942% - Rise in Oxford Property Prices since 1981

Roll the clock back 35 years to 1981.  Mrs. Thatcher was Prime Minister, we had a Royal Wedding, England won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Oxford all those years ago, especially when you consider what has happened to Oxford property values,

Oxford Property Values since 1981 have risen by 942%.

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Oxford are 670.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Oxford Property market run much deeper increases in value.  No one could have predicted how the property market has changed in Oxford over the last 30 years.

Looking at the Local Authority data for Oxford City Council in 1981, 29.3% of Oxford people lived in a Council House, whilst today its 21.4% ... a drop which can in part be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Oxford area (i.e. through a private landlord or a letting agency) has seen quite an increase, rising from 18.6% to 28.2% of all domestic property.

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Oxford City Council area who owned their own home was 51.9% and today it’s 46.7%. Not the seismic change most of you were probably expecting but a material reduction nonetheless.

Home ownership in the 1980’s and 1990’s in Oxford did in fact rise, but as I have discussed in previous articles in the ‘Oxford Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are too few Council houses for the younger generation to move into nor sufficient properties provided by social landlords to make up the shortfall.  This means that the people who would otherwise occupy such properties have no choice but to privately rent.

The Oxford property market is constantly changing but current imbalance between supply and demand for property means that buy to let investment in Oxford is over-reliant on house price growth, with rental yield having been progressively eroded by the ever increasing purchase price.  I see the changes in tax and landlord & tenant law in a different perspective to many commentators – I believe yield should and will become more important as landlords experience the consequential deterioration in their returns.  Some may need to change their buy to let targets, their financing methodology or broaden their portfolio geographically (e.g. look at Kidlington, Bicester or other satellite towns) and by type (e.g. ensuring you have exposure to Oxford’s student demand, and the growth in demand for HMO’s from young professionals).

Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; the changes to come will make some landlords panic, providing a more stable platform for knowledgeable and wise and well advised Oxford landlords to thrive.

It is a good time to re-mortgage?

According to L&C, Buy to Let landlords could be forgiven for thinking that they have been on the receiving end of some tough changes in the market recently.


The introduction of higher rates of stamp duty on the purchase of additional properties means landlords face higher acquisition costs. Meanwhile the regulator has unveiled new rules that could see a tightening in criteria for some lenders and the phasing in of changes to tax relief on mortgage interest will commence in April.


Whilst that may present some challenges to landlords it's not all bad news. Bank of England Base Rate had sat at a record low of 0.50% since it was cut in March 2009. All eyes were looking for a sign that could signal when rates might start to climb but all changed rapidly following the referendum vote to leave the EU.


That has seen Base Rate cut further to a new record low of just 0.25% and the Bank of England even went so far as to say it would consider further cuts if it felt it was necessary.

With a backdrop of low interest rates for longer and continuing competition in the market, mortgage rates could hardly look better.


That offers a great opportunity to cut mortgage costs by taking advantage of some of the great rates on offer. In fact the Council of Mortgage Lenders has pointed to the fact that two thirds of Buy to Let lending in August was remortgaging, as landlords look to restructure existing debts on more favourable terms.


Of course it is important to consider the costs of switching and not just the headline rate as some fees can be substantial. Shopping around the market for the best rate and fee combination for the individual circumstances will help achieve the best overall value, which will be valuable in helping landlords combat market changes.

Has the supply of Oxford rental properties peaked?

In Oxford just 46.7% of people own their own home vs. an English average of 63%.  28.2% rent from private landlords vs. an English average of 17%.  To put that into real numbers, Oxford has roughly 15,600 rented properties and around 37,500 tenants.  But, the level of home ownership continues to decline while the demand for rental properties continues to grow, because Oxford continues to be one of the country’s least affordable places to own a home.

Nationwide, the Royal Institute of Chartered Surveyors (RICS) forecast that there will be 1.8m households requiring private rented homes by 2025.

In September the Association of Residential Lettings Agents (ARLA) report that average available rental properties per branch to have risen to 193 from 183 in August, that is the highest level since April 2015.  In parallel the average number of prospective tenants rose to 40 per branch, up from 37 in August.

At current rates of growth, Oxford will require over 23,000 homes for people wanting to live in a rented property by 2025 or over 7,000 more than it requires today.  That’s around 17,300 additional people living and working in Oxford requiring rented accommodation.

These facts demonstrate the real risk behind the Government’s strategy of taxing landlords, risking that they will remove their properties form the private rented sector in favour of alternative uses – either short-term holiday lettings or releasing them for purchase by people who no longer rely on the private rented sector to live in Oxford.  Either way, the measures seem set to worsen an already acute shortage of rental properties.

Is this over-dramatic I hear you ask?  Well RICS doesn’t think so, they have called on Government to reverse many of the tax changes because of their likely impact.  And, when they are listed out, it is hard to draw any other conclusion:

·       Removal of 10% wear and tear allowance on furnished lettings;

·       Addition of 3% stamp duty on purchases over £40,000;

·       Removal of higher rate tax relief on mortgage interest payments staged over 3yrs from April 2017;

·       Capital gains tax payable within 30 days of a sale from April 2019.

From a Government that claims to be pro-entrepreneur and pro-investment, this is an unprecedented attack on a sector, which appears to risk unwanted consquences further down the line.

15.8% of Oxford People live in Shared Households

How does a canny landlord establish the shape of future demand, so she/he buys the right type of property?  As knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in Oxford, Oxford property prices, Oxford yields and Oxford rents.

In 2001, there were 51,700 households with a population of 134,200 in the Oxford City Council area. By 2011, that had grown to 55,400 households and a population of 151,900.

meaning, between 2001 and 2011, whilst the number of households in the Oxford City Council area grew by 7.16%, the population grew by 13.19%

Nothing surprising there then you might think, but my analysis of the 2011 Census results, using the most recent in-depth data on household formation (eg ‘one person households’, ‘couples/ family households’ or ‘couples + other adults households and multi -adult households’), has displayed a sudden and unexpected break with the trends of the whole of the 20^th Century. There has actually been a dramatic change in household formation in Oxford between 2001 and 2011.

Between 2001 and 2011, the population of Oxford grew, as did the number of Oxford properties (because of new home building). However, the growth rate of new properties built in Oxford was much lower than expected, but despite that the population has still grown by what was forecast rather than its growth being constrained by a lack of house building.  This must surely mean that the average household size was larger than anticipated in Oxford. In fact, average household size (ie the number of people in each property) in 2011 was almost exactly the same as in 2001, the first time for at least 100 years it had not fallen between censuses. (Since 1911, household size has decreased by around 20% every decade).

Looking at figures specifically for Oxford:

·       One person households - 32.7%

·       Couples/family households – 51.5%

·       Couple + other adults/multi-adult households – 15.8%

The decline was reflected in large scale shifts in the mix of household types. In particular, there were far more “couple + other adults households and multi -adult households” than expected (15.8% is c8,750 households). This can be put down to two things: Firstly, increased international migration; and, secondly, changes to household formation. A particularly important reason for the difference can most probably be attributed to the evidence that migrants initially form fewer households (ie two couples share one property) than those who have lived in the UK all their lives. Also, changes to household formation patterns amongst the rest of the population, including adult children living longer with their parents and more young adults living in shared accommodation (as can be seen in the growth of HMO properties (Homes in Multiple Occupation).  Traditionally in Oxford the term HMO was synonymous with student accommodation, however, as property become less affordable, young professionals are increasingly occupying shared accommodation enabling them to move for better jobs or simply to leave the family home earlier than would otherwise be the case.

So, what does all this mean for Oxford Homeowners and Landlords? Quite a lot in fact. There has been a subtle shift to larger households in the last decade, meaning smart landlords might be tempted to buy slightly larger properties, applying for an HMO licence from the Council in order to let their property to multiple professional tenants.  It also means that home owners selling their properties may be advised to market their property more widely via an agent with strong relationships with professional landlords as well as people looking to be owner occupiers.

New to buy in Greater Leys, Oxford

Afternoon all,

I have long made noises about Greater Leys, Oxford (positive noises of course) and its success in the private rented sector and today is no different after stumbling on this investment opportunity.

Currently on the market with Connells for £290,000 you can expect a rent of £1100pcm which will give you a 4.5% yield. Not too bad at all, but it should be better.

I don't agree with the valuation on this one I'm afraid. Recent selling history again backs me up here. Even if I consider that properties can and will be different I don't think it warrants the difference.

Number 5 Columbine Gardens sold for £270,000 on the 1st August this year with 21 Columbine Gardens selling for £275,000 in March this year. I don't know many properties that appreciate that quickly let alone stating it as 'guide price'.

Naturally the market dictates and there will be interest in this. It does still have question marks against it other than price. One of these being condition as there are no internal pictures on offer (disappointing!) however it is worth a closer look. This location and Greater Leys in general is hugely popular. Case in point a property let in Fieldfare Road last week within 3 days for £1125pcm and Peartree Close, Greater Leys last month for £1100pcm. I could go on.

Recent capital appreciation looks good too. On August 29th 2013 a two bedroom property in Columbine Gardens sold for £198,000. Based on the recently sold properties at £270k this is a good return in 3 years.

Happy Tuesday.

Oxford leads the way on HMO licencing

The Government is launching a new wave of measures to clamp down further on investors and landlords.  The main measure is a minimum space requirement.  Under the plans, which will apply in England, he minimum room size in Houses in Multiple Occupation (HMOs).  The minimum room size in HMO and some other shared homes with be 6.52 square metres (approximately 70 square feet)  The size being applied for each individual or couple living in the property, meaning landlords will not be able to squeeze in bunk beds in the smallest room.

The new measures will also include provision for mandatory HMO-style licencing for all shared homes with five or more people from two or more households.

Oxford City Council is ahead of the Government on this, with compulsory licencing for HMO’s in Oxford having been in place for a while now.  In my article to be published this week in the Guardian and Oxford Paper newspapers and on The Oxford Property Blog, I identify growing demand for HMO property in Oxford, from young professionals as well as from Students.  The licencing in Oxford seeks to manage the number of HMOs in any post code sector as well as to raise standards of safety and quality of provision.

All aboard for this great city centre investment!

Did I say city centre? Well it's OX1 so this gets in on a technicality!

OTTERS REACH, KENNINGTON

All joking aside and for anyone who knows Oxford, Kennington is a super, super location. A village by its own right offering a quiet community feeling whilst being very close to city centre (hence its OX1 status!)

This one is a real cracker and internally very nice. It has the added bonus of a conservatory as well, leading to garden which only adds to its appeal.

You are looking at a rent of £1025pcm. Against the asking price this brings you out with a 4.1% yield. 5% I hear you say? Nice if you can achieve the golden number but anything 4% in OX1 is today's market is a real plus point.

So the figures work well (ish) based on asking price but would I pay it? No I wouldn't! The reason I wouldn't other than getting a good deal is due to the recent selling history in this location.

On the 7th September 2015 number 6 Otters Reach sold for £250,000. I have had a look at this property in closer detail and it is in top order. It does not have a conservatory but it is still very nice. Put plainly I'd be questioning the 'offers over £300,000' statement. You'd have to gauge it by the level of interest of course but it is investor heaven and I would expect alot of interest in this.

Definitely worth a second look i'd say.

Call me for more information on this or any others you may have seen.

Best regards

Richard

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Eye Candy in Oxford

Morning all,

It is important to dream big I say and I couldn't resist sharing this one with you all!

Currently on the market with Savills for a cool £8.5 million I am not sure I will bother crunching the rental yield and capital appreciation so lets just admire it's awesomeness!

Whilst we can all marvel at how the other half live and dont get me wrong, it is truly stunning, I must admit to being a little disappointed with the finer details.

I have myself a beautiful cinema room (as pictured) which is probably where I would spend most of my time yet it doesnt seem to be complimented with a pool/games room with self serving bar. Surely the least you can expect for something so cavenous?!

The undoubted beauty of the property is punctuated by the fantastic finish of each room (as pictured) only the finest furnishings throughout however this is slightly tapered by the fact it has only one garage. One garage!! Come on, surely not?! I can see that parking wont be an issue here but a man still needs someone to store his tools!

If that wasn't bad enough the property is set over 4 floors with no lift access for grandparents and for 8.5 million quid I would have thought a swimming pool would be a given!

Joking aside this property is a fine example of everything that is beautiful about Oxford and it has a fantastic history dating back to 1873.

My mortgage advisor is suggesting a cash only purchase. I have submitted my overtime request this morning!

Have a good day folks.

It is time to invest in an Oxford student property

In last week’s article I set out the case for investing in property in Oxford as opposed to holding capital in savings accounts.  This week I’m asking: which type of investment property could provide the best income? Whether you are an existing landlord looking to grow your portfolio, or a first time investor making your first foray in to world of property, high among your concerns will be the rental yield from any potential investment. With Oxford property prices rising ahead of National trend and faster than rents, getting a satisfactory yield from your investment can seem tough.

There are many factors affect the rental yield you can earn:  for example the price of the property, the location appeal to tenants, the occupancy rate you achieve, the presentation of the property relative to comparable home and the costs of up-keep and maintenance. A good agent can help you with all these brain-aches, and help you maximise the value of your investment.  However, when considering your gross yield, there is a crucial question you should be asking when investing in Oxford:

 “Should I be investing in student property?”

For many landlords, the very thought of managing a student property conjures images of run-down houses with maintenance issues coming out of the woodwork and tenants who will damage the property at every opportunity. But is this the reality of becoming a student landlord?

The law states that any property that is occupied by three or more people who are unrelated (i.e. not in a couple or family relationship) must hold a HMO (House in Multiple Occupation) licence granted by Oxford City Council. HMO properties can range anywhere from upmarket flats in modern developments, all the way through to 6 or 7 bedroom Victorian townhouses. 3 bed+ Student properties in Oxford must invariably hold a HMO licence, which certifies the suitability of the house for multiple occupancy, ensuring that communal areas, kitchen/bathroom facilities and safety features are appropriate for the number of people living in the property.

The beauty of investing in a HMO is that rooms in the property are usually let on an individual basis, meaning that each tenant pays their own individual rent. The market value for rooms in shared houses in Oxford is significantly higher than the national average, meaning that the gross rental yield on a HMO property can far exceed that of the same property if it were let on a private residential basis. When we factor in the huge demand for student houses in expensive areas of Oxford such as Iffley fields, Cowley and Headington, investing in a student HMO could be your ticket to superior gross rental yields.

Do the numbers really stack up on student houses? Martin & Co in Oxford recently let a 3 bed family home in the popular student area of east Oxford near Cowley and Iffley Roads for approximately £1100 per calendar month. With the current market value sitting at around £525,000, this represents an approximate gross yield of just 2.5% for a new buyer - not a very attractive figure for any prospective buy-to-let investor. We also let an almost identical property, of the same approximate market value and just two streets away from the first property, to a group of four students. With one reception room converted to a bedroom and each student paying £487.50 per calendar month in rent, the total monthly income for the investor sits at £1950, representing a gross yield of 4.5% - nearly double that of the private residential let for an almost identical property in terms of age, quality and size.

There are of course costs associated with being a student landlord. For example, there is a cost of £699 associated with obtaining a HMO licence in Oxford, and the licence must be renewed annually if you are not a council accredited landlord at a cost of £187. However, allowing an accredited agent to manage your property will mean that your licence will only need renewing every five years. At Martin & Co. we save our clients time and money by using our accredited status to obtain five-yearly licences, and we process all the admin on behalf of our landlords.

Furthermore, maintenance issues can sometimes be more prominent in student houses, simply by virtue of multiple individuals using showers, cooking facilities and communal spaces. However, with the superior gross yields from HMOs, both these and licencing costs can be absorbed whilst still maintaining an enhanced monthly income.

Many landlords fear students, certain that their property will be damaged by careless and malicious damage. However, with the costs of University ever rising, students are increasingly viewing University as a financial investment in their future, and as such want to live and work as adults in quality accommodation – and they are willing to pay for it. And the best thing about student lets? You never have to worry about finding tenants again. Oxford city council estimate that up to 1 in 5 Oxford residents live in HMOs, with approximately 20000 students searching for the perfect home to share with friends each academic year. With this many tenants desperate to rent, a well-maintained student HMO with 4-5 bedrooms for around £450-500 per person per calendar month will be snapped up year after year.

So whatever your interest in the Oxford property market, don’t under-estimate investment in our city’s student housing, a brilliant way to optimise your yields, balance returns across your portfolio whilst protecting your valuable capital.

Another belter for investment in Yarnton, Oxford

Hello all,

Hmmmmmm, interesting is this one.

Currently on the market in Great Close Road, Yarnton with Oliver James it is a property I know very well having overseen its rental history since 2009!

Getting down to it you can expect a rent of approx £795 on this one and against the asking price of £200,000 this represents a 4.7% yield. Internally it looks ok and from recollection (and our pictures) this was the case when we looked after it. A closer inspection may be necessary on this but if the correct terms are negotiated then it can work in your favour.

Here is the point of particular interest; this property sold recently in March 2015 for £180,000. Just over a year later it is on the market again. It is worth enquiring with the agent as to why this is the case but the bottom line is thus - it hasn't gone up £20,0000 just yet, so a deal could be in the offing here and if that is the case then the numbers work even better.

The property has no history of void from 2009 and a steady increase in rent year on year. It lets with minimum fuss and is situated in a quiet residential location.

Call me if you would like to discuss in more detail.

Best regards

Richard

Deal of the week - Kidlington

Morning all,

Back again with another steal............

Me ol favourite has come up with another beauty! Currently on the market in Wilsdon Way, Kidlington with Chancellors for £205,000 this is prime letting location and the recent history for rental progress and capital gain is very good.

Firstly we look at the necessaries. This one needs a lick of paint throughout and certainly a replacement bathroom to bring it to modern standard. New furnishings are also in order so I anticipate an initial outlay of approx £3000. The great news is that there is plenty of margin for this if you are smart with the numbers.

At the right standard you are looking at a rent of £1000. Against the current asking price that gives you a 5.8% yield. I know of not many that settle at asking price for a purchase and neither should you, but you must gauge the interest for this as it is investor heaven. Interestingly it is priced about right as well. In February 2016 a very similar one bedroom maisonette (with a dodgy bathroom!) sold for £217,000 (leashold) and in March 2015 a similar one bedroom flat in this location sold for £172,500 which demonstrates this locations steady capital rise.

The rents have differed ever so slightly in recent times between £925- £1000pcm but such is the flexibility on this one that it allows for this movement in rent IF (and I stress if) it was necessary. At a rent of £925pcm the yield is still 5.4%

All in all this is a cracker. I have overseen 3 in this location since 2014 and they have been of minimum fuss.

Call me for more. Or call Chancellors and book in then call me! It says offers over but hey, who is going to do that??

Best regards

Richard

Interesting investment property - OX3

This property being marketed by Fox & Sons is on Bulan Road in Headington.  The Lye Valley area is close to both Churchill Hospital, Nuffield Orthopaedic Centre and University campuses.

Currently achieving £2,980 pcm with a guide price of £400,000 it appears to offer a tempting 8.9% gross rental yield from its 7 bedrooms that are currently let as individual rooms.  However, I would strongly recommend any interested party to view the property and inspect it carefully, as it s likely it will require up-grading to ensre it continues to meet tenants increasingly exacting requirements.

Other cost to factor in are the need for HMO licencing, electrical and gas safety certification.

All that said, it looks like an interesting property for an investor who proceeds with their eyes open!

The property is to be sold by auction at the Macdonald Botley Park Hotel on 27 October.

RICS calls for Government to reverse the stamp duty surcharge

The Royal Institute of Chartered Surveyors (RICS) forecasts that more than 1.8m households will be looking to rent across the country by 2025.  Between 2001 and 2014 the number of UK households renting rose from 2.3m to 5.4m households.

Oxford is widely recognised as the least affordable place in the UK with house prices at the lower end of the market being 10 times average earnings of the City’s residents and overall prices being over 15 times the average salary according to an Oxford University Study in 2015.

Not surprisingly that means demand for rented properties in Oxford is amongst the highest in the Country with over 28% of households renting in the private rented sector compared to just over 17% nationally.  That equates to some 16,000 households.

RICS recognises that as a result of the increasing demand for rental properties, it is vital that the Government change its focus from supporting and encouraging house ownership, to encouraging a greater supply of private rental properties.  It specifically, supports my own call for more property to be built specifically for purchase by landlords increasing the supply of available rental properties.

RICS also agrees with views I have expressed over recent months, that the new prime minister should reverse the stamp duty surcharge imposed on landlords, pointing to the fact that 86% of landlords’ state they have no plans to expand their portfolio of properties since the surcharge was introduced.

In Oxford this is more pressing than just about anywhere else in the UK.  House prices have risen steeply over the last 10 years and continue to offer average annual increases of 5.8% according to the latest LendInvest index.  This is reducing the rental yield that landlords can achieve on many properties to less than 5% per annum.  When coupled with the additional stamp duty burden (an apartment costing £390,000 has a stamp duty charge of £21,200 for a buy to let landlord) this can result in negative investment returns for the initial 2 to 3-year period of ownership.  Where the landlord is additionally borrowing to purchase the property, with recent HMRC legislation removing the ability for debt interest to be off-set, for many landlords the risk of investment is now too great.

Through its continued focus on home ownership, and a mistaken belief that penalising landlords would free-up more property for home ownership, the Government has failed to recognise that the affordability gap between property prices and average earnings, means that they will simply reduce the supply of affordable homes for households who wish to rent, exacerbating the already critical under-supply of homes.

Ultimately more homes need to be built and built quickly at numbers not previously achieved.  However, in Oxford particularly many new homes should target purchase by private landlords, increasing the supply of modern affordable rental properties.  In Oxford the fastest growth in terms of housing supply has been purpose built apartments, where close to 15,000 households now reside.  Expansion of purpose built apartments is critical if Oxford is to keep growing and offering great homes to its vibrant and young population.

Breaking News

Earlier today it was confirmed that Landlords have been refused permission to challenge proposed changes to the taxation of income from buy-to-let properties - the so-called Tenant Tax.

Landlords' campaign group Axe the Tenant Tax, submitted at London's High Court that the changes would be both 'unfair and unlawful', and that the case should go to a full judicial review hearing.  Mr Justice Dingemans ruled the challenge 'arguable' and dismissed it.

Cherie Blair QC, who represented the claimants, said that landlords face challenging times ahead, in light of the 'very disappointing' result.

The changes, which are due to come into force in 2017, would stop landlords being able to claim buy-to-let costs for example, mortgage interest payments - as a business expense. Landlords leading the campaign have vowed to continue to take their case to the Government.

These changes together with the imposition of a 3% stamp duty surcharge risk insufficient rental properties being available to meet demand.  See tomorrow’s article which discusses the implication of this for the Oxford Property market.

A 12 month review of Oxford City Centre Apartments

Morning all,

Last Saturday I had a visit from a current landlord regarding his 2 bed apartment in the centre 'Whats going on in the centre of Oxford this year Richard'? he said. Approximately 2 hours later I had a visit from another landlord looking to invest in OX1 who asked 'what has the market being doing in the last year'? It got me to thinking exactly how has the OX1 market been performing in the last 12 months..................

Comparing Oct 2014 to Oct 2015 the average rent in OX1 was £1500. For the same period to Oct 2016 this average has risen to £1550. Admittedly this was a comparison for OX1 1HD and a 1/4 of a mile surrounding it which brings in a number of apartments as you can imagine.

Concentrating my efforts on 'pure city centre accommodation', that being Empress Court, Lion Brewery, Oxford Castle and Stream Edge, the averages are slightly higher, but have always historically demonstrated an upwardly trend year on year. Whilst this is the case for rentals it is certainly not by as much as we would normally expect to see and the sales numbers (sold prices) in the centre seem to suggest things have plateaued a little.

In July 2015 we had 3, 2 bedroom apartments available for rent. One more was added in August 2015 totalling 4 properties. For the same period this year we had 23 available, 2 bedroom apartments to rent. On no less than 18 occasions there was a reduction in rent from asking price during this period before they were let and presently there are 22 available 2 bedroom apartments for rent in the city centre. Compared with the same time last year there were only 6 properties showing on Rightmove for OX1.

Why?

Opinions vary. Some would suggest that the rental market has levelled off a little and that the rental prices have hit their peak. Others would have you believe Brexit has played a part in things slowing down in the centre. Or was it just a coincidence that so many city centre apartments have become available this summer?

All of the above (in some small way) is the answer I tend to lean towards. It is too soon to make any firm predictions. In particular I do think that Brexit is holding people's attention which has had an effect, but I do not view this as long term. Things did slow down a little in the centre of Oxford but there is certainly not a changing of the guard. There may well have been 23 apartments available but we did manage to successfully negotiate tenancies for all of them.

City centre 2 bedroom apartments have always been high on the agenda for students looking to secure accommodation. I don't see this changing anytime soon but what this summer has taught me and our clients is to adapt to the market quickly where it demands it to ensure your investment is protected at all times.

For a review of your property please feel free to call me.

Best

Richard

Buy Vs Rent in Oxford - Which is best?

Your home is your castle (or so they say) but does it make a difference whether you are renting or you own it?

An intriguing question, yes? Or one which would appear patently obvious to answer? Surely we are all in this to own our own property one day rather than paying out large sums of what is essentially ‘dead’ money as we like to call it. Or is there a little more to it than that?

Let’s firstly look at a typical sale.  In Greater Leys, Oxford there is a 2 bedroom mid terrace house for sale at £275,000. Working off a typical mortgage rate of around 3%, with a 30 year repayment plan and based on an initial deposit of 5%, the monthly repayments would be £1136.88. Over this period the total repayable sum amounts to £399,066.

Turning my attention to the rental side and this property would fetch approx. £1125 per calendar month. Over a typical 12 month tenancy this would cost a tenant £13500 in rent. Calculated over the same mortgage period and renting this property has cost the tenant £405,000.

In this case the difference between renting and owning is just over £5k so it would appear as though the answer is clear. Buying would surely be the way to go. The sales is in most cases going very well, but yet in some cases, and the number of people choosing to rent continues to grow. Besides the numbers, it clear that a certain percentage of people still favour renting than buying. The National Centre for Social Research report, 2016 continues to back this up pointing to a shift in attitudes from previous generations when buying at the first opportunity was seen as the ‘done thing’.

Although in pure monetary terms, buying seems like the best option, first time buyers are clearly also considering the risk associated with owning their own property.  I point to the some of the following examples of why there is still a reluctance to buy:

• It’s a big financial commitment –first timers need to be sure they can afford what they’re taking on.
• When interest rates rise, repayments will also go up. It’s important to know how much a rise would be.
• New homeowners also need to be sure you can afford maintenance costs such as replacing a boiler if it packs up or fixing a leaky roof. If you stretch yourself too much when you buy you may resent not having money for meals out, holidays and entertainment
• You have less flexibility than when renting. For example, if you want to move for work or personal reasons selling up and moving on is far more expensive if you own as you’ll have all of the associated estate agency and legal fees. Also bear in mind that it may not always be easy to sell your home – it’ll be dependent on what’s happening in the market
• If you’re living with someone else and split up, the process of sorting out the property will be far more complicated and expensive.
• You job may require you to be flexible. You may need to move quickly and renting offers you the path of least resistance in this case.

Buying and owning your own home is certainly what the majority of us continue to strive towards, and I am not certain this will ever change. Why should it? Being the proud owner of anything is surely more preferable than renting or borrowing it but now more than ever ‘Generation Rent’ continues to gather considerable momentum and shows no sign of slowing down in the future. No doubt this will continue to be welcomed news amongst Oxford’s landlords and investors. 

 

Richard

When it comes to property returns, Oxford is more like Bristol than Cambridge

LendInvest has released its latest Buy-to-let index, and interesting reading it makes too.  Oxford is a top 10 location Nationally for property investment.  Since 2010 Oxford has offered property investors on average 5.8% per annum capital growth on their property, ranking Oxford 7^th in the National index (taking London as a whole).

Over the last 12 months, Oxford has offered average rental yields of 5.5%, ranking around 8^th in the National index (taking London as a whole).

The total return on investment (RoI) provided by Oxford according to LendInvest is 11.3% (a measure of rental yield plus average annual capital gains per year).  Again placing Oxford in the top 10 Nationally (taking London as a whole).

In the current climate  I think you’ll agree returns look very strong indeed.  But, what City area is most like Oxford?  Cambridge?  Not really, Cambridge has performed more strongly than Oxford in the lastest index offering lower rental yields (5.1%) but very strong capital appreciation (14.1%).  Having lagged Oxford’s property market for several years, Cambridge is now offering strong annual capital returns reflecting the investment in the tech-sector.  Overall RoI in Cambridge is 9% according to LendInvest.

So, if not Cambridge which City is closest to Oxford.  Well, the answer might surprise many, Bristol is conspicuously close to Oxford in terms of the returns it has offered property investors – Rental yield 5.5%; Capital growth 5.8%; and, overall RoI only marginally ahead at 11.4%.

Both Oxford and Bristol offer investors a very well balanced investment that balances income based returns and capital appreciation over time.  Too often rental yield alone drives property decisions, but the best medium to long-term returns are delivered where the two sources of financial return maintain balance.