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.
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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Chichester Investment Property Management Specialist CRJ Letting Agents Website
Chichester Property Market LinkedIn Page for Clive Janes
CRJ Letting Agents Chichester Facebook Page
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Chichester Investment Property Management Specialist CRJ Letting Agents Website
c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP
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