BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £315,000, 4.4% yield

Summary:
4 bed house in Chichester
Listed for sale on 06/10/20 @ £300,000
Rent = £1,300pcm
Yield = 5.2%

This is amongst the cheapest four-bedroom houses in Chichester currently for sale, which makes it a good place to start in suggesting it as a decent buy. It's also in good condition and remains relatively modern having been built in circa 2008. That means you get double glazing, gas central heating, downstairs cloakroom, en-suite to the principal bedroom and modern fittings throughout.

Townhouses (houses set over three or more floors) often provide good value in regards to maximising square footage for the money. In this case, there is 1,316 square feet of floor space (including the integral garage), which equates to just £228 per square foot. That's a third lower than the average of £342 per square foot for terraced houses in Chichester. 

That is based on an asking price of £300,000, having just been brought to the market. I've seen these same properties sell for £325,000 in the past year, so this already seems something of a bargain. With an expected rental figure of £1,300pcm that would produce a very strong 5.2% rental return from this freehold house, which seemingly needs little work to get it ready to rent.

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

https://www.rightmove.co.uk/property-for-sale/property-73886919.html

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What’s the cost of 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 £195,000. 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 £299,950 - a premium of £104,950 (54%) compared to a one-bedroom home.

The average three-bedroom property in Chichester will cost you £425,000 - a premium of £125,050 (42%) compared to a two-bedroom home.

The average four-bedroom property in Chichester will cost you £535,000 - a premium of £110,000 (26%) compared to a three-bedroom home.

The average five-bedroom property in Chichester will cost you £650,000 - a premium of £115,000 (21%) compared to a four-bedroom home.

The above shows that whilst the outright cost is relatively similar, with the jump from a two-bed to three-bed home costing the most in monetary terms, the comparative growth in percentage terms lessens with each step up the ladder.

Of course, this price increase 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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BUY-TO-LET DEAL OF THE WEEK: 4 bed house in Chichester, £300,000, 5.2% yield

Summary:
4 bed house in Chichester
Listed for sale on 06/10/20 @ £300,000
Rent = £1,300pcm
Yield = 5.2%

This is amongst the cheapest four-bedroom houses in Chichester currently for sale, which makes it a good place to start in suggesting it as a decent buy. It's also in good condition and remains relatively modern having been built in circa 2008. That means you get double glazing, gas central heating, downstairs cloakroom, en-suite to the principal bedroom and modern fittings throughout.

Townhouses (houses set over three or more floors) often provide good value in regards to maximising square footage for the money. In this case, there is 1,316 square feet of floor space (including the integral garage), which equates to just £228 per square foot. That's a third lower than the average of £342 per square foot for terraced houses in Chichester. 

That is based on an asking price of £300,000, having just been brought to the market. I've seen these same properties sell for £325,000 in the past year, so this already seems something of a bargain. With an expected rental figure of £1,300pcm that would produce a very strong 5.2% rental return from this freehold house, which seemingly needs little work to get it ready to rent.

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

https://www.rightmove.co.uk/property-for-sale/property-73886919.html

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Do postcodes matter?

I was asked several years ago whether your postcode matters when it comes to the value of your property. Well, in swanky West London, the difference between SW3 and SW10 can influence values by thousands or even millions of pounds. In Chichester however, we don’t have many Russian Oligarchs and Saudi Princes buying our properties. Nevertheless, ever since being asked that question, I’ve always found it interesting to compare Chichester’s PO18, PO19 and PO20 postcode areas.

The central postcode area for Chichester is PO19, covering the area up to Lavant and down to the A27, plus Stockbridge and part of Fishbourne. The villages to the North of this are in PO18, incorporating as far as Eartham to the East and Nutbourne to the West. Then to the South of the A27, covering the Manhood Peninsula and reaching down towards Bognor Regis, is PO20.

It is for these geographical reasons that I have indeed witnessed scenarios where two seemingly similar properties, but on different sides of the PO19/PO20 border, have varied in desirability and price (largely due to the proximity to Chichester’s city centre).

Of these three postcode areas, the one with the best performing housing market over the past 12 months has in fact been PO20, to the South of Chichester, with average values rising by 2.0%. In a close second was PO19 with a rise of 1.7% and in third was PO18 with a 1.3% increase.

It’s a similar story when looking back at the areas over a longer period. Over the last 5 years, values in PO20 have risen by 17.7%, PO19 is slightly behind with a 14.4% rise and finally PO18 has seen a 12.7% increase. That narrative remains the same when looking at the postcode regions on a 10 and 20 year timespan too.

Why might this be the case? Simple supply and demand of course! 53% of all properties on the market in PO20 are showing as sold, compared to 47% in PO18 and 43% in PO19, suggesting demand is strongest in PO20. And where there’s demand, prices typically follow. It’s a different story when it comes to rentals though, with 83% of the total properties showing as ‘let agreed’ in PO18, compared to 74% in PO20 and 69% in the PO19 region.

With all this in mind, it’s interesting to note that the PO20 postcode region has a greater ratio of homeowners versus renters than the more central PO19 postcode area. This is evident by the fact 380 properties are available for sale in PO20 but just 16 are available to rent, whilst there are 437 properties for sale in the PO19 postcode and a far healthier (albeit still low) 55 for rent. 

I would therefore conclude it has been the homeowners of Chichester that have predominantly driven house price increases. This tallies with other evidence that it is not landlords who have the greatest baring on property prices, but owner-occupiers who are happy to pay a little more for their dream home. 

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BUY-TO-LET DEAL OF THE WEEK: 1 bed flat in Tangmere, £150,000, 6.0% yield

Summary:
1 bed flat in Tangmere
Listed for sale on 10/03/20 @ £180,000
Now = £150,000
Rent = £750pcm
Yield = 6.0%
Last sold for £124,950 in 2016 (+20% in 4 years)

This one-bed flat in Tangmere could be a sound entry-level buy-to-let property (yes, £150,000 is 'entry-level' for the local area).

It's been modernised by the current owner, so there is nothing that appears in need of upgrading prior to letting it to tenants. It has a good-sized open-plan living area with a modern kitchen and neutral decor. There's then a double bedroom and a family bathroom. Bonuses include an upgraded heating system (albeit it's all electric rather than gas), double glazing throughout and a garage in a nearby block.

Although it's a flat, it has a long (155 year) lease and minimal ground rent and maintenance obligations. That means nearly all of the £750pcm rent I'd expect to achieve for the well-presented apartment isn't lost to the freeholder.

That's a very decent 6% rental return based on the current £150,000 asking price; an asking price that has been reduced by £30,000 since it was first listed in March. The current owner bought it for £124,950 in 2016, but it seems the bulk of that 20% increase in four years has been spent on the flat itself, rather than acting as profit for the current owner.

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

https://www.rightmove.co.uk/property-for-sale/property-68979156.html

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How to move tenants out

There are a variety of things that should be carried out when a tenant vacates their rental property in addition to the obvious - getting the keys back! Unlike when starting a tenancy there aren’t many legal requirements at this final stage of the tenancy, but there are a few things that should be done to help ensure it’s a smooth process. 

Just like at the move-in, here at CRJ Lettings we use a checklist to ensure nothing gets forgotten. Final meter readings and a forwarding address for the departing tenants are taken, meaning the utility providers can receive the correct details so as to send the tenants their final bills. This should stop any debate over who owes what, as the date and meter readings will be documented for both parties (a copy of the checklist is both retained and provided to the tenants).

It’s then time to receive back the keys and check over the condition of the property. This is when it becomes so important to have had a thorough inventory (with photos) in place at the start of the tenancy. Most people’s memory simply isn’t good enough to remember every imperfection that existed (sometimes years before)! It also ensures the process is fair to the tenants; providing proof of any discrepancies, whilst ensuring they aren’t made responsible for something that wasn’t their doing.

My top tip for landlords would be to visit the property a few days before the move-out date to undertake a ‘pre-check’ with the tenants. This basically means inspecting the property and telling the tenants anything that might be an issue in regards to the full return of their security deposit.

This then gives the tenants an opportunity to remedy any issues prior to the actual move-out appointment. Assuming they take this advice on board, it’s good for me as I’ll be able to re-let the property promptly without having to arrange repairs. Moreover, it’s good for the tenants as they won’t have monies unnecessarily deducted from their security deposit (and if they don’t remedy the issues highlighted to them, they can’t say they weren’t warned or given the opportunity to make things right).

If there are any issues that remain when the tenants move-out (subject to fair wear and tear) this should be pointed out to them, noted and discussed in regards to the best way of resolving matters. This is why I recommend tenants are present when checking the property; so that any issues can be raised immediately and the course of action mutually agreed.

This process (including the ‘pre-check’) should ensure the tenants are aware of their responsibilities, are able to return the property in the required condition to receive most, if not all, of their security deposit back and it should minimise any void periods caused by having to put things right.

If you’d like a free copy of my ‘move-out checklist’ please contact me and I’ll be happy to send it to you via e-mail.

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BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Tangmere, £265,000, 4.8% yield

Summary:
3 bed house in Tangmere
Listed for sale on 07/09/20 @ £295,000
Now = £265,000
Rent = £1,050pcm
Yield = 4.8%
Last sold for £175,000 in 2004 (+51% in 16 years)

This three-bedroom house in Tangmere has been slashed in price by £30,000, less than three weeks after it was first listed. Now priced at £265,000, it appears to be decent value for a good-sized three-bedroom house that, as the agent describes, is "beautifully presented".

The caveat I'd make to that is it doesn't necessarily look that way in the photos (in my opinion - let me know what you think). The 'artistic' front photo is around 60% foliage, 20% sky and 20% house - to me, it makes it look overgrown and unloved. Whereas, in fact, it appears to have been very well looked after, with gas central heating, double glazing, a reasonable kitchen, modern bathroom and crisp décor throughout. Here too though, some of the photos don't do the house justice. Net curtains, pictures cluttering some of the walls and striped wallpaper seem to combine to make the house feel smaller, and less modern, than it really is.

Once the house is emptied of such things though, it will likely look a completely different property; and a far more desirable one, in my opinion. Good sized rooms (although bedrooms two and three are a little smaller than you'd ideally like) with very little improvement works necessary (unless the striped wallpaper really offends you - I think in the flesh it could look good). With the bonus of a garage and being at the end of a cul-de-sac, it should be popular amongst renters, with the two smaller bedrooms providing ample enough space for children's bedrooms and/or offices for working at home (increasingly important!).

It would likely rent for £1,050pcm, which would provide a decent 4.8% rental return from a freehold property that has seen capital growth of 51% in the 16 years since the previous owner bought it for £175,000.

The property is on the market with Henry Adams and full details can be found on Rightmove via the following link: https://www.rightmove.co.uk/property-for-sale/property-97000847.html

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   crjlettings.co.uk   clive@crjlettings.co.uk  01243 624 599

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