Tuesday, 31 May 2016

1,256 Aylesbury Properties lie empty– An injustice for the 2,570 people on the Council House Waiting List?

Easy problems should have easy solutions  - shouldn’t they? 

Problems like Aylesbury’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people ... the answer is clearly to build more property in Aylesbury - but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions? 

Whilst at lunch with a friend whilst on holiday last week, the subject of property came up as it invariably does (as I am sure it does at most lunch/dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. As I had recently done some research on this topic, I want to share it with you as I did with my friend at lunch last week.

The most recent set of figures from 2015 state there are 1,256 empty homes in the Aylesbury Vale District Council area. So it begs the question ... why not put them back into the system and help ease the Aylesbury housing crisis? Whilst they stand empty, 2,570 Aylesbury households (not people – households) are on the Council House Waiting List for council houses. Surely, we can all agree that property left empty for years and years is not morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.  

But a different story emerges when you look deeper into the numbers. Of those 1,256 homes lying empty, only 240 properties were empty for more than six months. The local authority has to report a property being empty, even if it is for a week. So many of these Aylesbury properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer. 

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 69,406 properties in the area covered by Aylesbury Vale District Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Aylesbury housing needs.

So what does this mean for all the homeowners and landlords of Aylesbury? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils do not have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again. 

These are interesting times in the Aylesbury property market!
Sunshine walks with Nala

Friday, 13 May 2016

£7,300 boost to Aylesbury First time buyers

There is a whole legion of wannabe Aylesbury first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Aylesbury landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Aylesbury buy to let landlords has dropped away it offers Aylesbury first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker. 

Looking at the average value of a terraced house in Aylesbury currently standing at £244,900, that means if our Aylesbury FTB went up against an Aylesbury landlord, the landlord would have to pay an additional £7,347 in stamp duty. Early evidence from fellow property professionals in the town is suggesting landlords are being a bit more selective with Aylesbury properties reflecting the extra stamp duty costs.    

Since 2011/12, the Aylesbury property market has performed very well indeed. Over the last 12 months, £716,981,760 has been spent buying 2,376 Aylesbury properties.  Figures from the Land Registry have just been released and month on month in our council area, property values are 0.8% higher, yet 11.4% higher year on year. These figures are nowhere near the heady days of 2000 (August to be exact), when Aylesbury property prices rose by 22.2% in 12 months.

So as property values in Aylesbury (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see informed landlords view the Aylesbury property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Aylesbury Property Market Blog http://theaylesburypropertyblog.blogspot.co.uk/  take advice on what or not to buy and what to pay, meaning Aylesbury landlords are being more calculated with their Aylesbury BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Aylesbury. This in part reflects amplified uncertainty about the short term economic outlook (e.g. Brexit, Issues in the Far East etc.).   

Now I know a lot of Aylesbury landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Aylesbury investors will return for the right Aylesbury property later in the year, especially if it is at the right price and offers a sensible yield. However, in the meantime, Aylesbury FTB’s could and should, in the short term, make hay whilst the sun shines.

I love a mud bath in the sunshine.

Tuesday, 10 May 2016

The Aylesbury lettings market today…What landlords need to know.

A lot has happened over the last year that impacts on landlords. We have had a raft of new legislation, changes in Stamp Duty thresholds for landlords investing and more tax changes on the way. There has been good news with considerable increases in selling prices giving landlords substantial capital gains and in most cases rents have also increased significantly.

But where are we now? What impact have these changes had? Is buying to let still a sensible option? What is the current state of the Aylesbury lettings market?
Yes it is still a sensible investment to buy to let. The capital gains we have seen, and are likely to see, are substantial enough to give a sensible return in excess of other investments available to you and me. The tax changes will have an impact, so if you are highly geared it may become marginal on a monthly return basis, but the capital gains are likely to overshadow this if you have purchased the right property.
Rents seem to have reached a plateau over the last few weeks. Looking at Rightmove this morning there are 250 available properties. This includes 64 commercial properties but is still higher than the sub 200 levels we saw earlier this year. Noticeably there are increasing numbers or properties appearing as reduced. It reinforces the need to get your price right at the start of your marketing and to not be too ambitious. Do not be led by an over excited agent trying to hit his listings target, look at the evidence in detail. For example if you are letting a modern two bedroom house Rightmove will show you that almost everything sub £900pcm has been let, those over £900 have likely had to reduce, had that something extra that appealed to tenants, continue to wait for the right tenant or just got lucky when the market supply was poor.
Whilst mentioning Rightmove be aware that they are in the process of changing the way they display property. A standard display will include two photographs…looking this morning there are many properties that only have one photo showing, check with your agent, hopefully they will already be on the ball with this.
Rightmove have also changed the filters you can use as a viewer. Of the 250 properties listed today 19 of them do not appear using any filter, not great if you are trying to let! Check your agent has listed your property correctly.
The increase in available property numbers is not only a result of landlords buying early this year to avoid the revised Stamp Duty  but also tenants being reluctant to pay the increased market rents. Notably we are seeing very few tenants ending their tenancies at present, preferring to avoid moving costs and stay where they are. Many landlords, rightly, take a softer view on increasing rent if they have a reliable tenant in place so existing tenants are tending to stay put.
In summary the lettings market remains strong. If you have the right property, in a sensible location, present it well and don’t over price it you will let readily to good tenants. Do make it as tax efficient as possible ( I can point you in the right direction if this is an area you are not sure about) and do make sure you are up to date with legislation changes.
I am on holiday at the end of this week for two weeks so if you are popping by Declen will be pleased to help you. It is worth noting that he makes a better cup of coffee than me!
Nala pretends to ignore treats while her friend Syren takes pole position

Thursday, 5 May 2016

Brexit and Aylesbury Property market – 49% more properties on the market

April Fools Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31st March 2016. We were successful in getting one property exchanged at 6.30pm on the day of the deadline…lots of sweet talking required to get solicitors to do that one!! Because some investors brought forward their 2016 property purchases to save the extra tax, all of us have noticed, demand to buy in April and May from these landlords has eased, although demand remains strong driven by lack of supply.  

Then we have the Brexit issue, which is also a tempering effect on the Aylesbury property market – although if you recall I wrote about this a few weeks ago, and whilst an exit will have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Aylesbury property values, and whilst the rate of growth is slowing, Aylesbury property values are still 10.3% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. A very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015. It is worth noting that the growth has been more significant in the lower market, sub £275,000, where the demand has been strongest from investors and first time buyers.

All this had led to an increase in the number of properties for sale. For example in the HP19 postcode, which mainly comprises  Fairford Leys, Prebendal Farm, Quarrendon and Watermead there were 128 properties for sale in the postcode in December (of which 29 came on to the market for the first time). In January, February and March, 246 properties came onto the market in the postcode district (or an average of 82 per month), meaning by end of the first Quarter, there were 191 properties available for homeowners and landlords alike to buy in HP19 (i.e. a rise of 49.2% more properties for sale). These figures are mirrored in neighbouring postcodes throughout the Aylesbury area.

 On the face of it, this easing should be bad news for the 47,767 Aylesbury homeowners, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst  you would have achieved a top dollar figure for your property, you would would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Aylesbury Property Market!
All the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Aylesbury property and the supply will still exercise a sturdy and definitive influence on the Aylesbury property market. It would surprise me that if by 2021, whichever way we vote in late June, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be 20% to 25% higher than they are today. Income from capital growth you can’t get from a bank or Building society savings account!

Ready and waiting for the next treat

The future of the Aylesbury lettings market.

‘An Englishman’s Home is his Castle’ is the phrase that was coined in Victorian times as the UK has always had a reputation for being a country of home owners... but the truth could not be further from the point. In a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

As I mentioned a couple of weeks ago, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, in the early 40’s, the priority was to get people into clean and decent accommodation ... so Local Authority’s (Councils) took up the baton and built large council estates in the 1950’s and 1960’s. 
As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. By 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there was not much change as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group. 
Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.
When we look at the Aylesbury figures of homeownership, looking back to 1991, 69% of Aylesbury households were owned by the homeowner, whilst 2.6% of Aylesbury households were privately rented, whilst the 2011 census showed home ownership in Aylesbury had stayed stagnant at 69.51% and private rented had increased to 15.19%. Much of the recent rise in the occurrence of private renting in Aylesbury since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Aylesbury Property Market Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Aylesbury.
So if you are a tenant I am sorry but things are not about to change any time soon. Supply will continue to be limited and as a result prices will remain high and competition for the good/desirable properties will remain strong.
If you are a landlord you can be reassured that there will continue to be a ready market at strong prices for your stock and with the sales market continuing in strength you will see sensible levels of capital growth if you have bought the right property in the right location.

Living the dream.