Chichester Property News

Thursday, 2 April 2020

Should you renew your tenancy agreement?

Most tenancy agreements last for a fixed period of six or twelve months. This means the tenants are obligated to pay rent and remain in the property for that length of time, whilst the landlord can’t increase the rent or ask the tenants to leave (without applying to a court). Many take it as read that as the end date of the contract approaches they’ll need to renew it, but that isn’t actually the case.

You see, most tenancy agreements make provisions for the contract to continue on a contractual periodic basis. And even if they don’t, by law it will continue on a statutory periodic tenancy. In layman’s terms, these are both monthly rolling contracts, whereby the tenant is required to give one month’s notice to vacate the property, whilst the landlord may give two months’ notice to end the tenancy and regain possession of the property (this has been extended to three months during the Coronavirus pandemic).

Whilst some tenants like the certainty of a fixed contract, many actually prefer the flexibility of not being ‘locked in’ to a long-term rental contract in case their circumstances change. Consider the uncertainty around job security currently and tenants who can give a month’s notice to leave their current home certainly have more opportunities available than homeowners or tenants in a fixed contract.

As a landlord and letting agent I have always operated like this i.e. not re-signing contracts, finding it to be the best and easiest way to continue a tenancy, both administratively and in providing flexibility to both the tenants and landlord.

For me and my landlords, there’s also the added security that should the tenants conduct change or they start to fail in their obligations e.g. they stop paying the rent, we can regain possession with the set notice, rather than having to wait until the end of the new fixed term (or having to take them to court, which is time-consuming, expensive and uncertain).

And whilst a landlord can, if they wish, increase the rent with two months’ notice during a periodic tenancy, you may have read in my previous articles that I prefer to promote long-term tenancies by avoiding this where possible; only increasing the rent when it is significantly out of kilter from the ‘going rate’.

So why then do most letting agents insist on renewals? Well, whilst some may argue there’s more stability for their landlords that way, I think the only stability many of them are interested in is receiving their fees i.e. locking in a prolonged management fee and charging a renewal fee to both the landlord and tenant. Funnily enough, since letting agents were banned from charging fees to tenants, many have decided it might be best to just allow tenancies to continue on a rolling basis rather than renewing them like they’ve always done…

Are you a landlord or a tenant and, if so, do you prefer to renew contracts each year or let them amicably turn into a periodic tenancy? Please get in touch and let me know.

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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:

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Wednesday, 1 April 2020

Chichester Property News - Issue 49 - April 2020

Featuring the articles:

"Will property follow the stock market downwards?",
"Is now a good time to sell your Chichester Property?",
"Should you buy a new or used property?'",
"Community Focus: Enable's 'Queen of Hearts' Ball for Love Your Hospital "

and "Buy-to-let deal of the month: 4 bed house in Tangmere, £325,000,

4.8% yield"

➕ Plus, the latest average property values, rents and yields in Chichester!

Community Focus: Enable's 'Queen of Heart's Ball' for Love Your Hospital

“Love Your Hospital – Love a good party!”

The girls at Enable are wanting to raise as much money as possible to support Love Your Hospital, the charity set up to provide much needed funds for our West Sussex Hospitals. In order to raise money they are putting on a Black Tie Ball entitled “The Queen of Hearts” at the Hilton Avisford Hotel near Arundel on Saturday 16th May. The ball will feature bubbles on arrival, the fantastic local band ‘The Dumb Waiters’, a three-course meal with wine, dancing, and a DJ. There will also be an exciting auction with fabulous prizes to raise further money for Love Your Hospital. The cost is £60 per head, with a reduced rate of £55 per head for groups of 6-9 and £50 per head for a group of 10 or more.

The evening should prove to be a great opportunity to have some fun, whilst raising money for an exceptionally good cause.

Register your interest by emailing info@enableltd.com

About Enable
Enable is a local company started by Emily Allchurch, a practicing solicitor. The easiest way to describe the company is, as one client put it, “like having a really competent family member on tap”. They are able to arrange care, pay bills, look after all of your admin, sort through your post, even do your weekly shopping, to enable you to worry less and enjoy life more.

For more information on the services they offer see their website www.enableltd.com or telephone them on 01243680680 - they are always happy to offer a no obligation home visit to see how they can help.

About Love Your Hospital
Every year Love Your Hospital raise and invest more than £1m to help ensure patients and visitors at St. Richard’s, Worthing and Southlands Hospitals have the best possible experience.

This money is invested in several areas
- the latest medical equipment to speed up test results and diagnosis
- to improve the patient experience, such as installing information screens, communal gardens and refurbishing clinical areas
- by providing funding for education and training for our nurses and doctors to provide the best possible care to patients.

Visit www.loveyourhospital.org to see how you can help them provide the vital funding required for our local hospitals.

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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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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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}}