Tuesday, 28 June 2016

151% increase in Property Values in Aylesbury since the Millennium

Aylesbury house prices since the Millennium have risen by 151.41%, whilst average salaries in Aylesbury have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Aylesbury people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Aylesbury has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the Aylesbury Constituency, roll the clock back 20 years and there were 40,398 properties in the Constituency, whilst the most recent set of figures show there are 43,035 properties - a growth of 2,637 properties.

However, anecdotal evidence suggests that a many of those 2,637 were bought by Aylesbury buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 1,049 to 6,538 in the constituency - a rise of 5,489 properties.

Nevertheless, some say this historic growth of the Aylesbury rental market might start to change with the new tax rules for landlords introduced by Mr Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016) which was 163% up on the £2.7bn borrowed in the previous March. 

You see, from my point of view, I do not think things will get worse in the buy-to-let market in Aylesbury and these are the reasons why I believe that:

Firstly, what else are Aylesbury landlords going to invest in if it is not property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 151.41% rise in Aylesbury property prices?

Secondly, it is true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Aylesbury: the stock of property for sale being at a six year all time low. 

Thirdly, if there are fewer rental properties in Aylesbury, as supply drops and demand remains the same (although ask any letting agent in Aylesbury and they will say demand is constantly rising) this will create a squeeze in the Aylesbury rental market and as a result rents will rise. In fact, I predict even if landlords do not sell up, Aylesbury rents will rise as Aylesbury landlords seek to compensate for increased costs, which means more landlords will be attracted back. 
Nala keeping a close watch on political events

Friday, 24 June 2016

50.5% of Aylesbury Voters voted leave – What now for the 23723 Aylesbury Landlords and Homeowners?

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”. 

.. and now the vote has been made .. what next for the 19022 Aylesbury  homeowners especially the 11918 of those Aylesbury  homeowners with a mortgage?
The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices… and I would say, yes ... that could happen. 
Aylesbury  Property Values
Aylesbury property values may drop in the coming 12 to 18 months – but by 18%! - I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.  

Since the last In/Out EU Referendum in June 1975,
property values in Aylesbury  have risen by 2132.9%
(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?
And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train. 

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar ... we need a roof over our head. 

If the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier ... it will make British exports cheaper! Which is great for the economy.

Interest rates
… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise ... end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, in the 1990’s they were on average around 6.5% and in the uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) ... 4.5%. Many of those reading this who are in their 50’s and older will remember interest rates at 15%. I can recall myself having a 12% fixed rate mortgage and being grateful!

But I suspect interest rates will not rise that much anyway, as Matt Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?
.. because whilst property values might drop they will bounce back. It’s only a paper loss... because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% ... and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling. 

The 4,701 Aylesbury buy to let landlords have nothing to fear , nor do the 11162 tenants living in their properties.
Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, 250,000 properties a year to even stand still. As the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact. 

So, what will happen next?
Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived! 
And the value of your Aylesbury property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.


Monday, 20 June 2016

56.4% of Aylesbury Tenants are White Collar Middle Class

Renting is not like it was in the 1960’s and 70’s, where tenants could not wait to leave their landlords, charging sky-high rents for properties with Second World War wood chip wallpaper, no central heating and drafty windows. Since 1997 with the introduction of buy to let mortgages and a new breed of Aylesbury landlord, the private rented sector in Aylesbury has offered increasingly high quality accommodation for younger Aylesbury households.

So whilst I knew in my own mind that the type and class of tenant has improved over the last 20 years, I had nothing to back that up . According to some detailed statistics from Durham University just released, for the Aylesbury Vale District Council area, the current situation regarding social status of tenants shows some very interesting points. Using the  Demographic ABC1 grade classifications which refer to the social grade definitions (which describe, measure and classify people of different social grade and income and earnings levels, for market research, social commentary, lifestyle statistics, and statistical research and analysis) this is what I found out. 

Of the 13,984 tenants who live in a private rented property in the AVDC area, 23.0% (or 3,217) of those tenants are classified in the AB category (AB Category being Higher and intermediate managerial / administrative / professional occupations), compared to 32.48% owner occupiers who own their property without a mortgage or 5.28% who rent their property from the local authority.

Looking at the C1’s (C1’s being the Supervisory, clerical and junior managerial / administrative / professional occupations), of the already mentioned 13,948 tenants in the area, an impressive 4,670 of them are considered to be in the C1 category (or 33.40%). Again, when compared with the owner occupiers who own their property without a mortgage, that figure stands at 31.03%   and 17.95% who rent their property from the local authority.  So, if we use the conventional measurements recorded by the white-collar “ABC1” i.e. middle class ….
This means 56.40% of tenants are considered middle class in Aylesbury  

I could go through all of the social categories through to ‘E’, but I do not want to bore you with too many numbers. The fact is that private tenants are moving up the social ladder and whilst back in the 1960’s and 70’s, the private rented sector in Aylesbury (and the rest of the UK) had been viewed as a temporary tenure for 20 somethings before they bought a property, the increase in renting in Aylesbury, which I have talked about many times in the Aylesbury Property Market Blog may be a reflection of increasing difficulty for this group in accessing other tenures, but may also be a reflection that people now choose to rent long term instead? 

Aylesbury Landlords need to be aware that tenants now demand more from their properties, the agent and their landlord and whilst affordability for first-time buyers and tighter controls on lending may mean that potential first-time buyers are in the private rented sector for longer, they will still pay ‘top dollar’ rent for a ‘top dollar’ property.

It is however essential for any landlord to be aware what 'top dollar' rent actually is. Overpricing your rental property can seriously damage your wealth. ian@mortimersaylesbury.co.uk

All this talk about Brexit is quite tiring

Sunday, 12 June 2016

An Aylesbury landlord’s tale…

Marketing your property correctly is a key factor when managing your investment. You want the best possible rent but you also want a good quality long term tenant who can move in at a time that minimises any void period. Often there are compromises to be considered… Got a great tenant but time scale is a bit adrift? Timing great but tenant wants an appliance supplied that you had not budgeted for? These issues can make a difference to the short and long term costs i.e. on your return from your investment.

One of my tenants in a Fairford Leys detached coach house gave notice to leave in May. I was about to go on holiday so quickly put it on the market at £725.00pcm and jumped into my cab for the airport. The kitchen has recently been refitted and I was keen to see an enhanced rent over and above the rent I was getting from a long term tenancy. After all the market is very strong and of course you can let anything at the price you want can’t you?
The original photo was bleak and unattractive

Back from holiday 2 weeks later I reviewed the progress. We had had only 3 viewings and no one keen to take the property. I realised very quickly that I had acted in haste and ignored my own advice that I dispense every day.
Do your price research properly and do not think you can buck the market trends unless you are letting something exceptional. (I reduced the price £30 to £695, the lettings market is more dynamic than the sales market and a small reduction is often enough to make a real difference).
Make sure the photographs are good quality and up to date. (I had no photos of my nice new kitchen, instead relying on the strength of the market to be enough to find me a tenant).
Make sure the description is well written and in full with room sizes and descriptions. Make the property sound attractive by pointing out its main features. (In this case a private garden, multiple parking spaces, detached dwelling etc.).
These adjustments were put in place very quickly with a significant response. Six viewings across four days and two applicants that were keen to take the property…I had a choice of two great applicants with flexible timescales, the ideal scenario for any landlord.
So you can see how a busy estate agent can sometimes not get the marketing right even when the property is their own. I guess I could claim to be too busy looking after my landlords to look after myself properly!
If you are trying to let and not getting the right results consider the action above or ask why your agent has not done so.
Incidentally we have now invested £1000 in a new camera to upgrade our photographic capability and floorplans have been ordered for some of our larger stock to enhance the marketing.
Are you, or do want to be, a local landlord/investor? Pop in to my office in Temple Street when you are passing, my advice and knowledge are free and my coffee is passable.


Wednesday, 8 June 2016

Asking Prices of Aylesbury Property up 9% since December

I had an interesting question from a homeowner in Bedgrove yesterday who asked me the difference between asking prices and values and why it mattered. When it comes to selling property, there must be agreement between the purchaser (buyer) and seller (vendor) for a property sale to take place. The value a buyer applies to a property can massively differ from the value a seller or mortgage company places upon it. The seller, the buyer and the mortgage company must find an agreeable value to assign to a property so the sale can proceed.

In many of my articles about the Aylesbury property market, I talk about values, i.e. what property in Aylesbury actually sells for, but I have not spoken about asking prices for while. Now asking prices are important as they are one of the four key matters a potential buyer will judge your property on (the others being location, bedrooms and type). Price yourself too high and you will put off buyers. So let’s take a look at the Aylesbury numbers.

Over the last 12 months asking prices (i.e. the price advertised in the paper and on Rightmove) in Aylesbury have increased by 15%, taking the average asking price in Aylesbury to £294,200 (up from £255,200 twelve months ago). 
Interestingly though, when we look at, say detached and terraced property, a slightly different picture appears. Twelve months ago, the average asking price for a detached house in Aylesbury was £444,500 and today its £493,100 (a rise of 11%); whilst over the same 12 month period, the average asking price of a terraced property was £244,900 a year ago, and today its £278,600 (a rise of 14%). 
My research shows that the supply of property for sale in Aylesbury is beginning to increase. In December 2015, there were 235 on the market in Aylesbury today there are 291 properties on the market (up 24%). This will mean homeowners looking to sell will need to be conscious of how their property compares against others on the Aylesbury property market. The Aylesbury property market still has substantial momentum and sufficient demand remains to provoke more modest asking price rises. This noteworthy increase in supply since Christmas is currently providing more choice for buyers and is tempering asking price rises - and here is the devil in the detail - 9% of the overall 15% annual figure (mentioned in para 3) has appeared since December.
… And here is the second point to make. Asking prices are one thing, but what a property sells for (i.e. value) is a completely different matter. These are the average prices achieved (i.e. what they sold for or the average value) for property in Aylesbury over the last 12 months...

·         Overall Average          £301,500
·         Detached                     £465,300
·         Terraced                      £253,000 

You can quite clearly see, there is a difference between what people are asking for property and what it is selling for. The underlying fundamentals of low interest mortgages and tight supply remain prevalent in the Aylesbury property market. The number one lesson has to be this ... if you want to sell, be realistic with your pricing.

If you are an investor looking to buy check your numbers…I have used averages here but some sectors of the market buck this trend. If you are buying at the lower end of the market you will be facing competition from other investors, first time buyers, buyers moving down market etc. Given this you are more likely to have to pay asking price…but only if it is in line with the market. Many agents are pricing high to attract new business, don’t get caught out. I will happily research the right price for you…just email me the details or property link. ian@mortimersaylesbury.co.uk 
Husky on the move!

Friday, 3 June 2016

8.45% slump in Buckinghamshire Property Transactions

In this post credit crunch world of sub terrain low interest and annuity rates , the growth of buy to let since 2009 has been phenomenal. So much so, there has been an evolution in purchase of property in the UK from that of just buying the roof over one’s head to that of a buy to let investment where it is seen as a standalone financial asset to fund current and future (i.e. pensions) investment. So recently, a few days before the release of latest Land Registry data of property transactions, quite a few market pundits were anticipating a huge increase in the number of properties sold in January as the 1st of April 2016 stamp duty deadline got closer.   

Looking at the most recent set of data from The Land Registry, it seems there has been a drop in the number of completed property sales in the Buckinghamshire County Council area. Year on year, completed property sales in January (the latest set of data released) fell by 8.45% to 574 compared with 627 in January 2015. Nationally, the number is similar, as the number of completed house sales fell by 5% in January 2016 compared with January 2015. Some might say this counters the reports that there was a rush by landlords to buy ‘buy to let’ property ahead of the 1st April 2016 deadline but where was the stampede that many expected?

Looking even closer to home, in the HP19 postcode in January 2016, 53 properties changed hands, whilst 32 properties did so in January 2015. It’s even more interesting when you look at the average price paid, in January 2016, it was £229,418 yet in January 2015, the average price paid was £216,448. 
Is the buy to let dream over for Aylesbury landlords? 

.. but as ever the devil is in the detail. The 3% stamp duty surcharge for buy to let landlords was announced in the Autumn Statement on the 25th November 2015. Anyone who has bought a property knows from their offer being accepted to receiving the keys and monies paid is a long drawn out affair, taking on average 8 to 12 weeks, as the Land Registry only get notified upon completion of the sale. We also need to factor in that Solicitors seem to have the last two weeks of December off anyway.  

So if there was a rush in the last few days of November/early December in the Aylesbury property market, we would only see the results of that in the February figures (released in June) and more probably March’s (released in July). 

So why all the doom and gloom? Simple .. bad news sells newspapers and gets the headlines. Let’s be honest, the headline to this article is designed to be eye catching. However, when we look at both the bigger and smaller picture; nationally, property values dropped (month on month) by 0.5%; in the South East region they dropped 0.4%, whilst in Buckinghamshire they rose by 0.8%. The year on year figures tell a completely different story to that.

It just goes to show you should look deeper into something before making a judgment! For more  commentary on the Aylesbury property market – please visit the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/ or pop in to our Temple Street office when you are passing.
There is nothing quite like a good stick retrieved from the river.

Wednesday, 1 June 2016

A one bedroom cluster house on the Coppice, Aylesbury, 4.3% yield.

One bedroom houses have sold well over the last year and prices have been strong for sale and to rent. We have been renting this property for some time but the current tenant is now leaving.
 It was redecorated and the kitchen refitted two years ago but the d├ęcor and carpets will now require some updating. The electric heating has been removed and the property now has gas central heating. The big benefit for a cluster house is the enclosed garden to front, there is ample parking nearby.

Priced at £179,950 this property is not available in the open market yet but is being circulated to investors and landlords like yourself. Achievable rent is £650 comfortably, giving a yield of 4.3% gross about average for Aylesbury and better than the banks!
Aspen Close Aylesbury, HP20 1XY £179,950.
If you want more information or have some questions please give me a call 01296 398555 or email me ian@mortimersaylesbury.co.uk