Aylesbury Unemployment Drops to 3.2% , its impact on the Property Market

It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to see signs of that prophecy? The simple answer is yes and no. 

A good barometer of the housing market the share price of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Studying the most recent set of data from the Land Registry, property values in Aylesbury are 0.23% down month on month (and the month before that, they had barely grown with an increase of only 0.11%) – so is this the time to panic and run for the hills?  

Doom and Gloom then? Well, let’s consider the other side of the coin. 

It is dangerous to look at short term. I have mentioned in several articles, that the heady days of Aylesbury property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone. Yet it might surprise you that during those impressive years of house price growth, the growth wasn’t smooth and all upward. Aylesbury property values dropped by 1.18% in January 2012 and 2.06% in June 2013 – and no one batted an eyelid then. 

You see, property values in Aylesbury are still 12.16% higher than a year ago, meaning the average value of an Aylesbury property today is £371,100. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years - but only slightly.  

The Aylesbury housing market has been steadfast partly because the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the AVDC area stands at 3,300 people (3.2%), which is considerably better than a few years ago. In 2013 there were 5,400 people unemployed (5.8%) in the same council area.  

However, inflation is the only thing that does worry me. Looking at all the pundits, it will reach at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25%. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who amongst us can remember 1992 with Interest rates of 15%!  

Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Aylesbury (and British) property market is that there are simply not enough properties available thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t!

Posing for a treat.

£8.48bn – The total value of all Aylesbury Property Market

“How much would it cost to buy all the properties in Aylesbury?”

This fascinating question was posed by the 11-year-old son of one of my Aylesbury landlords when they both popped into my office before the Christmas break (that seems an age away now!). I thought to myself, that over the Christmas break, I would sit down and calculate what the total value of all the properties in Aylesbury are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2005.

In the last 11 years, since the autumn of 2005, the total value of Aylesbury property has increased by 77% or £3.69 billion to a total of £8.48 billion. The FTSE100 has only risen by 30.78% and inflation (i.e. the UK Retail Price Index) rose by 37% during the same 11 years. 

When I delved deeper into the numbers, the average price currently being paid by Aylesbury households stands at £300,629.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Aylesbury; the average numbers come out like this .. 

Aylesbury Property Market
Average Value of a Detached Property	Average Value of a Semi-Detached Property	Average Value of a Terraced/Town House Property	Average Value of an Apartment
£541,759	£288,679	£261,924	£169,236

 ... yet it got even more fascinating when I multiplied the total number of each type of property by the average value. Even though detached houses are expensive, when you compare them with the much cheaper terraced/town houses and apartments, you can quite clearly see detached properties don’t fare any better in terms of total pound note value of the terraced/town houses and apartments.

Total Value of all the Aylesbury Detached Properties	Total Value of all the Aylesbury Semi-Detached Properties	Total Value of all the Aylesbury Terraced/Town House Properties	Total Value of all the Aylesbury Apartments
£2,384,281,359	£2,692,509,033	£2,473,610,256	£936,044,316

 What does this all mean for Aylesbury?  Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Aylesbury remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

 

Aylesbury house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Aylesbury not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Aylesbury has always, and will always, ride out the storm.

 

As always, my articles can be found at the Aylesbury Property Market Blog here or you can pop in to see me any time you are passing my office in Temple Street.

Forecasts for the Aylesbury property market 2017.

There have been many wild predictions in the media for 2017...according to those that tell us they know best we are going to see something between a crash and a boom! Not overly helpful. I enlisted the help of some friends and local professionals working on the front line to get their view...

As always if you are thinking of buying for the first time or adding to your existing portfolio get in touch ian@mortimersaylesbury.co.uk

Are there good returns to be had in Aylesbury in 2017?

It is great to be in the new year! Once December arrives the new year always seems to take an age to arrive. When it does you can wipe that slate clean and the next 12 months stretch endlessly out in front of you with all the great opportunity a new year brings. Many of you will be considering property matters.

The mortgage market has changed and the affordability criteria mean you will most likely need a 40% deposit to get the best rates. If you are buying a two bedroom property that equates to a substantial £100,000 plus costs including weighted Stamp Duty.

Is it best to sit back and wait for the market prices to ease before committing? Unfortunately this does not look like a good strategy as supply is so weak that the number of buyers still supports current pricing.

What does your £250,000 buy in the current market. As frequent readers know I always suggest buying a two bedroom house if budget allows and Fairford Leys is my suggested location.
This what you can buy today...click here.

You can buy a two bedroom house in a great location for your money but what will it rent for...click here.

So lets say you buy at the full price of £250,000 and achieve a rent of £900, lower than those shown here. That gives you a gross yield of 4.32% still way better than the miserly banks will give you. PLUS you get capital growth! A year ago my sales colleagues were selling similar property around £200,000, so if you had taken this action a year ago you would have around £50,000 plus your monthly return to show for your efforts. Not bad for a pretty safe investment of £100,000.

Obviously there is no guarantee that returns will be as good over the next few years but most of us consider property a long term strategy, for our pension pot or as a legacy for children.

Pension rules have been relaxed and several of my landlords have taken advantage to generate a deposit by drawing down from their pension (not for everybody). Some have had endowment policies mature (remember them!) while others have inherited money. But whatever your situation, YES there are still good returns to be had, but you need to be canny over where you buy and what you pay. You need to take the right legal and financial advice, taking advantage of the best buying methods to ensure maximum returns and tax efficiency.
I can help with many of these areas and put in touch with the right professionals, no obligation, no fuss, just helpful advice. You can read the 'John and Alice story' here

Good luck for 2017 whatever your plans.

Nala has promised to smile more this year

ian@mortimersaylesbury.co.uk

Can we blame Aylesbury landlords for the housing crisis in the town?

Many of these landlords are also known as the ‘Baby Boomer Generation’. These Aylesbury people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments. They have emerged as a successful and prosperous generation. 

Yet some have suggested these Aylesbury baby boomers have (and are) making too much money to the detriment of others, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while others are forced to pay massive rents or pay large mortgages.

Between 2001 and today, average earnings rose by 65%,

but average Aylesbury house prices rose by 123.6% 

The issue of housing is particularly acute for the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 year olds, moulded by the computer and internet revolution, are finding as they enter adult life, that it is very hard to buy a property. These ‘greedy’ landlords are buying up all the property to rent back out to them at exorbitant rents ... it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as greedy, immoral, wicked people cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The three biggest influencing factors on the Aylesbury (and UK) property market in the latter half of the 20^th Century were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell many of those Council Houses in the 1980’s and finally 15% interest rates in the early 1990’s which resulted in many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Aylesbury.

 

In 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria as there was pressure on these banks to grant mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages. 

We can observe today those very same banks (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), reciting the Bank of England hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s bank statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are reluctant to ask for a mortgage (as more often than not after all that – the answer is negative). 

Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will throw money at you ... I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!

In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay that rose to 69% by 2001. Homeownership was here to stay as for many it’s very much a cultural thing here in Britain to own your own home. 

Many of these same baby boomers started to jump on the band wagon of Aylesbury buy to let properties as an investment. Aylesbury first time buyers were in competition with Aylesbury landlords to buy these smaller starter homes … pushing house prices up in the 2000’s beyond the reach of many first time buyers. Alas, it is not as simple as that. Other factors come into play, such as economics, the banks and government policy. But are Aylesbury landlords really fanning the flames of the Aylesbury housing crisis? 

The landlords of the 4,701 Aylesbury rental properties are not exploitive and are in fact, making many positive contributions to Aylesbury and the people of Aylesbury. Aylesbury (and the rest of the UK) isn’t building enough properties to keep up with the demand; with high birth rate, job mobility, growing population and longer life expectancy.

 

According to the Barker Review, for the UK to stand still and meet current demand, the country needs to be building 8.7 new households each year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand. 

It doesn’t sound like a lot of difference, but for Aylesbury to meet its obligation on the building of new homes, Aylesbury would need to build 251 households each year. We are missing that figure by around 105 households a year.

For the Government to buy the land and build those additional 105 households, it would need to spend £40,160,927 a year in Aylesbury alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year.

It is the property developers who are buying the old run-down houses and office blocks and turning them into new attractive homes to be rented privately to Aylesbury families or Aylesbury people who need council housing because the local authority hasn’t got enough properties to go round.  

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.  

So only you, the reader, can decide if buy to let is immoral, but first let me ask this question - if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade ... where would these tenants be living now?

If you are a landlord future demand looks secure set against this climate. If you are thinking of becoming a landlord demand is not what should concern you. Buy the right product in the right location at the right price and all will be well. To discuss your plans get in touch ian@mortimersaylesbury.co.uk

 

Nala is happy now it is so cold, makes her feel at home!

 

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....