Is a one or two bedroom property better in Chichester?

I spoke to a new landlord recently who was keen to buy a property in Chichester to rent out. With a limited budget he asked me whether a one bedroom property would be a decent investment or whether he should stretch to a two bedroom home.

Chichester’s one bedroom properties range in price from £130,000 to £325,000. Two bedroom homes in Chichester currently start at £159,000, whilst the most expensive is a two bedroom bungalow priced at £799,000!

If we look at current asking prices, we can see the average one bedroom property in Chichester is priced at £179,950 and the average rent for a one bed property in Chichester is £750pcm. This suggests an average yield of 5% for one bedroom properties in Chichester.

This compares to an average yield of just 3.9% for two bedroom properties in Chichester. This is derived from an average asking price currently of £295,000 and an average rent of £950pcm.

This suggests that one bedroom properties are the way to go when buying to let in Chichester.

However, if we look at the capital growth (increase in value) over the past two years, we see that one bedroom homes have increased just 1% in Chichester in this time, whilst two bedroom properties have outperformed this, increasing by 8%.

That means whilst a one bedroom property on the face of it appears to offer the better return, it is in fact two bedroom homes that have given a better overall return in Chichester over the past two years (15.8% vs 11%).

I’d also argue that two bedroom properties tend to rent out slightly easier, with fewer void periods and longer-term tenants. A two bedroom property should also be easier to sell in the future as it appeals to a wider variety of buyers.

This train of thought is backed up by the statistics, as the average time to sell a one bedroom property in Chichester is currently 126 days, compared to just 87 days for two bedroom homes.

With a budget of £180,000, this particular landlord could make the decision to invest in a ‘nice’ one bedroom property or a ‘low-end’ two bedroom property in Chichester. This would have a bearing on the type of tenants likely to rent the property, which may also be something to consider. It is also true that often the ‘low-end’ stock tends not to increase in value as much as the ‘nice’ properties either.

As you can see, there are many different variables and considerations to bear in mind when thinking of investing in buy-to-let. If you’d like to discuss the options available to you, please get in touch.

(This article was featured in the Chichester Observer's property section on 24th November 2016)

Clive Janes, CRJ Lettings.  

www.crjlettings.co.uk

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

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