Rents Paid By Tenants In Aylesbury On The Rise

 

With Easter just gone and considering we are a quarter of the way through 2015, I was talking to a landlord from Bierton the other day about what is happening to the level of rents that are being achieved in the Aylesbury property market.

In terms of rents in Aylesbury, it appears that rents being achieved for new rentals (i.e. when the tenant moves out and new tenant moves in) have risen in the order of 3.8% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents dropped by 2% over 2008/9, due to oversupply in the rental market. A lot of the people who couldn’t sell their property in Aylesbury in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Aylesbury dropped by 64.7% between February 2008 and March 2010, a lot of which came on to the rental market in Aylesbury. However, looking at the longer term though, tenants have had it good  because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.

I told the landlord that there is a lack of new rental properties in Aylesbury coming on the market, in fact according to the Office of National Statistics, there are only 40 new rental properties coming to the market each month in Aylesbury but the population of Aylesbury is rising by 69 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Aylesbury has improved. This is further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.

Looking at the rents charged in Aylesbury, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Aylesbury has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Aylesbury to £26,789pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

If you want a chat about the local Aylesbury property market, pop in for a coffee or email me on ian@mortimersaylesbury.co.uk

Nala just chillin' in the sun

 

“The way it works in Aylesbury is this, you have to rent where you want to live, or buy where you don’t want to live,”

I had this really interesting chat with some of my tenants the other day on renewal of their tenancy in Aylesbury. They have been tenants of ours for quite a while, so I know them quite well.  We got talking and I asked if they had ever thought of buying a property for themselves, to which they replied back with the title of this article. It made me think and so I did some more research into the subject which I want to share with you.

After the end of the Second World War, just over a quarter of the UK population owned their own home, the rest rented from private landlords or the local Council. If someone told you in the 1970’s and 1980’s that they rented, they were considered a second class citizen. Everyone wanted to own their own home ... it was the done thing. We think that home ownership will inevitably happen, but it won't.

It all changed in the 1970’s, when two things happened. Firstly, the number of people who owned their own home broke through the 50% barrier in 1971 and by 1981 it was at 57%. Tied in with that, the average house prices in Aylesbury were doubling, at one point, every four years in the 1970’s so property and profit started to feed off each other.

To put that growth in context, if we were to look at the last 85 years in Aylesbury, in 1930, the average Aylesbury property was worth £657. It took 16 years for Aylesbury property values to double, rising to £1,624 by 1946. Another 15 years and the average Aylesbury property doubled again to £3,083 in 1961. The next doubling only took 10 years, as by 1971 the average Aylesbury property had reached £6,268 in value.

It was the 1970’s when things really took off, as by 1975 (i.e. only four years) they had doubled to £13,117 and they doubled again to £26,259 by 1980. It took another eight years for values to double again, as an average Aylesbury property reached £54,924 in 1988. Twelve years had to pass until they doubled again in 2000 (£113,009) and just six years to double again by 2006, when they reached £227,924.  Where are we today? The average property value in Aylesbury currently stands at £322,700.

We could blame Maggie Thatcher for making home ownership the ultimate goal, but what we now need to consider is that the country is turning on its head and we need to, as a Country, love renting again. Some blame the banks, but obtaining a 95% mortgage is hard work, but nowhere near impossible. A typical Aylesbury first time buyer for example could buy a modest property locally and it would be cheaper each month in mortgage payments than renting.

People might say on the surveys they want to buy, when it comes down to it. If you have been living in a top of the range large property in Watermead , but the bank will only lend you enough to buy a smaller property in a not so good area what would you do? Again, if you were a twenty something, what would you do? Look once more at the title of the post ... “The way it works is, you have to rent where you want to live, or buy where you don’t want to live,”

With tenant demand only going in one direction that is probably why more and more people are getting into buy to let in Aylesbury. With the new rules on pensions and the ability to use them to buy residential rental properties from April onwards, this could be the time for you to buy a rental property. You must take advice on your pension from an Independent Financial Advisor (there are plenty in Aylesbury) and you must take advice from people who know what to buy (and not to buy) in Aylesbury to ensure you get the best from your investment. One place for such advice is the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

Are Aylesbury landlords worse than Politician’s ?

I was having an interesting chat the other day with a couple of solicitors at an Aylesbury business networking event, when the subject of a lack of property for first time buyers came into the conversation.  I followed the chat up with an email with my findings, findings that I would like to share with you today.

At the time of the last census in 2011, 3,401,675 properties in England were privately rented, of which it is estimated, over 1.25 million were owned by private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing our younger generations from being able to buy. There is also growing resentment towards the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief which is not available to homeowners.

They may be asset rich thanks to recently rising property values, but let us not make the landlords the bogymen they could easily be. Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Aylesbury.

Property values today in Aylesbury are still 9.9% above the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 16.1% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the town. Interest rates are at an all time low and first time buyers only need to save a £9,500 deposit to secure a  2 bed  in the Willows Development with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?

The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Aylesbury will have risen from the 8,096 properties recorded in 2011 to 11,700 by 2021. Sounds fanciful? Well in 2001, there were only 4,125 privately rented properties in Aylesbury.

It is a fact that we as a Country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they got a job.

Tenants  will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner. If you want a  chat about what would make the best sort  of property that would offer that in Aylesbury, then please email me on ian@mortimersaylesbury.co.uk or visit my Aylesbury Property Blog

Aylesbury Landlords invest £1.28 bn in the Aylesbury Property market

South East property asking prices jumped by more than £6,400 to £363,992 in February according to Rightmove, an increase of 1.8% from January and 8.1% higher than a year ago. The property market has really warmed up, but talking to some Aylesbury Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (i.e. their REAL value), is the issue a lack of supply?

Putting aside Aylesbury’s continual housing supply shortage, (we only built 4,880 properties in the last decade but the population of Aylesbury grew by 8,389), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Aylesbury landlords only last week, I said that I believe this is the new norm in the Aylesbury property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Aylesbury.

When one looks at the historic data, in February 2008, there were 1,653 properties on the market in Aylesbury compared to today’s 396. Should we be worried?  Well in March 2010, there were only 582 properties for sale in Aylesbury but eight months later in November 2010, this had jumped to 916 properties, for it to drop to 343 properties in December 2013. The number of properties on the market is a cyclical thing in Aylesbury, it always has been. As we go into the Spring of 2015, the number of new properties coming onto the market will increase ... just as the daffodils will flower.

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep ... the youngsters of Aylesbury still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Aylesbury landlords have stepped in and bought property to rent out to them. Aylesbury landlords have bought 3,971 properties over the last decade (investing approximately £1.281bn buying those Aylesbury rental properties), meaning there were at the last count, 8,096 Aylesbury properties being privately rented out to tenants. Aylesbury tenants are in fact getting a good deal as well, as average rents in Aylesbury are 5.9% above they were seven years ago. That sounds like a win-win situation for everyone to me. Don’t blame landlords and start building more properties in Aylesbury ... that is the only answer.

In the meantime, the demand from Aylesbury tenants for Aylesbury property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please visit the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/

Your Pension could now buy a Buy to Let property in Aylesbury

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Aylesbury property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6^th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year) .

.. and now the good news!

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Aylesbury are in the order of 3% to 7%.

The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Aylesbury is 19 years and 1 month (although interestingly, its 20 years 2 months in High Wycombe). If we roll the clock back 19 years 1 month to February 1996, property values in Aylesbury have risen by 253.3% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).

So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (ie low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce high returns (ie high yields) but low capital growth (ie how much the value of the property goes up). Now, I am not a financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Aylesbury property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Aylesbury Property market can always be found on the Aylesbury Property Blog  http://theaylesburypropertyblog.blogspot.co.uk/

Nala has not been well but hopefully now fully recovered. I think she qualifies as having the longest Husky tongue in the world when she yawns.

Prospects for the Aylesbury lettings market

I was discussing the local Aylesbury lettings market and all things lettings with a landlord this morning. We had both seen the following BBC article 'The disappearing property ladder' ...  http://www.bbc.co.uk/news/magazine-31762127
Forgive me for taking advantage of a BBC link but the full article is an interesting read.
The main points we both took from the article were some of the startlingly good figures for landlords.
In the last decade there have been substantial changes in the property market, as the article says, ten years ago 59% of 25 to 34 year olds owned their own home in England_ now it is 36%. Those buyers are now renting instead from landlords like you and me- 21% were doing that 10 years ago now its 46%! a huge shift in the market.
There is no sign of this trend changing. The ability of first time buyers to acquire a deposit is not about to change, they will continue to be a rare breed. Sale prices are strong and look set to continue being so, driven by investment buyers and the lack of supply. The younger generation no longer aspire to be homeowners in the same way we did, many see it as an unrealistic goal to achieve in the current climate.
Buying to let continues to look like a good retirement or investment plan. A good example of the right thing to buy has just come on to the market with us this morning.





Holly drive, Aylesbury. £215,000.

Rental demand for two bedroom houses is strong and you should see rent achievable around £800pcm, 4.4% gross yield.
If you are considering buying to let and want some straightforward advice please feel free to contact me at any time.
ian@mortimersaylesbury.co.uk
Ian Davies 01296 398555        



 

 

 

 

 



 

 

 

A great buy in Aylesbury for those of you chasing yield rather than capital growth.

A studio apartment built in the 1960s but in one of Aylesbury's most popular locations, Bedgrove. Close to shops, good school catchment and great road access in to town or out of town.
Rental demand for this location is strong and you can expect to achieve around £450.00 pcm in good order. That's a gross yield of more than 5.6%...a higher yield than for most property types in Aylesbury

 

http://www.mortimersaylesbury.co.uk/Property/Residential/for-sale/Aylesbury/Bedgrove/Selwyn-Court/MEA3505.aspx

 

If you need further details or wish to talk through your investment needs please give me a call or drop in to our Temple Street offices to have an informal chat . 01296 398555
ian@mortimersaylesbury.co.uk

Fairford Leys Aylesbury is the place to be!

This is an excellent example of the ideal buy to let. On a great popular estate. By popular I mean popular with tenants across all sectors so maximum demand for you the landlord. The price is strong but that is where the market is...full asking price already achieved on this one. Came to market Sunday sale agreed Tuesday.
Achievable rent around £800 giving a gross return of 4.3%, achieving £825 would take this to 4.5% so quite respectable. Modern house so low maintenance and will likely still be in good order whenever you come to sell with minimum outlay. A good investment for those trying to achieve a sensible yield and good capital growth prospects.

http://www.mortimersaylesbury.co.uk/Property/Residential/for-sale/Aylesbury/Fairford-Leys/Trebah-Square/MEA3512.aspx

If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, do what a number of other Aylesbury landlords do and visit the Aylesbury Property Blog where I discuss the Aylesbury property market, how Aylesbury compares with its neighbouring towns/ rivals, and at the same time, I can hopefully answer questions you may have . I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. If you are ever passing, do pop in and see me at our office on Temple Street, Aylesbury or email me at ian@mortimersaylesbury.co.uk or telephone me on 01296 39 85 55.

What properties are actually selling in Aylesbury?

Prices up, prices down, prices stable... the newspapers are full of good news, bad news and indifferent news about the Brit’s favourite subject after the weather... the property market. The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way.  At one end of scale is London, which has seen average prices grow in the last twelve months by a shade under 19% (and again that is an average because some Borough’s in London have risen by 26%) whilst in the land of Daffodils, by contrast, Wales only saw a 2% increase in property values (although in the Merthyr Valleys they dropped by over 11%).

Well we can’t ignore the rest of the UK, and we can’t forget that the Chancellor’s Stamp Duty reforms have polarised the London property markets above £1,000,000 because at the top end of the market, punitive Stamp Duty charges will dampen demand further. While the Bank of England warned of the growing London property price bubble in the Spring of 2014, talk of a recovery in some areas was premature. In 2015, irrespective of where you are in the UK, one story will unite the patchwork quilt of markets – really low levels of property coming on to the market.

The question you should be asking though is not only what is happening to property prices, but which price band exactly is selling? I like to keep an eye on the property market in Aylesbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Aylesbury. 

If you look at Aylesbury and split the property market into four equal sized price bands (in terms of households), each price band would have around 25% of the property in Aylesbury, from the lowest in value (the bottom 25%) all the way through to the highest 25% (in terms of value).  Over the last two months (63 days to be precise), in the lowest quartile, (those with prices under £165k) 85 properties have come on to the market in Aylesbury and 44.7% of them are sold stc (38 properties have a buyer).The next quartile, between £165k-£220k, of the 140 properties that came on to the market, 45% of them (63 properties) have a buyer. The £220k-£310k price range has seen 136 properties come on to the market, and 46.3% of the properties have a buyer (63 properties). The most expensive 25%, the £310k plus range, has seen 34 of the 116 properties that came on to the market find buyers (29.3%).   Fascinating don’t you think?

The next three months’ activity will be crucial in understanding which way the market will go this year and I honestly believe we will not see any increase in the levels of stock this side of the election. Election or no election, people will always need a roof over their head and that is why the property market has rode the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. And why? Because Britain’s chronic lack of housing will continue to prop up house prices and prevent a post spike crash... there is always a silver lining when it comes to the property market! 

If you are considering buying a property for investment in the near future in Aylesbury, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. You may be seeking capital growth, monthly yield or a measure of both, it is important to purchase the right product to suit your needs. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone (01296 398555), pop in to see me in temple Street or visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

 

 

Ayelsbury – massive drop in homeownership

 

Ok, a slight turn of phrase there on the classic, an Englishman’s home is his castle but when it comes to the UK the ‘Brit’s are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It is interesting to note that up until the mid to late 1960’s, more people rented their home (albeit mostly from the local council) than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied. 

It was only after the Second World War, when the Beatles were rocking, that people started to buy instead of rent ... but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme. Even though 48,864 households in Aylesbury were owner occupied in 2001 and that number had actually increased to 49,702 households by 2011, the percentage of homeowner properties in Aylesbury dropped drastically from 75.72% to 71.61%. Why, because whilst an additional  4,880 properties were built in Aylesbury between 2001 and 2011, a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Aylesbury. In fact, the number of properties in Aylesbury that were privately rented jumped from 4,125 in 2001 to 8,096 in 2011!

With no more council houses being built, this is increasing the number of people looking to renting, as everyone needs a roof over their head. With the Aylesbury Vale Council house waiting lists being in the 5 to 10 year range for a decent property in a decent location, it shouldn’t be forgotten that it is often Aylesbury landlords who house tenants waiting for a council house. Aylesbury landlords do not receive any subsidies from HMRC and income tax is paid on rent paid by the tenant.

However, in Aylesbury, as we have noticed more and more of the younger generation are renting because they can‘t afford to buy (raising a deposit being the sticking point for most), and a high percentage of the expansion in private renting actually comes from those who need and want temporary or short term accommodation. There are even a few landlords who rent their own Aylesbury property out for the short term, for ease, and not necessarily purely for profit.

With every report stating the rental market will continue to grow throughout the rest of this decade, with high demand and limited supply in the Aylesbury area now is still a good time to get in to the market. I have spoken to numerous landlords over the last couple of weeks who wish they had bought last year or at worst the early weeks of this year as prices have risen sharply. Those landlords who acted have already seen capital growth…two properties I have put on the market for new landlords this week (they have just completed) have already seen in excess of a £10,000 increase in the value of their investment.

 If you are considering buying a property for investment in the near future in Aylesbury, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. You may be seeking capital growth, monthly yield or a measure of both, it is important to purchase the right product to suit your needs. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone (01296 398555), pop in to see me in temple Street or visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

Princess Nala looking regal...note the muddy paws, my garden looks like the surface of the moon.

 

 

 

 

 

 

 

 

 

 

A smart two bedroom apartment in watermead, Aylesbury.

A great opportunity to buy a first floor apartment on this popular lakeside development, expected to return a rent of around £700pcm giving a gross yield of just over 5%. Regular readers know I have a preference for buying houses but if flats are your thing this is a good one.
The property is situated on the sought after Watermead development which can be found on the northern outskirts of Aylesbury. The development is based around two picturesque lakes and a central piazza which offers a range of individual shops and a public house/restaurant. The development is served by a regular bus service providing quick links into Aylesbury town centre.

If you need further details or wish to talk through your investment needs please give me a call or drop in to our Temple Street offices to have an informal chat . 01296 398555
ian@mortimersaylesbury.co.uk