Homeownership Amongst Aylesbury’s Young Adults Slumps to 54.02%

The degree to which young Aylesbury people are locked out of the Aylesbury housing market has been revealed in new statistics.

An Aylesbury landlord was asking me the other week to what effect homeownership rates in Aylesbury in the early to middle aged adult age range had affected the demand for rental property in Aylesbury since the Millennium. I knew anecdotally that it affected the Aylesbury rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Aylesbury, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 54.7% of Aylesbury 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 29.2% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Aylesbury person (therefore born in 1962) would have an 80.7% chance of owning his or her own home and a 38 year old today in Aylesbury (born in 1980) would only have a 62.9% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Aylesbury has reduced from 74.7% to 54.02%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Aylesbury. The fact is the figures in Aylesbury show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

The landlord suggested this deterioration in homeownership in Aylesbury across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.

I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above.  Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Aylesbury?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Aylesbury landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Aylesbury rental market .. drop me line or pop in 

BTL opportunity

This property has been on the market for a while now and priced at offers over £255,000 this could be one for the BTL investor.

Its a two bed terraced house, good sized bedrooms, nice garden. and allocated parking for two cars.

For me its a good property to come to the rental market.

We Let a similar one on Berryfields in January for £900pcm. Well given that the rental market is picking up again, and allowing time for the sale to go through, you could have this on the market to rent in the summer and should be still worth £900pcm then.

So we are looking at circa 4% gross yield. not at all out of keeping with the rest of Aylesbury.

And there is potential for capital growth in the future.

Give it a look.


http://www.rightmove.co.uk/property-for-sale/property-50344326.html

Great result for one of our Landlords....

VERY interesting conversation with a landlord of ours today. He has a small portfolio of four properties the first purchased about 10 years ago. Some of them have been remortgaged to finance deposits for further purchases but he has not looked at the mortgages on each of them for a few years.

Why would you when rates have been so low?

He has just this week sat down with his broker to remortgage the portfolio because he like most of us he wants to ensure his portfolio is as income effective as it can be in the future. We are likely to see further interest rate rises and he wanted to protect himself from those increases. Income is going to be eroded by tax changes and other costs he can do little about so he wanted to make sure he was being as sensible as possible regarding the mortgage packages.

He was stunned to find that he can fix the rate for 5 years on each of his properties at a LOWER rate than he is currently paying!! Yes that’s right...he can actually reduce his monthly costs AND protect himself from any rate rises for FIVE years.

With the almost complete lack of new entrants to the Buy to Let market lenders are desperate to lend to existing landlords by way of remortgage. The rates they are offering are super competitive. Many have few if any costs with many offering free survey and conveyancing, some even offer a cashback in addition!

If you have not looked at fixing your mortgages you really should be talking to your broker or at the very least be browsing the internet to look at rates NOW. You may find that you, like this landlord can get a stunning result for little cost.

If you want to talk through your investment plans and strategies as always I would be delighted to help you.

527 First Timer Buyers in Aylesbury Bought Their First Home in 2017

A little bit of good news this week on the Aylesbury Property Market as recently released data shows that the number of first time buyers taking out their first mortgage in 2017 increased more than in any other year since the global financial crisis in 2009. The data shows there were 527 first time buyers in Aylesbury, the largest number since 2006.

I expect in 2018 that this increase of first time buyers will level out and maybe dip slightly as, nationally, figures demonstrate that first time buyer’s average household income was £40,691 and this represented 17.3% of their take home pay. Although, it might surprise readers that it is actually cheaper to buy than it is to rent at the ‘starter home’ end of the housing market. Many of you can remember mortgage rates at 12% ... even 15%. Today, at the time of writing this article, I found on the open market, 189 first time buyer mortgages at 95% (meaning only a 5% deposit was required) with 3 year fixed rates from a reputable High Street bank at 2.49% ... they even did a 3 year fixed rate 100% mortgage for 2.89%!

Interestingly, looking at the other end of the market, the buy-to-let investment in Aylesbury was subdued, with only 108 buy-to-let properties being purchased with a mortgage. However, I must stress, whilst there is no hard and fast data on the total numbers of landlords buying buy-to-let, as HM Treasury believes only 30% to 40% of buy-to-let property is bought with a mortgage. This means there would have been further cash only buy-to-let purchases in Aylesbury – it’s just that the data isn’t available at such a granular level.

In terms of the level of mortgage debt in Aylesbury, looking specifically at the HP19 to HP21 postcodes, you can see from the graph there has been a steady rise in borrowing over the last couple of years. 

This is pleasing to see, as new mortgage debt is created by first time buyers, buy-to-let landlords and home movers themselves, that is being roughly equalled by the amount being paid off with mature mortgaged homeowners in their 50’s and 60’s finally paying off their mortgage.

So, what does all this mean for the Aylesbury Property Market?  Well, the stats paint a picture, but they don’t inform us of the whole story. The upper end of the Aylesbury property market has been weighed down by the indecision around the Brexit negotiations and rise in stamp duty in 2014, when made it considerably more expensive to buy a home costing more than £1m. The middle part of the Aylesbury property market has been affected by issues of mortgage affordability and lack of good properties to buy, as selling prices have reached the limit of what buyers can afford under existing mortgage regulations. The lower to middle Aylesbury property market was hit by tax changes for buy-to-let landlords, although this has been offset by the increase in first time buyers.

If you are in the market and selling now and want to ensure you get your Aylesbury property sold, the bottom line is you have to be 100% realistic with your pricing from day one and you might not get as much as you did say a year ago (but the one you want to buy will be less – swings and roundabouts?). I know it’s not comfortable hearing that your Aylesbury home isn’t worth as much as you thought, but Aylesbury buyers are now unbelievably discerning. 

An extension could add £82,700 to the value of your Aylesbury home

As our families grow bigger the need for more space, be that bedrooms or reception rooms, has grown with it. Also, as our older generation lives longer and nursing home bills continue to rise quicker than a rocket on the 5^th of November  (the average nursing home bill in the area being £839 per week) many families are bringing two households into one larger one.

So, should you move somewhere larger, or extend your Aylesbury property to make it large enough for you and your family? In some circumstances the choice has been made for you. If you live in an apartment with no garden, there isn’t much of an opportunity of making it larger. But if you have a house with a garden or an attic with sufficient headroom, extending your home becomes a real prospect.

Even if it makes more sense to extend or move, the choice hangs on a number of different dynamics – your future plans, money (both saved and access to finance), in what way you are emotionally attached to your home, the particular area of Aylesbury you live in and finally, the type/style of house you prefer.

Interestingly, the average British home is 968 sq.ft, which as you can see from the table, is in the middle of developed nations when it comes to the size of a property. Of the 1.11m homes sold in 2016 in England and Wales, the average floor area of the houses was 1,119 sq.ft – that’s about an eighth the size of an Olympic sized swimming pool. Apartments averaged 530 sq.ft that’s just over ten times bigger than an average garden shed. Looking at apartments and houses together, the average size of properties sold in England and Wales 968 sq.ft  – are slightly smaller than the European average, and much smaller than households in the US.

So back to the question in hand.. extending does mean you will have a lot of inconvenience whilst the work is being carried out. The location of your Aylesbury property, the quality of construction, what type of room(s) you want to add, your plot, neighbouring building lines, planning regulations and the overall demand for your type of Aylesbury home, will make a vast difference to the financial repercussions of extending versus moving.

A medium-sized 270 sq.ft single storey extension (say around 17ft x 16ft) will add on average £82,700 to the value of a property in Aylesbury

It’s important to note the end result of the extension needs to be a sensible and realistic home. A two bed semi-detached house extended to a four bedrooms with no lawn or driveway, or a home with outsized reception rooms downstairs and miniscule bedrooms upstairs, could be problematic if  and when you come to sell your home in the future. Irrespective of whether your strategy is to live in your extended home for a long time, you will want to side-step outlaying a lot of money on costly building work that will make it tougher to sell.

In terms of what it would cost to build an extension, you can expect to pay on average between £140 to £200 per sq.ft, depending whether the extension is a single or double storey extension and other factors including finish and type of extension (note – I have seen it cost a lot more than these figures – so please speak with a builder) … So taking a mid line figure, that same 270 sq.ft extension on your Aylesbury home would cost on average £55,080.

However, moving means there are substantial costs incurred - Estate Agency fees, Removal Van, Survey Fees, Legal fees and Stamp Duty on the property you are buying. Neither option is the obvious choice and comparing the costs of extending your Aylesbury home to that of moving is not a stress-free undertaking.

How realistic each option is will probably come down to one thing .. your mortgage provider. You will need a considerable sum of equity in your Aylesbury home before you can think of increasing your mortgage more, because most lenders will require you to have at least 10% to 20% equity left in your property after the extension or move has been done.

The best advice I can give .. don’t assume anything …. get advice and opinion from builders, mortgage brokers, architects, mortgage people and of course… an agent. Look at your options and make an educated decision with all the superficial and objective facts in front of you.

Aylesbury Property Market – The 7.9% ‘New Build Premium’

According to the National House Building Council (NHBC), more than 26,142 new homes were registered to be built in the South East last year, on par with 2016 levels of 26,147 dwellings. Great news when you consider it is still one of the highest number of new builds in the region since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the General Election.

So, when a landlord recently asked me why the brand-new property she was considering buying was a lot more expensive compared to a second-hand/existing property of similar type, accommodation, location and structure I thought this would make a fascinating topic to do some homework on … homework I want to share with the homeowners and landlords of Aylesbury.

You might believe that the difference between purchasing a new build home against purchasing a second-hand/existing home is just individual preference. Some buyers/tenants like the ostentatious trendy modern feel of a new home, whilst others like a home that has stood the test of time.

So, what is the right answer? Well, I am going to be looking at some statistics that show there is a real difference in the Aylesbury and Aylesbury Vale District Council area’s property market when in to comes to new vs existing homes and the price paid. Looking at the average price paid for existing (second-hand) versus a brand new home since 1996, you can see from the graph it makes interesting reading.

On this second graph, you can see the percentage difference in average price paid between new and existing…

Yet possibly nothing is ever that easy, as there are issues with these statistics.

The overall average for the whole Aylesbury Vale District Council area for the ‘new build premium’ (new build premium being the additional price a buyer pays for buying a new property compared to a second-hand one) over the last 21 years has been 7.9%. These statistics actually show that it is problematic to compare like with like because it is impossible to completely separate all the different factors of type, accommodation, location and structure etc.

One would have to have a mirror image second-hand Aylesbury home and a duplicate new build right next door to each other, then calculate out which Aylesbury house buyers or Aylesbury buy to let landlords would pay more for? Perhaps if everything was the same (all things being equal), there might not be any difference in what buyers would be prepared to pay… but then again, it’s like new cars versus cars that have a few hundred miles on the clock ... there is always a difference on the forecourt … because things are never wholly equal.

What I do know is that my statistics of the Aylesbury property market show that new build Aylesbury apartments are worth more to people than their second-hand equivalents, whilst the difference is negligible between new build Aylesbury detached houses and second-hand Aylesbury detached houses.

However, I believe the really important lesson in all these statistics is the fact that ‘new build premium’ for new-build versus buying a second-hand property increases in a buoyant market and reduces in a tougher market.  So, if you want to buy new and the only consideration is money … try buying in a tougher challenging property market.

One Bedroom BTL investment.........and its tenanted

For those of you out there that want to achieve a better yield over capital growth, I have seen the below property online that you should give some consideration to.

Its a one bedroom house on The Willows. Its close enough to town and the hospital to attract a good demographic of tenant type. but its not exactly needed with this property....

http://www.rightmove.co.uk/property-for-sale/property-71672291.html

A tenanted, one bedroom house on the market for £180,000 with Hurst Estate Agents could be a ready made investment for either a new investor or someone looking to add something to their portfolio.

Its presented well throughout, but you may want to look at replacing that bathroom at some point in the future.

So if we work conservatively on this, and expect a rent of £695, that would give a yield of around 4.5% Gross. Which is good, considering in a more buoyant rental market properties like this can fetch £725pcm and sometimes beyond.

You will need to do some digging to see what the current tenant is paying, but even if its lower, you don't have all the set up costs of finding a tenant (at least not straight away). 

Now the price, I have seen similar property types sell for around £174,000 in the last 8 months or so and my personal feeling is that the market hasn't exactly sky rocketed in that time, so you could even do a bit of work to secure the property at a little under the asking price. Just remember if you really want it, the seller is an investor too so they may be less inclined to negotiate too much.

Anyway, if your in the market for a buy to let property, this could be a good one for you to consider.

and let me know how you are getting on with your Buy to Let search!

Aylesbury’s ‘Millennials’ set to inherit £453,757 each in property!

That got your attention ... didn’t it!

But before we start, what is Generation X, let alone Generation Z, Millennials, Baby Boomers  ... these are phrases banded around about the different life stages (or subcomponents) of our society. But when terminologies like this are used as often and habitually as these phrases (i.e. Gen X this, Millennial that etc.), it appears particularly vital we have some practical idea of what these terms actually mean. The fact is that everyone uses these phrases, but often, like myself, they are not exactly sure where the lines are drawn ...until now…

So, for clarity …

Generation Z:              Born after 1996

Millennials:                 Born 1977 to 1995  

Generation X:              Born 1965 to 1976

Baby Boomers:            Born 1946 to 1964

Silent Generation:       Born 1945 and before

My research shows there are 6,614 households in Aylesbury owned by Aylesbury Baby Boomers (born 1946 to 1964) and Aylesbury’s Silent Generation (born 1945 and before). It also shows there are 17,468 Generation X’s of Aylesbury (Aylesbury people born between 1965 to 1976). Looking at demographics, homeownership statistics and current life expectancy, around two-thirds of those Aylesbury 17,468 Generation X’s have parents and grandparents who own those 6,614 Aylesbury properties.

… and they will profit from one of the biggest inheritance explosions of any post-war generation to the tune of £2.599bn of Aylesbury property or £223,029 each but they will have to wait until their early 60’s to get it!

However, it’s the Millennials that are in line for an even bigger inheritance windfall.

There are 11,761 Millennials in Aylesbury and my research shows around two thirds of them are set to inherit the 9,060 Aylesbury Generation X’s properties. Those Generation X’s Aylesbury homes are worth £3.560bn meaning, on average, each Millennial will inherit £453,757; but not until at least 2040 to 2060!

While the Aylesbury Millennials have done far less well in amassing their own savings and assets, they are more likely to take advantage of an inheritance boom in the years to come. This will probably be very welcome news for those Aylesbury Millennials, including some from poorer upbringings who in the past would have been unlikely to receive gifts and legacies.

However, inheritance is not the magic weapon that will get the Millennials on to the Aylesbury housing ladder or tackle growing wealth cracks in UK society, as the inheritance is unlikely to be made available when they are trying to buy their first home…but before all you Aylesbury Millennials start running up debts, over 50% of females and around 35% of men are going to have to pay for nursing home care. Interestingly, I read recently that a quarter of people who have to pay for their care, run out of money.

So, if you are an Aylesbury Millennial there potentially will be nothing left for you.

Of course, most parents want to give their children an inheritance, the consideration that what you have worked genuinely hard for over your working life won’t go to your children to help them through their lives is a really awful one … maybe that is why I am seeing a lot of Aylesbury grandparents doing something meaningful, and helping their grandchildren, the Millennials, with the deposit for their first house.

One solution to the housing crisis in Aylesbury (and the UK as a whole) is if grandparents, where they are able to, help financially with the deposit for a house. Buying is cheaper than renting – we have proved it many times in these articles … so, it’s not a case of not affording the mortgage, the issue is raising the 5% to 10% mortgage deposit for these Millennials.

Maybe families should be distributing a part of the family wealth now (in the form of helping with house deposits) as opposed to waiting to the end… it will make so much more of a difference to everyone in the long run.

Just a thought?

Aylesbury’s £139,476,960 “Rentirement” Property Market Time Bomb

Yes, I said ‘rentirement’, not retirement ... rentirement and it relates to the 606 (and growing) Aylesbury people, who don’t own their own Aylesbury home but rent their home, privately from a buy to let landlord and who are currently in their 50’s and early to mid-60’s.

The truth is that these Aylesbury people are prospectively soon to retire with little more than their state pension of £155.95 per week, probably with a small private pension of a couple of hundred pounds a month, meaning the average Aylesbury retiree can expect to retire on about £200 a week once they retire at 67.

The average rent in Aylesbury is £959 a month, so a lot of the retirement “income” will be taken up in rent, meaning the remainder will have to be paid for out their savings or the taxpayer will have to stump up the bill (and with life expectancy currently in the mid to late 80’s, that is quite a big bill …  a total of £139,486,960 over the next 20 years to be paid from the tenant’s savings or the taxpayers coffers to be precise!

You might say it’s not fair for Aylesbury tax payers to pick up the bill and that these mature Aylesbury renters should start saving thousands of pounds a year now to be able to afford their rent in retirement.  However, in many circumstances, the reason these people are privately renting in the first place is that they were never able to find the money for a mortgage deposit on their home in the first place, or didn’t earn enough to qualify for a mortgage …and now as they approach retirement with hope of a nice council bungalow, that hope is diminishing because of the council house sell off in the 1980’s!

For a change, the Aylesbury 30 to 40 somethings will be better off, as their parents are more likely to be homeowners and cascade their equity down the line when their parents pass away.  For example, that is what is happening in Europe where renting is common, the majority of people rent in their 20’s, 30’s and 40’s, but by the time they hit 50’s and 60’s (and retirement), they will invest the money they have inherited from their parents passing away and buy their own home.

So, what does this all mean for buy to let landlords in Aylesbury?

Have you noticed how the new homes builders don’t build bungalows anymore ... in fact some said the ‘bungalow storey’ is over.  The waning in the number of bungalows being built has more to do with supply than demand.  The fact is that for new homes builders there is more money in constructing houses than there is in constructing bungalows.  Bungalows are voracious when it comes to land they need as because bungalow has a larger footprint for the same amount of square meterage as a two/three storey house due to the fact they are on one level instead of two or three.

That means, as demand will continue to rise for bungalows supply will remain the same.  We all know what happens when demand outs strips supply … prices (i.e. rents) for bungalows will inevitably go up. 

4% yield on Fairford leys?

With 2018 firmly underway, I thought I would have a little look at the sales market to see if there is anything out there that had the potential to be a “good buy” for a buy to let investor.

Well, this time I have two properties that have the potential to be a good investment.

first is this Two Bedroom Semi on Fairford Leys, on the market with Hurst since 17^th January 2018 and priced at £257,500, this property could be a ready made buy to let, its neutrally decorated throughout, the kitchen and bathrooms appear to be the originals but they are also in good tidy order and could see a few more years of use yet. Whilst it doesn’t have a garage, it does have parking and a conservatory for a little extra living space.

Rental wise in a conservative market you could reasonably expect to hit £850 PCM.

A savvy buyer may try to negotiate on the price a little to push the gross rental yield to around 4%

Next on the list is another two-bed semi on Fairford Leys, and is one I can’t quite fathom as to why it has not yet sold. On the market at “offers over” £250,000 this is a good example of a popular rental property in a popular area and from what I can see, a good price. This has been on the market with Connells for a while and reduced recently, but as with the above rental expectation in a conservative market would be £850 PCM. So, if the seller is motivated you could try and cut the stamp duty threshold a bit and aim for a gross yield of just over 4%.

Whilst the yield on both of these properties is one thing, it’s the capital growth that could pay dividends in the long run on these properties.

Aylesbury Private Rents hit £13.47 per sq. foot

As I am sure you are aware, one the best things about my job as an agent is helping Aylesbury landlords with their strategic portfolio management. Gone are the days of making money by buying any old Aylesbury property to rent out or sell on. Nowadays, property investment is both an art and science. The art is your gut reaction to a property, but with the power of the internet and the way the Aylesbury property market has gone in the last 11 years, science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is, that is a great way to judge a property from the point of view of the tenant ... what space they get for their money. Now of course, location has a huge influencing factor when it comes to rents (and hence rent per square foot). Like people buying a property, tenants also have that balancing act between better/worse location, more vs. less money and size of accommodation (bigger and more rooms equalling more money) and where they live (location) verses making ends meet.

Interestingly, I know there are a lot of you in Aylesbury who like to see my statistics on the Aylesbury property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot on the values. In Aylesbury, the current AVERAGE figures are being achieved (and I must stress, these are average figures, so there will an enormous range in these figures), but on average, properties in Aylesbury, split down by type are achieving …

·         Aylesbury Detached Property - £395 / sq ft

·         Aylesbury Semi Detached Property - £367 / sq ft

·         Aylesbury Terraced Property - £367 / sq ft

·         Aylesbury Apartments - £323 / sq ft

So, the rental figures:

The extent of space you get for your rent is replicated in the space you get for your money when buying a property. The average size of rental property in the Aylesbury area is 817.54 sq ft (interesting when compared to the national average of 792.1 sq ft)

This means the average rent per square per foot currently being

achieved on an Aylesbury rental property is £13.47 sq ft per annum

So, what we can deduce from this?  Well the devil is always in detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite clear from data that there is relationship between the average £ per sq ft figures on property values and average £ per sq ft on rental figures as a property grows in size. However, something quite intriguing happens to those figures, in terms of what the property will sell for and what it will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Aylesbury property doesn’t mean you will double the value of it … in either value or rent. This is because the marginal value increases diminish as the size of the property increases. In layman’s terms … Subject to a few assumptions, double the size of the house doesn’t mean double the value … what really happens is a doubling of the size gives only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part … when it came to the rental figures, double the size of the house meant only 20% to 45% in increase in rent.