Monday, 3 October 2022

BUY-TO-LET DEAL OF THE WEEK: 2 bed flat in Chichester, £235,000, 5.1% yield


Summary
2 bed flat in Chichester
Listed for sale on 27/09/22 @ £235,000
Rent = £1,000pcm
Yield = 5.1%

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/127456253






Thursday, 29 September 2022

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.


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Monday, 19 September 2022

BUY-TO-LET DEAL OF THE WEEK: 2 bed flat in Chichester, £200,000, 5.7% yield

Summary
2 bed flat in Chichester
Listed for sale on 07/09/22 @ £200,000
Rent = £950pcm
Yield = 5.7%

The property is on the market with King & Chasemore and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/126800291







Thursday, 15 September 2022

Property prices increased 14,202% during the Queen’s reign


Queen Elizabeth II’s glorious seventy-year reign has sadly come to an end. When she ascended to the throne in 1952 the average UK home cost just £1,891. Upon her death, the average property was worth £270,452 - an increase of 14,202% (meaning you could have bought 142 homes in 1952 for the same money as you can now)!

Back then the UK was mostly an island of renters though, with only around four million owning their own home, compared to 15 million homeowners today. Buyers in 1952 were typically paying four times the average salary for a home, compared to eight times today’s average salary now.

It’s not just property that has increased in price though; with a pint of milk costing 4p and a pint of beer costing 9p when the Princess became the Queen, times certainly have changed across the land!

Of course, that meteoric house price growth has not been linear, as the below chart shows:


Meanwhile, King Charles III will now move into the most expensive residential home in the world (Buckingham Palace, said to be worth over £1bn). If he were to oversee the same house price growth during his reign, the average UK home would be worth a fanciful £38.4m by the time his heir takes over…

It seems unlikely we’ll ever see such extravagant house price growth again (unless Sterling collapses into hyperinflation). It is also unlikely a future monarch will reach the great milestone of having a Platinum Jubilee, without a tragedy befalling the Royal family. Indeed, it could be several generations until we sing God save the Queen as part of our National Anthem, such is the lineage of the crown. 

I am sure many of you will join me in the sentiment of reflecting upon and thanking the Queen for her service, whilst wishing the best to King Charles III in helping towards a prosperous future for the UK.


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Monday, 5 September 2022

BUY-TO-LET DEAL OF THE WEEK: 2 bed flat in Chichester, £275,000, 4.8% yield



Summary
2 bed flat in Chichester
Listed for sale on 27/06/22 @ £285,000
Now = £275,000
Rent = £1,100pcm
Yield = 4.8%

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/124373390







Thursday, 1 September 2022

Should you buy a developer’s show home?


With all the new housing developments springing up around Chichester recently, and with many more planned in the future, an interesting investment opportunity was raised by one of my landlords a while ago - should he buy the developer’s show home and rent it back to them whilst the housing development is being built?

This is not a new practice and has been a popular investment with some for many years - particularly when house prices were booming and it was a reasonably safe bet that come the end of the development the show home would be worth far in excess of what the investor had originally paid.

It can be difficult to get a mortgage on a property that you buy and intend to rent back to the builder (particularly when it is a corporate lease that might run for several years). This therefore means you cannot leverage your funds and thus it tends to appeal to more risk averse ‘cash-rich’ investors who aren’t seeking mortgages to turbo-charge their returns.

The concept of being able to lease back the property from day one on a long-term contract at a reasonably generous fixed return, is quite appealing. Particularly when you factor in that you won’t need to market for, or manage, live-in tenants and the builder will maintain the property.

It’s not without its downsides though.

Besides checking the developer’s credit worthiness to pay the rent, you need to be confident of what the property is actually worth. This can be difficult when it is the first home to be built on what will be a building site for often many years. New-build properties are normally sold at a premium, so it can be hard to find comparables that justify the price, as existing homes nearby are likely to be cheaper in comparison.

There seems to be a flurry of developers right now who are overpricing such offerings and simply paying the rental return from the overinflated price. This is predominantly happening in the North and North-East of England, where developers are largely marketing the properties to ‘Southerners’ who aren’t perhaps familiar with the local housing market and their accompanying lower house prices.

Unfortunately, at the end of the term the investor is likely to find the achievable market rent is far below what they had been used to and the property hasn’t necessarily increased (or retained) the value they originally paid.

As ever it is buyer beware in regards to how good the ‘deal’ actually is. It is also ‘horses for courses’ in regards to what you are trying to achieve as to whether buying a developer’s show home is right for you.

As it happens, for this particular landlord it seemed to make sense. It was a national housebuilder and the property price and rental return seemed reasonable. The landlord was a cash investor and for the next few years he needn’t worry about tenants or property maintenance and he won’t have to pay a letting agent their management fees! ……oh.


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Monday, 22 August 2022

BUY-TO-LET DEAL OF THE WEEK:   3 bed house in Chichester, £315,000, 4.8% yield




Summary
3 bed house in Chichester
Listed for sale on 01/04/22 @ £340,000
Now = £315,000
Rent = £1,250pcm
Yield = 4.8%
Last sold for £206,000 in 2006 (+53% in 16 years)

The property is on the market with Hamptons and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/121854122