'Chichester Property Market' monthly update - Feb/Mar

FEB/MAR 2016WRITTEN BY PMS LETTINGS COVERING THE CHICHESTER PROPERTY MARKET CHICHESTER PROPERTY MARKET Monthly UpdateWHERE WILL CHICHESTER PROPERTYPRICES BE BY 2021?HAS EU MIGRATION CHANGED THECHICHESTER PROPERTY MARKET?COULD YOUR CHICHESTER PROPERTYSAVE YOU FROM PENSION OBLIVION?“SHOULD I RENT MY CHICHESTERPROPERTY TO TENANTS ONHOUSING BENEFIT?”WILL CHICHESTERYOUNGSTERS EVER OWN THEIR OWN HOME?

Where will Chichester Property Prices be by 2021?We were talking with a local As the Chichester job market has However, it wouldn’t be right not toChichester solicitor the other day, improved with better job prospects, mention those potential negativewhen the subject of property came salaries are rising too, growing at issues as we do have some slightup. He asked us our thoughts on their highest level since 2009, at concerns about the future ofthe Chichester property market 3.4% per year in the private sector Chichester housing market. Thefor the next five years. Property as recently reported by the Office number of properties for sale inprices are both a British national for National Statistics. That is why, Chichester is lower than it was fiveobsession and a key driver of the even with the turbulence of the last years ago, which on one hand, restrictsBritish consumer economy, so it’s no few years, property values in the choice for buyers, yet on the other,wonder the subject is a popular one. Chichester area are 22.57% higher it is that that keeps prices higher.So what will happen next in today than they were five years ago. Interest rates were being predicted tothe property market? Here is Many home occupiers have held back rise around Easter 2016, but now wewhat we told him, and now moving house over the past seven think it will be nearer Christmas 2016.wish to share with our readers. to eight years following the Credit Finally the new buy to let taxationBefore we can predict what will Crunch but with the outlook more rules which are being introducedhappen over the next five years to optimistic, we expect at least some to between 2017 and 2021 will also haveChichester house prices, firstly we seize the opportunity to move home, an impact, although choosing theneed to look at what has happen releasing pent up demand as well as right sort of property and portfolioover the last five years. One of the putting more stock onto the market. mix in Chichester will, we believe,key drivers of the housing market and With a more stable economy in the mitigate those potential issues.property values is unemployment, City, this will, we believe, drive a slow We are telling the landlords weas that drives confidence and wage but clearly defined five year wave of speak to, that with interest rates atgrowth – key factors to whether activity in home sales and continued their current level 0.5%, the cash inpeople buy their first house, existing house price growth in Chichester. your Building Society Passbook ishomeowners move up the property We forecast that the value of the going to grow so slowly that it mightladder and even buy to let landlords average home in Chichester will as well be kept under their bed.have an appetite to continue Property prices, by contrast, havepurchasing investment property. increase by 21.6% by 2021 rocketed over the years, even afterWhen the Conservatives came to 21.6% might sound optimistic the property crashes, far outstrippingpower in May 2010, the total number to some, but according to Land bank accounts and inflation.of people who were unemployed in Registry, values are currently rising So our final thought… property isCity stood at 1,355 (or 2.8% of the in Chichester at 7.6% year on year, a long term investment, it has itsworking age population in Chichester we believe our forecast to be fair, up’s and downs, but it has alwaysparliamentary constituency). Last reasonable and a reflection of both outperformed, in the long term,month, this had dropped to 515 people positive and negative aspects of the most investments. Those in theiror 1.1% of the working age population. local property market and wider UK 40’s and 50’s in Chichester would economy as whole. be mad not to include property in their long term financial calculations. Tel: 01243 788257

895.00 PCMHas EU Migration changed the Chichester property market?The argument of migration and what it In 2001, 3.68 million rented a property According to the Office of National from a landlord in the UK. Ten years Statistics, rents for tenants in the Southdoes, or doesn’t do, for the country’s later in 2011, whilst EU migration added East have only grown on average byeconomic well-being is something that an additional 676,091 people renting a 0.95% a year since 2005…. we wouldhas been hotly contested over the property from a landlord, there were say if it wasn’t for the migrants, welast few years. In our article, we want actually an additional 4.14 million would be in a far worse position whento talk about what it has done for the people who became tenants and were it came to the Chichester propertyChichester Property market. not EU migrants, but predominately market. This was backed up by the thenBefore we look at Chichester though, British! Home Secretary Theresa May back inlet us look at some interesting figures As a landlord, it is really important to 2012 – more than a third of all newfor the country as a whole. Between gauge the potential demand for your housing demand in Britain is caused by2001 and 2011, 971,144 EU citizens rental property, especially if you are a inward migration and there is evidencecame to the UK to live and of those, landlord who buys property in areas that without the demand caused by171,164 of them (17.68%) have bought popular with the Eastern European such immigration, house prices wouldtheir own home. It might surprise EU migrants. To gauge the level of EU be 10% lower over a 20 year period.people that only 5.07% of EU migrants migration (and thus demand), one ofmanaged to secure a council house. the best ways to calculate the growthHowever, 676,091 (69.62%) of them of migrants is to calculate the numberwent into the private rental sector. This of people who ask for a Nationalincrease in population from the EU has, Insurance number (which EU membersno doubt, added great stress to the UK are able to obtain).housing market. In Chichester, migration has risen over the last few years. For example, inLooking at the figures, the housing 2006 there were 653 migrant nationalmarket as a whole is undoubtedly Insurance cards (NIC) issued, the yearaffected by migration but it has been after in 2007, 1,052 NIC cards werethe private rented housing sector, issued and in 2014, this had increasedespecially in those areas where to 1,232 NIC’s. However, if the patternmigrants come together, that is of other migrations since WW2affected the most. Indeed, we have continues, over time there will be anseen that many EU migrants often increasing demand for owner occupiedcompete for such housing not with UK property, which may affect the markettenants but with other EU migrants. in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures. In essence, migration has affected the Chichester property market; it couldn’t fail to because of the additional 9,942 working age migrants that have moved into the Chichester area since 2005. Although, it has not been the main influence on the market. Property values in Chichester today are 29.12% higher than they were in 2005.

Rent arrears is one of a landlords greatest worries, • NIL Excessclosely followed by any potential costs of eviction • Rent payable until Vacant Possessionshould they be necessary. For those landlords who • Cover up to £2,500 per monthdon’t have cover, the implications of a tenant not • £50,000 Legal Costs in order to obtain Vacantpaying the rent can be awful.Don’t Panic! We can offer a great product to protect Possessionyour rent. To find out more call us on 01243 788257 • 6 or 12 month Tenancies • No involvement in Claims ProcessCould your Chichester property However, buy-to-let is not all aboutsave you from Pension Oblivion? capital growth and in retirement, incomeIf you were born in the early 1970’s or Let us explain… say you have a deposit of is more important than capital growth,late 1960’s, but you haven’t started to 25% and the value of the property rises as rent is the key to a steady income.think about it yet, retirement is closer by 3% a year, your gains in fact multiply So surely the best strategy is to buy thosethan you think. In fact the number of to 12%. However, if property prices Chichester properties with the high rentsyears you have left to work is less than drop, ‘leverage’ can be catastrophic, as compared to the value of the property -the number of years you have worked. losses will also be multiplied. Property these are called high yield properties inThe basic state pension is worth values have dropped a number of times the buy-to-let world. So surely they are£115.95 a week for a single person in in the last 50 years, but they always the best buys?2015/16 (or £6,029 a year) and £231.90 seem to bounce back… property must Possibly, but the properties that offera week for a couple (£12,118 a year). be seen as a long term investment. these higher yields - in order of 5% to 6%As a household, could you live on just per year - tend to be in Chichester areasover £12k a year? which, historically, haven’t offered suchHowever, could the property you are good capital growth when compared toliving in Chichester save you from the city average. They also have a higherpoverty when you reach retirement? void periods and such properties tend toYou see a regular income is vital in have higher maintenance due to moreretirement, and the bricks and mortar regular changes in tenancy.you own in Chichester could provide a Therefore, if a high maintenance rentalway for you to finance life when you portfolio wasn’t for you, another strategyretire. could be buy a property with relatively smaller rental returns of 3% to 4% perIf you are in your 30’s, instead of This is how leverage could work… If year, but in an area such as Summersdalesaddling yourself with bigger and bigger you had bought a Chichester house in where properties such as these tend tomortgages, going from your first time spring of 1983 for £70,000, using a 75% suffer from less void periods i.e. whenbuyer flat, to a terraced, to the semi mortgage and 25% deposit, (meaning the property is vacant. These propertiesand then the large detached house, your deposit would be £17,500). Today, historically have had better long termyou could instead keep your terraced that Chichester property would have capital growth when compared to theor semi, turning it into buy a buy-to-let risen in value to £506,653, a rise of city average.property, let the rent pay the mortgage 623.8%. However, when you look at Every landlord is different and everyand then rely on capital growth to the growth on just your deposit, the property is different. All we suggest toprovide you with a lump sum when you rise is even better … instead of 623.8%, you is do your homework.sell the property and retire. One of the we see a rise of 2795% -remembering As regular readers will know, we arebiggest plus points of buy-to-let is what that the mortgage would have been happy to share our knowledge andis known as leverage. paid off. experience of the Chichester property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Chichester Property market. Call us on 01243 788257! Landlord Referral Scheme Only applies to properties let on a Fully Managed service. Call us on 01243 788257 to arrange a no obligation, rental valuation.

Doing things better... Choosing an agent to let and manage your property can be a difficult decision. The lettings process is virtually the same whichever agent you decide to appoint. The only way we can persuade you to pick PMS Lettings to look after your investment property is simply to do things better than every other agent!Will Chichester youngsters ever own their own home?We had the most interesting chat with However, let us not forget 7,421 We said we believed there had been aa mature couple in their early / mid 50’s properties are owner occupied – 2,876 cultural attitude change towards rentingfrom Westhampnett the other day, whilst with a mortgage. property in Britain and that this quietviewing one of our rental properties. Let’s be honest, private renting doesn’t revolution was likely to be permanent.The property wasn’t for them, but their have the stigma it had a few decades ago In the 60’s, 70’s and 80’s, saving for theson, who wanted a second viewing with and it might surprise people that even deposit was everything and buying a househis parents to get the parental blessing. though us Brit’s class ourselves as a nation was everything. Youngsters today have farNow we know that isn’t the norm, but in of homeowners, roll the clock back 100 much more disposal income today thanthis case the parents were going to act years and over 75% of people rented their people had in the Callaghan and Thatcheras guarantor. We got chatting about the own home (and it was all from private years, but choose to spend it upgradingChichester property market and how they landlords as council housing only started their mobile phones every 12 months, thehad bought their first property in the town to come in with the ‘homes for hero’s’ newest tablet or PC, a newest 50” plasmajust after they got married in the late after the first World War). It might also LCD TV and two sun drenched holidays1980’s when they were in their early 20’s. surprise you to learn that at the time of a year, than go without and save for aAnyway, we got chatting about how the the 1971 census, still more people rented deposit.youngsters of the UK seem to rent more than owned their own home. Yes, there are horror stories of tenants livingthan buy nowadays and from that the Looking at the affordability issue, we in rat infested properties with landlordsconversation covered a number of similar have proved time and time again, it is in who charge massive rents and don’t repairtopics. We want to share the highlights of fact cheaper to buy a property than rent, their properties. But that is very much thethat conversation with you. when one looks at starter homes for first exception as most tenants rent homes of aTheir son, like many 20 to 30 year olds time buyers. 95% mortgages have been quality they couldn’t ever to afford to buy.in Chichester, desperately wants to own available to first time buyers for over four Twenty years ago, if you said you rented ahis own property and the parents said he years and whilst you could certainly find property, you were considered the lowesthad read in the Telegraph recently, when better properties in better areas, some of of the low… but now it’s the norm.you compare house prices to earnings, the the newer houses can be bought for as So with mortgage affordability beingcurrent 20 to 30 something’s generation little as the early £120,000’s in the area well within the bounds of most first timehave to spend more of their salary in off Swanfield Drive in Chichester meaning buyers, the level of deposit required for amortgage payments than any previous a modest deposit of £6,000 would be 95% being surprisingly modest (starting offgeneration. The demand for private rental required. as low as £6,000 in Chichester as alreadysector accommodation in Chichester is When it came to affordability, we were mentioned) until we change our attitudes,huge. There are in fact 2,540 private rental able to tell them that when they bought the UK housing market is slowly but surelyproperties in Chichester at the last count, their first house in Chichester in 1988, turning into a more European model,impressive when you consider there are the ratio of house prices to salary was where people rent for long periods of their414 council houses in the City. 7.54 to 1 in Chichester… and here was the life, then eventually inherit their parents surprise for both of us, today’s ratio is only properties and subsequently become 6.53 to 1! homeowners themselves, albeit later in life. Hence, we cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the right price, in the right location – that’s where we come in! If you would like a no obligation, free rental valuation on your property, pop into our office in West Street, Chichester or call us on 01243 788257. Property Accademy Landlord Survey 2015

“Should I rent my Chichester property Qualityto tenants on housing benefit?” Landlord Insurance“What does the ideal Chichester tenant look Interestingly, it might surprise some readerslike?”, asked one of our landlords from Lavant of the Chichester Property Blog, when we We have been working with ourthe other day, to which he carried on before compare Chichester to the national picture, specialist partners at Let Alliance onwe could reply, “Let me guess, a professional Chichester’s Housing benefit claimants are developing Landlord Buildings andcouple, both in their 30’s, flawlessly tidy, pays lower, as nationally a higher proportion of Contents Insurance that is tailoredtheir rent early, doesn’t complain or fuss, private tenants claim the benefit. Nationally, specifically to meet your needs withwho has no plans to move and cheerfully 39.2% of the tenants of the 3,891,467 rental great new benefits and at a veryaccepts annual rent rises”. properties in Great Britain claim some form competitive price;Before we can answer that question properly, of housing benefit; 1,526,915 properties. • NIL Excess (£250 & £500 Excess alsowe have always believed all a landlord wants, Now, let us look at the occupations ofand expects, of their tenants is to pay their Chichester tenants, which makes even more available)rent on time and look after the property as fascinating reading. Of the 6,356 privately • Up to £500,000 Buildings Sumif it were their own. In return, the landlord rented properties in the Chichester area,should provide a property that is warm, 5,037 head tenants (the head tenant being Insured as standard (Up to £2clean, modern and damp free and sort any classified as the head of the household) are million on request)maintenance issues quickly and without fuss. in employment with the other 1,319 rental • Buildings Accidental DamageSo let’s get back to the tenants – tenants tend property head tenants either being retired, included as standard - No charge!to fall into several groups… 20 something long term sick, students or job seekers. • Legal Liability Cover up to £5 millionprofessionals; young and middle aged • Trace and Access up to £5,000families; corporate tenants (the employer Splitting those 5,037 head tenants down into • Malicious & Accidental Damage byfinds their employee a house to live in); their relevant professions, 2,268 of them Tenant optionstudents; older singles/couples and housing are Managers, Directors, Senior Officials, • Up to 20% Loss of Rentbenefit claimants – and they come with Professional or Technical Professions, 365 in • Up to 90 days un-occupancydifferent needs and wants. So choosing who Administrative and secretarial occupations, • Contents Cover up to £50,000 sumbest suits your Chichester property – and 812 in skilled trades, 414 in the caring, leisure insuredsteering clear of bad tenants – is a big factor and other service occupations, 347 sales and • Theft of Keys & Recplacement locksin making property investment a success. customer service occupations, 320 plant • Nil Excess Home Emergency CoverOne topic that we are often asked is “Should and machine operatives and finally, 511 in option (unlimited claims)I rent my Chichester property to tenants on elementary occupations. • Multiple Property Portfolio quoteshousing benefits?” The one thing we have always known, but (including discounts) availableIt might interest the landlords of Chichester until we did our research, never had anything • Employed, Retired, Student, Selfthat of the 6,356 private rented properties to back it up with, was the high proportion Employed, Local Authority tenantsin the local council area, 32% of the tenants of professionals and skilled trades renting all coveredof those properties are on some form of property in Chichester – intriguing eh? • Pay monthly policy underwritten byhousing benefit. Maybe in future articles, we will look deeper UK General Insurance Ltd on behalf…2,038 properties to be exact! We know into the corporate tenant market, young and of Ageas Insurance Ltdmany landlords have suffered late rent middle aged families, students and olderpayments with tenants on benefit, especially persons rental markets… Why not let us get a no obligationsince 2008, when local authorities started quote for you? Call us on 01243paying housing benefit to tenants rather than 788257directly to the landlords, but you can’t ignorethe fact that housing benefit tenants makeup a significant proportion of the Chichesterrental population. Our opinion is that thefinal choice of accepting such tenants hasto be the landlords but you can’t tar everytenant with the same brush as individualcircumstances can vary enormously. We are a family owned independent letting agency based in West Street, Chichester and we were formed in 1988. In that time we have built up our landlord portolio based on excellent service, recommendations and unrivalled local knowledge of the area and property market. We are 100% lettings only! Call us on 01243 788257 to discuss any aspect of letting your property or where to buy your next investment property.