Monday, 27 June 2022

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £375,000, 4.5% yield


Summary:
3 bed house in Chichester
Listed for sale on 27/05/22 @ £375,000
Rent = £1,400pcm
Yield = 4.5%

The property is on the market with Linden Homes and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/123735716






Thursday, 23 June 2022

Shortage of homes to rent leads to tenant bidding wars

This was the title of a recent BBC News article, which seems to have come as a surprise to many. Rents have increased by 10.6% on average in the past 12 months across the UK. Who could have possibly anticipated that all of the government's meddling would negatively impact those it was supposed to help (i.e. tenants).

Maybe they should read my newsletter!....


In December 2015, when the stamp duty surcharge to landlords was announced, I wrote:

“The tax changes announced in the Summer budget and now the additional 3% stamp duty to new buy-to-let properties will reduce investment in rental properties. There is already a shortage of rental properties on the market and the new legislation will further limit the options available to tenants, which will ultimately increase rents.”


In April 2017, when ‘section 24’ tax changes first took effect, I wrote:

"The impact of all this is likely to translate into some landlords selling up, alongside fewer people entering the market. The resulting drop in the supply of rental properties, coupled with landlords needing to earn more to make the venture worthwhile, suggests rents are likely to increase."


A couple of months later in June 2017, when a ban on fees to tenants was announced, I wrote:

"I believe the letting fees ban will lead to rents rising; meaning any short-term savings for tenants will be more than offset by the monthly increase in rent. Perversely this will penalise those tenants wanting to create a long-term home the most, which is something I thought the government was in favour of?"


In February 2019, when the previously announced tax changes started to bite harder, I wrote:

"Some landlords are already exiting the market as they’ve calculated it just isn’t worth it for them anymore. Whilst that may create some opportunities for people looking to buy, it will mean a further reduction in the number of properties available to rent and, as a consequence, an increase in rents for those that remain."


In June 2019, when ‘the other stuff’ bolted on to the Tenant Fees Act was better understood, I wrote:

“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).”

as well as:

“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.”


The renters reform bill has now started to take shape; so, do I think it will ultimately prove to be good news for tenants? In a word…no.

The problem with all of the government’s meddling and the theory that ‘good landlords should not be worried about the changes’, is that the good landlords (and letting agents) are the ones burdened by trying to do things right. This can become an onerous task, to which many decide the easiest solution is simply to exit the market. Meanwhile, the rogue landlords will continue to ignore or sidestep the rules like they always have. I believe this will ultimately lead to a drop in the supply of rental homes, which will lead to a rise in rents, alongside a decrease in the quality of the operators who remain in the industry. 


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Monday, 13 June 2022

BUY-TO-LET DEAL OF THE WEEK: 4 bed house in Tangmere, £399,950, 4.8% yield


Summary:
4 bed house in Tangmere
Listed for sale on 01/06/22 @ £399,950
Rent = £1,600pcm
Yield = 4.8%

The property is on the market with White & Brooks and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/85424457






Thursday, 9 June 2022

Property has increased 13,690% during the Queen’s reign

I hope you all had a wonderful long weekend celebrating the Queen’s Platinum Jubilee. As I watched the Queen step out on to the balcony of the most expensive residential home in the world (Buckingham Palace, which is worth over £1bn), I thought it might be interesting to see how property prices have changed since her accession to the throne on the 6th February 1952. 

Back then, the average price of a property in the U.K was just £1,891. Seventy years later and the average property now costs £260,771; an amount which would have bought you 138 homes in 1952! 

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 when the Princess became the Queen, times certainly have changed across the land!

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

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Monday, 30 May 2022

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Fishbourne, £395,000, 4.6% yield



Summary:
3 bed house in Fishbourne
Listed for sale on 22/05/22 @ £395,000
Rent = £1,500pcm
Yield = 4.6%
Last sold for £248,750 in 2011 (+59% in 11 years)

The property is on the market with Kenton Budd and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/123559598






Thursday, 26 May 2022

Which buy-to-let property is right for you?

I was previously contacted by a retired couple who were moving to Chichester and wanted some advice. They were looking to invest in a few rental properties to supplement their pensions and had been to four local estate agents, who each had the ‘perfect’ property for them. Yet each property was in a different part of town and in various states of repair!

So, they asked me, which should they buy? To which my response was; it depends!

You see, we all have different circumstances and preferences, which call for a different approach to property investment:

- ‘Bargains’ can be elusive in and around Chichester as it is an area in high demand. Modest rental returns (yields average 3.2%) should, however, give way to better long-term prospects for capital growth.

- People seeking more rental income may want to look further afield where property prices are lower. Bear in mind though that these relatively cheaper areas may require more management, not rent as easily, nor provide such positive long-term prospects.

- Newer-build properties will require less maintenance and should attract good quality tenants. This type of property can give you a quieter life but at a higher purchase price, which will impact your initial rental yield.

- ‘Doer-uppers’ on the other hand can be great if you have the skills, time and money to inject new life in to a tired property. Buying the right property at the right price, with a sensible budget for refurbishment, could maximise your returns.


The retired couple had worked hard for the past forty years and now wanted the quiet life; with a safe investment that gave them a reasonable return. They had a good amount of capital to invest and did not want to undertake a project, nor spend hours chasing after ‘problematic tenants’.

In this instance I recommended they look at modern houses in and around Chichester, which should prove to be a good long-term investment. Well-kept properties will attract good quality, long-term tenants with fewer maintenance issues. They would be able to move people straight in and start earning a reasonable (4%+) return on their money.

Whilst it may not make them a fortune overnight it is a simple and relatively safe strategy, which is what they wanted. It beats the return from a savings account too!


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Monday, 16 May 2022

BUY-TO-LET DEAL OF THE WEEK:  3 bed house in Chichester, £300,000, 4.8% yield

Summary:
3 bed house in Chichester
Listed for sale on 06/05/22 @ £300,000
Rent = £1,200pcm
Yield = 4.8%
Last sold for £205,000 in 2013 (+46% in 9 years)

The property is on the market with Nexa Properties and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/85266834