in a very good condition, with a modern kitchen and bathroom and tidy décor (as far as the limited photos show). It should rent for £950pcm, which would provide a decent 4.6% rental return from a freehold house in ready to rent condition. The bedrooms are a little on the small side, so this may hamper renting it instantly (if they were a bit bigger I'd be suggesting £1,000pcm). It can also be a disappointment to only find one toilet in a three-bedroom home, which will typically be aimed towards families, and in this particular property they have removed the bath in the bathroom, which can stop families with young children from renting them.

The only other thing which makes me think twice about this property is the sales history. It was sold for just £100,000 in 2016! I thought maybe it was a council tenant buying their ex-council home, but it also sold in 2000 for £42,500 (when this was possibly the case). How and why could it only have achieved £100,000 just three years ago? Then I did a little digging online and found this was a 50% shared ownership price (and it was in a bit of a state!), which means it's actually increased (a still decent) 25% in three years rather than the 'on paper' 150%!

The property is on the market with King & Chasemore and full details can be found on Rightmove via the following link:
https://www.rightmove.co.uk/property-for-sale/property-63027387.html

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}}

Thursday, 20 June 2019

Does psychological pricing work?

If you’re wondering what psychological pricing is, it’s where retailers set the price of something to make it appear cheaper than it is using a simple trick of the mind. This typically means using a 5, 7 or 9 to round off a price, rather than using a round number. The classic is something that costs, say, £4.99. Wow, that’s much less than £5 right! Well to most humans it is, hence why retailers do this. It’s to do with our primitive brains looking at the first digit and ignoring the rest.

In the world of property that means a price tag of £400,000 becomes £399,999, or more commonly £399,950.

So, does psychological pricing work for property? Well, the answer is yes and no, which I’ll now explain.

Yes it does, in that £399,950 does at first appear much cheaper than £400,000. In the olden days when property buyers would look in estate agents shop windows and the local newspaper listings this worked well. Plus, when people would contact estate agents to enquire what properties they had for sale, the estate agent would be able to say it cost “3-9-9-950”, which sounds a lot cheaper than the one next door who said “400-thousand”.

However, in today’s mainly online world i.e. where people scroll through the property portals, there are a few major downsides to continuing with this old method of psychological pricing.

Firstly, the default of the property portals is to list properties by ‘highest price first’. That means the property listed at £400,000 actually appears higher up the page than the one at £399,950, unless the user has played around with the sort function.

Secondly, most people will use the search parameters to narrow down the amount of properties that are shown. The £399,950 and £400,000 price tags will both show up when someone enters a maximum budget of £400,000. But the next level up may be someone with a £450,000 budget, who therefore sets a minimum price of £400,000 to narrow the field. Now, the property listing of £399,950 is cut from the search entirely!

And thirdly…..it doesn’t work as well anymore as people have grown wise of this ruse!

You should also consider the ‘big round numbers’ when listing a property. I’ve just seen a property reduced to £251,750….what a bizarre figure! How many people do you think set their maximum budget at £250,000? I can tell you that it’s a lot, and this estate agent has just wiped out a whole bunch of people from even seeing this property when they click ‘search’.

So, next time you’re scrolling through the property portals, why not have a play with its search tool and see the price increments it uses and let me know whether you think psychological pricing when it comes to property listings is a good or bad idea.

This article was featured in...

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Monday, 17 June 2019

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £251,750, 4.6% yield

3 bed house, Charles Avenue, Chichester, West Sussex

Summary:
3 bed house in Chichester
Listed for sale on 16/05/19 @ £265,000
Now = £251,750
Rent = £975pcm
Yield = 4.6%
Last sold for £208,000 in 2019 (+21% in 0 years)

This week's buy-to-let property is a three-bedroom house in Charles Avenue in Chichester. It's an interesting pick because it was also highlighted in February when it was up for auction. My guess then was it would sell for around £230,000, but it actually didn't sell at all! A canny buyer grabbed it for a stonking price of £208,000 though when it came up for auction again the following month.

Even so, I expected it to sell to a first-time buyer or a landlord looking to rent the house out, who would spend a few thousand doing it up to an ok standard (décor and flooring), making it worth around £250,000 and thus meaning there was some equity built-in, but probably not enough for a worthwhile 'buy, do-up and sell'. The house has indeed been done up to an ok standard, which will suit the rental market for this part of Chichester, but the fundamental finish of the house doesn't lean itself to being an easy flip in my opinion - not without attending to the 'OK' kitchen, bathroom, fire alarm system that was left over from its previous setup as an HMO and the gas central heating pipework that has been (not particularly well) tacked on to the walls rather than tunnelled inside them.

And so it may be proving, having been first listed around a month ago at £265,000 and already having been dropped to £251,750.

IF it sells at, say, £250,000 then on paper there's £42,000 of profit (this is classic 'Homes Under The Hammer' maths). Unfortunately when you factor in the two sets of legal costs, auction fees, stamp duty (that's £7,900 alone based on it being an additional property of the buyer), the refurb costs and estate agents fees to sell, you're likely looking at circa £20,000 of profit, before tax. Sure that's a good figure in just a few months (buyers may have an issue getting a mortgage with Land Registry showing the previous purchase price from just a few months earlier by the way), but there can be a lot of risk at auction and hidden nasties with any project, so it's not a huge margin, which also doesn't take into account the financing costs.

If I were the buyer I'd be pleased to have got the property at a great price and would now rent it out for the long-term, possibly re-financing the property in due course to withdraw much of the money spent buying it.

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-81830795.html

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

Thursday, 13 June 2019

What is average in Chichester’s property market?

The average property price in Chichester is £367,322. This is down (I haven’t said that for a while) by 4% compared to 12 months ago (when the average property in Chichester sold for £381,106). This is still some 62% higher than the UK’s average property price of £226,798 though.

Currently on the market at this average price range in Chichester are a variety of three-bedroom houses; from new-builds on Graylingwell Park, to modern houses near the hospital or further out in Westhampnett, as well as a variety of period properties closer to the city centre.

From a rental perspective, the average rental price in Chichester is currently £995pcm, which is down 3% compared to 12 months ago (when it was £1,025pcm) but is still 28% higher than the UK’s average rental price excluding London (£775pcm) but just 6% higher when including London (£936pcm).

There’s a wide variety of properties on the rental market around this average price. There are modern two-bedroom apartments close to the city centre, period houses near the city walls, as well as some affordable three-bedroom houses on Chichester’s ex-council housing estates.

It’s interesting to note that the premium that Chichester’s renters pay is much less compared to the UK average than Chichester’s homebuyers have to. Either way though, with Chichester’s average salary being £29,867, which is only 3% more than the UK’s £29,009 average salary, it is clear that the ‘average’ resident in Chichester would struggle to afford those costlier than normal ‘average’ local properties.

In fact, with the average property price in Chichester being 12.3 times the local salary for home buyers and eating up 40% of a renter’s income, Chichester is often cited as one of the most unaffordable places to live in the country. Of course, with an increasing number of households having more than one breadwinner nowadays these headline figures aren’t necessarily reflective of the overall affordability, but it does show that it is particularly difficult for the ‘average’ person to live in Chichester.

The mainstream media may bring you plenty of national updates on the property market, but I am passionate about bringing you news and statistics about your local property market right here in Chichester. So, for updates that are relevant to you, you can subscribe to my weekly ‘Chichester Property News’ e-newsletter free of charge by visiting www.bit.ly/chipropertynews or feel free to pick up the phone and call me for a chat.

This article was featured in...

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

Monday, 10 June 2019

BUY-TO-LET DEAL OF THE WEEK:3 bed house in Chichester, £299,000, 4.8% yield

3 bed house, Pecketts Gate, Chichester, West Sussex

Summary:
3 bed house in Chichester
Listed for sale on 10/04/19 @ £315,000
Now = £299,000
Rent = £1,200pcm
Yield = 4.8%
Last sold for £308,995 in 2013 (-3% in 6 years)

This three bedroom townhouse is offering a lot of property for not a lot of money in the scheme of things. Now priced at £299,000, having been reduced from £315,000 when first listed a couple of months ago, it's actually cheaper than when the current owner bought it in 2013 for £308,995 as a new-build.

To put that into context, the average property in Chichester has increased in value by 24% since then...yet this one has gone down!?! Zoopla's algorithm seemingly can't cope with that, as it suggests the house should now be worth £392,000 based on its previous selling price (+27%).

And as it's only six years old it's in great condition. It's previously been rented (for £1,150pcm according to online data) so presumably the landlord is cashing their chips in...which makes it even stranger they're doing so at a loss. I think it could rent for £1,200pcm such is its good location (albeit facing the main road isn't ideal), size and condition. This figure would provide a very good 4.8% rental return from a freehold property that needs no work to get it 'rentable', which again makes it strange as to why it's being sold...

The property is on the market with Charles Peck and full details can be found on Rightmove via the following link:
https://www.rightmove.co.uk/property-for-sale/property-80835881.html

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

Thursday, 6 June 2019

Five major changes introduced by the Tenant Fees Act

Originally centred around banning administration fees to tenants, it’s actually the ‘other stuff’ that has been bolted on to the Tenant Fees Act that I believe will have the biggest consequences for the lettings industry in the long-term. Here’s five major changes and how this may impact the market:

Holding deposits
You can now only take a one-week holding deposit, which must be returned to the tenant within 15 days if you haven’t entered into a tenancy agreement by then. With many tenants having to give one months’ notice to their previous landlord, clearly the timescales don’t quite work here. Cue having to get applicants to waive this right, which is allowed under the guidance. And a word of caution to those landlords who instruct multiple agents (which I don’t advise)…it’s now illegal to take more than one holding deposit, so if each agent happens to accept a tenant and take a holding deposit, it’ll be you carrying the can for the £5,000 fine.

Security deposits
Security deposits will be capped at five-week’s rent (for rents up to £50,000pa). Whereas tenants with credit issues, who are self-employed (with income that’s hard to prove) or with pets used to be welcomed simply by asking for an increased security deposit, now this is not an option. Instead many will be rejected outright and will thus find renting a home even more difficult than it already is. They may alternatively be asked to pay an enhanced rent (which is allowable under the guidance of the Act).

Third-party payments
You can no longer enforce the use of third-party companies upon tenants. Traditionally this would have been in the form of clauses in the tenancy agreement to protect against certain things e.g. end of tenancy carpet cleaning for pet owners or annual chimney sweeping for properties with open fires if the tenants wanted to use them. Without these it is likely the usage of the property will be restricted and pet owners will again find that landlords are less likely to accept them.

Tenancy amendments
The charge applicable for any alterations to the tenancy agreement, for example leaving early, adding a pet or changing a named tenant, will be restricted to £50 or the reasonable cost (which needs to be proven to avoid a potential fine). Renting is therefore set to become less flexible, as it is far simpler to say ‘no’ to a request rather than to take on a load of administrative work (which often isn’t in the landlord’s best interests) for such a small sum.

Rent arrears
Landlords want their rent to be paid on time, so many used to insert late fees or a reasonable interest rate into the tenancy agreement as a deterrent against late payment. Now, however, all that can be charged is interest of 3% above the base rate, but only after the rent is 14 days late. This effectively gives tenants a two-week line of free credit, followed by perhaps the cheapest personal loan on the planet!

Unfortunately, I believe these changes will lead landlords to be pickier than ever as to who is allowed in their properties, as well as being less flexible (and perhaps less helpful) than they were before the Act came into force.

This article was featured in...

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

Monday, 3 June 2019

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Tangmere, £260,000, 4.6% yield

Summary:
3 bed house in Tangmere
Listed for sale on 23/05/19 @ £260,000
Rent = £1,000pcm
Yield = 4.6%
Last sold for £175,000 in 2009 (+49% in 10 years)

I've just come back from a rental valuation in Tangmere and I'm always amazed with what great value it offers to homeowners and tenants alike. Yes there are new-build sites popping up in Tangmere and the huge 1,000 home development is taking shape with the planning department. But all that should bring with it some additional amenities for the village, which will only enhance what is already a nice place to live whilst being cheaper than nearby Chichester, which is just a few miles away on the easily accessible A27.

And so it is with this three-bedroom house, which priced at just £260,000 fairs well against the new-build prices and yet offers decent internal space plus a driveway and garage. The kitchen, bathroom and décor need a closer inspection to see whether it is starting to show its age, but from the photos (short of a bit of decorating) it appears to be in a 'ready to rent' state. It should do so for around £1,000pcm, which would provide a decent 4.6% rental return for a freehold property in this part of the country.

It's interesting to note that the property was last purchased in 2009, which was around the nadir of the credit crunch, for £175,000. Clearly a 49% increase since then is good...but it's not quite the old adage of 'property doubles in value each decade' that used to be spun out in the early noughties. Zoopla suggests properties as a whole in Tangmere have increased 48% in the past 10 years, putting this house bang on target and suggesting it offers fair value in today's market.

The property is on the market with Charles Peck and full details can be found on Rightmove via the following link:
https://www.rightmove.co.uk/property-for-sale/property-82029053.html

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

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