Is it 'Doom and Gloom' for the Oakham Property Market?

One of my landlords rang me last week from Stamford Road, after he had spoken to a friend of his. They had been discussing the Oakham property market and neither of them could make their mind up if it was time to either sell or buy property.

If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, new legislation on checking tenants and the general uncertainty in the world economic situation.

I will admit there are certain landlords in Rutland who have over exposed themselves in the last few years with high percentage loan to value mortgages. Those mortgages, with their current (yet artificially low) interest rates, will start to suffer, as their modest monthly positive cash flow/profit, i.e. income (rent) less costs (mortgage, fees, tax) will become negative when the tax and mortgage rates rise throughout 2017 and beyond.

It appears to me these landlords seem to have treated the Oakham Buy-to-Let market as a ‘sure bet’ and have not approached this as a business and, as a result, they will suffer as they thought, "Buy a property, rent it out so it covers the mortgage and make a few quid on top".

 
These are just the types of people will now be thinking twice. I see opportunities everywhere in the Buy-to-Let marketplace and will not be stopping.  I am here to stay. It is going to be an exciting year ahead.

Gone are the days when you could buy any old house in Oakham and it would make money.  Yes, in the past, anything in Oakham with four walls and a roof would make you money because since WW2, property prices doubled every seven years … it was like printing money – but not anymore.

True, since February 1997, the average price paid for an Oakham flat/apartment has risen from £41,750 to today’s current average of £115,000 in the town.  An impressive rise of 175% and terraced/town houses have risen in the same time frame, from £40,990 to £148,083, an even better rise of 261%.

However, look back to 2005, and in that year, the average flat was selling for £129,995, meaning our Oakham landlord would have seen a modest drop of 12% and the terraced owner would have seen an increase of 86%, as they were selling for on average £79,617.  Not bad, until you consider inflation.

Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to retain its value, an Oakham terraced property bought for £79,617 in 2005 needs to be worth £106,184 today. Therefore, our landlord has seen the ‘real’ value of his property increase by 52.6% (i.e. 86% less 33.4% inflation).

The reality is, since around the early 2000’s we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either.

Therefore, it is high time anyone considering investing in property stopped believing the hype and did some serious research using independent investment expertise.

You can still make money buying the right Oakham property at the right price and finding the right tenant. Properties in real terms are 52.6% higher than ten years ago, so investing in Oakham property is not only about capital growth and yield (the return from the rent), it’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’?

Well, we discuss such matters in other articles on the Oakham Property Blog ...  check them out in the archive section now. 

 

If you wish to discuss any properties you are considering purchasing, or would like to discuss one you already own, please contact me via david@upp-property.co.uk or call me on 01780 484 554 and I would be happy to help.

 

This week's 3 best Buy-to-let properties in Rutland and Stamford are...

Property 1: South Street, Oakham  £170,000
2 Bedroom end of terrace
 

http://www.rightmove.co.uk/property-for-sale/property-51865807.html

 

This property was under offer but has come back to the market unexpectedly. Generating a good rental income of £595pcm, this property is located close to Oakham town centre and would be a fantastic starter home for a young professional couple.

Purchase Price: £170,000
Rent: £595pcm
Call James Sellicks Estate Agents on 01572 366 032



Property 2: West Walk, Oakham, £99,950
1 Bedroom flat in great location

http://www.rightmove.co.uk/property-for-sale/property-39923388.html

Priced under £100,000 and in a great position close to Oakham train station & amenities.

The rental income would be in the region of £425pcm and based on paying the asking price, this would be a yield of over 5% which is very rare for the Oakham rental market.

A sounds investment.

Purchase Price: £99,500
Rent: £425pcm

Call Adrian McCarthy, Sales Director
UPP Property Agents on 01572 725 825

Email: adrian.mccarthy@upp-property.co.uk

www.upp-property.co.uk







Property 3: Somerby Close, Stamford - offers over £115,000
2 Bedroom terrace

This has just had a drastic price reduction for a quick sale with open house viewing on Friday 19.02.16, call Rosedales for more info'.

http://www.rightmove.co.uk/property-for-sale/property-37611195.html

 

Whilst this property would need a little TLC it is offered to the market at a fantastic price. Even if you paid over the asking price, the rental return of £595pcm would still bring in a unbelievable yield for the Stamford rental market. One to watch and whilst it appears to be vacant the no onward chain must viewed as an attraction for beating that April 1^st deadline!

 

Purchase price: Offers over £115,000

Rent: £595pcm

Call Rosedales on 01780 695 012

Have Stamford landlords counted the cost of a Tory election win?

Can you remember 10.05pm on Thursday, 7^th May 2015 ... with the shock news that BBC Exit Polls suggested the Conservatives would be returned with a majority lead?

The middle classes in First Drift and Tinwell Road exhaled a huge sigh of relief, as landlords, faced with rent controls from “Red Ed” and the Labour Party, now had something to cheer about as the Tory’s were always considered to be a party that accepted the importance of the rental market and supported its development whilst properly targeting the ‘lawbreaker landlords’ renting out below-standard rental accommodation.



Since May though, George Osborne announced future rises in stamp duty for buy-to-let landlords and a change in the interest relief on buy-to-let mortgages, some people have started to question that loyalty.

However, things could have been a lot worse for landlords, as previous ideas of making landlords pay more tax was the idea (which was seriously considered) of increasing Capital Gains Tax rates to the landlord’s own income tax levels.

If landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non-starter for almost everyone.

However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially. The new rules are likely to slow demand in the housing market, which is in fact good news for the other landlords, as there is less competition from 'amateur' landlords offering too much.

Just a thought, but making Stamford landlords think twice and run their numbers more cautiously is not such a bad thing.

So looking at the numbers, the November figures have just been released and they show a growth of property values in Stamford of 0.3% over the month of November. That figure doesn’t surprise me due to the time of year.

It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Stamford have risen by 5.4%, not bad when you consider inflation is running at -0.1%.

However, regular readers of the Stamford Property Blog know my passion for looking deeper into the stats. The really interesting information is the ‘value growth’, but what types of properties are actually selling in Stamford?  

Looking at all the properties sold, as recorded by ‘The Land Registry’, within 2 miles of the centre of Stamford in September 2015 (this data always runs a couple of months behind the house price data) compared to September 2007 (a couple of months before the credit crunch started to bite and the subsequent property crash).

No. of properties sold	Sept 2007	Sept 2015	Difference
Detached in Stamford	16	9	-44%
Semis in Stamford	17	8	-53%
Terraced Houses in Stamford	13	21	+62%
Apartments / Flats in Stamford	5	3	-40%

Now I have mentioned in previous articles that the numbers of properties selling in the town has certainly dropped post 2008, but what amazed me were the drop in the number of detached, semis and apartments selling in Stamford compared to the sales of terraced properties.

Less properties are selling than last decade in Stamford and the types of properties selling have changed ...interesting times ahead for the Stamford Property market!

Therefore, all I can say to the landlords of Stamford is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and above all, for those of you planning to add to your portfolio, buy the right property at the right price, in the right location and put the right tenants in place!

 

If have a property in the area, or are considering purchasing one, please contact me and I would be glad to discuss it with you further.

 

David@upp-property.co.uk or call me on 01780 484 554

 

 

 

 

 

 

3 of the best Buy-2-Lets on the market this week...

 

Here are my favourite properties on the market this week offering great buy-2-let opportunities, in no particular order...
 
Property 1: Ladywell, Oakham with UPP Property Agents
2 bed end terrace home
Purchase price: £135,000
Currently achieving: £550pcm
 
New on the market, this superb two bedroom end of terrace home is located on a highly desirable rental development.  Currently achieving £550pcm with a long term tenant in situ'. A great opportunity to beat the tax rise and earn a rental income from end of March.  This great investment won't stay on the market for long.
 

Ladywell, Oakham by UPP Property Agents
Call Adrian McCarthy on 01572 725 825

 

For full property details, click this link:-

 

http://www.rightmove.co.uk/property-for-sale/property-39716304.html

Property 2: Deans Street, Oakham with Newton Fallowell

1 bed first floor flat

Purchase price: £85,000

Currently achieving: £395pcm
 

Possibly the best investment on the market in Oakham right now. 5.5% is as good as it gets in the town and located within close proximity to the station and amenities. Good solid investment.

 

For full property details, and to contact the agent, click this link:

http://www.rightmove.co.uk/property-for-sale/property-39754434.html 

 
Property 3: Ancaster Road, Stamford with Knight Partnership
3 bed end of terrace home
Purchase price: £195,000
Approx. rental of: £650pcm
 

Not the best yield out there, but an outstanding property. With a solid return of £650pcm this property offers classy internal decoration and with scope to add value as a investment. Must be considered.  Stamford will always hold strong appeal.

 

http://www.rightmove.co.uk/property-for-sale/property-52870672.html

 

32.7% of Stamford tenants in the private rented sector receive Housing Benefit

“What does the ideal Stamford tenant look like?”, asked one of my landlords from Uffington the other day, to which he carried on before I could reply, “Let me guess, a professional couple, both in their 30’s, flawlessly tidy, pays their rent early, doesn’t complain or fuss, who has no plans to move and cheerfully accepts annual rent increases”.

Before I can answer that question properly, I have always believed all a landlord wants (and expects) of their tenants is to pay their rent on time and look after the property as if it were their own. In return, the landlord should provide a property that is warm, clean, modern and damp free and sort any issues (such as repairs) quickly and without fuss. 

Back to the tenants.  Tenants tend to fall into several groups ... 20 something professionals; young and middle aged families; corporate tenants (i.e. an employer finds their employee a house to live in); students; older singles/couples and housing benefit claimants.

And they come with different needs and wants. So choosing who best suits your Stamford property (and steering clear of bad tenants), is a big factor in making property investment a success.

One topic that I am often asked is should they, as a landlord, accept tenants on housing benefit?

It might interest the landlords of Stamford that of the 7,653 private rented properties in the local council area, 32.7% of the tenants of those properties are on some form of housing benefit.

(2,509 properties to be exact). I know many landlords have suffered late rent payments with tenants on benefit, especially since 2008, when local authorities started paying housing benefit to tenants rather than directly to the landlords, but you can’t ignore the fact that housing benefit tenants make up a significant proportion of the Stamford rental population.

I believe that the final decision in accepting such tenants lies with the individual landlord (and if relevant, gaining the mortgage provider’s permission), but you can’t tar every tenant with the same brush.  Remember, I will always give you a balanced opinion if ever asked.  

It won’t surprise some readers of the Stamford Property Blog, when we compare Stamford to the national picture, Stamford’s Housing benefit claimants are lower, as nationally a higher proportion of private tenants claim the benefit.

Nationally, 39.2% of the tenants of the 3,891,467 rental properties in Great Britain claim some form of housing benefit (i.e. 1,526,915 properties).

Now, let us look at the occupations of Stamford tenants, which makes even more fascinating reading. Of the 7,653 privately rented properties in the Stamford area, 6,069 ‘head tenants’ (the head tenant being classified as the head of the household) are in employment (the other 1,584 rental property head tenants either being retired, long term sick, students or job seekers).

Splitting those 6,069 head tenants down into their relevant professions, 2,175 of them are Managers, Directors, Senior Officials, Professional or Technical Professions, 473 in Administrative and secretarial occupations, 921 in Skilled Trades, 558 in the Caring, Leisure and other service occupations, 368 Sales and Customer Service Occupations, 783 Process, Plant and Machine Operatives and finally, 791 in Elementary Occupations.

The one thing I have always known anecdotally, but until I did my research, never had anything to back it up with, was the high proportion of professionals and skilled trades renting property in Stamford – intriguing!

Maybe in future articles, I will look deeper into the corporate tenant market, young and middle aged families, students and older persons’ rental markets.

Stamford Landlords could be fined £93,000pa

“Who would want to move to Stamford in weather like this?” was what one landlord said to me as we shook hands outside his property the other afternoon. It was dark, windy and cold.  It had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the heating on, and watching 'Location, Location, Location'.  But this landlord lived in neighbouring Peterborough and this was the earliest he could do.

It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, and as his tenant had handed in their notice recently, he called us for our opinion in time for the next tenancy.

For those Stamford landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub-let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.

Our landlord from Peterborough wanted to know how much of a real issue was ‘Right to Rent’ in Stamford. I was able to tell him.  The last available figures (from a couple of years ago) show that 31 people (whom were registered as 'Non-UK Born Short-term Residents') moved into private rented accommodation in the South Kesteven District Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £93,000 to the landlords of the town.

It doesn’t sound a lot when you think there are 19,701 residents in Stamford, and of those, 18,086 people (or 91.80%) were born in the UK.  But Stamford is a growing cosmopolitan town, and the country of birth of the residents in Stamford can be split down as follows:

·         UK                                                                      91.80%

·         Ireland                                                               0.61%

·         Europe                                                               3.87%

·         Africa                                                                 0.97%

·         Middle East and Asia                                      1.68%

·         Americas and Caribbean                               0.81%

·         Australia and Pacific region                          0.22% 

 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 763 Europeans in the area necessarily have the right to live in the UK either.

In a nutshell, Stamford landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include:-

·         UK Passport

·         EEA Passport/Identity card

·         Travel document or Permanent Residence Card showing indefinite leave to remain

·         Paperwork from Home Office stating their Immigration status

·         Certificate of registration or naturalisation as a British citizen

 

I hope the new law will target dishonest landlords who repeatedly fail to carry out 'Right to Rent' checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.

So what did our landlord do?

Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Stamford Property Blog for a while and because of the knowledge we impart to the landlords of Stamford, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £50 per month for his property (when we found him a tenant one week later)

Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.

3 of the best Buy-2-Lets on the market this week...

Property 1. 

Northgate, Oakham via Spencers 01572 366022

 

This 2 bed terrace on Northgate, Oakham has off-road parking, and is all about LOCATION...as it is set within an easy walk to Oakham train station, shops etc.,

 

This property will easily achieve £550pcm being located so close to the town centre.  In fact, this type of property is pretty unique due to its location so if the time comes to sell, it would be snapped up!

 

Purchase Price £185,000 with rental of approx. £550pcm

 

http://www.rightmove.co.uk/property-for-sale/property-39079398.html

 

 

Property 2.

The Leas, Cottesmore.  Call Adrian McCarthy, UPP Property Agents 01572 725 825

At a bargain price of £190k, this 4 double bedroom property is located in the sought after village of Cottesmore. 

The home has huge rental potential and one that would almost always remain occupied.

 

This property would suit all sectors of the rental market and at a rent of £875pcm it has to be deemed as a sound purchase.

 

 

Guide Price: £190,000 with a rental of approx. £875pcm

 

Marketed via UPP Property Agents on 01572 725 825

http://www.rightmove.co.uk/property-for-sale/property-39080397.html

 

 

 

 

Property 3. 

Trinity Road, Stamford £159,995 through Murray Estate Agents on 01780 695 021

 

3 bed terraced home in a very sought after area.  It would make a great family home or perfect for a young couple looking for their first home. A good solid purchase with what should be low maintenance upkeep.

 

Marketed at £159,995 with a rental valuation of approx. £725pcm

http://www.rightmove.co.uk/property-for-sale/property-57463271.html

Alternatively, if you are considering another strong property and would like my opinion (good and bad!), please email me via david@upp-property.co.uk

I look forward to hearing from you.

 

 

Where will Stamford Property Prices be by 2021?

I was having lunch the other day with a local Stamford solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Stamford property market for the next five years.

Property prices are both a British national obsession and a key driver of the British consumer economy.  But before I can predict what will happen over the next five years to Stamford house prices, firstly I need to look at what has happen over the last five years.

One of the key drivers of the housing market and property values is unemployment (or lack of it), as that drives confidence and wage growth – key factors to whether people buy their first house, existing homeowners move up the property ladder and even buy-to-let landlords have an appetite to continue purchasing buy-to-let property.

When the Tory’s came to power in May 2010, the total number of people who were unemployed in town stood at 1,945 (or 3.7% of the working age population in the Stamford parliamentary constituency).  Last month, this had dropped to 878 people (or 1.6% of the working age population).

As the Stamford job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 3.4% per year in the private sector (as recently reported by the ONS).

That is why, even with the colossal turbulence of the last few years, property values in the Stamford area are only 1.29% lower today than they were five years ago.

Many home occupiers have held back moving house over the past seven to eight years following the ‘Credit Crunch’ but with the outlook more optimistic, I expect at least some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market.

With a more stable economy in the town, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Stamford.

I forecast that the value of the average home in Stamford will increase by 19.8% by 2021

19.8% might sound optimistic to some, but according to ‘The Land Registry’, values are currently rising in Stamford at 1.8% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.

However, it wouldn’t be correct not to mention those potential negative issues as I do have some slight concerns about the future of Stamford housing market.

The number of properties for sale in Stamford is lower than it was five years ago, restricting choice for buyers (yet this keeps prices higher).

Interest rates were being predicted to rise around Easter 2016, but now I think it will be nearer Christmas 2016 and finally the new buy-to-let taxation rules which are being introduced between 2017 and 2021 (although choosing the right sort of property / portfolio mix in Stamford will, I believe, mitigate those issues with the next taxation rules).

I am telling the landlords I speak to, that with interest rates at their current level 0.5%, the cash in your Building Society is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes, far outstripping bank accounts and inflation.

So my final thought ...  property is a long term investment, and has always outperformed most investments over the same period.

Stamfordians in their 40’s and 50’s would be mad NOT to include property in their long term financial calculations.

Just make sure it’s the right property, at the right price and in the right location.

What does 2016 have in store for the Oakham Property Market?

 

Will Oakham house prices go up or down? And if so, by how much?

Those of you who regularly read this blog will know I am not the sort of person who pulls punches nor someone who ever fails to give a forthright and straight talking opinion.  So here are my thoughts for the 3,248 Oakham homeowners and landlords.

The average Oakham property is 2.8% higher today than it was a year ago, which doesn’t sound a lot, but when you consider inflation is currently running at -0.1% (i.e. consumer/retail prices are dropping) and average salary growth is only around 2.5% pa. 

This is bad news for first time buyers as property affordability continues to decrease (although I was reading in The Times the other day that wage inflation (i.e. salary growth) is showing signs of weakening).

Some commentators have said the higher stamp duty taxes announced a few weeks ago in the Autumn Statement for Buy-to-Let landlords will really dampen the property market, with concerns over first time buyer affordability and the outlook of UK interest rate rises in 2016.

Well, I hope you all read my previous article in my blog about what the new stamp duty rule changes would REALLY mean for Oakham landlords, but I believe the real issue in the Oakham property market is the shortage of property to buy, as people either worry there will be no suitable house to move to, or simply cannot afford to upgrade.

However, on the supply side, Mr Osborne said in his Autumn Statement that he will change the planning laws to ensure the government meets the pledge made at the General Election (back in May) of 200,000 new homes a year.  All I can say is “good luck George hitting those numbers”!

Why? Because houses take years to build, not months.  So, George and his fabled house building aside - where does that leave us in Oakham in 2016?

And talking of supply...whilst Mr Osborne builds his properties (and let’s be honest - a week doesn’t go by without him being filmed on a building site with a high viz jacket and hard hat building a house here and there.  Oh, isn’t he doing well with those targets!), let us look at the shortage of properties for sale. Back in March 2012, 168 properties were for sale in Oakham.  Today that figure is 122.

On the face of it, this means there is less choice for Oakham buyers, but it also means with a restricted supply of properties for sale.  It keeps property prices high for Oakham house sellers and pushes up rental prices.

Everything isn’t all doom and gloom though.  Back in March 2012, the average property in Oakham took 111 days to find a buyer.  The latest figures state this has dropped to 96 days, a drop of 14% in the time it takes to find a buyer.

However, when you delve even deeper, the best performing type of property today in Oakham is the 2 bed, which takes just 89 days to find a buyer (on average) compared to the 1 bed, which takes 210 days. It just goes to show, even though the average has dropped since 2012, how varied that change has been!

So, back to the question everyone is asking – “What will happen to property values in Oakham in 2016”? 

I am going to suggest they will rise between 2% and 2.5%. Nothing out of the ordinary, but unless something cataclysmic happens in the world, 2016 will be like 2015!

 

 

 

The 3 Best B2L properties for sale this week are...

The 3 best buy-to-let properties for sale are:

 

Property One: Ladywell, Oakham.  2 bed 1st floor flat with allocated parking.

http://www.rightmove.co.uk/property-for-sale/property-38657610.html

 

 

Sale Price: £117,500

 

Currently achieving: £495pcm

 

 

 

 

There is a tenant in place here until June, so this property is ideal for Buy-To-Let investors.  It's offered in excellent order and will generate an immediate rental income from day one.

Contact: Adrian McCarthy, UPP Property Agents on 01572 725 825

 

Property Two: Edward Road, Stamford.  3 bed end of terrace.

http://www.rightmove.co.uk/property-for-sale/property-52578988.html

 

Sale Price: £159,995     Rental valuation: c£650pcm

 

Presented in very good condition. The yield for Stamford would be very good on this purchase.

 

Contact: Easy move Estate Agents, Peterborough

 

Property Three: Launds Green, South Witham.  2 bed terraced house.

 

 

http://www.rightmove.co.uk/property-for-sale/property-38775120.html

 

Sale Price: £97,500

 

Rental valuation: £475pcm

 

 

 

 

 

An outstanding B2L purchase at this value with no work required (new kitchen and bathroom already in place), the rental return is tremendous at £475pcm. The village is becoming more popular with investors due to the yield being so good.

 

Contact: Adrian McCarthy, UPP Property Agents on 01572 725 825