£5m/Year Black Hole In Oakham’s Property Market - PART 2

Is Buy-To-Let Immoral?

(Part 2)  

As the saying goes “An Englishman’s home is his castle” and as Maggie Thatcher lauded ‘everyone should own their own home’.  In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay that proportion of homeowners rose to 69% by 2001.  Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your home.

But on the back of TV programmes like ‘Homes Under The Hammer’, these same baby boomers started to jump on the band wagon of buy-to-let properties as an investment.  First time buyers were in competition with landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in last week's blog) beyond the reach of first time buyers.  Alas, it is not as simple as that.  Many factors come into play such as economics, the banks and government policy.  But are landlords fanning the flames of the housing crisis bonfire?

I believe that the landlords of the 659 Oakham rental properties are not exploitive and are in fact, making many positive contributions to Oakham and its residents.  Like I have said before, Oakham (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built.  Nationally, we are currently running at 5.07 per 1000 and in the early part of this decade were running at 4.1 to 4.3 per 1000.

It doesn’t sound a lot of difference, so let us look at what this means for Oakham …

For Oakham to meet its obligation on the building of new homes, Oakham would need to build 41 households each year. Yet, we are missing that figure by around 17 households a year.

For the government to buy the land and build those additional 17 households, it would need to spend £5,920,612 a year in Oakham alone.  Add up all the additional households required over the whole of the UK and the government would need to spend £23.31bn each year.  Our country simply hasn’t got that sort of money.

The bottom line is that as the population grows, there aren’t enough properties being built for everyone to have a roof over their head.  Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security where they can rely on good landlords providing them high standards, with safe and modernised homes.  As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

So only you the reader can decide if buy-to-let is immoral, but first let me ask this question, if the private buy-to-let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade, where would these tenants be living now?  The alternative doesn’t even bear thinking about.

 David Crooke, Owner

Understanding People & Property

 

 

We can help you to buy, sell, rent and manage your homes and property investments.

 

 

 

 

 

Oakham 01572 725 825    

Stamford 01780 484 554

Private Renting In Oakham Set To Hit 929 Households By 2021 (Part 1)

Private Renting In Oakham Set To Hit 929 Households By 2021 –

Is Buy-To-Let Immoral? (Part 1)

 

Can we blame the 55 to 70-year-olds for the current housing crisis in our towns? Also known as the ‘Baby Boomer Generation’, they were born after the end of WWII as the country saw a massive population explosion and recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments... they have emerged as a successful and prosperous generation.

Yet some have suggested these baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth whilst their children are forced either to pay massive rents or pay large mortgages.

 

Between 2001 - today average earnings rose by 65%, but average Oakham house prices rose by 144.9%

The issue of housing is particularly acute with the generation called the ‘Millennials’, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution are finding it very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents ... it’s no wonder these Millennials are lashing out at buy-to-let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The 3 biggest influencing factors on the property market in the later half of the 20^th Century were, firstly, the mass building of council housing in the 1950’s and 60’s, secondly for the Tory’s to sell most of those council houses off in the 1980’s and, finally, 15% interest rates in the early 1990’s which resulted in many houses being repossessed.  It was these major factors that underpinned the housing crisis we have today.

To start with, in 1995 the USA relaxed its lending rules by rewriting the ‘Community Reinvestment Act’.  This Act saw a relaxation on the banks’ lending criteria as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, the American viewpoint was that anyone, (even someone on the minimum wage / any working class person) should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as banks and building societies relaxed their lending criteria and marketed 100% mortgages, even Northern Rock offered 125% mortgages.

Today we can observe those very same footloose banks from the early/mid 2000’s (lending 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending.  On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

Conversely, you have unregulated Buy-To-Let mortgages.  As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you ... E.g., Virgin Money are offering 2.99% fixed for 3 years – so cheap!

So, in Part 2 next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore - and it’s not what you think!

 

Understanding People & Property

We are here to help you buy, sell, rent and manage your homes & property investments

 

Oakham 01572 725 825  &    Stamford 01780 484 554

 

 

 

 

This week's 3 Best Buy-To-Let Deals on the Stamford & Rutland Property Market

Property 1

3 Bed Semi-Detached House For Sale.  Guide Price £245,000

 

Cedar Road, Stamford.  On the market with Sowden Wallis

 

This looks a neat and well maintained 3 bedroom property with rear garden, garage and driveway parking.  Benefitting from gas central heating, uPVC double glazing and in a sought after location.  Expect to receive a rental income of around £750pcm.  Based on the guide price the yield is on the low side at 3.6%, but it's a great property and will always generate interest.

 

Guide Price: £245,000

Rent: Approx. 750pcm

Yield: c3.6%, based on guide price

 

Click this link for more details on this property:-

http://www.rightmove.co.uk/property-for-sale/property-46420083.html

Property 2
3 Bed Semi-Detached House For Sale.  Guide Price £195,000

Nightingale Way, Oakham.  On the market with Newton Fallowell

This tidy 3 bed-semi has all the attributes the majority of tenants are seeking...3 bedrooms, great location, gas central heating, uPVC double glazing, garage, driveway & garden.  More importantly, it has all the attributes a prospective landlord is also seeking... what looks like to be well maintained and presented, a sought after property and offering a good yield of c4.3%

Guide Price: £195,000

Rent: Approx. £700pcm

Yield: c4.3%

Click on this link to see more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-45646521.html

Property 3

3 Bedroom Town House For Sale.  Price £199,950

 

Coleridge Way, Oakham.  On the market with Murray Estate Agents 

If you're looking to invest in modern new build property then look no further than this 3 bedroom end of terrace town house.  Situated within easy reach of Oakham train station, and the town centre's amenities, properties on this development always hold appeal.  Offering a rental yield of 4.5%, this is my investment property of the week.

Price: £199,950
Rent: Approx. 750pcm
Yield: c4.5%

Click this link to see more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-64059554.html

 

If you would like to discuss any of the above in more detail with me, or if you are considering investing in a different property, just send me the details and we can discuss it in detail - good and bad!

David Crooke, Owner
david@upp-property.co.uk

Understanding People & Property

Sales & Lettings





Tel: Stamford 01780 484 554     Oakham 01572 725 825

Is Brexit Set To Restrain Property Prices in 2017

While Brexit has not yet had a sizeable impact on the Stamford housing market, my analysis is pointing to the fact that the economic viewpoint still remains uncertain and Stamford property price growth is likely to be more subdued in 2017 - although that isn’t a bad thing, so let me explain.

Since last summer, apart from a little wobble of uncertainty a few weeks after the Referendum vote, property values (and the economy) on the whole has outperformed what most people were anticipating.  In fact, when I looked at the property prices for our South Kesteven District Council (SKDC) area, these were the results...

October 2016              - drop of 1.05%

September 2016         - drop of 0.25%

August 2016                - rise of 1.06%

July 2016                     - rise of 2.47%

June 2016                    - rise of 1.68%

 

 

The UK property market continues to perform robustly (because we can’t just look at Stamford as if in its own little bubble) with annual price growth set to end this year at 6.91% and most of the East Midlands region property market at 7.52%.

Talking to fellow agents in London, the significant tidal wave of growth seen from 2013 through to 2015 in the capital has subdued over the last 6 months.  However, as that central London house price wave has started to ripple out, agents are starting to see stronger property growth values in East Anglia and the South East regions outside of London, than what is being seen within the M25.  So, fellow Stamford landlords and homeowners, is this the time to get your surfboards ready for the London wave?

Well, we in Stamford haven’t really been affected by what is happening in the central London property mega bubble (i.e. Kensington, Chelsea, Marylebone, Mayfair etc.).  The property market locally is more driven by sentiment and confidence.  The main forces for a weaker Stamford property market relate to economic uncertainty surrounding the Brexit process, which I believe will impact unhelpfully on consumer confidence in the run up to and just after the serving of the Section 50 Notice by the end of Q1 2017.

In addition, the influence of reforms to the taxation of landlords is expected to result in a reduced demand from buy to let (BTL) landlords, which will limit upward pressure on property values.  However, on the other side of the coin, demand from tenants has been strong, but this has been counterbalanced by a strong supply of rental properties.  In my opinion, there is a slight risk of rents not growing as much in 2017 as they have in 2016, but by 2018 they will rise again to counteract Philip Hammond’s changes to tenant fees.

The broader Stamford rental market looks relatively positive with modest rental growth expected and rents might rise further if landlords begin to sell properties in an effort to offset to the impact of tax rises.

So what do I predict will happen to the Stamford’s future housing market?  In Stamford, I believe property values are expected to rise by 1.5% in 2017, compared to the 5.3% seen this year.  Then picking up again with a rise of 2.4% in 2018, 3.1% in 2019, 4.6% 2020 and 6.1% in 2021.

But my predictions do not take into account any effect of a possible snap General Election or further referendum on ratifying any Brexit deal - if that comes to pass in the future.

David Crooke, owner & managing director

UPP Property Agents, Sales & Lettings

Stamford 01780 484 554 and Rutland 01572 725 825

Stamford Property Market Sees An Unpredicted 4% Boost

Well, it doesn’t seem like 2 minutes ago that it was Christmas – and now it’s all over!

Last week after moving into our smart new Stamford office on Red Lion Street (please call in to see us and say hello), I thought I would nip out for a quick coffee at my favourite local coffee shop.

I met a senior partner of a local solicitors in there and we got talking about the Stamford property market.   As a solicitor he had noticed a slight blip, but felt things appeared to be going back to normal.

He asked me how the Stamford property market had performed towards the end of last year, and if there were any great buy-to-let (BTL) deals around for one of his clients to consider.

In reply I said that, in my view, shrugging off the uncertainty of the initial post-Brexit vote, I have seen an increase in supply and a rise in the number of properties selling at the lower - middle end of the market, meaning both first time buyers and BTL landlords have been returning in the last few months – proof the market is still buoyant.

So let’s look at the numbers...

In November 2016, according to the 3 main property portals Rightmove, Zoopla and OnTheMarket, there were a total of 124 properties for sale in Stamford (within 2 miles of the centre of Stamford). In November 2015, there were only 119 properties for sale, a rise of 4%.

When I split it down into bedrooms (note things like building plots and part commercial/part residential etc., won’t be in these figures, so the numbers below won’t exactly match up to those in the above paragraph).

	# Properties on the market in Nov 2015	# Properties on the market in Nov 2016	% Change
5+ Bedrooms	12	18	+50%
4 Bedrooms	21	28	+33%
3 Bedrooms	49	48	-2%
2 Bedrooms	24	20	-17%
1 Bedroom	9	10	+11%

 ...and when I looked at type of properties, it got even more interesting:
 

Type of Property	# Properties on the market in Nov 2015	# Properties on the market in Nov 2016	% Change
Detached	39	51	+31%
Semi	29	32	+10%
Terraced	24	18	-26%
Flat	9	6	-6%

As the number of Stamford properties for sale has risen by 4%, homeowners have become more realistic about how much their homes are worth. This increase in homeowners wanting to sell suggests there is still confidence in the Stamford property market and there are also signs that people are being more realistic about pricing their property. (I have previously commented on the vital importance in pricing your property right from the beginning – see the archive section on my blog for more).

As you can see, there has been an uplift in semi-detached properties, which means they are a great choice for first time buyers and landlords.

So with a combination of realistic pricing and more properties on the market – both first time buyers and landlords alike might be able to pick up a few bargains!


Remember to look out for my weekly post of the '3 Best BTL deals in Rutland and Stamford' -  irrespective of which local agent is selling the property.  I also post the details on Twitter too... @UPPproperty


David Crooke

Owner

 

SALES & LETTING AGENTS

Email: david@upp-property.co.uk
Stamford: 01780 484 554      Oakham: 01572 725 825