Chichester Property News

Thursday, 26 March 2020

Do you trust your letting agent?

Having met a couple of new landlords for a cup of tea and a chat about their options in purchasing their first buy-to-let, they posed me the question “why should we use you?”

It was a fair question and one that I hoped I’d covered in the previous hour I’d spent chatting with them about the market, the type of property that might best match their circumstances and my own experience with buy-to-let.

Not because I’d been spouting out my qualifications, property redress scheme membership or the excellent value for money I believe I offer. More by way of the natural conversation we had, which I hoped would’ve demonstrated my honesty, openness and the passion I have for property and helping people.

Ultimately, it all comes down to trust. Like with any service provider, wonderful promises can be made but ultimately you need to trust that they can deliver upon them.

I use, and recommend to others, my accountant, insurance broker, mortgage broker, solicitor and tradesmen because I trust them. I know they are qualified to do the job and offer a good service. I’ve done my best to find those that offer the best value, but ultimately it all comes down to repeatedly using those I trust will act in my best interests.

Similarly, as I don’t sell properties, I often get asked which estate agent I’d recommend. There are a couple I’d happily suggest because I’ve used them myself and I trust their advice. I’d always recommend contacting a few and seeing who you build the most rapport with and can trust to do the best job for you (as well as searching for reviews and testimonials).

A trusted agent should have an open line of communication with their client, regardless of whether or not there’s ‘something in it’ for the agent. A trusted agent should have expertise on their local property market. They will know their business, their client’s business, and they should have enough general knowledge about how things work to offer advice worth taking.

Letting agents should remember that it is the people (both landlords and tenants) that are the lifeblood of their business and that they should be treated accordingly.

These are the things you should be looking for when instructing an agent. Only then can you be sure they have both the competence to do the job well, whilst trusting they’ll have your best interests in mind.

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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, 23 March 2020

BUY-TO-LET DEAL OF THE WEEK:2 bed house in Chichester, £239,950, 4.8% yield

2 bed house, Winterbourne Road, Chichester

Summary:
2 bed house in Chichester
Listed for sale on 17/03/20 @ £239,950
Rent = £950pcm
Yield = 4.8%
Last sold for £203,000 in 2014 (+18% in 6 years)

This good-sized two-bedroom property is in an area of Chichester with a lot of student lets, being relatively close to Chichester's university. Both bedrooms are large doubles, which helps with its desirability and many of these houses use the downstairs dining room as a third bedroom.

It doesn't have to be let to students though to provide a very good return. A similar property is on at £995pcm, but I've scaled this back slightly to a suggestion of £950pcm as this one is in need of some decorative improvements and doesn't come with gas central heating. Even so, with an asking price of £239,950, that conservative rental figure would provide a very decent 4.8% return. It would be well worth installing gas central heating rather than having the electric storage heaters in my opinion, both from a desirability point of view and an environmental one (the EPC is currently an E, so is legal...for now).

At £239,950 it seems reasonably priced for such a well-proportioned house in Chichester. The current owner bought it for £203,000 six years ago, so has seen a decent 18% increase in that time.

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-83709449.html

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

Thursday, 19 March 2020

Will property follow the stock market downwards?

I’m writing this as the FTSE 100 has seen another 10% drop amid the collapsing oil price and Coronavirus panic. The index currently sits at 5,238 (12th March close), which means it is down around 30% in just one month! I thought I’d compare the FTSE 100 index and UK house prices over time, to see whether the financial market’s discontent is likely to seep through to the property market

25 years ago the FTSE 100 index stood at 3,217, whilst the average UK home sold for £52,063. The FTSE 100 may have increased by two-thirds since, but house prices have quadrupled in that same timeframe! It hasn’t been a one-way street for either asset class though, with peaks and troughs along the way. Looking at the data, it’s interesting to see that the stock market has had many more ups and downs than house prices though. In fact, house prices have increased pretty steadily since 1995, with the exception of the ‘credit-crunch’ induced financial crisis.

Of course, the greater liquidity of the stock market is the reason for having a wilder ride of things. Property takes rather a long time to buy and sell in comparison to the almost instantaneous process of buying or selling a share. This means people can’t offload properties in an instant like they can shares, which is why the stock market can suddenly collapse like it is doing at the moment.

Interestingly, there have been times whereby the stock market has been heavily impacted by global events and yet the UK housing market hasn’t been affected. At the start of the millennium the dot com bubble burst and with it the FTSE 100 dropped nearly 50% from 6,930 in December 1999 to 3,567 by January 2003. Meanwhile, UK house prices in that time actually rose by 57%, showing that falling share prices doesn’t automatically mean the housing market will follow.

On the other hand, the recent financial crisis saw both the FTSE 100 and house prices take a tumble. Interestingly, they both peaked in October 2007 (the FTSE 100 at 6,722 and UK house prices at £186,044). That suggests the impact was felt upon both markets at the same time, rather than a fall in the stock market leading to a fall in the housing market. Both markets also bottomed out at the same time (February 2009), with the FTSE 100 43% off its peak and UK house prices 21% lower than they had been. It took until May 2014 for house prices to break through its previous high, whilst the stock market recovered more quickly, reaching new heights by October 2013.

The current decline in the financial markets has been much stronger over a shorter timeframe than has been seen before. Whilst this is worrying in regards to the impact it will have on the wider economy, history suggests this doesn’t necessarily mean house prices are set to fall as well. Unfortunately, there’s simply no way of knowing when a market has peaked or bottomed until long after the event!

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

Monday, 16 March 2020

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £260,000, 4.5% yield

Summary:
3 bed house in Chichester
Listed for sale on 02/03/20 @ £260,000
Rent = £975pcm
Yield = 4.5%
Last sold for £59,995 in 1997 (+334% in 23 years)

This three-bedroom semi-detached house is close to Chichester's city centre, in good condition and is a nice size. It only needs a few decorative tweaks to make it a very nice family home indeed. It also has a large garden, which may offer scope for development or potential to install off-road parking to the side (if you can get permissions to do so).

The one negative of the house for today's standards, is it has a downstairs bathroom. At least it looks almost new, so most people should be able to overlook this. And if the bathroom were moved upstairs, you'd lose one of the bedrooms, so that isn't really worth doing. Having said that, it can be a tough decision for homeowners and property developers alike - do you retain a three-bedroom house with a downstairs bathroom, or convert it to a two-bedroom house with the bathroom upstairs. There's no right answer, but certainly as time goes by people are becoming a little less accepting of having no bathroom upstairs.

Either way, at £260,000 the house offers good value; it is amongst the cheapest three-bedroom houses available to buy in Chichester. Even so, the current owner is on to a tidy profit, having bought the house for just £59,995 in 1997 - that means the price has more than quadrupled in the 23 years since!

It would likely rent for around £975pcm, which is relatively 'cheap' for a three-bedroom home in Chichester. Doing so would provide a landlord with a 4.5% rental return based on that full asking price, which is a good return from a freehold property in such decent condition.

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-84091304.html

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

Thursday, 12 March 2020

Should you buy a new or used property?

comic style strip with modern and old house

I’ve spoken with many landlords who are either looking to buy their first buy-to-let or expand their portfolio. I often get asked whether it’s worth buying a new-build property when it comes to investment.

I point out that most landlords shy away from new-build property as there is a premium factored in to the price, meaning there are normally better returns to be found elsewhere from a ‘used’ property. A new-build also offers little scope in adding value through refurbishment, whilst many complain they simply “don’t build houses like they used to”.

For others though, a new-build property is perceived as a safe and low-hassle investment, which is ready to rent immediately. They are popular with tenants wanting all the ‘mod-cons’ and it’s generally an easier job letting and managing a new property that comes with guarantees and warranties.

Like I tell my landlords though, if the property is purely for investment, you should really let the numbers do the talking, as opposed to what you might like the look of.

Nationwide data suggests there is currently a 14% premium in price between new-build properties and the average UK home. This premium has steadily grown over the past decade; in 2010 you would pay just 3% more for a new-build home than the average house price. It seems the various incentives, such as the help to buy scheme, have artificially inflated the market for new-build properties. Many of these schemes benefit first-time buyers (and the house builders - just look at their share prices), whereas investors are left paying a premium without the government-induced financial enticements.
line graph of new build price premium vs average UK house price

line graph of new build price premium vs average UK house price

However, when you consider the ease of letting a new-build home and the reduction in overall maintenance (once snagging is completed), my experience suggests the net yield from a new-build property will be much closer to the (albeit lower) gross yield than it would be on a potentially more problematic older property.

It can also come down to picking the right new-build site and negotiating the best deal possible from the developer. Discounts may be available in the early stages of a development as the builder seeks to boost their cashflow, particularly when the property is bought ‘off-plan’ i.e. before it is built. Conversely, towards the end of a development, a shrewd buyer may be able to negotiate a decent discount as the developer seeks to sell their last few homes and move on to their next site.

As ever with the vast array of possible property investment strategies, it really is ‘horses for courses’. Some people would rather take on the project of an older property; adding value and maximising their return in the process. Others are happy to get a more modest return from a new-build property that comes with less effort and stress.

If you’re looking to invest in buy-to-let and would like some impartial advice about the various options, please get in touch.

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

Monday, 9 March 2020

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

Summary:
3 bed house in Chichester
Listed for sale on 28/02/20 @ £315,000
Rent = £1,150pcm
Last sold for £235,000 in 2009 (+40% in 11 years)
Yield = 4.4%

This modern, detached, three-bedroom house in Tangmere looks to be a decent buy-to-let prospect. The terraced three-bedroom houses nearby are typically priced at around £275,000, so the £40,000 premium in price (this property has just been marketed for sale at £315,000) gives you bigger rooms, a garage and a more modern detached property with driveway.

That seems a fair price to pay, and whereas with the older-style three-bedroom houses I typically attach a rental price of around £950pcm-£1,000pcm, you should see a decent uplift in rental price for this particular home too, as they are less commonly available. I'd suggest a rental figure of £1,150pcm, which would provide a decent 4.4% rental return.

There should also be potential for further capital growth in the future, particularly as the large new development in Tangmere is built and the new houses will be sold at a premium price. Yet with three good size rooms, a cloakroom downstairs, an en-suite and bathroom upstairs plus the now to be expected double glazing and gas central heating, short of a few minor cosmetic tweaks this could once again be compared to a new home. Bear in mind too that many new homes are built in terraces and so to have a detached home with a driveway and garage is both rare and typically comes with a hefty premium as a result.

The current owner bought the property in 2009 for £235,000, so has overseen a 40% growth in its value. Interestingly, they purchased it at a lower price compared to the previous owner, who paid £244,500 in 2006, having to accept a loss a few years later as the credit crunch bit.

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-89940107.html

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

Thursday, 5 March 2020

What can you rent in Chichester?

Last week I looked at what properties were for sale in Chichester, but for those wanting to move home there is of course also the option to rent. With that in mind, I thought I’d take a look at what’s out there at the moment in Chichester for potential tenants.

There are 257 rental listings currently online in Chichester, of which 153 are still available to rent, with the other 104 ‘let agreed’. However, when you start to browse through these properties you’ll notice there are a lot of house shares (which is no good if you want your own place), student properties (only available to students) and holiday lets (not suitable as a permanent home). When you take those properties out of the mix, you’re left with just 84 to choose from.

Those looking to rent a two-bedroom flat have the most choice, with 47 currently to let, whilst those at either end of the market have the least to choose from, with just 13 one-bedroom flats and 12 four-bedroom houses on offer.

Of course, what you can rent will largely depend on your budget. The cheapest of the 84 whole properties available to non-students on a long-term basis, is a very nicely presented studio apartment on the road between Chichester and Fishbourne, priced at £575pcm. On the other end of the scale, the most expensive property to rent in Chichester today is a large Grade II listed four-bedroom townhouse in West Pallant, priced at £3,250pcm.

Assuming your budget is somewhere in the middle of those two extremes, it might be interesting to know that the average property marketed for rent in Chichester is priced at £1,000pcm. This figure is up around 3% compared to the £975pcm average of twelve months ago.

Breaking the averages down by property type provides a good indication of what your budget is likely to be able to afford in Chichester:

Interestingly, the average price of the three-bedroom houses are the only ones to have dropped on average compared to a year ago (albeit only by £5pcm). Meanwhile, both two and four bedroom houses have increased on average, whilst flats across the board have remained at the same level.

It seems this relatively low supply of rental property in Chichester is a key reason why rents remain stubbornly high. Due to the negative impact of recent legislative and tax changes, this supply issue isn’t likely to improve any time soon, which will make it increasingly difficult for tenants to find their dream home at an affordable price.

For a weekly digest of the average rental figures by property type in Chichester, be sure to subscribe to my free weekly e-newsletter at http://bit.ly/chipropertynews

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