Monday, 3 August 2020

BUY-TO-LET DEAL OF THE WEEK: 4 bed house in Chichester, £450,000, 4.3% yield


Summary:
4 bed house in Chichester
Listed for sale on 29/05/20 @ £485,000
Now = £450,000
Rent = £1,600pcm
Yield = 4.3%

To coincide with writing about the stamp duty relief up to £500,000 that now exists, I thought I'd pick a buy-to-let property that maximises that saving. I found a new-build property on Graylingwell Park at £490,000 (close enough right?) but then noticed an identical house (albeit a couple of years old now) up for sale for £450,000. A £40,000 saving for having had someone else work through the snagging - sounds like a deal to me!

At over 1,600 square feet I believe it is one of the largest houses on Graylingwell Park. It also means on a '£ per square foot basis' it compares well to other properties on the estate and in Chichester. Having been reduced to £450,000 from £485,000 when first listed in May, it means it now costs around £280 per square foot. Three-bedroom houses on Lloyd Road in Graylingwell Park are around 1,000 square feet and £330,000, equating to £330 per square foot, whilst the average value in Chichester is around £340 per square foot.

You often find good value like this on townhouses such as this property i.e. ones set over three floors. The house provides four generous double bedrooms, a large living space and a  kitchen/diner. Bear in mind as well that published square footage doesn't include the integral garage and large balcony! Even the garden (which is South-facing) is a reasonable size compared to others on the estate.

The above goes to show that what may seem relatively expensive at first glance compared to nearby properties actually isn't when you delve a little deeper. Unfortunately, it can take the market a little while to work this out, which will have a similar impact on the rental value. £1,600pcm seems relatively conservative for such a large property in great condition and in a nice part of Chichester. But that is reflective of prospective tenants just seeing it as a '4 bed end-of-terrace'. Even so, a 4.3% rental return based on that figure isn't bad in the wider context of buying a property significantly below it's new-build equivalent, which should do well from a capital growth standpoint as people catch on to its positives in the future.

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






Chichester rental valuation

Thursday, 30 July 2020

Chichester home buyers are set to save £12 million

You’ll no doubt have read about the stamp duty relief offered up by the Chancellor in the recent ‘mini-budget’. In short, there is no stamp duty to pay on property purchases up to £500,000, which equates to a saving of upto £15,000.

It should be noted, however, that the 3% premium for ‘additional properties’ i.e. second homes and rental properties, still applies. Nevertheless, the withdrawal of the standard rate still means a decent saving for anyone who is buying a property, until this offer comes to an end on 31st March 2021 (as it stands).

Some are questioning whether this tax relief was actually necessary though. Since lockdown was lifted the sales market had been pretty strong, with online chatter of properties selling both quickly and at a good price. Nevertheless, the rules are the rules, so let’s take a look at what it might mean for those looking to buy a property here in Chichester.

With the average sale price in Chichester currently standing at £376,285, the average buyer is set to save £8,814. That in itself would be half-way to the 5% minimum deposit buyers typically require.



When you consider the number of properties sold, along with the average price paid in Chichester between July 2019 - March 2020, the taxman would have collected £12 million from those buyers. So, if the same number of properties are sold at the same price (both of these figures are likely to be higher due to the new policy though) it could mean a substantial sum saved for those looking to buy in the next eight months.

Bear in mind though that first-time buyers already benefitted from stamp duty relief up to £300,000; which meant they had a £5,000 saving at this price compared to non-first-time buyers. The playing field has now been levelled, which has led to claims that it will now be tougher for first-time buyers to compete. That could be especially true as mortgage lenders seemingly tighten their criteria for those with smaller deposits on hand (typically first-time buyers).

Talking of mortgages and lenders tightening criteria; people are now realising that taking various payment holidays during the Covid-19 pandemic has resulted in them being rejected for new mortgage applications. As promised, the payment holidays haven’t actually affected their credit file. Crucially though, lenders are asking the question as to whether the applicant took a payment holiday and, if they did, are being rejected as a higher-risk accordingly.

I suspect there will be a mad rush in the Spring of 2021, just like there was before the additional properties’ premium was introduced in April 2016. In order to save the extra 3% stamp duty, a decade-high number of properties were sold in March 2016 (291) compared to a decade-low the following month (96). The number of properties being sold had been trending up nicely up until that point, but has been trending down ever since. I imagine a similar story might evolve with the latest cuts, as people won’t want to buy in April, May and June of next year, having just ‘missed out’ on the stamp duty savings.


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Chichester rental valuation

Monday, 27 July 2020

BUY-TO-LET DEAL OF THE WEEK: 4 bed house in Chichester, £325,000, 4.8% yield




Summary:

4 bed house in Chichester
Listed for sale on 20/07/20 @ £325,000
Rent = £1,300pcm
Yield = 4.8%

This four-bedroom house near St Richard's Hospital in Chichester comes with bold marketing from the agent; calling it a 'bargain'. At £325,000 I'm not sure it's exactly that, but it's certainly decent value compared to other nearby properties.

That's especially true when you consider it is a good-sized house (spread over three floors) on a good-sized plot (considering it is relatively new, having been built circa 2007). It has a garage and driveway (which could take two cars if you, perhaps controversially, were to remove the tree out front) and well-proportioned rooms. 

It is in good condition, with neutral decor throughout and modern bathrooms and kitchen, meaning there would be virtually nothing to do before marketing the property for tenants. Whilst many of these houses have been let to students (which has had an effect on the street as a whole), it would suit a family. It should achieve £1,300pcm due its size, location and condition, which would be a useful 4.8% rental return from this relatively modern freehold property. 

The property is on the market with Zone and full details can be found on Rightmove via the following link: 
https://www.rightmove.co.uk/property-for-sale/property-66547257.html







Chichester rental valuation

Thursday, 23 July 2020

Which is Chichester’s cheapest street?


Having looked at where the most expensive streets in and around Chichester were last week, I was asked by one reader which the cheapest street in Chichester is. Normally I don’t look at this as it can come across as a little negative towards the occupants of that street (not that that’s necessarily the case) but I shall, as they say, “give them what they want”.

There are also a few reasons why profiling the cheapest streets doesn’t necessarily work. The most obvious is where a street is predominantly made up of flats rather than houses, which will naturally be ‘cheaper’. For instance, St. Cyriacs in the heart of Chichester’s city centre makes the top five on account of it being made up nearly exclusively of one-bedroom flats (at an average value of £170,000, which isn’t exactly ‘cheap’!). Mobile homes also create the same affect, particularly when you expand the search to include Selsey and the Witterings, rather than focusing solely on the PO19 postcode area.

Another reason the data can be skewed (and I have to use a little local knowledge to filter through it) is a more recent phenomenon - properties sold under shared ownership. You see, according to Zoopla the cheapest street in Chichester is Silverlock Close, which is a newer part of the Swanfield estate. The £119,000 average value in this row of two and three bedroom houses seem like a steal; until you realise they were sold as 50% shared ownership and thus their true value is actually double this figure.

So, what’s really the cheapest street in Chichester when you filter all this out? Well, in the PO19 postcode area that would be Lennox Road, with an average value of £152,000. The 81 properties in Lennox Road are all flats, most of which are rented out socially or from the council.

In second place is Douglas Martin Road; another street located on the doorstep of St. Richard’s Hospital, which again is predominantly made up of flats. Each of the 26 homes here have an average value of £156,000. And in third place we move across to Parklands, where Bishop Luffa Close’s homes have an average value of £161,000. Considering it is positioned right next to some of the best regarded schools in the area, this makes one of its 65 properties attractive when it comes to their school catchment area.

When you compare this to last week’s article, when I was writing about a home worth in excess of £5m, it just goes to show what a vast difference in wealth there is in Chichester, despite it being a relatively small city.

If you’d like to receive more facts and stats about Chichester’s property market straight to your inbox, please visit www.bit.ly/chipropertynews to subscribe to my free weekly Chichester Property News e-newsletter. 

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Chichester rental valuation

Monday, 20 July 2020

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £330,000, 4.4% yield

3 bed house, Lloyd Road, Chichester, West Sussex
kitchenlounge

Summary:
3 bed house in Chichester
Listed for sale on 04/12/19 @ £425,000
Now = £330,000
Rent = £1,200pcm
Yield = 4.4%
Last sold for £295,495 in 2010 (+12% in 10 years)


I saw this three-bedroom house on the first phase of Graylingwell Park come on at the end of last year. It was priced at £425,000, which I assumed was a typo and it was meant to have been listed for £325,000 (which is what similar properties on the street were selling for). Alas, a few days went past and the priced stayed the same and I thought "huh?".

I guess the market felt the same way, what with it being reduced to £400,000 within a few weeks, before dropping a chunky £50,000 to £350,000 in February and now this month it has been reduced to £330,000. That's a £95,000 drop (22%) compared to when it was first marketed. Now, I'll make a side-point here - what's going on? Either the agent allowed the vendor to market the property at a wildly unrealistic price, or the agent provided the wildly unrealistic price and the vendor has allowed them to reduce it by nearly a quarter since...and stuck with them?!? Quite bewildering.

Putting that to one side, let's focus back on the house itself. Lloyd Road is something of a pet project for me...I lived on the street for six years, own a house on it and manage several others there. I'm well-versed in the intricacies of the varying plot sizes, layouts, parking allocations and which properties benefit from solar panels (and when they were commissioned, which greatly affects their feed-in-tariff rates).

The houses are well presented and offer a good amount of space and a good quality of fixtures and fittings. They therefore typically appeal to young professionals who are willing to pay a slight premium for what do feel like premium homes. As such, I'd expect to achieve £1,200pcm for the property, although the particularly small garden might put some people off. On the plus side though, whilst parking is an issue in the street for many, this house has the benefit of two allocated parking spaces.

That rental figure would mean a 4.4% rental return on the current asking price. That's a fair, if unspectacular return, for freehold properties in Chichester. It also raises the point that the solar panels on these houses never seem to add to the sale value, but if you buy one with them they can put £100+ per month in your pocket from the feed-in-tariff. The current owner bought the property in 2010 for £295,495, meaning they've only seen its value increase by 12% in a decade, compared to the average Chichester home increasing by over 40%! 

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-66811512.html



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Chichester rental valuation