Two bed houses in Chichester are in strong demand

This article was featured in the Chichester Observer's property section on 2nd April 2015.

I was speaking to a landlord last week who wanted to expand his portfolio and wondered whether the number of bedrooms should be a significant consideration as to which property he buys.

According to Zoopla, gross rental yields in Chichester average 5.2% for a one bedroom property, 4.8% from a two bed, 4.1% for a three bed and 3.5% from a four bedroom property.

This tends to correlate with the generally accepted concept that you receive a diminishing gross rental return as the size (and cost) of a property increases.

If we factor in the ground rent and service charges that come with flats, the best net return in Chichester actually comes from two bedroom houses.

Two bed houses are very popular with a variety of tenants, being suitable for an individual, two sharers or a young couple who can grow into the house; the second bedroom evolving from spare room/office into baby’s bedroom.

At the moment, however, there are only 15 two bedroom houses available to rent in the whole of Chichester. With another 15 being ‘let agreed’, this means 50% of the two bed houses that were available have been let already.

This highlights the strength of demand from tenants for two bed houses, comparing favourably to just 9/29 (31%) of one bed flats being let agreed, 17/42 (40%) of two bed flats and 12/35 (34%) of three bed houses.

Looking at the new-build developments in Chichester, I would anticipate this lack of supply versus the strong demand for two bed houses to intensify as developers are largely focusing on three and four bedroom homes.

This is understandable as developers are able to achieve a higher sale price for these larger homes without using much additional land (or no extra land as many are doing this by adding the third bedroom as a third storey of the property).

This should mean that two bedroom houses will become an increasingly desirable property in the future due to a dwindling supply compared to the overall housing mix. This should lead to them having minimal void periods alongside strong rental and capital growth.

So if two bedroom houses are so great, which one should you buy? Well, this is where it becomes tricky as there are just 65 two bedroom houses for sale in Chichester, of which 34 (52%) have already sold. This again shows the strength in demand for two bedroom houses, this time from buyers, as the overall sold rate in Chichester stands at 42%.

If you’re thinking of investing in a new buy-to-let and would like to discuss your options, please get in touch. 

Clive Janes, CRJ Lettings

www.crjlettings.co.uk

01243 624 599 / clive@crjlettings.co.uk

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E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

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