Merry Christmas!

I would like to take this opportunity to wish everyone a very Merry Christmas.

Thank you for taking the time to read my blog this year, I really hope that you have found the articles informative. 

Enjoy the festive season and have a Happy New Year!

Matthew

Martin & Co Chichester - Launch of Residential Sales Department

We are pleased to announce that we will be launching our residential sales department in January 2016 to complement our established lettings service, with a vision-plan to offer landlords in the Chichester area a ‘one stop shop’ for their buy-to-let investments.

Since the Chancellor announced a rise in Stamp Duty Land Tax in his Autumn statement we have seen an increase in enquiries from landlords, both existing and new, keen to expand their portfolios and invest before the changes take effect in April next year.

Martin & Co believe that there is likely to be a flurry of activity before the Spring of 2016, however as long as careful and considered investment advice is sought, any initial increase in financial outlay will be recouped by purchasing the right property and maximising the rental return of the investment.

As a property industry expert, with many years’ experience working within the local marketplace, we firmly believe that we are best-placed to listen to your aspirations from your investment - from initial purchase right through to exit strategy - to ensure that we guide you towards a successful and prosperous buy-to-let experience.

Similarly, if you are considering selling your investment property, who better to manage the process from start to finish, than a company you can trust and who know your property inside-and-out to provide a prospective purchaser with detailed answers to all of their questions from initial point of enquiry. 

Buy-To-Let Deal of the Day - 17% Capital Growth Over 8 Years PLUS 4.8% Gross Yield!

Looking through Rightmove this morning I noticed a property that I feel is worth serious consideration if you considering entering the buy-to-let investment market, or indeed looking to expand your current property portfolio.

St Georges Court on Cleveland Road (just off Whyke Lane) is a modern, niche development of ten apartments which have a successful track record of renting extremely well over the years to both single professionals and working couples, and in my opinion would make a safe BTL investment.

http://www.rightmove.co.uk/property-for-sale/property-38444121.html 

Rental values in the block have risen by around 4% over the last three years, with sales values also on the up, from circa £150,000 for a one bedroom ground floor unit back in 2007, to around £175,000 this year - a growth of over 17%.

Void periods are also very low, with one of our landlords in the development only experiencing a total of 13 days without rent in the 5 years we have managed his property. 

The above price rises, minimal voids, and the curb appeal of modern apartment living, are all big factors in what makes a successful BTL venture.

If you are considering investing in the Chichester property market, whether this be for investment or for a house to make a home, please come and speak to us first for free, impartial, and honest property advice.

Changes to Buy to Let Stamp Duty - Statement from MartinCo PLC

In Wednesday’s Autumn Statement (25/11/2015), the Chancellor announced that buy-to-let landlords and people buying second homes will face an additional 3% surcharge on each band of their stamp duty land tax bill, commencing from April 2016. The rate of duty will be as follows: 

Property value	Standard rate(currently)	Buy-to-let/second home rate (from April 2016)
0 -£125,000	0%	3%
£125 – £250,000	2%	5%
£250 – £925,000	5%	8%
£925 – £1.5m	10%	13%
over £1.5m	12%	15%

This surprise intervention comes at a time when the buy-to-let market is working extremely efficiently and we believe this move has been announced for political, rather than economic, reasons. Lending in this market is at record post-credit crisis levels with over 1,000 BTL products available and c.20% of the population is now housed in the private rental market in the UK. The day after the Chancellor’s announcement, it was revealed that the Government had once again missed its target to reduce net migration into the UK, and the latest figures were at a new high, with 330,000 people added to the UK population over the year.

MartinCo Plc continues to believe that all of the drivers for further growth in buy-to-let remain in place; restricted housing supply, high net migration, limited affordability and restrictions on lending. The management believe that total returns from buy-to-let will continue to outpace other investments including traditional pensions, and have the psychological and emotional advantage of being an easily understood, tangible asset.

Martin & Co Plc believe a principal effect of these changes will be for prospective buy-to-let purchasers to factor this into the price they are willing to pay for a property, and this will have a dampening effect on appreciating house prices in some sections of the market. One may argue as a consequence, that buy-to-let purchasers could be out bid by purchasers for owner occupation (e.g. first time buyers); however we believe buy-to-let purchasers will continue to be better placed to bid/complete on these properties given that they typicallyhave more cash to inject and less restrictive buy-to-let mortgage conditions meaning that there is greater certainty of the sale completing.

It should also be noted that buy-to-let purchasers  generally have long term time horizons for investment e.g. to provide supplementary income to employment income over a number of years. The effect of an uplift of 3% on the initial transaction cost is therefore unwelcome, but does not significantly affect total returns over the long term,  especially if factored into the purchase price.

Further, we believe this move is the lesser of two evils; given the Government’s new found desire to promote home ownership, we believe that higher transaction costs are significantly less severe than other potential regulatory levers, such as restrictions on buy-to let lending or rent controls.

In the short term, we would actually expect some benefit to the buy-to-let market, as we would expect prospective investors to bring forward purchases to before the April 2016 deadline for these changes.

There is also the interesting possibility of tax engineering by creating corporate vehicles such as Real Estate Investment Trusts to own larger numbers of properties and escape both the extra stamp duty and the taper reductions in mortgage interest relief.

Therefore, we believe initial reactions, including that of the Association of Residential Letting Agents (ARLA) who described the announcement as a “catastrophe” in mainstream press, to be significantly overblown. While admittedly an unwelcome move for letting agents, we believe current thoughts as to the severity have been greatly over exaggerated.

We do think any effects these changes may have on buy-to-let investment will be felt most in the prime London market given the higher transaction values.

Student Landlords - Fail To Prepare, Prepare To Fail!

Chichester is home to just over 5,000 University students, studying a variety of courses ranging from Fine Art to Sports Science, and Primary Teaching to History. In such a vibrant and thriving University city comes a very strong student buy-to-let market. 

Having worked with many student landlords over the years, one of the most important aspects of the lettings process I have learnt is that advertising timings and tight tenancy renewal's processes are absolutely key to securing a successful tenancy. 

Experience tells us that the majority of motivated students looking for accommodation for the next academic year will start their search early to ensure they secure the best houses available. Approximately 80% of students will look to secure their accommodation for next year during the months of January and February.

If you are a landlord with a student property for this next cycle here are a few tips that have served us well in ensuring your property does not get left behind when the window and interest closes (around late March/early April.

1.    Have you or your agent called the existing tenants to determine their intentions for the next academic year? They should be offered the option to renew at a price you have decided with the help of your agent if you currently use one.

2.    Ensure a time frame for decision is agreed. As the marketing window for this period is so sensitive it is always best to lay out the conditions under which the renewal is offered. We recommend a decision by the 1st February with a new agreement signed and completed. During this time the property should be marketed and the tenants made aware, so that interest is generated.

3.    Get that signed agreement back ASAP! A tenant telling you 'yes we would like to renew', is not a legally binding agreement. Every day that you don’t have a signed agreement is another day wasted on marketing. If you don’t have an agreement in place and the tenants decide to change their mind, your property is caught in a bad marketing period and you may struggle to secure new tenants for the following year. Tenants DO change their minds for all sort of reasons. they drop out of their course, they decide they need a change or they fall out with their housemates. It all happens and more regularly than you'd imagine. A signed agreement ensures they are committed.

4.    If your tenant is leaving, do not delay the marketing and most importantly of all, instruct a reputable letting agent (unless of course you are already using one!). All new first year tenants will be guided by college mentors. This includes advice on accommodation and the "do's and don’ts" when renting a property. A decent agent offers them the security they are looking for and gives your property the greatest shop window to achieve maximum return - The World Wide Web of course! 

If you are a student landlord, or considering entering the student BTL market, please give me a call on 01243 887887. We always give our advice freely and are happy to assist with any questions or queries you may have.

Market Intelligence Report Autumn/Winter 2015

Our new Market Intelligence Reports are hot off the press and proving extremely popular with our landlords and property investors!

The latest edition, compiled by Dataloft, an independent property research company, has found that accommodation rented to families with one dependent child has almost doubled in the last decade. 

This intelligence is telling us is that professional families, who would have once harbored intentions to purchase their own property, are now seeing rental accommodation as a long-term alternative to buying. This could be for a variety of reasons - rising house prices, struggle to obtain finance/raise deposits, flexibility to migrate and re-locate with work/business etc. 

This change in demographic, coupled with a 21% increase in tenant activity since the beginning of January 2015, imply that that the buy-to-let market remains a savvy, sound and growing investment strategy.

To receive your free copy of the Report please email me at matt.berry@martinco.com

Buy-to-let Deal of the Day - Neat and Well Presented Apartment offering 5.3% Gross Yield

As we have previously discussed, it is extremely important to obtain full details of all service and maintenance charges when considering purchasing a leasehold investment. These costs can often run into well over a thousand pounds per annum, taking a serious chunk out of a landlord's yield. 

Whilst browsing Rightmove this morning I noticed a two double bedroom apartment with an annual maintenance charge of a very modest £600 (plus a peppercorn ground rent of £10 p.a.).

On the market with Bryne Runciman Estate Agency for a guide price of £180,000, the flat is offered in good condition, with a fully tiled modern bathroom with shower, and two double bedrooms. Elizabeth Road is situated approximately one mile to the east of Chichester City Centre, and a similar distance from St Richards hospital. 

Our agency manages several apartments within this particular development, with rents achieving between £775 and £795pcm. These properties tend to attract either young working couples or professional sharers, due to their close proximity to the city centre and A27. 

A purchase price at the £180K guide, coupled with a £795pcm rent, would return a 5.3% gross yield. If we also take into account the service charges of circa £50 per month, a potential investor would still see a healthy 5% return.