I’ve been helping a couple of landlords expand their buy-to-let portfolios in Chichester recently. They have a preference towards newer properties so the ‘eco-development’ at Graylingwell Park got mentioned.
Due to be completed in 2017, the 750 homes will form the UK’s largest carbon neutral development. Opinions on the styling and ‘feel’ of the development vary, so I thought I’d look at some of the facts as to whether it could be a good place to invest in a buy-to-let.
The first consideration when looking at the site is whether to buy a brand-new home or one of the earlier ‘second-hand’ properties (built around 4 years ago).
There are a variety of new properties being built; with 1 bed apartments starting from £200,000, 2 bed apartments from £275,000 and 3 bed houses from £400,000.
With rents in the order of £750pcm for the 1 bed apartment, £950pcm for a 2 bed apartment and around £1,300pcm for one of the (large) 3 bed homes, these new-build properties should provide a gross yield of between 3.9% and 4.5%.
Is there better value to be had from the pre-existing homes from phase one of the development (Lloyd Road)? From a price perspective there is, with several 3 bed houses for sale ranging in price from £309,950 to £350,000.
Depending on size, these houses would rent for around £1,100 - £1,200 (they are smaller than the new ones), generating a reasonable yield of 4.1% - 4.3% from a ready-to-rent freehold property.
As I crunched the figures, what occurred to me was the impact of having a property with solar panels versus without. Only available with some of the phase one houses, they come with a generous feed-in-tariff estimated to bring an additional £2,000 per year income!
Based on a £320,000 house with a rent of £1,150pcm, the yield would increase from 4.3% to 4.9% if the house has solar panels (the feed-in-tariff goes to the landlord whilst the tenants benefit from cheaper electricity bills).
When you factor in the capital growth Graylingwell Park has seen, the investment case becomes even more positive. Properties in Chichester have increased 13% in the past four years, yet in Lloyd Road the 3 bed houses on the market now have increased an average of 19% over that same time frame.
If you’re considering investing in buy-to-let and would like a free consultation about your options, please get in touch. As I don’t sell property I can remain impartial on which particular one you buy, ensuring you optimise your investment.
Clive Janes, CRJ Lettings
01243 624 599 / clive@crjlettings.co.uk
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