'Chichester Property Market' monthly update March/April 2016

MAR/APR 2016WRITTEN BY PMS LETTINGS COVERING THE CHICHESTER PROPERTY MARKET CHICHESTER PROPERTY MARKETTOO MUCH ‘DOOM AND GLOOM’ IN THECHICHESTER PROPERTY MARKET!CHICHESTER BUY-TO-LET SEESRETURN OF 11.91% IN 2015!WEAR AND TEAR -A GUIDE FOR LANDLORDSARE CHICHESTER LANDLORDSNOW COUNTING THE COSTOF A TORY ELECTION WIN? ESSENTIAL READING FOR LANDLORDS AND PROPERTY OWNERS

ITIN’SCAHLICLH‘EDSOTOEMR! AND GLOOM’Too much ‘Doom and Gloom’ in the Chichester property market!One of our Peter Weston Place landlords We see opportunity everywhere and Therefore, our landlord has seen therang us last week after he had been won’t be stopping. We are here to stay. ‘real’ value of his property only increasespeaking to a friend of his over a beer. It’s going to be an exciting time for by 2.6% – 36% less the 33.4% inflation.They were discussing the Chichester Chichester property! The reality is, since around the earlyproperty market and neither of them Gone are the days when you could buy 2000’s we haven’t seen anything likecould make their mind up if it was time any old house in Chichester and it would the capital growth in property weto either sell or buy property. If you make money. Yes, in the past, anything have seen in the past and it’s notread the newspapers and the landlord in Chichester that had four walls and a predicted to grow at the rates it hasforums on the internet, there is a good roof would make you money because previously done either. So, it is highhelping of ‘doom and gloom’, especially since WW2, property prices doubled time anyone considering investing inwith changes in the taxation towards every seven years… it was like printing property stopped believing the hypelandlords, new legislation on checking money – but not any more! and did some serious research usingtenants and the general uncertainty True, since January 1997, the average independent investment expertise. Youin the world economic situation. price paid for a Chichester flat/ can still make money by buying the rightWe will admit there are a proportion apartment has risen from £63,536 to Chichester property at the right priceof landlords in Chichester who have today’s current average of £208,578 in and finding the right tenant. Think aboutover exposed themselves in the last the city, an impressive rise of 228%. The it, properties in real terms are 2.6%few years with high percentage loan terraced and town houses have risen in higher than ten years ago, so investingto value mortgages. Those mortgages, the same time frame, from £84,538 to in Chichester property is not only aboutwith their current yet artificially low, £318,211, an even better rise of 276%. capital growth, but also about the rentalinterest rates, will start to suffer, as However, look back to 2005, and in returns. It’s also about having a balancedtheir modest monthly positive cash that year, the average flat was selling property portfolio that will matchflow/profit, i.e. income (rent) less costs for £170,080, meaning our Chichester what you want from your investment(mortgage, fees, tax), will become landlord would have seen a modest rise – and what is a ‘balanced propertynegative when the tax and mortgage of 23% and the terraced owner would portfolio’? you may ask… well werates rise throughout 2017 and beyond. have seen an increase of 36%, as they discuss such matters on the ChichesterIt appears to us that these landlords were selling for on average £234,023… Property Blog … so if you haven’t readseem to have treated the Chichester which isn’t good for people that bought our previous offerings, then it mightBuy to Let market as a sure bet and in 2005, and it gets worse when you take be worth a few minutes of your time?have not approached this as a business into account inflation. Don’t forget to sign up to our blogand, as a result, they will suffer as Since 2005, then inflation, i.e. the cost to receive our ‘Chichester Propertythey thought “Buy a house – rent it of living, has increased by 33.4%. That Market’ monthly update newsletter.out so it covers the mortgage and means to retain its value, Chichestermake a few quid on top”. These are terraced property bought for £234,023the people who will be thinking twice. in 2005 needs to be worth £312,113 today.Free Instant Online ValuationWanting to know how much your property is worth?When it comes to valuing your property and setting an asking price there are lotsof factors to consider. You have the freedom to select your own marketing price sothat’s why we offer instant online valuations. Visit valuations.pmslettings.co.ukfor an indication of what your property is worth.

895.00 PCMChichester Buy-to-Let sees returns of 11.91% in 2015!A few days ago, we got chatting with However – you knew there would be Return on investment is everything. So,one of our out of town landlords who a however – before we look at yield looking at property values in Chichesterwas back in Chichester visiting his and capital growth, one important have risen in the last year by 7.4%…family. Brought up in Chichester, he consideration that often many which means the current annual returnwent to Bishop Luffa School back in the landlords tend to overlook, is the on investment in Chichester for a typical1970’s and is now a University Lecturer propensity of how likely the rent will 2 bed flat is 11.91% a year… not bad eh?in central London. To enhance his increase. Interestingly, the averageretirement, he has a small portfolio of rent of a Chichester property currentlyfour properties in the City and wanted stands at £1,026 per month, whichour advice on where his next Chichester is a rise of 6.0% compared to twelvebuy-to-let should be. months ago – although it must beAs he lives in a college owned flat and noted this rise in rents is for newanyway, he would never dream of buying tenancies and not existing tenants.where he lives in Kensington where the Anyway, back to yield and capitalaverage value of a flat is £1.62m and a growth, the average value of aCity house £4.1m. Eye-watering to say Chichester property currently stands atthe least!! £388,700, meaning the average yield stands at 3.17% per annum, which onBefore we could advise him, we the face of it, many landlords wouldreminded him that the most important find disappointing.thing when considering investing in That is the problem with averages, soproperty is finding a Chichester property if we were to look at say 2 bed flatswith decent rental yields for income in Chichester which are the sort ofreturns, yet at the same time, it must properties a lot of landlords buy, inhave the potential for capital growth Chichester, the average value of a 2from rising house prices over time. bed flat is £248,487, whilst the averageGoing into 2016, Chichester landlords rent for a 2 bed flat is £934 per month,will be under more pressure to find the giving a yield of 4.51%.best permutation of yields and capital However, if that wasn’t high enough,growth, as extra stamp duty charges there are landlords in Chichester whofor buying properties and a squeeze on own some specialist properties withmortgage interest relief will raise their specialist tenancies, that are achievingcosts. nearly double that yield – again it comes down to your attitude to risk and reward! Give us a call or drop us an email if you wanted to chat about those sorts of properties – although they can be fun and games! Ultimately investors want to be making gains from both rent and house price growth. When combined, the rental yield and capital growth gives you the return on investment, and that is what we told our University friend from Kensington.

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 ProcessWear and Tear - A guide for landlordsAlthough there are no exact rules Quality and Condition Number and Age of Occupiersfor what is reasonable wear and tear The original quality of the item and The more bedrooms and occupants,we offer some useful advice to help what it cost to provide, needs to be the higher the wear and tear in alllandlords decide what they feel is considered at the beginning of the common parts should be expectedfair and what is not when deciding tenancy. It is unfair and unreasonable e.g. living room, hallways, stairs,whether anything should be deducted for a landlord to provide cheap and bathrooms and kitchen.from the deposit when the tenant(s) poor quality furniture and then blame If letting to a family with childrenmove out. The following factors the tenant(s) if the items has fallen this needs to be factored in as well.should be taken into consideration: apart/damaged through normal Scuffs and scrapes are unavoidable• Wear and Tear vs Actual usage. Keeping receipts of any items in normal family life. A property purchased is very important as it is with a single occupant should see Damage a good way of proving age, cost and far less wear than a property with• Quality and Condition quality when new. a family of four, so take this into• Length of Tenancy Consideration should also be given to account when it comes to the• Number and age of occupiers the quality or fabric of the property. check-out.• Inventory and Schedule of Older properties tend to be more Inventory and Schedule of robust than many new builds or Condition Report Condition Reports conversions. Walls, partitions and It should not be underestimated• Photographic/Video Evidence internal painted surfaces tend to be the importance of an inventory.• Summary thinner and therefore more likely This document could be used asWear and Tear vs Actual Damage to suffer more stress, particularly in evidence by either an adjudicatorWhen is it no longer normal wear? If higher footfall areas of the property. or court. Deposit protectionsomething is in good condition at the This means there may be a greater schemes do not disregard, out ofstart of the tenancy but is broken or need for redecoration at the end of the hand, inventories that have notdamaged at the end of the tenancy and tenancy period and therefore anything be compiled by an independentresulting in replacement or repair by a other than a simple contribution to companies or individuals.specialist. the cost of the redecoration may be Many landlords use us to conductLight marking on carpets may have to seen as unreasonable. their check-in and check-outbe viewed as unavoidable, however Length of Tenancy inspections. There is howeveriron burns or candle wax that have The longer the tenancy, the more an added need to show that theoccurred due to the tenant(s) natural wear. Common sense, but process and person undertakingnegligence could be seen as liable for think, for example, how much wear a the inspection was impartial. It isrepair or replacement. carpet in your own home shows after very important to get the tenant(s)It needs to be considered if the item one, two or three years. Consider to view the documents at thehas been damaged or worn out through what condition the item was in when start of the tenancy, preferablynatural use rather than negligence. the tenancy started, was it brand new at a check-in and allow them to or has it already seen a few tenancies? amend (if necessary) and sign the documents.

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!If the tenant does not sign them, they Video evidence can also be useful In some cases, the damage may notshould explain why. If a landlord puts where photographic evidence is be so extensive as to require thethe onus on the tenant to complete unclear or unavailable. Only submit complete replacement of an item attheir own check-in, this is far less the relevant part of the video and the tenants expense (such as kitchenrobust than a ‘full’ check-in. again direct the adjudicator or court worktop or carpet), however theJust providing an inventory to the to view a certain point in the video adjudicator or court will award sumstenant and expecting them to note itself. in recognition of any damage whichany discrepancies, or relying on a has occurred.document that has not been signed,will not be sufficient to convince an In the rare circumstances whereadjudicator or court. damage (to the worktop/carpet/You will need to provide other mattress/item etc) is so extensiveevidence to show that the tenant(s) or severe as to affect the achievableobligations and expectations were rent level or market quality of thefully explained to them. We carry property, the most appropriateout regular periodic inspections of remedy might be replacement and tothe properties we manage during the apportion costs according to the agetenancy. and useful lifespan of the item.Photographic/Video EvidencePhotographic and video evidence can An example of how this might bebe used to support, and/or defend calculated is set out below:a claim against a deposit. Onlyphotos that are relevant should be A) Cost of similar replacementsubmitted. Preferably before and carpet/item = £500.00after photos should be submittedwith a clear narrative as to what the B) Actual age of existing carpet/itemphoto is showing e.g. colours, item = 2 yearsdescription, marks on surfaces etc.Do not assume that an adjudicator or C) Average useful lifespan of thatcourt is seeing the same image as you type of carpet/item = 10 years– draw them to the part of the photoyou want them to focus on. Photos D) Residual lifespan of carpet/itemshould ideally, be dated and signed by calculated as ‘C)’ less ‘B)’ = 8 yearsboth parties, or alternatively digitallydated (preferably visible on the E) Depreciation of value ratephotograph). calculated as ‘A)’ divided by ‘C)’Photographs need to be of a good = £50 per yearquality to show clearly the conditionof the property at any given time. Summary F) Reasonable apportionment cost toPhotographs are useful as supporting tenant(s) calculated as ‘D)’evidence in addition to a signed times ‘E)’ = £400inventory and schedule of conditionreport. When considering if cleaning/ Whilst it is impossible for any guide repair is necessary versus complete to guarantee what the outcome to replacement at the end of the a tenancy deposit dispute might be. tenancy, an adjudicator or court will By their very nature, disputes are examine the inventory and schedule contentious and one party is likely of condition report, together with to feel aggrieved at the end of the any photographic/video evidence in process. Adjudicators or courts are order to compare the condition of the looking for a fair and reasonable property at the start of the tenancy. outcome.

‘Risigchotmtinog!ReLQnauntad’lliotrydAre Chichester landlords now counting Insurancethe cost of a Tory Election win? We have been working withCan you remember 10:05pm on Thursday 7th That figure doesn’t surprise us due to the our specialist partners at LetMay 2015… with the shock news that BBC Exit time of year. It’s quite dangerous to look at Alliance on developing LandlordPolls suggested the Conservatives would be one month in isolation, so looking at a more Buildings and Contentsreturned with majority? The middle classes medium term view, over the last 12 months, Insurance that is tailoredin Oving and Fishbourne exhaled a huge sigh property values in Chichester have risen by specifically to meet your needsof relief, as Chichester landlords, faced with 7.4%, not bad when you consider inflation is with great new benefits and atrent controls from Red Ed and the Labour running at -0.1%. a very competitive priceParty, now had something to cheer about However, regular readers of the Chichesteras the Tory’s were always considered to be a Property Blog know our passion for looking • NIL Excess (£250 & £500 Excesspolitical party that accepted the importance of deeper into the stats. The really interesting also available)the rental market, supported its development information is the value growth, but what typeswhile properly targeting the lawbreaker of property are actually selling in Chichester? • Up to £500,000 Buildings Sumlandlords renting out below standard rental Looking at all the properties sold, as recorded Insured as standard (Up to £2accommodation. by the Land Registry, within 2 miles of the million on request)Since May though, George Osborne announced centre of Chichester in September 2015 (thisfuture rises in stamp duty for buy to let data always runs a couple of months behind • Buildings Accidental Damagelandlords and a change in the interest relief on the house price data) compared to September included as standard - Nobuy to let mortgages, some people have started 2007 (a couple of months before the credit charge!to question that loyalty. However, things could crunch started to bite and the subsequenthave been a lot worse for Chichester landlords property crash). • Legal Liability Cover up to £5as previous ideas of making landlord’s pay millionmore tax was the idea (which was seriously Now we have mentioned in previous articlesconsidered) of increasing Capital Gains Tax that the numbers of properties selling in the • Trace and Access up to £5,000rates to the landlord’s own income tax levels. If city has certainly dropped post 2008, but what • Malicious & AccidentalLandlords would have had to pay capital gains amazed us was the drop in the number oftax of 40% – 45% on any uplift in value, we can semi’s and flats selling in Chichester compared Damage by Tenant optiontell you here and now, that would have made to the sales of detached properties. • Up to 20% Loss of Rentinvesting in property a non-starter for almost “Less properties are selling than last decade in • Up to 90 days un-occupancyeveryone. Chichester and the types of properties selling • Contents Cover up to £50,000However, we will admit the loss of mortgage have changed … interesting times ahead forhigher rate tax relief will make a number the Chichester Property market!” sum insuredof properties not stack up financially. The Therefore, all we can say to the landlords of • Theft of Keys & Recplacementnew rules are likely to slow demand in the Chichester is do your homework, make sureChichester housing market, which is in fact the numbers do stack up, take advice and locksgood news for the other landlords, as there opinion from professionals and above all, for • Nil Excess Home Emergencyis less competition from ‘amateur’ landlords those of you planning to add to your portfolio,offering too much. buy the right property at the right price. Cover option (unlimited“Just a thought, but making Chichester claims)landlords think twice and run their numbers • Multiple Property Portfoliomore cautiously is not such a bad thing” quotes (including discounts)So looking at the numbers, the November availablefigures have just been released and they show • Employed, Retired, Student,a growth of property values in Chichester of Self Employed, Local Authority0.2% over the month of November. tenants all covered • Pay monthly policy underwritten by UK General Insurance Ltd on behalf of Ageas Insurance Ltd Let us get a no obligation quote for you? Call us on 01243 788257Would you like to receive our extended online version? Sign up at www.chichesterpropertyblog.co.uk or email [email protected]