Monday 2 September 2024

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Fishbourne, £285,000, 5.5% yield


Summary
3 bed house in Fishbourne
Listed for sale on 19/08/24 @ £285,000
Rent = £1,300pcm
Yield = 5.5%
Last sold for £199,950 in 2013 (+43% in 11 years)

The property is on the market with Charles Peck and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/151490810









Thursday 29 August 2024

Is a ground floor flat a good buy?

 

Which floor a flat is on is an important factor when deciding what to buy (or rent). Some are ardent in their opinion that an upper-floor flat is the only way to go, whilst others can see plenty of benefits in keeping your feet on the ground. Typically, top floor flats have achieved a premium price over their ground floor counterparts, but is this justified?

Many will say it is and that flats on the ground floor represent both a privacy and security risk. In theory that is true; people walking past will be able to see into a ground floor flat rather than one higher up. And it’s easier to hop through an open window or break the glass of one on the ground floor than if you’d need a ladder to do so. But the same could be said for any house that isn’t built on stilts, so that logic doesn’t really cut the mustard in my opinion.

Certainly the view can be better in a flat on a higher floor and they tend to be brighter too. Plus, heat rises, so they are often easier and cheaper to heat in the Winter. I think there’s still something of a ‘status’ about being higher up in the sky though (think top floor penthouses), which largely clouds people’s opinions on the matter. Having said that, there’s definitely something to be said for only having neighbours below you, compared to ground floor flats, which in a poorly insulated building can mean hearing ‘footsteps on the ceiling’.

Ground floor flats though make perfect sense for those wishing to avoid the stairs. Whilst many immediately think of the elderly in this regard, the benefit is also there for young families with pushchairs and people with mobility issues. They’re also easier to evacuate for the safety conscious and you won’t have to worry about leaking roofs (although they’re the first ones to feel the impact of rising damp or drainage problems).

But the real bonus of having a ground floor flat is that many come with their own private garden or direct access to communal grounds. Apart from the obvious benefit this provides, which came to the fore as we were stuck at home during the pandemic, it can also make ground floor flats suitable for pet owners compared to their more penned-in upper-floor flat counterparts (although you’ll need to check the head lease to ensure pets are allowed at all).

I have long argued that houses are more popular than flats with both owner-occupiers and tenants. This is because they come with their own entrance, private outdoor space and, normally, better parking. But I’ve visited many ground floor flats that also come with these benefits and it’s not surprising that demand for these are holding up noticeably better at the moment compared to flats without these bonuses.

So for me, a ground floor flat that provides access onto its own outdoor space could be a winner; particularly with an aging population that values their own private space. This is a good way of getting many of the benefits associated with a house, but with a lower price tag.








Monday 19 August 2024

BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Chichester, £285,000, 5.1% yield


Summary
2 bed house in Chichester
Listed for sale on 12/08/24 @ £285,000
Rent = £1,200pcm
Yield = 5.1%
Last sold for £260,000 in 2021 (+10% in 3 years)

The property is on the market with Sims Williams and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/151223648









Thursday 15 August 2024

Energy efficiency proposals for buy-to-let reintroduced

The Labour Government has confirmed that landlords will need to have at least a ‘C’ energy efficiency rating from 2030 via their EPC (Energy Performance Certificate). This comes less than a year on from when Rishi Sunak dropped this requirement, which was due to come into force in 2028 (having previously been delayed from 2025).

This hasn’t come as too great a shock to landlords though, as I noted last year when the policy was dropped. At that time the Labour party had already said they would reintroduce the policy if they came to power (which became ever more likely to happen as Sunak’s time at the top went on). Regardless of who was in power, it seemed to be a matter of when targets would be brought in rather than if. It is a shame though that the policy has come back in its original ‘one size fits all’ criteria, which seems overly simplistic for such a complex subject.

If you’re unfamiliar with EPC’s, they show a property’s energy efficiency on a scale from A (highest) to G (lowest). They are valid for ten years and you can easily look-up a property’s certificate online by visiting www.epcregister.com.


Whilst every rental property has needed an EPC since 2008, from April 2018 it became unlawful for new tenancies or tenancy renewals to proceed in a property with a rating lower than an E. From 1st April 2020, these rules expanded to ALL tenancies i.e. no property with an EPC rating below an E should currently be tenanted (although some exclusions apply). Those who fail to comply with these laws face significant financial penalties; from £5,000 all the way up to £150,000 for repeat, long-term offenders.

Updated lettings legislation also stipulates that if you don’t provide the EPC to your tenant before they let the property, you are unable to serve them with a Section 21 notice should you want to regain possession of the property.

It is therefore a good idea for landlords to check their property has a valid certificate in place with at least an E rating and that the tenants were given a copy before any tenancy agreement was signed after 2020. If you use a letting agent, be sure they are on top of this for you, as ultimately it is the landlord that faces the consequences (and fines) for not abiding by the legislation.

It should be noted that, legally, the EPC is only needed at the point of marketing and at the start (or any renewal of) the tenancy. So, if the EPC expires during the tenancy, it doesn’t technically need to be renewed straight away. This is something of a grey area though, as how can you prove the property satisfies the minimum rating if you don’t have an in-date certificate? Also, you need an in-date EPC to be able to serve notice to tenants, so it is wise to have one in place in case this becomes necessary.

Until they were dropped last year, most landlords had accepted that the more stringent energy efficiency rules were incoming, with some having already spent sizeable sums in preparation for the anticipated legislation. A study by Shawbrook Bank at the time suggested 80% of landlords were already prepared for the ‘C’ rating requirement. 

Nevertheless, that same statistic means around 550,000 landlords weren’t prepared! 

Further worrying research that has been published estimates it would take until 2042 for all rental homes to become compliant with the new rules; some 12 years after the 2030 target. This is for several reasons; most notably the extensive works many properties would require to actually achieve a C rating, alongside a lack of qualified tradespeople able to undertake the works (whilst also supposedly building 370,000 new homes a year…).                                                                                                              Critics of EPCs argue they are inaccurate and largely based on (flawed) assumptions anyway. They also appear non-sensical when certain upgrades (most notably energy efficient electric heaters being installed in place of old storage heaters) actually lower the perceived energy rating! Some ‘improvement’ works are also known to negatively affect the structure of a property and lead to damp; such as the fad of ‘insulating spray foam’ being used in lofts a few years ago, which is now being shown in the media as leading to condensation issues such that the properties affected have become unmortgageable and unsaleable without costly removal.

Most are also of the opinion that once the C rating is commonplace it will only be a matter of time before the goal posts are moved to a required ‘B’ and then an ‘A’ rating. Meanwhile, why is it only rented properties that need to meet the criteria, as opposed to all properties (both residential and commercial).

On the flip side, many landlords are responsible and environmentally conscious enough to realise there are benefits of improving energy efficiency without being forced to do so. Rising energy prices in the past couple of years has focused the minds of many tenants, such that they are now actually taking note of the EPC rating prior to choosing a property. Previously, so few people paid attention to the EPC that there was little value in improving the energy efficiency of the home, nor to then instruct and pay for another assessment to prove it. 

Similarly, the value of a property should benefit from being more energy efficient; with 74% of those looking to purchase within the next two years advising that a home with an EPC rating of an A or B is more attractive than less energy efficient homes. There are also a growing number of ‘green’ mortgage deals, with incentives or improved terms reserved for those with the most energy efficient homes.

I suspect the reintroduction of the enforced energy efficiency proposals will now mean a swathe of properties being sold rather than let. This will be especially true of older properties and leasehold properties, whereby the required improvements are simply impossible to implement, or are far too costly to justify at a time when landlords’ margins have already been squeezed. I guess those properties will be sold to an owner-occupier who doesn’t need to meet the minimum requirements, whilst those in the rental market will face a further supply shortage and, inevitably, higher rents.








Monday 5 August 2024

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £300,000, 5.0% yield


Summary
3 bed house in Chichester
Listed for sale on 12/04/24 @ £335,000
Now = £300,000
Rent = £1,250pcm
Yield = 5.0%
Last sold for £260,000 in 2020 (+15% in 4 years)

The property is on the market with Sims Williams and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/146760044










Thursday 1 August 2024

Is it time to turn the heating on?



With temperatures soaring outside you may think this article has been posted at the wrong time of year. Bear with me though, as it could pay to turn your heating on now despite the logical preference for some air conditioning!

You see, much like a car needs to be run every so often, so should a boiler. If it’s not there are several things that might happen, all of which could lead to a breakdown when you actually need it the most. 

The obvious one would be if the boiler or heating system has developed a fault, for which you’ll only find out when you turn it on (presumably because you are cold). Whereas checking it periodically should mean when the time comes you’ll remain nice and toasty (although perhaps not quite as much as we are now!).

‘Combi’ boilers, which provide both the heating and hot water, may still be ‘on’ during the warm weather (to supply the hot water) but they aren’t fool proof either. They contain a valve that shifts the demand between the heating and hot water, depending on what the control unit is requesting. These valves can get stuck if they aren’t moved for a long period of time (say, the six months of the year you don’t need the heating so have it constantly in hot water mode). Selecting the heating function instead of the hot water every so often can therefore aid the smooth motion of the valve.

Be aware that heating engineers are more in demand come the colder weather too. You can guarantee when the cold weather comes and everyone starts turning their heating on (many for the first time in months), they will be rushed off their feet with repairs. If you’re amongst this crowd you may have to wait (or pay more), whereas keeping on top of it could help identify and rectify any issues before the rush. It’s for this reason that it can also pay to service or replace your boiler during this quieter time, if that’s on the cards for you. 

So, whilst it may seem counter intuitive, turning up the thermostat (briefly) once a month or so can help keep your boiler running, ensuring it is ready for when you need it whilst avoiding niggly breakdowns caused by lack of use. 








Monday 22 July 2024

BUY-TO-LET DEAL OF THE WEEK: 4* bed house in Chichester, £325,000, 6.6%* yield


Summary
4* bed house in Chichester
Listed for sale on 10/07/24 @ £325,000
Rent = £1,800pcm*
Yield = 6.6%*
Last sold for £167,500 in 2009 (+94% in 15 years)

* built as a 3 bed house, this property is currently let as a HMO

The property is on the market with Leaders and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/144444053