BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Chichester, £250,000, 4.7% yield

Summary:
2 bed house in Chichester
Listed for sale on 03/02/21 @ £280,000
Now = £250,000
Rent = £975pcm
Yield = 4.7%
Last sold for £225,000 in 2017 (+11% in 4 years)

There are very few properties currently on the market in and around Chichester that I would deem a 'bargain' or worthy of investing in currently. The market is hot, prices are up and are being further inflated by estate agents...and then sold! I have a few investors who have contacted me recently and we have had exactly this discussion - if you want to buy now, fine (it's normally best to "buy property and wait" as opposed to "wait to buy property"), but, personally, I would wait for the occasional gem that comes to the market that offers great value.

I believe this two-bedroom house, however, is one of those rare gems!

Keen Chichester Property News readers will note I highlighted it as a 'buy-to-let deal of the week' when it was first listed in February at £280,000. It was subsequently reduced to £270,000 and just this week has been reduced to £250,000. My original write-up (see here) said it was a good house but that it wasn't a bargain...but now I think it's very close to being so. It's the cheapest two-bedroom house in Chichester (a good start) and is now just 11% more than the current owner paid four years. It's projected rental value of £975pcm will provide a decent 4.7% rental yield based on the full asking price, which is decent for a freehold property in the area. As my recent market statistics show, two-bed houses are in short supply and rents are increasing as a result.

Per my last write-up of the house, it is in a popular area that I believe will continue to attract buyers and tenants alike for it's relatively quiet setting, close to the South side of Chichester, which will (one day) be improved by the Southern gateway development. It has two double bedrooms, which makes it suitable for a wider variety of tenants compared to those with one double and one single bedroom. It seems to be in nice condition throughout, with double glazing and gas central heating, so it should be ready to rent straight away rather than requiring extensive refurbishment works first.

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/properties/102439622

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What’s for sale in Chichester?

With the stamp duty relief extended, yet more fuel has been thrown onto what was already a busy and competitive housing market. With that in mind, I thought I’d take a look at what’s out there at the moment in Chichester for potential buyers.

There are 802 property listings currently online in Chichester. 418 are still available to buy, whilst the other 384 have been sold (subject to completion). However, when you start to browse through these properties, you notice there are a lot of mobile homes (that can’t be used as a permanent residence), retirement flats (that are only good for people of a certain age), shared-ownership homes (that aren’t available to everyone) and properties advertised for ‘cash buyers only’ (which won’t apply to most). When you take all of these out of the mix, you’re left with just 276 properties to choose from!

Those looking to buy a three-bedroom home have the most choice, with 76 currently for sale (mostly terraced houses). Meanwhile those at the lower-end of the market looking for a one-bedroom property have the least to choose from, with just 25 on offer (all but one of which are flats).

Of course, what you can buy will largely depend on your budget. The cheapest of the 276 mortgageable properties that are suitable for non-retirees, can be called your own and lived in all year round, is a one-bedroom flat in Shopwhyke Road, priced at £135,000. 

At the other end of the scale, the most expensive property for sale in Chichester today is a five-bedroom townhouse in West Pallant, priced at £1.5million. Located in the heart of the city, the Grade II listed property boasts three floors of beautifully-presented accommodation, as well as a south-facing rear courtyard.

Assuming your budget is somewhere in the middle of those two extremes, it might be useful to know that the average property marketed for sale in Chichester is priced at £379,950, which is just £50 shy of the average figure twelve months ago i.e. asking prices are very similar to a year ago.

Breaking the average 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 each property type has either increased or remained the same (in the case of two-bedroom flats) compared to a year ago. This has occurred at the same time as the number of properties available to buy has (marginally) decreased and yet the number of properties sold has nearly doubled compared to a year ago.

It seems therefore that the low supply of property alongside an increase in demand in Chichester is a key reason why property prices remain so resilient despite the pandemic. This limits prospective buyers’ choices, which makes finding that dream home just a little bit trickier.

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BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Chichester, £259,950, 4.5% yield

Summary:
2 bed house in Chichester
Listed for sale on 19/03/21 @ £270,000
Now = £259,950
Rent = £975pcm
Yield = 4.5%
Last sold for £180,000 in July 2009 (+44% in 12 years)

Having been marketed for just a few weeks, this two-bedroom house on the East-side of Chichester has just been reduced in price by a little over £10,000. It's new asking price is £259,950, which is just £950 more than the cheapest freehold house in the whole of Chichester - but this one comes with a garage, which I think makes it the better buy overall of the two.

Located on the Arundel Park estate, these houses are always popular with young professionals, young families and older couples too. In fact their decent size makes them flexible for a wide range of tenants, which helps underpin its desirability and rental value. It's presented in reasonable order, but it could perhaps do with a few cosmetic tweaks. Nevertheless it would still rent (everything in Chichester is flying off the shelf at the moment!) and would do so for around £975pcm. That would provide a decent 4.5% rental return based on paying the full asking price.

The current owner bought the property in 2009 for £180,000, so it has risen a decent 44% in the 12 years they have owned it. Then again, its history highlights the huge increase in property prices in the run up to this, having sold for just £56,500 in 1997 i.e. a meteoric rise of 219% in the 12 years previous (between 1997-2009)!

The property is on the market with Henry Adams and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/104320433

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How much are Chichester’s landlords spending on property maintenance?

As another tax year recently came to a close, annual account statements have been sent out to all of my landlords who use my fully managed service. It’s something I include (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made e.g. my management fees and any maintenance costs. It’s similar to what they receive each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important at a time when the full deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,100pcm, which is 11% higher than the current average rent in Chichester of £995pcm. Plus, they have received all of the rent due to them. This time last year, I seriously questioned whether I’d be able to make that statement again, as the impact of Covid-19 began to bite. With some swift management and guidance for those tenants who needed it though, I’m quite proud to have maintained that great track record.

What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 9.1% for an award-winning full management service. One landlord is paying just 5.7% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.

What is also interesting to see is that my landlords are spending £558 a year on average on property maintenance, which is just 4.5% of the total rent they receive. Considering that figure includes a large proportion of properties that needed to comply with the new electrical regulate ons, it is remarkably low.

Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so it seems my landlords are doing far better than this. I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, but also because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer good value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission on such works. I’ll also typically run through a few simple steps with tenants when issues do occur, in case we can resolve them without the need for paid help.

If you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Fishbourne, £259,700, 4.6% yield

Summary:
2 bed house in Fishbourne
Listed for sale on 21/12/20 @ £265,000
Now = £259,700
Rent = £1,000pcm
Yield = 4.6%

When is a house not a house? When it's a coach house! OK, technically it is a house, and a freehold one at that, which is good. But when you think 'house' you think of living areas downstairs and sleeping areas upstairs, along with a garden out back. In my opinion, a coach house is really just a flat above a garage...

This coach house in Fishbourne is nicely presented though, being modern throughout. The kitchen comes with integrated appliances and the bathroom has a shower over the bath. There's also two double bedrooms, gas central heating and double glazing....just no garden. There is a large garage though as mentioned, with parking in front.

As a result, the (rather strange) £259,700 asking price seems fair, although I expect a reduced offer should be accepted based on it clearly having been on the market a while. The reason that is abundantly clear is because of the photos, which features a Christmas tree in the lounge (the agent should have gone back and taken fresh photos once the decorations were packed away). The back data shows the property was first listed just before Christmas last year at £265,000, meaning the recent price drop is not a particularly significant one after four months of not selling, so it may still need a little trimming off to get sold.

I'd expect to achieve £1,000pcm for such a well-presented two bedroom property, even if it were effectively benchmarked against other flats, with the bonus of a garage. That would provide a 4.6% rental return, which is reasonable for a freehold property of this age in Fishbourne.

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/101286398

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Why landlords could be facing a £30,000 fine

Electrical safety within rental properties had been largely overlooked by specific legislation, instead relying on a landlord’s general duty of care towards tenants to ensure they were safe. Now though, legislation requires the electrics in all rental properties in England to be checked and certified by a qualified and competent person i.e. a registered electrician.

For landlords this means having an EICR (Electrical Installation Condition Report) in place for their property, which remains valid for five years (unless the electrician advises it needs checking again sooner). 

 

Much like gas safety certificates (which are required annually), the certificate must now be provided to tenants before they occupy a property and be kept on file by the landlord. Should the local authority request a copy of the EICR it must be provided to them within seven days, whilst any renewal of the certificate should be issued to the current tenants within 28 days.

 

I’m pleased to say that all the properties managed by CRJ Lettings got these checks and certificates in place before the (1st April 2021) deadline. Despite the ongoing pandemic and lockdown restrictions in place for much of the year prior to the deadline, there has been no extension or grace-period granted by the government. If you’re reading this and have a rental property without a valid EICR, you now risk a fine of £30,000!

 

I was pleasantly surprised how smoothly the majority of our electrical checks went. Such are the increasingly stringent safety requirements for electrics within a home, I had expected every property (bar a brand new one) to receive a certificate raising some ‘observations’. 

 

Whilst technically that’s true (as many of the certificates still contain C3 ‘advisory’ observations), the majority of properties escaped having any of the more serious ‘action-required’ C1 & C2 faults that couldn’t simply be resolved by the electrician at the point of testing. 

 

In fact, one in five properties required no remedial works whatsoever. Three in five fell within the camp of the electrician dealing with matters at the time of testing, with the cost to remedy averaging around £70 per property. The final one in five properties did require a second appointment for more intensive works, the most expensive of which resulted in a £400 bill. 

 

Not unsurprisingly, older properties raised more issues compared to newer homes. Having said that, there were a couple of modern houses that had clearly had some ‘DIY’ electrical work carried out, which fell short of the necessary safety standards. 

 

So, whilst this new legislation is yet another cost landlords’ need to endure before they can rent their property, remember that the inspection and any remedial works will ensure your property is safe! And if that doesn’t convince you to abide by the new requirements, remember there’s a government in need of money who have forewarned landlords of the £30,000 fine for non-compliance.

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BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Fishbourne, £290,000, 4.8% yield

Summary:
3 bed house in Fishbourne
Listed for sale on 17/03/21 @ £290,000
Rent = £1,150pcm
Yield = 4.8%
Last sold for £227,000 in 2014 (+28% in 7 years)

This house in Fishbourne is presented in nice condition and benefits from three double bedrooms, off-road parking and a private garden, making it an excellent proposition as a rental property.

It will be popular with a variety of tenants - be they sharers who won't have to argue over having a box room or more traditional tenant types for the area, such as young professionals or young families. Fishbourne is a quiet (but growing) village with a well-regarded primary school, pubs, village centre and good transport links, with easy access to the nearby A27 or Fishbourne's own train station.

Having just been listed at £290,000, a three-bedroom house in the area for that price is a good proposition. It last sold for £227,000 in 2014, so has seen decent growth of 28% in the past seven years. I'd expect it to rent for £1,150pcm given the severe lack of supply at the moment (there are only 4 three-bedroom houses in Chichester currently available to rent). That would equate to a decent 4.8% rental yield on what should be a relatively hassle-free and simple to let property.

The property is on the market with Bell & Blake and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/104235404

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