‘Taxing’ Time for local landlords

Between 1960 and 1990, a large majority of 20-somethings saved up their 5% deposit, went without life’s luxuries for a couple of years and then bought their first home.  By 2000, 51.6% of Stamford 25-29 year olds owned their own home (compared to 46% nationally) as did 72.1% of 30-34 year olds (compared to 64.2% nationally), whilst the remaining youngsters mostly rented from the council and occasionally, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 27.5% of Stamford 25-29 year olds own their own home and 48.5% of local 30-34 year olds (interestingly mirroring the national picture of 24.5% for the younger age cohort and 64.2% for the older 30 to 34 year range).

There was concern in government since the late noughties that this shift from homeownership to private renting wasn’t good for the well-being of the country and things needed to change to make it a more level playing field for first time buyers.  House prices needed to be more realistic and there needed to be incentives for both landlords and first time buyers.

It’s just in this post credit crunch/Brexit environment, the use of higher interest rates wouldn’t directly affect landlords, as around two thirds of buy-to-let properties are bought without a mortgage.  Therefore, an increase in interest rates would have hardly any effect on landlords but hit first time buyers - the very sector the government would be trying to help!

In the 1980’s and 1990’s, interest rates was the government’s weapon of choice to cool or heat up the UK housing market – and it did work – up to a point.   However, interest rates also affected many other sectors of the UK economy (and not always positively).  Also, given muted growth of real income in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying property comparatively attractive.

Instead, over the last 8 years the government has encouraged first time buyers and implemented taxes and restrictions on property investors.  First time buyers have had the ‘Help to Buy’ Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC.  On the other side the coin, the way landlords were able to offset the tax relief of their mortgage payments against income has now changed for the worse, plus an increase in Stamp Duty and they will be hit with additional costs as the government will be phasing out fees to tenants in the next 12 - 18 months.

For resourceful landlords it’s all about looking at your property/s and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment in terms of current and future income, capital growth and when you plan to dispose of your assets.  

 

In fact, some local landlords have strategically SOLD some of their portfolio to either reduce mortgage debt or more often to adjust their portfolio and buy other types of property that to help them meet their current and future investment goals.

The Oakham Bank of Mum and Dad lent £1.97m last year

 

My analysis has shown that up to the end of the last quarter, Oakham first time buyers purchased 146 properties. With wages rising at 2.8%, unemployment at a low rate of 4.2% (down from 4.6% from a year earlier and the joint lowest since 1975), national GDP rising at 1.87% and inflation at 2.3%, tied in with indifferent house price growth (compared to a few years ago), this has given first time buyers a chance to get a foot hold on the Rutland property market.

Over the last year, the average purchase price of an Oakham first time buyer property has been £190,200 and the average deposit was £30,812. Furthermore, my calculations show Oakham parents on average contributed £13,480 of that £30,812 figure. “The Bank of Mum and Dad” is for countless 20 something’s, perceived to be the only way they will ever be able to afford their first home. In fact, Oakham parents put up a substantial £1.97m in the last 12 months to help their children to purchase their first home with help in raising the deposit.

With mortgage rates at all-time lows, few 20 something’s would struggle to make mortgage repayments, but it is the requirement of the deposit which is the issue, although where parents and grandparents are helping out where they can, it does little to address the real problems of the housing market, whether for renting or buying their first home.

If you think about it, as a country we have been fortunate that the older generation who control the biggest share of the nation’s wealth are so plentiful to those following after. We need to remember, though, that this generosity is
 a sign of the issues of the British housing shortage, not its solution.

Note that in a previous paragraph, I used the word PERCEIVED… Granted, the average first time buyer deposit is 16.1%, but that is an average. Did you know 95% mortgages returned to first time buyers in late 2009 and have been available ever since? Also, many mortgage lenders and building societies now offer 100% mortgages (i.e. no deposit) at 2.75% fixed for 3 years. The perception is you need 15%, 20% even a 25% deposit to be a first-time buyer – you don’t! You don’t need any deposit, but (there is always a but!)...

Over the last decade, many tenants have upgraded into homes that they (or any generation before them) could never historically have afforded as a first time buyer. The British housing market has started to change - renting is now seen as a choice with many young (and increasing older) people are becoming more at ease with the flexibility offered by private renting a property rather than being tied to home ownership. Oakham landlords will continue to see growth in sector, and today’s tenants will become homeowners in 20 years’ time – when they will inherit the wealth of their parent’s home.

 

Do you want to style your bed like a pro'?

Here's how to make your bed look great for sales viewings...

1. Buy the best bedding, covers and accessories you can afford. Treat styling your home as an investment in your house sale. A well styled home can add to your house value and don't forget you can take the items with you to your new home.

Reversible duvet cover sets are really on-trend at the moment. Mix and match prints together to add contrast. Turn down the top for added interest.

2. Add a bedspread. You can add more colour and texture here and update for different seasons - a lightweight weave or jacquard for spring/summer or a heavier cable knit or faux fur for autumn/winter.

3. Add a throw. Keep it casual and don't fold it too carefully. It needs to look informal.

4. Pillows. These need to be big, fat and ready to plump. 4 for a king or double bed and 2 for a single. If you have a super-king bed, buy super-king pillows.

A question I am asked most by our vendors is whether to place the pillows on top of the duvet or beneath it? Personally, I prefer to see the pillows placed on top of the duvet.

5. Cushions. Odd numbers can work well and fill the space - try 3 or 5 on a larger bed. Mix different styles, sizes, colours, textures & designs.

Save your new bedding (and new white towels in your en suites and bathrooms) for viewings!

Call us to see how we can help you achieve sales success.

We have lots of creative ideas on how to make your home stand out from its competition and to maximise on its value.


By

Lottie Crooke

Creative Director, Stylist & Cushion Plumper!


UPP Property, Selling homes across Stamford & Rutland

01780 484 554

 

Should you buy a brand-new home?

Over the last 10 years, 2,864 new homes have been built in the South Kesteven area.  Historically, there were 2 distinct camps of property buyers; those who would only contemplate living in characterful period properties, and those people who preferred the low maintenance of a new home.
 
Now, in an attempt at appealing to a wider audience, developers are changing those uniform rows of identical homes into developments that are as individual as the families that live in them.  Whatever home you buy, be it old or new build, there can be hidden or supplementary costs that are often not taken into account by potential homeowners or buy-to-let landlords.

Unsurprisingly, over the last 10 years, a greater proportion of detached homes have been built locally (39.4% when compared to the national average of 29.2%) and fewer flats (11.4% locally vs 22.3% nationally). This is because of the nature of the Stamford area, its position in the country, the availability of building land, local government planning restrictions and the price of building land.

If you are considering new, look out for items such as curtain rails, TV aerials, kitchen appliances, carpets and curtains, gardens and patios being excluded from the sale.  With older properties, consider energy efficiency and look into the insulation, heating type and windows etc., Do your research, ask questions and get a surveyor to make a detailed inspection of the property so you are fully informed.

 

My research further revealed there was a pattern to when people bought a new home locally.  I discovered there was a drop in new homes buying in the credit crunch years (2008 - 2010) and since then the general trend has been better!  Looking at the much larger second hand housing market in Stamford over the same 10 years, the correlation between the new homes market and used market has been quite strong, which shows the new home builders don’t make (or break) the Stamford housing market, they just follow it (although with the planned building locally in the next 10/20 years – who knows if that will continue to be the case?).



If price is your sole motivator, then new homes are always CHEAPER when the economy is bad.  However, in normal and good housing market conditions, you will pay a ‘new build premium’. The Royal Institute of Chartered Surveyors admits that this can be as high as 10% extra, when compared to a similar second hand property. 

One final thought, at least with new homes there is no gazumping or no upward chain to ruin any sale completion dates!

 

NEWS... We have SOLD our lettings division

NEWS ... NEWS... NEWS...

We have sold our lettings division to focus on property sales.

Having worked hard over the last 9 years to establish a reputation envied by many of our competitors, we have sold the lettings division of the business to Leaders Romans Group, one of the UK’s (and Stamford’s) leading lettings and property management specialists.

This has been a difficult and sometimes emotional decision to make. It was very important to me and Lottie that our clients and colleagues would continue to be looked after and that the same personal level of service and performance could be maintained by the new owner of the lettings agency. We believe this has been achieved and Leaders’ national strength, financial backing and local market knowledge will allow the company to grow and introduce new services.

We will miss working with our lettings colleagues and thank them for their hard work, support and loyal dedication over the years. Thanks to Louise Howe, Mel Close, Lucy Barnes, Sarah Howe, Martin Matthews, Eleanor Burge and Lisa Sherriff.

Moving forward, Lottie and I will continue to be proud local business owners but will now focus all of our attention in the development and growth of our sales offering local homeowners. It’s a very exciting and positive time for us. The Stamford and Rutland property market continues to expand as a result of our micro-property markets, local area regeneration, government ‘help to buy’ incentives, superb local education authority schools and a wealth of outstanding private day and boarding school alternatives that all contribute to energising property sales and boosting relocation figures.

However, we sincerely believe that a buoyant property market shouldn’t make for marketing complacency. In fact, with a strong market comes the need to offer homeowners more creative marketing solutions as they plan to sell their home or investments. We know there is a better way to sell property and we want to offer our clients something different to what’s currently available, such as advising our clients on how to make their house stand out from its competition and suggesting practical ways to help them maximise on their home’s value.

As we continue to strive forward, we know we are well supported by a strong sales team with shared values, with Janet Cottis - sales manager, Lorna Bright - sales negotiator and welcome a newcomer to the team with local Rutland resident Ben Schofield as sales valuer.

Moving on and moving UPP!

 

 

 

43% Drop in Rutland Properties For Sale Compared to 10 Years Ago

There is good news for local landlords as ‘top of the range’ well-presented properties are getting really decent rents compared to a year ago.  However, this rise in rents is thwarting many potential first time buyers from saving for a deposit and saving in general.  In addition, there is also a shortage of homes coming on the market thus adding to the slowdown and affecting not just first time buyers but also those moving up the housing ladder.

Whilst it is true that the government’s initiatives targeted at improving the supply of homes built and helping first time buyers obtaining necessary funding are slowly starting to take effect), I also believe that to boost more properties onto the market, we need to see a better focus on those looking to downsize.

Incentives such as removing stamp duty for those downsizers (as was done for first- time buyers last year), together with encouraging even more first-time buyers with 100% mortgages to buy the smaller properties, would in turn release more mid-range properties onto the market.  In turn, this would encourage more mature homeowners to downsize and buy those mid-range properties - thus completing the circle. 

Rutland property values and transactions continue to be sluggish, and the monthly peaks and troughs of house prices and properties changing hands doesn’t mask the deficiency of suitable realistically priced property coming onto the Rutland property market, meaning the housing market is slowly becoming inaccessible to some.

 

Referring back to research for early summer 2008, at that time 168 properties were on the Rutland property market for sale, whereas today, there are only 95 properties for sale – that’s a drop of 43%.  And, in the last 6 months, only 313 Rutland homes changed hands.

The government needs to seriously consider the supply and demand of the UK property market as a whole to ensure it doesn’t seize up. It needs to do that with bold and forward-thinking plans but, in the meantime, people still need a roof over their head, so as local authorities don’t have the cash to build new houses anymore, it’s the job of landlords to take up the slack. I must stress though, I have noticed a distinct ‘flight to quality’ by local tenants, who are prepared to pay more for an exceptional home to rent.