One week has passed since the general election, so there’s now (a little) more certainty as to the future for housing policy nationally and how that may affect us here in Chichester.
Many property investors have been waiting it out since the election was called but will now be actively hunting for more buy-to-let properties. For many, as property is tangible and has an excellent track record, it is the preferable choice for safekeeping their money, whilst improving their returns compared to keeping money in the bank.
It therefore irritates me that a large number of potential landlords, particularly those new to property investment, may be wandering into the hands of misleading salespeople. They could fall victim to those offering illustrious schemes that promise instant riches. Or it could be a humble estate agent who just happens to have the ‘perfect’ buy-to-let in their shop window (and yet owns no rental properties themselves).
Many estate agents will of course advise you that the property on their books is more expensive than the exact same one around the corner on with ‘that other agent’.
They won’t pressure you into using their solicitor, their mortgage advisor and indeed their letting service, if some or all of those things aren’t actually in your best interests. They certainly wouldn’t bother showing you that property they’ve been unable to sell because it’s overpriced. Would they?
A couple of first-time landlords came to me wondering if the £250,000 two-bed apartment in Chichester they were recommended by an estate agent really was as great as they’d been told. I informed them that it would rent for around £875pcm, much the same as a two bed house on Arundel Park……which you can buy for £225,000 and avoid the leasehold charges.
Another landlord I spoke to was buying a three bedroom house in his village as he was told (by the local agent) it’s good to buy near to where you live. I certainly agree with the sentiment…but not if that means buying in a village where there’s only one rental property on the market! It doesn’t exactly show a strong demand from tenants does it?
Here are a few quick tips when investing in property:
• Check nearby comparable properties for asking prices, sold prices and rents.
• Use this as a guide to the achievable rent. Use this to calculate and compare yields (annual rent divided by purchase price).
• Consider the additional costs of leasehold property i.e. ground rent and service charges.
• Check rental demand by seeing how many properties are ‘to let’ nearby and which have been ‘let agreed’.