Chichester's rental demand is rocketing

I had an interesting chat with a gentleman this week, having seen my article about the stellar returns from property over the past 18 years, wondering if he’d ‘missed the boat’ on buy-to-let. He was also concerned, what with all the newspaper headlines of a booming housing market, that there wouldn’t be any demand from tenants.

Whilst I don’t have a crystal ball to foresee the future, what I can say is that there is significant demand from a growing number of tenants wanting to rent good quality property in and around Chichester.

The number of UK households now renting grew by 42% between 2008 and 2013 and is expected to grow a further 17% by 2016, representing a fifth of all homes, according to a recent Savills report. Other research suggests this figure will continue to expand so rapidly that by 2032 over half of us will be renting, bringing us more in-line with continental Europe’s housing market.

Escalating house prices, constrained mortgage availability and the need for significant deposits (plus stamp duty, legal fees and even ‘buyers fees’ from some agents now) have become big hurdles for would-be home buyers.

One trick to test local rental demand is to examine an area’s affordability, by comparing property prices to the average salary. If we look at Chichester’s average property value (£347,372) and the average local salary (£27,369) we get a ratio of 12.7 to 1. This makes the area expensive compared to both the national average (9.4 to 1) and the South-East region (10.8 to 1).

The biggest struggle wannabe homeowners’ face is trying to raise the £17,368 for the average 5% deposit in Chichester (and that’s IF Help to Buy continues). Tenants’ inability to raise that sort of money will continue to create strong demand for rental property; whilst future interest rate rises will further impact their ability to access the required mortgage finance to buy.

As government resources become stretched and housing waiting lists continue to grow, there is definitely an opportunity for investors in buy-to-let to cater for this growing need for rental property.

Furthermore, with three quarters of all landlords viewing property as their pension, the recent budget changes to pensions and annuities could see buy-to-let become an increasingly attractive way for retirees to diversify their investments. This should be further buoyed by the mortgage companies’ recent relaxation of their previously restrictive maximum age limits to borrowers. Access to an appropriate buy-to-let mortgage could help make your pension work even harder for you.

For advice about your next buy-to-let or if you want assistance letting your property, please get in touch.

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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.

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