Aylesbury OAP’s sitting on £2.17 bn of Property

Aylesbury people aged over 65 currently hold more housing wealth in their homes than the annual GDP of the whole of the Scottish Borders … and this is a problem for everyone in Aylesbury!

Many retiree’s want to move but cannot, as there is a shortage of such homes for mature people to downsize into. Due to the shortage, bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. To add to the woes, in 2014, just 1% of new builds in the UK were bungalows, according to the National House Building Council - down from 7% in 1996.

Research has found that there are 5,738 households in Aylesbury owned outright (i.e. no mortgage) by over 65 year olds. Taking into account the average value of a property in Aylesbury, this means £2.17 billion of equity is locked up in these Aylesbury homes, compared to the GDP of the whole of the Scottish Borders being £1.7 billion of GDP.

A recent survey by YouGov, found that 36% of people aged over 65 in the UK are looking to downsize into a smaller home. However, the Government seems to focus all its attention on first-time buyers with strategies such as Starter Homes to ensure the youngsters of the UK don’t become permanent members of ‘Generation Rent’. Conversely, this overlooks the chronic under-supply of appropriate retirement housing essential to the needs of the Aylesbury’s rapidly ageing population. Regrettably, the Aylesbury’s housing stock is woefully unprepared for this demographic shift to the 'stretched middle age’, and this has created a new 'Generation Trapped’ dilemma where older people cannot move.

Some OAP’s who are finding it difficult to live on their own, are unable to leave their bungalow because of a lack of sheltered housing and ‘affordable’ care home places. So, older retirees can't leave bungalows, younger retirees can't buy bungalows and younger people can't buy family houses.

Interestingly, adding insult to injury, the problem will only get worse, as in the 50 year old to 64 year old homeownership age range there are an additional 4,021 Aylesbury households that are mortgage free and a further 5,039 Aylesbury households who will be completing their mortgage responsibility. With Government projections showing the proportion of over 65’s will rise by over a third from the current 17.7% to 24.3% of the population in the next 20 years ... this can only add greater pressure to the Aylesbury Property market.

  

House prices have rocketed over the last 40 years because the supply of property has not kept up with demand. With migration, people living longer and high divorce rates (meaning one family becomes two) we need, as a Country, 240,000 properties to be built a year to just stand still. In the 1990’s and early 2000’s, the Country was building on average 180,000 to 190,000 households a year, but since the Credit Crunch (2009), that has only been between 130,000 and 145,000 households a year.

The solution …. release more land for starter homes, bungalows and sheltered accommodation because land prices are killing the housing market as the large firms dominating the construction industry are more likely to focus on traditional houses and apartments. My opinion – until the Government change the planning rules and allow more land to be built on – Bungalows could be a decent bet for future investment as they continue to attract ever growing premiums?

As always any thoughts are always welcome, ian@mortimersaylesbury.co.uk

I wish you all a merry Christmas and a prosperous new year.

Aylesbury Property Market – Q4 Update

Well, hasn’t 2016 been eventful. The ups and downs of Brexit, the Queen’s 90^th, Andy Murray winning Wimbledon, Trump, Bake Off to Channel 4 and something close to the hearts of every buy to let landlord and homeowner in Aylesbury ... the Aylesbury property market.

So, let’s look at the Aylesbury property market...

In the last month, Aylesbury property values dropped by 0.08%, leaving them, year on year 13.69% higher, whilst interestingly, Aylesbury asking prices are down 2.0% month on month. All three statistics go to show the Aylesbury property market has recovered well after the summer lull, which was worsened by the uncertainty surrounding the EU vote back in June. Irrespective of all the issues, the average value of an Aylesbury home now stands at £379,500.

Generally, Aylesbury asking prices continue to hold up well, as asking prices are 4.7% higher year on year. At this time of year, asking prices tend to drop on the run up to Christmas and locally, they had dropped by 2.0% last month (November 2016), although this compares well with last year’s drop in Aylesbury asking prices, as we saw asking prices drop by 1.1% in November 2015.

After chatting with fellow property professionals in Aylesbury, all of us have seen the number of property sales fall slightly, suggesting a slowing market. However looking at what our own sales team have done in December so far, they have seen much improved results when comparing with previous years.

The numbers are limited, so it’s interesting to take note from a recent survey by the Royal Institution of Chartered Surveyors, stating new buyer enquiries and new instructions are falling at the same rate, suggesting that there will not be a downward pressure on property values.

Looking at the figures for the UK, property values are generally rising slower than a few years ago, but on a positive note, there's still growth across the UK. You see, slowing property value growth isn't solely Brexit related, but after a number of years of double digit rises in property values, affordability has weakened and cooling price growth is widely seen to be a natural correction of the market.

On the other hand, interest rates being at a record low of 0.25% are helping the property market. The cut in interest rates in the late summer was the medicine for the post-Brexit worry and will, as a consequence, ensure that the UK economy continues to be underpinned by buoyant property prices.

 So, what will happen in 2017 in the Aylesbury property market?

Some say until we know what type of exit the UK will make from the EU it is hard to evaluate the outcome. Although, I believe, the whole Brexit issue is a sideshow to the main issue in the UK (and Aylesbury) housing market as a whole. As I have mentioned time and time again over the last few months, the biggest issue is demand outstripping supply when it comes to the number of households required to house us all. Aylesbury has an ever-growing population: with immigration (we still have at least two years of free movement from EU members into the UK), people living longer and the fact we need thousands of additional households as the country has nearly 115,000 divorces a year (where one household becomes two households).

As always, you can find me in my Temple Street office and I welcome your thoughts when you are next in town. Ian@mortimersaylesbury.co.uk

 

I'm looking forward to Christmas Turkey.
 

 

 

 

 

Aylesbury Semi Detached House Prices rise by 411% in 20 years

The semi-detached house with its bay windows and net curtains has long been ridiculed as an emblem of safe, lacklustre and desperately uncool suburban life; the homes of the likes of Hyacinth Bucket in Keeping up Appearances and more latterly Alan Partridge – but they could have the last laugh - having enjoyed the highest price growth of any property type in Aylesbury, up by an average 411% increase in the last twenty years.

The semi can now laugh in the face of its posher detached counterpart, which saw a rise of only 298% in the same 20-year period. Looking at smaller properties, flats/apartments only rose 260%, whilst terraced houses did better at 349% (although they were starting from a lower base and demand from buy to let landlords has had a big part in driving the values on that type of house (i.e. the price a buy to let landlord is prepared to pay is driven by the rent the landlord can achieve). 

In 1996 the average value of an Aylesbury semi stood at £61,100,

today it stands at £312,200 

Such is the attractiveness of semis, which are less expensive than detached houses but have most of the same benefits for families. Semi-detached houses were built in their hundreds of thousands by the Victorians and Edwardians between the wars and through to the present day. Interestingly in the late 19^th Century and early 20^th century – they often were not referred to as semi-detached – but as villas! 

So whilst Europeans live on top of each other in apartments us British chose, in the late Victorian and early Edwardian times, suburban comfort, being near … but not too near, the neighbours! I once heard someone say the semi-detached house was a peculiar crossbreed that doesn’t stand on its own — it is inseparable from its neighbour — yet somehow still embodies a dream of suburban independence. 

 

Over one in four houses in Aylesbury is a semi-detached house 

There are 9,327 semi-detached properties in Aylesbury and they represent 32.48% of all the households in Aylesbury. Aylesbury has such a mix of semi-detached properties with the older semis to more modern ones built in the last couple of decades. Especially with the older ones, the semi offered a hall to provided separation between the reception rooms and privacy for their occupants. Also the downstairs offered larger rooms to accommodate dining tables, whilst upstairs, bedrooms were smaller, yet cosy.  

However, probably the most overlooked aspect of popularity for semis is the garden. The front garden, designed to separate the house from the world, and the back garden designed for private relaxation. The semi in the suburbs was relaxing, well presented, plumbed and enhanced by a garden so that when a window was opened the air had a chance of being genuinely fresh… and it’s for all those reasons why 316 semi-detached houses have been sold in Aylesbury in the last 12 months alone.  Still as popular today as they were with the Victorians all those years ago – some things just stand the test of time!

 

Whatever property type you are thinking of adding to your portfolio next year I am sure it will let readily as the market remains strong with a lack of supply continuing to feed strong rental prices. If you are in town stroll in to my office to discuss any plans you may have whenever you wish or email me ian@mortimersaylesbury.co.uk

 

 

Aylesbury First Time Buyers Are Paying 17.4% More Than 12 Months Ago

Figures just released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property - impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages for house purchase, which is the highest it has been for two years. Looking locally, in Aylesbury last quarter, £545.8m was loaned on HP21 properties alone! 

Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.

And it’s not just buy-to-let landlords that seem to be flourishing. I am finding that first-time buyers are also a lot more confident too. Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Coupled with a low interest rate environment and you have all the ingredients for a strengthening property market. To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%). 

When I looked at the data for Aylesbury Vale District Council area, the average price paid by first-time buyers (FTB’S) was £253,957, which is a rise of 2.0% from last month and a rise of 17.4% to twelve months ago. The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £306,694, a rise of 1.92% from last month and a rise of 17.22% to twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £319,806, a rise of 1.9% from last month and a rise of 17.31% to twelve months ago. 

What surprised me with these figures was how close the property prices, values and percentages were to each other. It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Aylesbury and UK market.  And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) - mortgage rates are so competitive that they are inducing people to commit to a home purchase.

It seems the great Brexit uncertainty is over hyped, and house price growth as well as mortgage approvals, will pick up pace into 2017.

Now is a great time to give thought to your 2017 investment plans. Pop in to see me when you are passing or trying to avoid the Xmas carols! ian@mortimersaylesbury.co.uk

 

 

I'm lovin' this cold weather.

 

Aylesbury Landlords and Tenants : What does the Tenant Fee Banning order mean for you?

·         Tenant Fees set to be banned within 12 to 18 months

·         Rents due to rise as those fees passed to Landlords

·         Landlords won’t be worse off – and neither will tenants or agents 

With our new Chancellor of the Exchequer revealing a ban on tenant fees in his first Autumn Statement on Wednesday what does this actually mean for Aylesbury tenants and Aylesbury landlords? 

The private rental sector in Aylesbury forms an important part of the Aylesbury housing market and the engagement from the chancellor in Wednesday’s Autumn Statement is a welcome sign that it is recognised as such. I have long supported the regulation of lettings agents which will ensconce and cement best practice across the rental industry and, I believe that measures to improve the situation of tenants should be introduced in a way that supports the growing professionalism of the sector. Over the last few years, there has been an increasing number of regulations and legislation governing private renting and it is important that the role of qualified, well trained and regulated lettings agents is understood. 

Great News for Aylesbury Tenants

 

So, let’s look at tenants .. this is great news for them, isn’t it?  Well before you all crack open the Prosecco, read this … 

Although I can see prohibiting letting agent fees being welcomed by Aylesbury tenants, at least in the short term, they won’t realise that it will rebound back on them.

First up, it will take between 12 and 18 months to ban fees, as consultation needs to take place, then it will take an Act of Parliament to implement the change. A prohibition on agent fees may preclude tenants from receiving an invoice at the start of the tenancy, but the unescapable outcome will be an increase in the proportion of costs which will be met by landlords, which in turn will be passed on to tenants through higher rents.  

Published at the same time as the Autumn Statement, hidden in the Office for Budget Responsibility’s Economic and Fiscal Outlook on the Autumn Statement (The Office for Budget Responsibility being created by Government in 2010 to provide independent and authoritative analysis of the UK’s public finances), it said on Wednesday … 

“The Government has also announced its intention to ban additional fees charged by private letting agents. Specific details about timing and implementation remain outstanding, so we have not adjusted our forecast. Nevertheless, it is possible that a ban on fees would be passed through to higher private rents”

The charity Shelter and Scotland 

Scotland banned Letting Fees in 2012. The charity Shelter have been a big voice in persuading and lobbying the Government since it managed to persuade the Scottish Parliament to ban fees in 2012. On all the TV and radio shows at the moment, they keep talking about their Independent Research, which they said showed that,  

“renters, landlords and the industry as a whole had benefited from banning fees to renters in Scotland. It found that any negative side-effects of clarifying the ban on fees to renters in Scotland have been minimal for letting agencies, landlords and renters, and the sector remains healthy.”

Going on,  

“Many industry insiders had predicted that abolishing fees would impact on rents for tenants, but our research show that this hasn’t been the case. The evidence showed that landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK. It found that where rents had risen more in Scotland than in other comparable parts of the UK in 2013, it was explained by economic factors and not related to the clarification of the law on letting fees” 

.. yet the devil is in the detail…. 

Last week Shelter were quoting this Research from December 2013 to say rents never went up following the tenant fee ban in Q4 2012. I have read that research and I agree with that research, but it was published three years ago, only 12 months after the ban was put into place.  

I find it strange they don’t seem to mention what has happened to rents in Scotland in 2014, 2015 and 2016 ... because that tells us a completely different story!

What really happened in Scotland to rents? 

I have carried out my research up to the end of Q3 2016 and this is the evidence I have found.. 

In Scotland, rents have risen, according to the CityLets Index

by 15.3% between Q4 2012 and today

 (CityLets being the equivalent of Rightmove North of the Border – so they know their onions and have plenty of comparable evidence to back up their numbers).  

When I compared the same time frame, using Office of National Statistics figures for the English Regions between 2012 and 2016, this is what has happened to rents  

·         North East 2.17% increase

·         North West 2.43% increase

·         Yorkshire and The Humber 3.21% increase

·         East Midlands 5.92% increase

·         West Midlands 5.52% increase

·         East of England 7.07% increase

·         South West 5.82% increase

·         South East 8.26% increase

·         London 10.55% increase 

….and let me remind you about Scotland … 15.3% increase.  

 

 

 

 

Are you really telling me the Scottish economy has outstripped London’s over the last 4 years? Is anyone suggesting Scottish wages and the Scottish Economy have boomed to such an extent in the last 4 years they are now the Powerhouse of the UK? .. because if they had, Nicola Sturgeon would have driven down the A1 within a blink of an eye, to demand immediate Independence. 

So what will happen in the Aylesbury Rental Market in the Short term? 

Well nothing will happen in the next 12 to 18 months .. it’s business as usual! 

… and the long term?

Rents will increase as the fees tenants have previously paid will be passed onto Landlords in the coming few years. Not immediately .. but they will.

As a responsible letting agent, I have a business to run. It takes, according to ARLA, (Association of Residential Letting Agents) on average 17 hours work by a letting agent to get a tenant into a property. We need to complete a whole host of checks prescribed by the Government; including a right to rent check, Anti Money Laundering checks, Legionella Risk Assessments, Gas Safety checks, Affordability Checks, Credit Checks, Smoke Alarm checks, Construction (Design & Management) Regulations 2007 checks, compliance with regulations relating to blinds, compliance with the Landlord and Tenant Act, registering the deposit so the tenants deposit is safe and carry out references to ensure the tenant has been a good tenant in previous rented properties. This list is by no means exhaustive!

All of which the vast majority of lettings agents take very seriously and are expected to know inside out making us the experts in our field. Yes, there are some awful agents who ruin the reputation for others, but isn't that the case in most professions? 

No landlord, no tenant and no letting agent works for free. 

Aylesbury letting agents will have to consider passing some of that cost onto landlords in the future. Landlords will be able to offset higher letting charges against tax, but I (as I am sure they) would not want them out of pocket, even after the extra tax relief. 

It will be interesting to watch this play out over the next couple of years as agents and landlords decide what their response to any changes may be....

 

 

 

 

 

 

 

 

 

Excellent three bedroom house on the Hartwell estate, Aylesbury, 5% potential yield

An excellent three bedroom house, reduced to sell.
The Aylesbury average yield is around 4% this house will give you 5% with a monthly rental of £1100.00pcm and is in great condition. This is what the sales team here say...

PRICED TO SELL AND OFFERED WITH NO UPPER CHAIN!
This excellent three bedroomed house is located on the popular Hartwell development and is bound to sell quickly at this price.Keys held for immediate viewing.
This excellent three bedroom terraced house has been well maintained by the current owners and benefits from replacement double glazed windows and gas central heating.  The accommodation includes entrance hall, lounge, large kitchen/diner, three bedrooms and a modern bathroom.  Outside there is private rear garden and a single garage situated in a block nearby.
http://www.mortimersaylesbury.co.uk/listing/hillington-close-aylesbury/

Hillington Close Aylesbury HP19 7SG

Good presentation throughout



This one is going to sell fast so please call the sales team 01296 398555

 



£13m paid in Stamp Duty by Aylesbury Residents

“A pound saved is worth two pounds earned . . . after taxes” is what my Grandfather used to say. He loved his irony, yet was always a wise man, and it is tax I want to talk about today, in particular, property taxation ... Stamp Duty as it is otherwise known. 

Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68bn a year for the HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty). 

In the latest set of data from HMRC, in the MP constituency that covers Aylesbury, property buyers paid £13m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £361m in income tax that all of us in the same area paid last year). 

 

However, as you may know, George Osborne introduced an additional tax for landlords or anybody else buying a second home and from 1^st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property. There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.

 

HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).

In previous articles, I spoke about the slump of property transactions after the 1^st of April (as landlords rushed through their property purchases in March to beat the April deadline). In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy to let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge). 

However, looking at Q3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge. 

The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year. The figures also show that 65.4% of "buy to let" purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31^st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.  

You shouldn’t believe everything you read in the newspapers! I can assure you the Aylesbury property market is doing just fine.

All this talk of tax is tiring, can we talk about food?

Is this a window of opportunity for Aylesbury investors?

The Aylesbury buy to let market has been a little quiet over the past weeks. Sellers have not been keen to sell at levels that would be interesting to investment buyers who lack confidence in the current market or bought earlier in the year to avoid Stamp Duty changes. But some sellers have come to realise that unless they take action on their pricing they will not be selling this year.

 For those that are selling to make a ‘desired’ move this is not a problem, they will wait until 2017 and try again. But for the motivated ‘need’ to sell vendors time is running out and they are taking action. This is evidenced by Rightmove figures.

 Of the 139 properties that have featured in the last 14 days 29 of them (20.8%) have been price reductions, 23 (16.5%) have been new build homes and only 19 (6.4%) of them have become SSTC in the same time period. That leaves just 68 homes that have come new to the market and remain available.

We have registered more investment buyers in the last two weeks than in the preceding month. Perhaps it is not just me that sees this window of opportunity to buy before the year end at sensible prices? Stock levels are low and the motivated sellers are hard to find but they are out there.

If you do not buy now the New Year will bring the usual inflated prices that come with the optimism of the turn of the year even if it is not warranted. April would then represent the next opportunity to invest if the first quarter does not deliver for sellers. In my experience April is always the first month that you can call the market for the year. If the first quarter has been strong all will be fine. If it has not it will be April before sellers react and start to take action to get sold.

So if you are buying to let in the next 6 months it is worth getting out now and looking for those motivated sellers. Or you can keep watching the market and this blog! with a view to buying in April or beyond. There is of course the possibility that the economic news will be sufficiently good through the first quarter to encourage others to buy…then you will have to go with higher market values!

I hope this helps those of you that are sitting on your hands trying to get a fix on the market. If you want to talk through your plans I would be happy to see you or you can email ian@mortimersaylesbury.co.uk

Average Rent Paid by Tenants in Aylesbury rises to £922 per month

Back in the Spring, there was a surge in Aylesbury landlords buying buy to let property in Aylesbury as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in HP20. 

Jan 2016 – 18 properties sold

Feb 2016 – 29 properties sold

March 2016 – 55 properties sold

April 2016 – 20 properties sold

May 2016 – 23 properties sold 

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction? 

However, there appears to be no apparent effect on the levels of rent being asked in Aylesbury - and more importantly achieved - and this direction of rents is not likely to reverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage. 

.. but it’s not all bad news for tenants. Whilst average rents in Aylesbury since 2005 have increased by 22.6%, inflation has been 38.5% over the same time frame, meaning Aylesbury tenants are 15.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets) 

Year	Average Rent in Aylesbury per month
2005	752
2006	769
2007	786
2008	812
2009	825
2010	813
2011	833
2012	852
2013	864
2014	877
2015	897
2016	922

 I found it interesting looking at the rent rises over the last five years in Aylesbury, as it was five years ago we started to see the very early green shoots of growth of the Aylesbury economy.  As a whole, following the Credit crunch (2011), rents in Aylesbury have risen by an average of 2.4% a year.  

The view I am trying to portray is that while renting is often seen as the unfavorable alternative to home ownership, many young Aylesbury professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.