Stamford home owners move every 11.9 years

During my school years, my parents seemed to move every other year (or it seemed that way). In reality, looking back at the house moves, we actually moved 3 times before I left home. However, whilst my parents kept the removal van people in business whilst I was at school, from research I have carried out it shows things have changed considerably in Stamford over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!

In Stamford, there are 8,994 properties. However, after we remove the 1,399 council houses, 1,497 privately rented houses and 138 houses where the occupants live rent free, that leaves us with 5,960 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 66.3% of the properties in Stamford are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Stamford, over the last 12 months, has only been 500. This means on these figures, the homeowners of Stamford are only moving on average every 11.92 years.

These are the reasons; Firstly, the cost of moving house has risen over the last 20 years. Secondly, with many remortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors driving fewer moves by existing homeowners.

However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2002 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Stamford property market (i.e. Stamford property values not rising quickly) is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Stamford homeowners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Stamford buy to let landlords? Well for the same reasons existing Stamford homeowners aren’t moving, fewer ‘20 somethings’ are buying their 1st home as well. Stamford youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their 1st property as soon people reach their early 20’s, the memory of the 2008 housing crisis and the belief the hard times either aren't over or the worst is yet to come, current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngsters wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. As a society, we expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit? Why go without holidays, the newest smart phone, socialising four times a week and the fancy satellite package for a couple of years, to save for that 5% deposit if there is no longer a social stigma in renting or pressure to buy as there was... say... a generation ago?
Even though, in real terms, property prices are 5% cheaper than they were 10 years ago (when adjusted by inflation), 16.6% of Stamford properties are privately rented (nearly double it was 20 years ago). As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing.


For advice and opinion on the Stamford Buy-To-Let property market, please visit our office on 12 St.John's Street, Stamford.

Are 'would be' Rutland homeowners warming to the idea of renting?

I was reading a report the other day produced by the Halifax, about the UK property market & why of the younger generation seem to be renting rather than buying. I find it fascinating that over the last 10 years, the British obsession of buying a house almost as soon as you left school, & the fact that if you rented you were seen as a 2nd class citizen, has turned on its head to a point where the hopes & dreams to own a nice home will be replaced by the ambition simply to live in one.

In the latter half of the 20th Century, you left school, got a job, bought a small house and kept buying and selling property, constantly upgrading, until eventually they carried you out in a box.  However, the perceived shame and stigma of renting is no longer the case, as it seems the British are now beginning to accept this flexible lifestyle.  This is a very important consideration for both Rutland homeowners and Rutland landlords, as it will transform the way the Rutland property ladders looks in the future, and I might ask, whether or not it will exist at all for some people? 

The make-up of households is one important factor, especially in the Rutland property market. The normal stereotypical married couple, 2 kids & dog of the 1970’s & 80’s has changed. Increasingly we have the need for larger houses where two families come together after divorce (plus kids), & need a property to house everyone, through to an increase in the number of one person households.

Looking at the data for Rutland, of the 1,741 private rental properties in the Rutland County Council area, 34.69% are 1 person households. However, when we compare the number of 1 person Rutland households who have bought their own property with a mortgage, of the 10,556 owner occupied households in the area, only 5.77% are 1 person households. Compared to a decade ago, this explosion in demand for decent high quality rental properties that 1 person households require has not been met with an increase in supply of such properties. Increasingly I believe Rutland landlords need to consider this change in the make-up of Rutland households, as I see an opportunity here. Another interesting stat’ was that 13.84% of those 1,741 rental properties are lone parent households as well. Again, another opportunity for landlords!

The government’s introduction in 2013 of the ‘Help to Buy Scheme’, where first time buyers only needed a 5% deposit, changed the perception of people’s ability to buy without having to save for a huge deposit. However, it might surprise you that 95% mortgages were re-introduced within 6 months of the ‘credit crunch’ in late 2009. So again, it comes down to people’s own perception. Many youngsters think they won’t get a mortgage, so don’t even bother trying.

Coming back to the deposit, it is still a fact that once you start renting, it becomes much harder to save for a deposit, regardless of the size. Interestingly, 86% of the renters polled by the Halifax refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit. This is the real reason why people aren’t buying – but renting. And, why demand for renting will continue to grow in the future (great news for landlords).

Rutland tenants can upgrade the quality & size of the property they live in for a minimum rent increase. The average rent of a 2 bed property in Rutland is £525pcm, a 3 bed is £170 more at £695pcm, whilst the average 4 bed is £995pcm. If you had to make that jump when buying, the monthly mortgage payments would be stratospherically higher. Without any social pressure & with better quality rental properties compared to a decade ago, we will become a nation of renters within the next generation. The UK is becoming more like our European neighbours, where renting is ‘the norm’. Who is going to supply all these properties to rent? Landlords!
Whether you are an existing landlord looking to grow your portfolio, or looking to become a ‘first time landlord’, my thoughts are to take advice from as many people as possible.

As the majority of landlords buy their 'Buy-to-Let' properties in the same town as where they live, you might need specific advice about Rutland itself. 

Please call me to arrange an appointment at either my Rutland or Stamford office and I will be happy to assist you.

Stamford Buy-To-Let; Demand and Supply

 

Following on from my recent article about the state of the Stamford property market, and in particular, what had happened to the rents Stamford tenants have had to pay since the 'Credit Crunch'. If you recall, I said rents in Stamford are still 4.86% lower than they were in 2008. A Stamford landlord has since rung me after reading the Stamford Property Blog, wanting to know more of the story of what was happening to current rents in the town. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy-to-let investment.

The Stamford rental market is all about supply and demand (isn’t it so in all parts of the economy?). On the supply side, 40 rental properties have come up for let in the last 31 days in Stamford. It sounds a lot until you consider there are 1,497 rental properties in Stamford, that means only 2.67% of the rental stock of properties in Stamford are coming onto the market each month (it is normally around 5%). One reason for this lack of new rental properties coming on the market is the fact that tenants seem to be staying in properties longer.

With this lack of supply, newer tenants have to pay more to secure the property they want. And this is the crux of the matter ...properties they want. Older properties in Stamford that haven’t been maintained still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents stagnate or drop. Tenants want　either modern properties with all the 'mod cons' or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Stamford have risen by 0.4% in the last month. Any properties, old or modern, put on the market in good or excellent condition will rent in a matter of days. 　　

Interestingly, looking at Stamford property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015 (the latest set of data), property values rose in Stamford, with 1% growth, meaning they are now 4.3% higher than they were a year ago. When one looks at the regional picture, the East Midlands average property values rose by 1.4% in the last month. The difference doesn’t concern me, as the regional and local property values always even themselves out over the months.

Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Stamford to rise by 3% to 5% over the coming 12 months, following the Conservative victory.  In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the town.

...And so back to our landlord. Each property is unique and as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week. For more in depth thoughts and opinions like this on the Stamford Property market ... keep visiting the Stamford Property Blog.

Oakham Buy-To-Let; To extend or not extend...?

Last week, a landlord from Oakham emailed me to ask, after reading the Oakham Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought a good way would be get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it.　If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property. Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at　semi detached properties, turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.

 

 

However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord. What would be the cost of making that extra bedroom? The average value of a terraced house in Oakham is currently £196,300 whilst the average value of a semi detached house is £230,300, meaning to make money the cost of the extension would need to be less than £18,648 on the terraced property and £24,181 on the semi detached house. Talking to a number of trades people in the town, most are booking up into the New Year. Also, no matter how good a friend he was, I know of no builders that would charge as little as that. Maybe the builder was just thinking of a bit of pointing work on the chimney!

Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well. Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending.

33.3% of the one bed properties on the market to rent in Oakham have a tenant with an average rent of £390 per month

33.3% of the two bed properties on the market to rent in Oakham have a tenant with an average rent of £514 per month

53.8% of the three bed properties on the market to rent in Oakham have a tenant with an average rent of £678 per month

60% of the four bed properties on the market to rent in Oakham have a tenant with an average rent of £1,139 per month

 

Now, if you want to increase the value of your property, be you an Oakham landlord or homeowner, there are things that cost a lot less than building extra bedrooms. Spruce up the exterior, emulsion all the rooms, install fresh carpets and curtains. For homeowners, a matter of a few hundred pounds will add thousands - whilst for landlords, these things can add an extra 10% to the rent that you can achieve.

 

For more advice and opinion on the Oakham property market, please visit our Church Street office and keep visiting our blog for new updates.