Chichester Property News: properties chichester area

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Thursday, 30 May 2019

All change for the lettings industry as the tenant fee ban looms

Perhaps the most significant changes to the lettings industry for 20+ years are upon us, as the Tenant Fees Act commences on the 1st June. What was initially set to be a change of law to ban tenants having to pay administration fees to letting agents and landlords has morphed into something far more impactful.

And whilst the proposal was first announced in the Autumn Budget of 2016, the act was only officially confirmed in January of this year, with further details and guidance released in April, just two months before the act came into effect.

Not only has that not given letting agents and landlords much time to dissect, assess and change a heap of processes they need to undertake, but there is still some confusion and debate over certain parts of the guidance (which amounts to 59-pages). There has been a total lack of clarification from official sources as to the full ins and outs of how some of the most widely disputed elements should be interpreted and thus implemented.

I find it rather frustrating therefore that a large number of my processes are now defunct - processes that had led to 100% of all rent being paid and 97 out of 97 online reviews from my landlords and tenants being five-star. It wasn’t broke…yet it’s been ‘fixed’ against my will.

And it might come as no surprise to those within the industry that the government also hasn’t updated their ‘How to Rent’ guide for tenants or ‘How to Let’ guide for landlords. Providing the How to Rent guide to all new tenants is a legal requirement…and yet this government-produced document was last updated in July 2018 and therefore still mentions tenant fees and other incorrect information.

Putting the poor implementation of the act to one side, I wrote in late 2016 how a tenant fee ban would have minimal effect on CRJ Lettings, as we charged just £100 per adult i.e. a couple would only ever pay us £200 for the duration of their stay. That was the cheapest tenant fee of any letting agent in Chichester, with the average being £454 (plus renewal fees thereafter). I actually saw this as an opportunity as it was widely perceived that letting agents would increase their fees to landlords to accommodate for this loss of income, which is exactly what has happened in most cases (whereas my fees remain unchanged for now).

Unfortunately, it is the ‘other stuff’ that has been bolted-on to the banning of fees that I believe will cause the biggest issues for letting agents and landlords. Falling foul of the new rules, even due to an innocent mistake, will result in a £5,000 fine - so make sure you’re aware and up to date with things, or get in touch with someone who is!

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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:

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Thursday, 23 May 2019

Should Chichester’s retirees invest in buy-to-let property?

I was contacted by a recently retired couple who were considering investing in buy-to-let property to supplement their pensions. Whilst I can’t offer financial advice, here’s a few snippets of what I suggested they consider first.

Is it too much hassle?

Retirement should be the time to relax and undertake the pursuits you enjoy whilst spending time with those you love. Property is not an ‘armchair investment’ like sticking money in the bank; you need to buy the right property at the right price…and then the hard work starts!

Even if you use a letting agent, ultimately the landlord is responsible for what goes on at their rental property. And whilst a letting agent should take the bother out of receiving those emergency maintenance calls from tenants, for some people the worry over whether the tenant will pay their rent or whether the property will require costly repairs is enough not to want to invest in property in the first place.

How much will you earn?

In Chichester the average net rental return from a single-let property will be around 4%. Whilst this is more than double the best savings accounts at the moment, is this enough to warrant the additional effort and risk it entails?

And don’t forget the taxman will be keen to get his mitts on a chunk of your investment return as well. Rent is recorded as income for tax purposes, so higher rate taxpayers will be stung accordingly, but bear in mind that even lower-banded tax payers could get dragged into the higher tax bands with the added income.

What does the future hold?

Property is not an asset you can easily sell quickly to cash in your chips if you suddenly need the money e.g. for care fees. And whilst capital growth can be strong with property, consider whether you’ll actually get the benefit of this.

If you do decide property is right for you it is worth spending some time with an estate planner to assess the best way to purchase the property. For example, in a company or trust, or possibly in your children’s names rather than your own, for optimal tax planning when it comes to future inheritance tax liability.

In summary

Property can be a great store of wealth and, with interest rates so low, the returns are better than you can get from many other investments. But I’d question whether it’s worth it for retirees with only a modest sum to invest if they’ll then need mortgage finance, as new rules on mortgage tax relief could see their net returns don’t warrant the hassle. But for higher net-worth retirees, property is certainly a logical place to put some of that wealth, preferably in a tax-efficient holding that can mitigate future inheritance tax, whilst providing a decent income for you to enjoy your golden years.

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^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Thursday, 16 May 2019

Should landlords bother inspecting their properties?

The short answer is that yes, a landlord should regularly inspect their properties to ensure they are in a good condition and that your tenants are happy in their home. There is of course a fine line between making this intrusive towards your tenants, so here’s an insight into my normal process:

A week after moving in I’ll give the tenants a courtesy call to ensure they’ve settled in ok and to check if there are any ‘teething issues’ they’ve discovered that needs attention.
When the rent comes in for the first time, I’ll send the tenants a text message thanking them and giving them peace of mind that their standing order payment was received ok. It also opens up a dialogue to ensure everything is running smoothly their end and that they’re happy in their new home.

If all goes smoothly, the first time I’ll re-visit the tenants and the property is after three months. Inspecting the property is obviously important at this stage to gain an idea as to how it is being treated by the tenants. But, it’s just as important to see how the property is treating the tenants too. Have they met the neighbours? Have the utilities been set-up? Are there any maintenance issues or potential improvements to make their home more comfortable (and their stay longer)? Testing the smoke alarms and carbon monoxide alarms is also sensible, as is checking that the tenants are happy with how the appliances and heating function.

Whilst my tenants know they can call, text or e-mail me anytime, often they won’t bother me with minor maintenance issues until I visit them. Sure, I now need to fix a broken extractor fan at a property I visited this week that I knew nothing about (and the tenants hadn’t spotted). But that’s far better (and cheaper) than getting a phone call next Winter about the black mould in the bathroom caused by the excess moisture in the room.

Hopefully at this point your tenants have been paying their rent and are looking after the property. If not, now is the time to raise these concerns and what the consequences will be if their actions continue.

I’ll undertake a similar visit a few months later and then in most cases (where the rent is being paid and the property looked after) I’ll stretch the visits out to every four to six months. If there are any concerns with a particular property or set of tenants I’ll continue to visit quarterly. All this needs a little common-sense towards the type of property and the tenants, but don’t visit too frequently; not only is it intrusive to what is the tenants’ home, but it can be deemed as harassment if you’re visiting every month!

And a word of caution; don’t put off visiting your property just because the rent is always paid on time. Last year a landlord in Kent was in the news having not visited his property for 12 years because of this reason...to find thousands of empty cans and piles of rotting food in the flat when the tenants moved out because they couldn’t access the communal bins! It’s also a common ploy amongst criminal gangs to pay six or twelve months rent upfront on the agreement they be ‘left alone’.

So, whether you use a letting agent or self-manage your rental property, be sure someone visits the property and interacts with your tenants to ensure everything is running smoothly. If you’d like the burden of this task taken away from you by a competent letting agent, please get in touch and I’ll be happy to help.

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^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

Thursday, 9 May 2019

What’s for rent in Chichester?

Last week I looked at what properties were for sale in Chichester. This week I thought I’d cater for those who aren’t yet in a position to buy and instead are looking for a property to rent in Chichester. It should also help Chichester’s landlords see how their properties fit into the rental market.

Of course, what you can rent is largely dependent on your budget. The cheapest property in Chichester costs £350pcm (per calendar month). The problem is it’s a single room in a shared (student) house, rather than a whole property. The cheapest property you could call your own in Chichester is a studio apartment in Arundel Park, which is up for rent at £585pcm.

On the other end of the scale, the most expensive property for rent in Chichester today is a five-bedroom detached house in Summersdale, which is available to rent for £2,250pcm.

Clearly rental property in Chichester is expensive…some more so than others! Let’s assume your budget is somewhere in the middle of the market. In fact, the median property for rent in Chichester costs £950pcm, which is the same figure as it was 12 months ago. For £950pcm there are a variety of two-bedroom flats and houses available to rent throughout the city.

Delving a little deeper into the median price by property type provides a good indication of what your budget is likely to be able to afford in Chichester:

What is also interesting to note is how much (or how little!) choice there is for prospective tenants in Chichester right now. There are a total of 212 properties for rent, of which 133 are still available to rent and 79 are now ‘let agreed’. This is actually a slight improvement on the market a year ago, when just 126 homes were still available to rent; but it is still low for a city that houses 6,356 private renters.

Those looking for a two-bedroom apartment have the most choice, with 36 available to rent in Chichester. There are a larger number of three-bedroom houses available than normal (29), whilst there’s a tighter supply when it comes to two-bedroom houses (17 available), one-bedroom flats (16 available) and four-bedroom houses (14 available).

It seems that rental supply remains tight in Chichester, which is limiting tenants’ choices, keeping rents stubbornly high, and makes finding that dream home just a little bit trickier.

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^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}