The Future of the Rutland Buy-To-Let Market

A recent report issued by the ‘Home’ website suggested many landlords are selling their buy-to-let investments due to increasing burdens on them.

Their findings suggest the number of new properties that came onto the sales market jumped by 11% across the UK as a result.





Those increasing ‘burdens’ include new tax rules coming in over the next 3 to 4 years and the announcement that all ‘self-managing landlords’ (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes.

Other recent legislations that have hit the private rented sector include the ‘Right to Rent’ regulation which came in to operation last year, whereby landlords have to certify their tenants have the legal right to live in the UK. This is, of course, one of the services included if landlords appoint a letting agent to manage their property. For ‘self-managed landlords’ who ignore these regulations, the consequences and fines can be severe.

So, what about those properties being released onto the sales market? 

 

Well, overall, Oakham doesn’t match the quoted national trend, with the number of properties on the market actually rising by 54% in the last year.  It was particularly interesting to see the number of flats increase by an impressive 338%, yet the number of semi's on the market only rose by 12%.

 

 

The majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the ‘owner-occupier’ market, not landlords.  Over the last 10 years, there has always been a small number of Rutland landlords who have been releasing their monies from their Oakham buy-to-let properties - as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016, but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some landlords will want to release the equity held in their buy-to-let properties in 2018.  Landlords should seek advice from their lettings agent first, as putting a rental property on the open market often unsettles the tenants and may prompt them to hand in their notice days after you put it on the market, and can create costly void periods.

 

However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in.  If you have a property portfolio in the Stamford and Rutland area and are considering selling some or all of them - drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won't have any rental voids).

 

David Crooke

david@upp-property.co.uk

 

Tel: 01572 725 825

 

 

 

 

Local youngsters unable to buy their first home ask if ‘Baby Boomers’ and Landlords are to blame?

Many local 20-somethings see home ownership as a distant dream aggravated by ‘Baby Boomers’ - with their free university education with grants, property windfalls, golden final salary pensions and free bus passes. Indeed, a Stamford property purchased in 1977 for £20,000 is worth £337,108 today!

But to blame the 60/70 year olds for that sort of rise seems a little unfair, with the value of the homes rising like rocket it’s hard to make them liable for that. In fact, they simply reacted to the inducements of our property and tax system; in the 1970’s and 1980’s, they were able to take out huge mortgages protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains boosted their ability to repay. Buy-to-let landlords are also humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Hyperinflation in the 1970’s meant the real value of people’s mortgages was wiped out, Margaret Thatcher sold off millions of council houses and then there was Nigel Lawson’s delayed ending of the MIRAS Tax Relief in 1987. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions prohibits a more efficient distribution of the current housing stock.

Under-occupancy is another current concern, i.e. couples living in large 4/5 bed houses despite their children having left home years ago. Governments have had plenty of opportunity to change the draconian stamp duty rules to incentivise mature house owners to downsize.
However, over the last few years there is a change in government policy towards housing and the new breed of buy-to-let landlords that have come about since the Millennium have had their wings clipped recently with the introduction of new tax rules, making it harder to make money out of property unless they are well informed with national data and facts on local property trends.

It’s easy to think the only reason that first time buyers have been priced out of the housing market is because of these landlords. Landlords have been undervalued with the local homes they provide for local people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords providing homes over the last 10/15 years, we would have a bigger housing crisis than we have today. 

Since the global financial crisis of 2008/9, local councils have had to cut services, so they certainly don’t have enough money to build new homes ... homes that were instead available on the private rental market.

Each year, 448 homes are being bought up by buy-to-let landlords in the South Kesteven District Council area when otherwise they might have become available to other buyers.

However, the current national average deposit is £51,800, which is by far the greatest barrier to those wanting to buy their first home. 

For advice on the buy-to-let market, please contact David Crooke, UPP Property on 01780 484 554 or via email on: david@upp-property.co.uk

Flats are 4.9% more affordable than 10 years ago

My research shows that certain types of property are more affordable today than before the 2007 credit crunch.

Just before the 2007 credit crunch that caused property values to plummet, the Rutland property market had peaked with prices hitting the highest levels. Between 2008 and 2010, Rutland property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Oakham flats are now more affordable than they were before the crunch.

Back in 2007, the average value of an Oakham flat stood at £133,810 and today, it stands at £161,946, a rise of £28,136 or 21%.

However, between 2007 and today, we have experienced inflation (as measured by the government’s ‘Consumer Price Index’) of 25.97% meaning that in real spending power terms Oakham flats are 4.9% more affordable than in 2007. Or, if the average Oakham flat (valued at £133,810 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £168,560 (instead of the current £161,946).

 


The point I’m trying to get across is that property is more affordable than many people think. First time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

 It really comes down to a choice and if first-time buyers can get over the hurdle of saving the 5% deposit for a mortgage – they will be on to a winner, especially with these ultralow mortgage interest rates. In fact, a mortgage can be between 10% - 30% cheaper per month than the rental payments on the same house.

Back in the 1960’s and 1970’s, renting in Britain was sneered at and there was a stigma attached to it. However, over the last 10 years we have done a complete U-turn in our attitude towards renting, meaning many find renting a better option and now even a lifestyle choice.

Saving the 5% deposit means going without holidays, gym memberships, multiple satellite movie and sports channels, regularly socialising or the latest smart phone. Therefore, instead of saving to put towards a mortgage deposit 20-somethings choose to rent and have their luxuries.

Over the next 10 - 15 years, the people who choose renting over buying will continue to rise.

Therefore, everyone in the area has a responsibility to ensure that an adequate number of quality local rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of tenants on the finish and specification of their rental home.

Historically, renting a property was only a short-term choice to fill the gap before jumping on the property ladder and therefore, their ‘wants’ were less. Before the millennium, wood chip wall paper and 20-year-old kitchen and bathroom suites were considered the norm – and accepted.

However, tenants’ expectations are becoming more discerning and the tenancy term is increasing (this was backed up recently by stats from a government report), although I have noticed a tendency for many local landlords not to keep the rental payments at the going market rates.

Local landlords will need to be more conscious of tenants ‘needs and wants’ and consider their financial planning for future enhancements to their rental properties over the next 5, 10 and 20 years.

The current and future status of the Stamford and Rutland private rental property market is important, and I frequently help local buy-to-let investors looking to spread their rental-portfolios.  I also enjoy meeting and working alongside first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield.


David Crooke, Owner and MD
UPP Property, Sales & Lettings 01572 725 825

 

Less than 0.1% of Stamford / SKDC is concreted over ... Should we build on more of it?

Well, the fallout from the recent Budget is still continuing. I was chatting to a Stamford couple the other day, when one said, “There isn’t enough land to build all these 300,000 houses Philip Hammond wants to build each year”.  

60 years ago the first satellite (Sputnik) was launched. All the superpowers have used them to take high definition pictures of each other for decades, but now satellites and their high-powered cameras are being used for more peaceful purposes. The European Environment Agency (EEA) have been taking HD pictures of the UK from outer-space to give us a focussed picture of what every corner of the country really looks like.

If you are a Stamford landlord or homeowner, this knowledge will enable you to make a more considered opinion on your direction and future in the Stamford property market. Like every aspect of all economic life, it’s all about ‘supply and demand’, because over the last 20 or so years, there has been an imbalance in the British housing market, with demand outstripping supply, meaning the average value of a property in the South Kesteven District area has risen by 319.58%, taking an average value from £48,500 in 1995 to £203,500 today.

Using the information from the EEA and data crunched by Sheffield University with their Corine-Land Cover project, I posed them a few questions about the local area;

1. What proportion of the whole of South Kesteven is built on?

3.47%

That surprised you, didn’t it? In the study, land classified as ‘urban fabric’ has land which has between 50% - 100% of the land surface built on, (meaning up to a half might be gardens or small parks, but the majority is built on).

2. How much land is intensively built on locally?

Of that amount mentioned above, how much of it is high-density urban fabric? (I.e. where 80% - 100% is built on – still leaving 20% for gardens) Less than 0.1%. Again, I bet that surprised you?

3. So, how is the land used locally?

Airfields 0.49%

Sports facilities 1.49%

Arable farmland 85.64%

The rest being made up of various other minor types such as pastures and waterways, etc.,

I read that property covers less of the UK than the land revealed when the tide goes out. The assumption that vast bands of our local area have been concreted over doesn't stand up to inspection. However, the effect of housing undoubtedly spreads beyond its actual footprint, in terms of noise, pollution and roads.

Now I am not suggesting we concrete over every inch of the locality, but our country’s population levels are growing at a quicker rate than the homes we are building. I appreciate the emotional effect of housing is greater than other land use types because most of us spend the vast majority of our time surrounded by it. As Brits, we live our lives driving along roads, walking on footpaths and working and living in buildings meaning we tend, as a result, to considerably overemphasise how much of it there is.

The bottom line is residents and local authorities are going to have to put their weight into building more homes for people to live in. There is going to have to be some give and take on both sides, otherwise house prices will continue to rise exponentially in the future and Stamford youngsters won’t be able to buy their own Stamford home, meaning Stamford rents and demand for private rented accommodation in Stamford can (and will) also grow exponentially. 

The Rutland Property Market and Hammond's Budget Promise to Build 300,000 more homes

I miss the good old days of George Osborne as Chancellor with his hardhat and hi-vis jacket. He must have visited every new-home building site in the UK with his trademark attire!  For the last few years the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party.  

However, with what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home, in total there were 257 ‘net additional dwellings’ in the last 12 months in the Rutland County Council area, a decent increase of 96% on the 2010 figure.

The figures show that 94% of this additional housing was down to new build properties. In total, there were 242 new dwellings built over the last year in Rutland. In addition, there were 22 additional dwellings created from converting commercial or office buildings into residential property.

While these all added to the total housing stock in the Rutland area, there were 7 demolitions to take into account.

Net additional dwellings in Rutland in the last 12 months
New build	Conversions	Change of use	Demolitions	Net Additions
242	0	22	-7	257

I was encouraged to see some of the new households in Rutland had come from a change of use. The planning laws were changed a few years back so that in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had re-utilised vacant office space into residential homes in the local council area.

 

Converting offices and shops to residential use will be vital in helping to solve the Oakham housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

 

 

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.   Although, I am keen to see where all these new homes will be built!

 

Back to the main point though and the focus on the housing market by the Tories is good news for all homeowners and landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all.

 

However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.

 

If you would like a free valuation of a property you already own, for either sale or rental purposes, please get in touch.

 

David Crooke

MD, Owner UPP Property Agents 01780 484 554

 

 

This week's 3 best property buys in Stamford & Rutland

PROPERTY 1)

WHAT? 2 bedroom semi-detached bungalow 

WHERE? Welland Way, Oakham

 

WHY? Firstly, it's a much sought after bungalow, secondly it has a garage with driveway parking, and thirdly, it is well located on a popular road.  It is in need of some modernising, so plan wisely and don't make costly unnecessary renovation mistakes if you are investing in the property for the rental market.

HOW MUCH?  Guide Price £185,000

 

FINANCIAL RETURN?

Rent Approx. £650pcm

Annual Income c£7,800

Yield c4.25%

MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-70466675.html

 

PROPERTY 2)  

WHAT? 2 bedroom flat

WHERE? Edward Road, Stamford

WHY? Fully renovated and immaculately presented throughout, the flat is chain free and already tenanted.  And best of all, the yield is a very interesting 5.3%

   

HOW MUCH?  Guide Price £130,000

 

FINANCIAL RETURN?

Rent Approx. £575pcm

Annual Income c£6,900

Yield c5.3%

MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-70470791.html

 

 

Property 3)
 

WHAT? 2 bedroom semi-detached terrace

WHERE? Newboults Lane, Off Radcliffe Road, Stamford

WHY? A popular and characterful 2 bedroom Victorian end terraced property, in very good order with a courtyard garden.

 

HOW MUCH?  OO £185,000

 

FINANCIAL RETURN?

Rent Approx. £650pcm

Annual Income c£7,800

Yield c4.2%

 

MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-70427678.html

 

If you are considering investing in property and would like to chat it through with me, I would love to hear from you. 

I look forward to discussing property with you.

David Crooke, Owner and MD
UPP Property, Sales & Lettings 

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

 

FOR SALE Detached Family Home with 4 Bedrooms - and a hot tub!



 

Positioned in the quaint village of Wansford, with great links to Peterborough and Leicester and in just a stone’s throw to the historic market towns of Stamford and Oundle - Welcome to Swanshill House, a former Police house.

This stunning detached home is designed with a busy family in mind; 4 bedrooms, 2 en-suite shower rooms, a family bathroom, cloakroom, 3 reception rooms and at the heart of the home you will find a wonderful kitchen overlooking the light filled dining room.

 

For those hasty school run morning breakfasts the open plan kitchen is ideal, or at the weekends you can throw open the patio doors and take the party outdoors.  Did we mention the hot tub bubbling away under the thatched gazebo? The gardens are wonderful with large lawns and elegant trees to the front or you could relax in the secluded garden nestled at the back.

Leave your car behind and explore the local riverside walks and county pubs on your doorstep, but as daylight fades, head home and truly unwind at Swanshill House.

For more images and information on Swanshill House, watch this beautiful video and call us to arrange a viewing on 01780 484 554.



 

 

 

 

David Crooke, MD & Owner

UPP Property Agents 01780 484 554

 



Stamford Rents Set to Rise to £1,017pcm in Next 5 Years

It’s now been a good 12-18 months since annual rental price inflation peaked at 3.7%.  

Since then we have seen increasingly more humble rent increases. In fact, in certain parts the Stamford rental market saw some slight falls in rents over the autumn. 





So, could this be the earliest indication that the trend of high rent increases seen over the last few years may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years it is my opinion that rents will regain their upward trend and continue to increase as demand for Stamford rental property will outstrip supply, and this is why.

 The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Stamford). However, because of the government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

  Interestingly, countless market experts assumed at the start of 2017 that the number of rental properties would, in fact, drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords would look to vacate their tenants, sell up and invest their capital elsewhere. Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!

Anecdotal evidence suggests (and confirmed by my discussions with fellow property, accountancy and banking professionals in the area), that Stamford landlords are (instead of selling up en-masse), actually either

(i) re-mortgaging their buy-to-let properties instead or

(ii) converting their rental portfolios into limited companies to side-step the new taxation rules.

The sentiment of many local landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the ‘voodoo magic’ of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin). 

 Remarkably, there is some good news for tenants, as the Tories recently published the draft ‘Tenants’ Fee Bill’, which is designed to prohibit the charging of tenants lettings fees on set up of their tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth. 

 So, how will this impact on our local landlords and tenants?

In my considered opinion, rents in Stamford over the next 5 years will rise by 9.9%, taking the average rent for a Stamford property from £926 per month to £1,017 per month.

To put all that into perspective though, rents in Stamford over the last 12 years have risen by 18.7%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Stamford economy, demand and supply of rental property, interest rates, Brexit and other external factors.

Please see the following graph for my projections:



In the past, making money from buy-to-let property was as easy as 'falling off a log'. But with these new tax rules, new rental regulations and the overall changing dynamics of the Stamford and Rutland property market, as a local landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the local, regional and national property markets, to enable you to continue to make money.

If you have any questions regarding property investment, please call me I am happy to help you.


David Crooke
MD & Owner, 01780 484 554

The 3 Best Buy-To-Let Properties on this week's Stamford & Rutland property market

PROPERTY 1)

WHAT? 3 bedroom semi-detached house

WHERE? Lonsdale Way, Oakham

WHY? Good sized property with garden, driveway parking and single garage in well-respected and established area of Oakham.

HOW MUCH?  Guide Price £210,000

 

FINANCIAL RETURN?

Rent Approx. £700pcm

Annual Income c£8,400pa

Yield c4%

MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-50731563.html

 

PROPERTY 2)  

 

WHAT? 3 bedroom townhouse

WHERE? Dawson's Court, Oakham

WHY? Sought after central location near Oakham railway station, with allocated parking and presented in good order throughout.

 

 

 

 

HOW MUCH?  Guide Price £185,000

 

FINANCIAL RETURN?

Rent Approx. £725pcm

Annual Income c£8,700pa

Yield c4.7%

MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-70357763.html

 

Property 3)

WHAT? 3 bedroom terrace

WHERE? Trinity Road, Stamford

WHY? In need of some renovation, but a spacious property with sitting room, dining room and conservatory.

 

HOW MUCH?  OIEO £170,000

 

FINANCIAL RETURN?

Rent Approx. £700pcm*

Annual Income c£8,400pa*

Yield c4.9%*

 

MORE DETAILS?  Click here...

http://www.rightmove.co.uk/property-for-sale/property-70301984.html

(*excluding renovation costs).

 

If you are considering investing in property and would like to chat it through with me, I would love to hear from you. 

I look forward to discussing property with you.

David Crooke, Owner and MD
UPP Property, Sales & Lettings 

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