Confusing market for Oxford property investors

It is interesting to note two things about the current property market – there are fewer approved mortgage agreements (currently at an 18 month low), and yet, the latest evidence is that property prices are still rising.  The latest house price data from Nationwide shows that house prices increased by 0.6% in August with annual growth rising from 5.2% in July to 5.6% in August.

On the face of it this seems to be conflicting data, but Nationwide offer an hypothesis that the data shows that there has not only been a reduction in demand for property, but a corresponding reduction in the level of supply, meaning that the market has remained balanced, allowing house prices to continue to rise.  Like many commentators the Nationwide forecast little to zero growth for the 2^nd half of the financial year, placing the blame on uncertainty resulting from the vote to leave the EU.

As regular readers will know, I don’t agree that there is any hard data to support an assertion that Brexit has yet had an impact on the Oxford property market.  I do believe that the decisions made in relation to stamp duty and mortgage interest relief for landlords has and continues to have an impact, which is wrongly being blamed on Brexit.

The house price increase is also being impacted by another factor.  Around 64% of people own a home, this figure is only marginally higher than last year.  However, that hides a much more significant trend and one that has sustained over a number of years.  Now 52% of homes are owner without a mortgage i.e. their owners have either settled their mortgage to own outright, or are investing in new property without a mortgage.  This further explains the confusing data – fewer approved mortgages but continued house price growth!

However, this also hides a generational divide – people over the age of 39 years old are far more likely to own their own home with a third of homes in England being owned by people over the age of 65 years.  People aged from 20 to 39 years are known as ‘generation rent’ with good reason.  The owner occupier rate is expected to fall from a peak of 70% to 60% by 2025, with an additional 1.8m households becoming private renters by 2025 that’s 1 in 4 of UK households.

In Oxford this trend is very plain to see, investment in property is overwhelmingly coming from people aged 50 years and older or from foreign nationals.  Demand for rental properties is much more typically coming from people aged between 18 and 40 years of age.  The big question is:  is this sustainable? And, is it desirable?  If the answer to both of these questions is ‘yes’ then it can’t possibly be a good idea to bash the landlords in the way the government has chosen to so do.  If the answer is ‘no’ how is Government policy going to be effective?  Limiting the supply of much needed rental property in the short-term by discouraging landlord investment; whilst in parallel failing to address the severe under-supply of affordable and starter homes to arrest the growth in demand for rental properties.

Cleanliness...the biggest hit to tenant's deposits.

I saw an article in the Property Reporter which states:

Since the introduction of tenant deposit protection in 2007, cleaning has been the number-one cause of disputes and the problem is getting worse, according to Imfuna Let.

The latest data from the Tenant Deposit Scheme shows that cleaning continues to take the lion’s share of deposit disputes, up almost 50% over the last five years. Cleaning has consistently been the most common dispute in cases brought to the TDS and arises in around half of the cases they deal with (58%).

This really resonates with our experience in Oxford, and it is interesting to note that it is not uniquely an Oxford problem.  For letting agents, cleanliness is a difficult issue, because for the most part, tenants are allowed to live however they choose, provided it does not do permanent damage to the fabric of the property.  During management inspection visits, cleanliness can be identified as an issue, and can be reported to the landlord, and we can notify the tenants of their obligations to leave the property in the condition it was in at the start of the tenancy.  We can point out the risk of a deposit deduction for professional cleaning, but even then tenants are not obliged to take action.  Those same people are then very often deeply shocked at the true cost of a ‘deep clean’ particularly when it is combined with disposal of items they may have left behind and perhaps some work in the garden to return the outside space to its original condition.

Only where a cleanliness issue has the potential to result in damage to the property can action be taken to avoid that damage.  Issues such as mould caused by condensation on walls close to windows, around showers and baths can be surprisingly problematic if they are left unattended.  So constant vigilance, good communication with landlords and tenants are key.

Landlord court challenge delayed until October

The date for the court hearing to decide whether there should be a judicial review of the buy to let tax changes introduced by George Osborne has been changed.

The new date is Thursday October 6, following a request from HMRC on the grounds that its lawyers were not available for the previous mid-September dates.

The new date is when there will be a hearing, estimated to last 90 minutes, which will decide whether landlords Steve Bolton and Chris Cooper can move on to the judicial review. 

The landlords say section 24 of the Finance (No. 2) Act 2015 is an infringement on buy to let investors’ rights. This is the section which concerns the phased reduction in some landlords’ mortgage interest tax relief.

Afternoon all,

I hope you are very well.

Yet another cracking little number from my investment hotline:

I spotted this one on the market with Martin and Co, Oxford. Oh no wait, that's us! OK, OK so its a shameless plug but with sincerity this is a super opportunity!

Currently on the market for £265,000 this property will fetch a rent of £1000. Should you end up pay the asking price for this property (non-negotiable!!) then it brings you out with a very tidy 4.6% yield which in the ever increasing property price world of Oxford, is very, very good indeed.

You will have an initial outlay on some new furnishings but other than that the property is internally sound (picture below)


Bought in 2005 from new at £182,950 its capital growth has been stead leading to present day and we anticipate big movement in the Kidlington market as its popularity grows year on year and even more so now with the new rail line that will be running through it to London. And Oxford of course!

Call us for more on this one but be quick folks!

Happy bank holiday.

Is Oxford Over Crowded?

Oxford is in the clutches of a population crisis that has now started to affect the quality of life of those living in Oxford. There are simply not enough homes in Oxford to house the growing numbers of people who want to live in the city. The burden on public services is approaching a breaking point with many parents unable to send their child to their first choice of primary or secondary school and the chances of getting a decent Dentist or GP Doctor Surgery next to nil.

That’s what the papers would say anyway! But I’ve taken a look at real numbers, and in particular I’ve looked at the housing issue in Oxford. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Oxford itself is 12.621 square miles and there are 159,900 Oxford residents, meaning 12,669 people live in each square mile of Oxford, or 11,600 more than the national average…so it’s no wonder we appear to be bursting at the seams!

But, we all know that newspapers, politicians and property market bloggers quote big numbers to sell more newspapers, get elected or get people to read their blog (I recognise the irony!). A square mile is enormous and much bigger than is sounds, so the numbers look correspondingly large (and headline grabbing). Most people reading this will know what an ‘acre’ is, but those younger readers who don’t, it is an imperial unit of measurement for land and it is approximately 63 square metres.

In Oxford, fractionally more than 18 people live in every acre of Oxford, not as headline grabbing, but a lot more relative to everyday life, and if I am being honest, a figure that doesn’t seem that bad.

However, the issue at hand is, we need more homes to be built. In 2007, Tony Blair set a target that 240,000 homes a year needed to be built to keep up with the population growth, whilst the Tory’s new target since 2010 was a more modest 200,000 a year. However, since 2010, as a country, we have only been building between 140,000 and 150,000 homes a year. So where are we going to build them? Because we have no space! Or do we?

Well, let me tell you this fascinating piece of information - I found out recently in an official Government report that in England (which is the most densely populated country of the Union), the 20 million English homes cover only 1.1% of its land mass. That is not a typo, only one point one per cent (1.1%) of land in England is covered by residential property. In more detail, of all the land in England:

·       Residential Houses and Flats 1.1% 

·       Gardens 4.3%

·       Shops and Offices 0.7%

·       Highways (Roads and Paths) 2.3%

·       Railways 0.1%

·       Water (Rivers /Reservoirs) 2.6%

·       Industry, Military and other uses 1.4%

Which leaves 87.5% which is Open Countryside (and if you think about it, add to that the gardens, which are green spaces, and the country is 92.8% greenspace)

As a country, we have plenty of space to build more homes for the younger generation and the five million more homes needed in the next 20 years would use only around 0.25% of the country’s land. Now I am not advocating building massive housing estates and 20 storey concrete and glass apartment blocks next to local beauty spots such as Blenheim Palace or Christ Church Meadow, but with some clever planning and joined up thinking, we really do need to think outside the box when it comes to how we are going to build and house our children and our children’s children over the coming 50 years in Oxford. This should be of concern to owner occupiers and landlords alike, Oxford needs up to 32,000 more homes to buy and to rent to keep up with population growth.  Today, average house prices are 16.2 times average earnings, amongst the highest once London is excluded and growing.  If anyone has their own ideas or opinions, I would love to hear from you.

In the meantime, if you would like to read other articles about Oxford Property Market, please visit the Oxford Property Market Blog www.oxfordpropertyblog.co.uk

Latest data suggests Oxford property may have taken a summer dip

The latest data from Rightmove reveals that the average price of property coming to market dipped by £3,602 during July - equating to a 1.2% fall. Brexit uncertainty and the usual seasonal summer slowdown are identified as the main cause of this.  Although the drop is typical for this time of year and in line with what has happened over the last six years, Rightmove identify that there have only been larger drops in two of those years and believes that 2016 is "on course to be a year of two halves".

As 2015 was unusually busy due to the General Election, July's buyer enquiries are 18% lower annually, but remain 4% higher than July 2014. However activity in H1 also "skewed" the market the other way, with the buy-to-let surge boosting property transactions to 12% higher than 2015.

Rightmove says which way 2016 will go depends upon the "strength of the traditional market rebound this autumn, especially at the upper end of the market and within the London commuter belt, which currently appear to be the most subdued".

ONS house price date for June pointed to a 8.7% increase in average prices compared to the year before, meaning UK average house price rose to £214,000.  The Rightmove data therefore suggests a fall of 1.7%.  A similar trend in Oxford would suggest prices have fallen £6,648.  Our own assessment finds little or no evidence that Oxford prices have fallen, indeed recently premium prices have been secured/observed on central Oxford apartments pointing to continued confidence.

The table below summarises our latest data on the Oxford market.