I met
with a landlord this week who has properties in both Chichester and Bognor
Regis. We were comparing the rents he achieves against the properties current
values when he said it seems property in Bognor Regis provides a better return
than in Chichester.
On the
face of it, he’s right. The average property in Chichester is worth £390,411
compared to an average rent in the city of £1,048pcm. Buying and letting out
the ‘average’ property at these prices would give a lowly 3.2% yield.
When
you compare that to Bognor Regis’ average 4.1% rental yield (based on an
average value of £274,643 and average rent of £942pcm) it would seem clear as
to where the best place to invest is.
This
ignores two very important issues though. ‘Average’ isn’t necessarily
reflective of what a landlord will purchase as a buy-to-let. Most often a
landlord will buy a two or three bedroom house or a two bed flat; all of which can
be bought for less than the ‘average’ property.
Put it
this way, whilst the ‘average’ property for sale in Chichester has 2.7
bedrooms, the ‘average’ rental property has a more moderate 2.5 bedrooms.
When
you focus on Chichester’s two bedroom flats (available for an average of
£259,613 and renting for an average of £951pcm), the yield jumps to a more
respectable, if unspectacular, 4.4%.
My
five most recent Chichester ‘buy-to-let deals of the week’ (as featured at
www.chipropertynews.co.uk) offered yields of between 4.7% and 6.3%.
The headline
averages also ignores the fact that capital growth is often the component of
property investment that provides the greatest return over the long term. Many
also prefer to invest in property for capital growth rather than immediate
rental returns for tax purposes.
This
is where Chichester really out-trumps Bognor Regis; posting a 6.1% gain in the
past year, compared to Bognor Regis’ 5.6% increase. Longer-term, this is
compounded further as data shows prices have risen 34.4% in Chichester over the
past ten years, compared to ‘just’ 25.7% in Bognor Regis.
For
those looking to take on more risk (and workload) there are also two
fundamental ways to increase your rental yield. The first is to reduce your
initial spend e.g. transform a run-down property or buy ‘below market value’.
The second is to increase the rent you receive e.g. rent to students or create
a HMO (House of Multiple Occupation).
If you
are considering investing in property and would like a free consultation as to
what particular strategy and location would suit you best, please get in touch.
(This article was featured in the Chichester Observer's property section
on 18th February 2016).
Clive Janes, CRJ Lettings.
www.crjlettings.co.uk
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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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