Chichester Property News: Chichester Proerties

Showing posts with label Chichester Proerties. Show all posts

Thursday, 26 September 2024

Buy-to-let: home or away

Opinions are divided over whether you should invest in buy-to-let locally or venture further afield in an attempt to achieve better returns.

The area you invest in should be considered alongside your strategy and goals. Certainly if you’re looking to invest in student lets you’ll want to buy near a large, vibrant and growing University. Budget may also be a factor, whereby local house prices are simply too high for you to buy an appropriate property. Many Londoners have to buy outside the city because of this, although many will now rue missing out on the spectacular capital growth London property has seen.

When I began investing in property I spent a long time deliberating on where I should buy. Trying to find the next up and coming area to invest in that offered the holy grail of high yields and strong future capital growth appeared elusive. In the property boom years I researched city centre apartments up North as well as foreign property in Bulgaria, Cyprus, Florida and Las Vegas.

Whilst the glossy brochures promised quick riches, ultimately I decided that the grass wasn’t actually greener elsewhere. There are in fact many reasons why I believe you should keep it simple and invest close to home.

Familiarity is often the biggest reason why many landlords buy locally. You’ll know where the best areas are, which are the decent schools and the good transport links, along with a knowledge of the upcoming developments that will impact the area.

You could spend time walking the streets and meeting with local agents. Nothing beats face-to-face contact and building rapport with people who can advise and support you. It’s easier to spend more time in a local area so you can work out the facts as opposed to relying on third party information.

It is obviously far more convenient to manage a buy-to-let close to home. Whether that be overseeing a refurbishment, the on-going maintenance or managing tenants. Having a property nearby saves a lot of time and this is perhaps why over 50% of landlords choose to buy within 10 miles of where they live.

Buying locally might mean you decide to self-manage the property and therefore save yourself the letting agent’s management fees. Even if you do hand the keys over to an agent, there’s certainly some peace of mind knowing the property is within easy reach should something go wrong or you simply want to keep an eye on things.

If you’re thinking of investing in buy-to-let and would like some free advice about whether your local area can meet your needs, please get in touch.

Thursday, 14 September 2023

Avoid having your house ‘stolen’

Scammers are getting increasingly sophisticated and property is an area they target due to the high transactional values. You may be aware of ‘phishing’ attacks, whereby fraudsters impersonate your solicitor to try and intercept the transfer of funds into their own pockets, but have you heard about the tricksters who attempt to impersonate you so as to steal your property!?

The theft occurs with the criminal impersonating the owner of a property so they can then sell or re-mortgage it. Buy-to-let properties without a mortgage are the perfect storm here, as the owner won’t live at the property and there isn’t a mortgage company double-checking things or receiving any of the sale proceeds.

Fortunately, there is a solution to this; which is to enter a restriction on your title deed. This will then state that any application to change the register must be accompanied by a solicitor’s certificate verifying your identity as that of the legal owner. This can cause a slight delay when you actually want to sell or mortgage your own property, but that’s surely better than falling victim to this crime.

Another option is to sign up to the Land Registry’s free property monitoring service. You’ll receive an email if an application is made to change the register; so, whilst it won’t prevent changes being made, at least you’ll know straight away so you can take prompt action.

As ever, prevention is better than cure. So, whilst the above is rare, it pays to be aware of such matters so you can put measures in place to ensure you are protected. Thorough tenant referencing will also put off any chancers with such misdeeds in mind, as they will seek an easier target if asked too many questions.

Thursday, 7 July 2022

Buy-to-let: home or away

Opinions are divided over whether you should invest in buy-to-let locally or venture further afield in an attempt to achieve better returns.

If you’re thinking of investing in buy-to-let and would like some free advice about whether your local area can meet your needs, please get in touch.

Thursday, 11 November 2021

Avoid having your house ‘stolen’

A worried landlord forwarded me a news article last week about this recently happening to a man in Luton. He had returned home to find it stripped of all his possessions, having been sold without his knowledge. Unfortunately, this is not an isolated incident, with the Land Registry paying out £3.5m in compensation due to fraudulent transactions last year.

The fraud occurs with the criminal impersonating the owner of a property so they can then sell or mortgage it. Buy-to-let properties without a mortgage are the perfect storm here, as the owner won’t live at the property and there isn’t a mortgage company double-checking things or receiving any of the sale proceeds.

That’s exactly what happened with the property in Luton, with the fraudulent tenant selling the property without the landlord even knowing! Another case saw a previously unencumbered property in London become subject to a £1.2million bridging loan, which was paid out to a mother and daughter who had changed their name to match the registered owners.

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Thursday, 30 January 2020

Is your property protected against fraud?

Unfortunately, scammers are getting increasingly sophisticated and property is one area they target due to the high transactional values. You may be aware of ‘phishing’ attacks, whereby fraudsters impersonate your solicitor to try and intercept the transfer of funds into their own pockets. But have you considered the fraudsters who attempt to impersonate you!?

Property title fraud has been on the increase in recent years. In simple terms, this is where a fraudster will target properties that they can sell or mortgage by impersonating the registered owner. Buy-to-let properties without a mortgage are the perfect storm here, as the owner won’t live at the property and there won’t be a mortgage company double-checking things.

As title deeds are a publicly available document (they cost £3 to download online), it is very easy for anyone to get the name of the owner of a property. The title deed will also show whether there is a ‘charge’ against the property i.e. a mortgage. With this information the fraudster, who typically poses as a tenant, will simply change their name by deed poll to match the property owners name. Now living at the property with the same name as the true owner, it becomes very easy to build up identification documents and paperwork that would see that person passed off as the ‘owner’.

That’s exactly what has happened in recent cases, with one fraudulent tenant selling a property without the landlord even knowing! Another case saw a previously unencumbered property in London become subject to a £1.2million bridging loan, which was paid out to a mother and daughter who had changed their name to match the registered owners.

Fortunately, there is a solution to this; which is to enter a restriction on your title deed. This will then state that any application to change the register must be accompanied by a solicitor’s certificate verifying your identity as that of the legal owner. This can cause a slight delay when you actually want to sell or mortgage your own property, but that’s surely better than falling victim to this crime.

Another option is to sign up to the Land Registry’s free property monitoring service. You’ll receive an email if an application is made to change the register; so, whilst it won’t prevent changes being made, at least you’ll know straight away so you can take prompt action.

As ever, prevention is better than cure. So, whilst the above is rare, it pays to be aware of such matters so you can put measures in place to ensure you are protected. Thorough tenant referencing will also put off the chancers who will simply walk away to find an easier target if they are asked too many questions.

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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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Thursday, 14 November 2019

How profitable is buy-to-let in Chichester?

I was recently running through some rough figures with a couple who were contemplating buying a rental property for the first time, having first considered it shortly after the credit crunch. A lot has changed in the world of buy-to-let over the decade since then, but as many people ultimately invest to make money, I thought it might be interesting to see how things have fared in that regard.

The biggest impact upon rental profits has been the collapse in interest rates. Consider that mortgage rates a decade ago were around 6% based on a 75% loan-to-value five-year fix. That meant that every £100,000 of mortgage cost £500 per month (interest only). Today, that same loan can be had for around 2.1%, which lowers the cost for every £100,000 borrowed to just £175 per month. At the same time rents have increased, so it’s been a double whammy of income increasing alongside the cost of finance decreasing.

Of course, house prices have gone up a lot in the past ten years, so you now need to borrow more to buy the same property. But they haven’t increased as much as interest rates have gone down, which means the profits on offer from buy-to-let today have actually increased for landlords. That of course assumes you’re utilising mortgage finance for your buy-to-lets. If not, then the returns on offer from buy-to-let now are lower than they were a decade ago as rents haven’t increased as much as house prices have.

On the negative side though, there have been serious tax changes that are starting to have an impact on landlords’ bottom line. You see, whereas finance costs used to be offset against income before calculating your profit (the same as in any other business), tax changes mean this is no longer the case. Instead, by the 2020/2021 tax year you’ll only be given a ‘tax reducer’ of 20% of the total finance costs. Whilst many have said this won’t affect basic tax-rate payers (technically correct) it will push a huge number of landlords into higher rate tax brackets as their gross rent now counts towards their income.

Many people buying rental properties now are side-stepping these negative changes by purchasing through a company. The mortgage rates to do so can be slightly higher, but overall it is a more profitable way to buy (unless they change the rules again…). Whatever way you buy though there’s no avoiding the 3% stamp duty surcharge that now applies to landlords!

Back to those rough figures though and here in Chichester a typical two-bedroom rental property might cost £250,000. With buying costs, stamp duty and a 25% deposit you’ll need around £75,000 to buy that property. The £187,500 mortgage will cost you around £330pcm on an interest-only basis, whereas such a property should rent for around £875pcm. So, a potential £545pcm could be yours, which is a pretty decent 9% return on the £75,000 you’ve invested. Of course, that completely ignores management and maintenance costs and assumes everything runs perfectly….as well as ignoring the fact the taxman will be waiting come the end of the year too.

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Thursday, 20 June 2019

Does psychological pricing work?

If you’re wondering what psychological pricing is, it’s where retailers set the price of something to make it appear cheaper than it is using a simple trick of the mind. This typically means using a 5, 7 or 9 to round off a price, rather than using a round number. The classic is something that costs, say, £4.99. Wow, that’s much less than £5 right! Well to most humans it is, hence why retailers do this. It’s to do with our primitive brains looking at the first digit and ignoring the rest.

In the world of property that means a price tag of £400,000 becomes £399,999, or more commonly £399,950.

So, does psychological pricing work for property? Well, the answer is yes and no, which I’ll now explain.

Yes it does, in that £399,950 does at first appear much cheaper than £400,000. In the olden days when property buyers would look in estate agents shop windows and the local newspaper listings this worked well. Plus, when people would contact estate agents to enquire what properties they had for sale, the estate agent would be able to say it cost “3-9-9-950”, which sounds a lot cheaper than the one next door who said “400-thousand”.

However, in today’s mainly online world i.e. where people scroll through the property portals, there are a few major downsides to continuing with this old method of psychological pricing.

Firstly, the default of the property portals is to list properties by ‘highest price first’. That means the property listed at £400,000 actually appears higher up the page than the one at £399,950, unless the user has played around with the sort function.

Secondly, most people will use the search parameters to narrow down the amount of properties that are shown. The £399,950 and £400,000 price tags will both show up when someone enters a maximum budget of £400,000. But the next level up may be someone with a £450,000 budget, who therefore sets a minimum price of £400,000 to narrow the field. Now, the property listing of £399,950 is cut from the search entirely!

And thirdly…..it doesn’t work as well anymore as people have grown wise of this ruse!

You should also consider the ‘big round numbers’ when listing a property. I’ve just seen a property reduced to £251,750….what a bizarre figure! How many people do you think set their maximum budget at £250,000? I can tell you that it’s a lot, and this estate agent has just wiped out a whole bunch of people from even seeing this property when they click ‘search’.

So, next time you’re scrolling through the property portals, why not have a play with its search tool and see the price increments it uses and let me know whether you think psychological pricing when it comes to property listings is a good or bad idea.

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Thursday, 13 June 2019

What is average in Chichester’s property market?

The average property price in Chichester is £367,322. This is down (I haven’t said that for a while) by 4% compared to 12 months ago (when the average property in Chichester sold for £381,106). This is still some 62% higher than the UK’s average property price of £226,798 though.

Currently on the market at this average price range in Chichester are a variety of three-bedroom houses; from new-builds on Graylingwell Park, to modern houses near the hospital or further out in Westhampnett, as well as a variety of period properties closer to the city centre.

From a rental perspective, the average rental price in Chichester is currently £995pcm, which is down 3% compared to 12 months ago (when it was £1,025pcm) but is still 28% higher than the UK’s average rental price excluding London (£775pcm) but just 6% higher when including London (£936pcm).

There’s a wide variety of properties on the rental market around this average price. There are modern two-bedroom apartments close to the city centre, period houses near the city walls, as well as some affordable three-bedroom houses on Chichester’s ex-council housing estates.

It’s interesting to note that the premium that Chichester’s renters pay is much less compared to the UK average than Chichester’s homebuyers have to. Either way though, with Chichester’s average salary being £29,867, which is only 3% more than the UK’s £29,009 average salary, it is clear that the ‘average’ resident in Chichester would struggle to afford those costlier than normal ‘average’ local properties.

In fact, with the average property price in Chichester being 12.3 times the local salary for home buyers and eating up 40% of a renter’s income, Chichester is often cited as one of the most unaffordable places to live in the country. Of course, with an increasing number of households having more than one breadwinner nowadays these headline figures aren’t necessarily reflective of the overall affordability, but it does show that it is particularly difficult for the ‘average’ person to live in Chichester.

The mainstream media may bring you plenty of national updates on the property market, but I am passionate about bringing you news and statistics about your local property market right here in Chichester. So, for updates that are relevant to you, you can subscribe to my weekly ‘Chichester Property News’ e-newsletter free of charge by visiting www.bit.ly/chipropertynews or feel free to pick up the phone and call me for a chat.

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Thursday, 6 June 2019

Five major changes introduced by the Tenant Fees Act

Originally centred around banning administration fees to tenants, it’s actually the ‘other stuff’ that has been bolted on to the Tenant Fees Act that I believe will have the biggest consequences for the lettings industry in the long-term. Here’s five major changes and how this may impact the market:

Holding deposits
You can now only take a one-week holding deposit, which must be returned to the tenant within 15 days if you haven’t entered into a tenancy agreement by then. With many tenants having to give one months’ notice to their previous landlord, clearly the timescales don’t quite work here. Cue having to get applicants to waive this right, which is allowed under the guidance. And a word of caution to those landlords who instruct multiple agents (which I don’t advise)…it’s now illegal to take more than one holding deposit, so if each agent happens to accept a tenant and take a holding deposit, it’ll be you carrying the can for the £5,000 fine.

Security deposits
Security deposits will be capped at five-week’s rent (for rents up to £50,000pa). Whereas tenants with credit issues, who are self-employed (with income that’s hard to prove) or with pets used to be welcomed simply by asking for an increased security deposit, now this is not an option. Instead many will be rejected outright and will thus find renting a home even more difficult than it already is. They may alternatively be asked to pay an enhanced rent (which is allowable under the guidance of the Act).

Third-party payments
You can no longer enforce the use of third-party companies upon tenants. Traditionally this would have been in the form of clauses in the tenancy agreement to protect against certain things e.g. end of tenancy carpet cleaning for pet owners or annual chimney sweeping for properties with open fires if the tenants wanted to use them. Without these it is likely the usage of the property will be restricted and pet owners will again find that landlords are less likely to accept them.

Tenancy amendments
The charge applicable for any alterations to the tenancy agreement, for example leaving early, adding a pet or changing a named tenant, will be restricted to £50 or the reasonable cost (which needs to be proven to avoid a potential fine). Renting is therefore set to become less flexible, as it is far simpler to say ‘no’ to a request rather than to take on a load of administrative work (which often isn’t in the landlord’s best interests) for such a small sum.

Rent arrears
Landlords want their rent to be paid on time, so many used to insert late fees or a reasonable interest rate into the tenancy agreement as a deterrent against late payment. Now, however, all that can be charged is interest of 3% above the base rate, but only after the rent is 14 days late. This effectively gives tenants a two-week line of free credit, followed by perhaps the cheapest personal loan on the planet!

Unfortunately, I believe these changes will lead landlords to be pickier than ever as to who is allowed in their properties, as well as being less flexible (and perhaps less helpful) than they were before the Act came into force.

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