www.OxfordPropertyBlog.co.uk is hosting a Landlord seminar

On 2 March 2017, we will host a seminar featuring expert speakers from Martin & Co, Hedges Law, Critchleys Chartered Accountants and London & Country Mortgages.

The seminar will ensure you understand the changes to mortgage interest rate relief that is to be phased-in from April 2017.  And, you will learn from experts about how to put in place sensible plans to minimise the financial impact on your income.

The Seminar will commence at 6pm and finish at 7.30pm at The Oxford Spires Hotel, Abingdon Road, Oxford, OX1 4PS.  The event is limited to just 150 places. 

Please reserve your place by emailing me at info@OxfordPropertyBlog.co.uk

This is the first in a series of planned seminars through 2017, and will provide you with easily understood information and the practical steps you can take now, to minimise the financial impact to you.  Commencing at 6pm you will still be home by 8pm, having heard from local experts over 90 minutes.

At the event you will hear from

Gerry Jackson a Chartered Tax Advisor and Director at Critchleys
Carl Selby a Solicitor and Head of Business Services at Hedges Law
Ollie Sills a Manager at London & Country Mortgages

Oh, and yours truly will host the event to make sure it flows properly and finishes on time!  And, there will be time to pick their brains before, during or after the seminar.

You will be run through the changes to mortgage interest rate relief planned from 5 April 2017 and how they will phase-in progressively over the coming years.  Through worked examples, you will know how to assess the impact on you.  You will learn about the factors that need to be considered when planning how to off-set the financial impacts of the changes, and we will explore in some detail the pros and cons of setting up a company structure, and the opportunity to re-mortgage given the changes many lenders have implemented since the start of 2017.

This is a must attend seminar designed to help Oxford's landlords - don't hesitate, email me at info@OxfordPropertyBlog.co.uk to reserve your place - YOU WON'T REGRET IT!

8 Months-on from the referendum, so how is Oxford property bearing-up?

In May 2016, 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 was then 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?

Historically, good barometers for the housing market include the share prices 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 of 37.9%. Looking at the most recent set of data from the Land Registry, property values in Oxford are 1.48% down month on month (and the month before that, they had decreased by 1.25%) – so is this the time to panic and run for the hills?

Well, as I have spoken about previously in my blog, it is dangerous to look at just short term indicators.  I have mentioned recently, the heady days of the Oxford property prices rising quicker than a thermometer in the desert sun are gone. Yet it might surprise you that during those heady years of house price growth, the growth wasn’t smooth and all upward. Oxford property dropped by an eye watering 3.77% in February 2013 and 1.34% in November 2014 – and no one batted an eyelid.

You see, property values in Oxford are still 6.01% higher than a year ago, meaning the average value of an Oxford property today is £495,000. 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% clawing back most of their losses. 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 Oxford housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since June 2016. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the Oxford City Council area stands at 4,300 people (4.6%), considerably better than in 2013 when there were 5,500 people unemployed (6.2%).

However, inflation does worry me. Looking across the various opinions, it appears likely that inflation will hit 3% (if not more) in the latter part of 2017 as the fall in Sterling on the currency markets results in higher import prices. If that transpires, then the Bank of England whose target for inflation is 2%, may raise interest rates from 0.25% to 2% increasing the cost of borrowing.  However, 81.6% of new mortgages in the UK in the last two years have been fixed-rate and 2% remains well below long-term trends – I’m old enough to remember interest rates at 15% in 1992!

But, to my mind the greatest risk to the Oxford (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t! Next week, I will look at how property is performing differently in different parts of Oxford. 

I am back in Greater Leys, Oxford for today's investment weekly

Morning all,

Happy Thursday to you all.

Alot of activity around these parts in recent times on both the sales and rental front and to be honest it is just a very good location for renting.

Currently on the market with Connells for £284,000 you can expect this property to fetch £1100 per calendar month or possibly £1125pcm. Your yield would equate to 4.6% against asking price, however the bit that interests me is the capital growth on these 2 beds.

From 2011 21 Firs Meadow went for £172k on the 4th November. It then sold again on the 12 December 2014 for £200k and finally it recently sold on the 13th May 2016 for £260k.

In a more extreme example number 12 Firs Meadow was purchased for £62,000 in 1997 and recently sold for £250k on the 14th April. That aside the growth is plain to see.

It looks internally sound from the photos. Maybe investment in a new electric shower is needed but other than that it looks good.

It would appeal to couples or a single professional with the second bedroom being a single but this is a still a huge market. I currently have in excess of 300 tenants searching under similar criteria so I dont anticipate concerns over long void periods either.

Call me for more. I have plenty of comparable evidence in this location. It has been a super location for us and very very popular with potential tenants.

On a final note we have also just listed one for sale in this location so if you are keen on learning more it would be good to hear from you.


Best

Richard

A cracking investment opportunity in OX2!

Morning folks,

I hope you are well and enjoying the weather. What more reason do you need to sit down with a cuppa in front of the PC and plot your next foray into the money making market?!!

I saw this one on the market with Chancellors, Botley which caught my attention.

Now I wouldn't normally look at new build because with new build property comes new build prices. Having said that if the numbers are on point then I don't have an issue with them! in fact if the numbers do work and the layout is right then there should be little to appreciate from a new build property.

On the market for £337,500 this property will fetch between £1250 and £1300 per calendar month which will see you hit 4.5% on the gross yield. There is no current evidence on capital appreciation or nothing of great note because they are new but that can work to your favour assuming you are in it for the long haul and not the fast buck!

To explain my point you need only look at the neighbourhood for similar 2 beds to see how they have been growing. Check this one out in the same development:

 Purchased at £269,950 on 23rd December 2014, it recently sold for £315,000 on the 4th March 2016. I have no doubt this was purchased at a 'deal' shall we say but even still the appreciation in such a short space of time is super impressive!

All in all it ticks the boxes. A great location, very neighbourly and safe, brand new throughout so it will be extremely low on the maintenance certainly in the first couple of years and the numbers are pretty decent too. If you can take this lower than its current asking price then you have yourself a real winner here.

Call me for more on this and others folks.

Richard

How much would it cost to buy all the properties in Oxford?

This fascinating question was posed by the 11-year-old son of one of my landlords when they both popped into my offices before the Christmas break.  I thought to myself, that over the Christmas break, I would sit down and try calculate what the total value of all the properties in Oxford 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 Oxford property has increased by 98% or £14.29 billion to a total of £28.88 billion. Interesting, when you consider 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 Oxford households stands at £526,335.  But I wasn’t going to stop there, so I split the property market down into individual property types in Oxford; the average numbers come out like this.

Oxford 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
£862,650	£592,037	£482,151	£280,733

When I multiplied the total number of each type of property by the average value. Even though detached houses are so expensive, when you compare them with the much cheaper terraced/town houses and semi-detached houses, you can quite clearly see detached properties are no match in terms of total pound note value of the terraced/town houses and semi-detached houses.

Total Value of all the Oxford Detached Properties	Total Value of all the Oxford Semi-Detached Properties	Total Value of all the Oxford Terraced/Town House Properties	Total Value of all the Oxford Apartments
£5,652,945,450	£10,658,442,111	£7,669,093,806	£4,897,948,651

So, what does this all mean for Oxford?  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 Oxford remains relatively good, as over the last five years, the local property market was a lot more sensible than central London’s.

I predict that Oxford 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, thirdly, the simple lack of new house building in Oxford which is not keeping up with current demand, let alone eating into years and years of under investment – means only one thing –Oxford will ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2017 Oxford Property Market.

How might the recent changes to the Private Rented Sector affect tenants and landlords in Oxford?

This year is likely to be a challenging time for letting agents, following a raft of changes introduced by the government prompting concern that fewer homes will come onto the market, as vast numbers of landlords will be forced to exit the sector, restricting the level of housing stock agents have to offer.

The phasing out of mortgage tax relief from April 2017, coupled with the introduction of more stringent buy-to-let mortgage lending conditions as the Prudential Regulation Authority seeks to cool existing lending practices in the sector, will inevitably push some landlords out of the market.

There has already been a sharp decline in the volume of buy-to-let valuation instructions since the introduction of the 3% stamp duty surcharge on additional properties in April and the scrapping of the 10% ‘wear and tear’ tax relief for landlords who rent out furnished homes, with the number of valuations carried out for the buy-to-let sector having fallen by 18.5% over the past 12 months, according to Connells Survey & Valuation.

The proposed ban on letting agent fees is widely viewed as a excessive measure within the letting industry which will have an adverse impact on the rental market and in particular, tenants.

According to the charity Citizens Advice, fees currently cost tenants an average of £337 per person, but ARLA advises that approx £200 per tenant is a more realistic figure for fees relating to a range of administration, including reference, credit and immigration checks, as well as the drawing up of tenancy agreements and all associated paperwork.

Recently ARLA managing director, David Cox (below), said: “These costs enable agents to carry out various critical checks on tenants before letting a property. “If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting  the very people the government intends on helping the most.”

So rent price rises are on the horizon......?

A recent survey online letting survey found that currently 40% of landlords plan to increase rents if existing tenant fees are passed onto them to pay. Only a third of the respondents questioned said that they would definitely not raise their rents, meaning that potentially two-thirds of tenants, or up to 2.6 million renters, could face a permanent increase in rent as a direct result of last month’s announcement.

Frustratingly for everyone involved, this research suggests that landlords will be left with no choice but to further increase rent.

The warning is that tenants could end up paying up to three times as much as they currently do, if tenant fees are banned. For people paying a monthly rent of £1,000, a 3% rent increase to cover the cost of any banned fees would mean that - over an average tenancy duration - a tenant could end up paying three times as much as the fee would have been.

Everyone in the industry is saying that it doesn't make sense so why are the government not listening?? Currying popularity and favour with voters would be my thought.

I would like to think that if you ask any long-term landlord - or tenant -  they will tell you that good letting and managing agents are worth their weight in gold. A reliable agent that helps to provide landlords with a stress free investment, which includes sorting any problems for them relating to their rental property, providing access to a network of plumbers, electricians, and handymen or women, who can get things fixed straight away, do essential maintenance swiftly and at a fair cost and keep tenants happy, will always be in demand.

Agents that provide a substandard service will quickly be found out and squeezed out of a market, in which standards are rapidly changing - for better or for worse - owed in part to government changes, designed to increase the desirability of the sector to tenants as a choice of tenure. It’s just a shame that when the government implements these alterations, they are often not fair on all parties, especially landlords and letting agents.

If you have questions or concerns about how these new changes could affect you including your options please get in touch.

Best regards

Richard

Landlords seeking HMO to off-set higher costs

I was interested to read an article in LettingAgent Today that suggests that an increasing number of buy to let investors are converting properties to Houses in Multiple Occupation (HMO) to increase their rental income as tax increases start to bite in 2017.

This is in line with advice that I have been giving to several landlords I support via my lettings business (Martin & Co Oxford).  In Oxford, as many of you will know, HMO’s require a licence from Oxford City Council.  Licences are restricted to ensure that roads or parts of Oxford do not become dominated by HMO properties, and to ensure that minimum standards of health and safety are observed.

Applying for a licence follows a standard process, initially to validate that the property is eligible for a licence, and a process of inspection to confirm the precise requirements for conversion work to meet the Council’s health and safety standards.  Following conversion, the property will be inspected and once deemed to have met the standards it is signed-off and granted a licence typically for a 12 month period.  On re-inspection, it can be possible for a property to renew its licence for a longer period up to 5 years.

My agency is accredited by Oxford City Council to advise landlords on HMO and to manage those properties thereafter.  HMO properties usually require more attention in terms of management, placing an emphasis on regular inspection, careful communication with tenants and monitoring of common issues such as mould growth, drainage and general up-keep.

So, given all this, is it worth the hassle?  Well in general yes.  HOM in Oxford has historically been synonymous with student properties – this remains a big market with 30,000 students resident in the City each year.  However, with property affordability remaining an issue for young professionals, there is growing demand from this group for high quality HMO accommodation, that allows them to live in Oxford affordably in groups often as couples.  Whilst students are increasingly stringent in their requirements too.  Making HMO a real success requires landlords to be clear about their target market, and to understand their requirements reflecting those preferences in the layout and content of the property.

Done well, HMOs in Oxford offer gross rental yields of 8% vs a City average of nearer 5%.  For landlords with multiple properties, having HMO within their portfolio is sensible to boost income to off-set the changes to tax reliefs.

Oxford Property Values increase by 2.88% ... good or bad news?

Even the Brexit vote has not hindered Oxford’s steady rise in property values. Last month alone Oxford property values went up 2.88%, leaving them 6.79% higher than a year ago.

So why, given Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout – has the Oxford property market remained so strong, still 20.1% higher than 20 months ago?

The Oxford housing market is built on the foundations of basic economic rules that any GCSE Economics student should understand. However, at a time when we seem eager to uncouple ourselves from all manner of proven facts, why is it that Oxford’s property seems to be in a ‘post-fact bubble’?

Even the wary Royal Institute of Chartered Surveyors (RICS) said most of its Chartered Surveyors anticipated house prices to increase in the coming six months, which seems contradictory given economic cautions from Mr Hammond, HM Treasury and The Bank of England. Given that inflation will rise to between 2% & 3% in 2017 because of Sterling’s devaluation, and uncertainty remains about how Brexit will impact the wider economy, how can RICS and most of my landlords be so confident about the value of their homes?

Nationally the starting point is a strong base of low unemployment, low inflation and preposterously low interest rates, while in Oxford, the local economy continues to perform well. Confidence also plays a part. But the fact is, there is a strong long-term relationship between property values, wages and unemployment. For example, looking at the graph below, you can quite clearly see the ratio of property values to earnings is nowhere near as high as it reached in 2008 and currently is in the middle of the range for the last 30 years. As a country, we are in a good place.  Whilst Oxford remains one of England’s least affordable property markets, demand for homes – rented and owner occupied continues to far out-strip supply, and until the supply increases via new house building and via new private rental supply, the market will continue to be buoyant.

By April 2017, Article 50 will be invoked. This will bring further doomsday press commentary, polarised political opinion and short term crises of confidence. With both purchasers and vendors predisposed by the 24-hour news cycle, which let’s face it, gets more haphazard by the day, it is likely to prove a challenging couple of years … and yes, Oxford property values might rise less reliably during 2017, but based on what we know of the UK plc now, the UK and Oxford property values are not projected to move that much over 2017 or 2018.  Going into the next two years, we are in much better financial shape as a country compared to 2008, and since 2008 Oxford house prices have risen reliably – last year they were up 6% again and up 30% since 2013.

Confidence will continue to be the key player in the Oxford housing market for a while longer – despite being pro-remain, Oxford and its home owners need to look for the positives, stay confident and continue to invest in a solid long-term asset.

Another little beauty in Wheatley, Oxford

Morning all,

I hope you are well on this fine Thursday.

There is much to be said about village life. The walks, the countryside, the quiet and a wonderful sense of community spirit. And they are not bad places to invest either.

I have dipped into Wheatley on a few occasions primarily for 3 reasons:

Good yield
Capital appreciation
SCHOOLS!!!

The first two are important and go without saying. This one is on the market with Morgan and Associated, Little Milton for £265,000. It is set over 3 floors and has clearly been refurbished throughout. From its last selling price it is clearly also a conversion into I would suspect two apartments.

Right so that condition sorted (very nice). Size wise the bedrooms are perfect and 2 doubles always reaches out to a wider demographic. The living room is open plan dining/living/kitchen which can appeal if the right size and layout however this is one open room from what I can tell on the pics. It is not very small but not that big either at 312sq ft.

Aside from this it has no real down side. You can expect approx £1100 per calendar month on the rent. Against the asking price (if you pay asking price that is) then you are hitting 4.9% which is a healthy figure in the Oxford market especially considering the high demand.

Whether 2 bed, 3 bed or 4 the properties in this location shift quite significantly in price year on year. A 4 bedroom house sold on 19th August 2014 for £416,000 and then sold on the 14th October 2016 for £675,000. Recently a 3 bedroom property purchased for £240,000 on 5th August 2011, sold for £305,000 on 15th November 2016.

It is the last of the 3 points that generates the biggest stir (assuming you have or are expecting a child of course) The primary school in this area is hugely sought after, so much so that we saw one of our 3 bedroom property, available to rent last year go over and above the stated asking price. The reason was for families or young couples to be in the catchment area for this school.

All in all a nice investment. For more on this and other village locations to make an investment please call me.

Best regards

Richard

Investment property of the week - Kidlington, Oxford

Afternoon all,

WILSDON WAY, KIDLINGTON

So I have stepped into the up and coming area of Kidlington for my next installment. for some of you die hard blog fans you will have noted my recommendations from last year for Kidlington particularly as the new railway is built. It has seen a 2.7% increase in value in the last 12 months alone which is set to continue to grow as people look for alternatives to the comparably steeper prices in Oxford centre.

This one is on the market with Thomas Merrifield, Kidlington for £270,000. It will fetch a rent of approx £1050 per calendar month which will see it return 4.6%. Recent lettings evidence suggests that £1100 per calendar month is achievable. This from a similar property in this street that was slightly bigger. Even still the rents are moving here. At the beginning of 2016 the going rate was approximately £925 per calendar month.

An offer (surprise surprise) is definitely worth considering here. It was first listed on 20th October 2016. 232 people have clicked on it for extra information but I can assure you that 232 people have not viewed it. Why? Price. It should be nothing more than this. At the right price it is a cracking investment. Another reason a deal is necessary is that work is needed in places. From the pictures only ( yes I do have a very keen eye!) I suggest possible replacement carpets. I see a few marks. Bathroom and kitchen are sound in design but shower screen may be required. RE-paint is possible along with new furnishings and the back garden needs weed blasting and sorting out with some nice garden furniture as an addition. Estimated cost would be approx £3k to make it tip top.

Capital value? 72 Wilsdon Way sold on 29th July 2011 for £194k and resold on 11th November 2016 for £275k.

Not a bad return is it?

Call me for more on this and others.

Best regards

Richard

Average Rents in Oxford set to rise

Back in the Spring of 2016, there was a surge in Oxford landlords buying buy to let property in Oxford as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. Below are the property statistics for sales either side of the deadline in OX2:

Jan 2016       –  42 properties sold

Feb 2016      –  27 properties sold

March 2016  –  91 properties sold

April 2016     –  19 properties sold

May 2016      –  23 properties sold

Normally, the number of sales in the Spring months is very similar, irrespective of the month. This shows that Government policy does affect behaviour in the housing market.

During 2016 Oxford rents rose steadily is not likely to inverse any time soon, particularly as Government 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 buy to let 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 growth in rental stock at a time of severe shortage in Oxford.

But it’s not all bad news for tenants. Whilst average rents in Oxford since 2005 have increased by 22.6%, inflation has been 38.5% over the same time frame, meaning Oxford 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).  However according to Dataloft, Oxford remains the least affordable place to rent outside of London with average rents approaching 50% of average household income (assuming household income is 1.5 times Oxford’s average earnings).

Year	Average Rent in Oxford per month
2005	2030
2006	2077
2007	2123
2008	2193
2009	2227
2010	2196
2011	2249
2012	2300
2013	2334
2014	2369
2015	2421
2016	2490

However, looking at the rent rises over the last five years in Oxford following the Credit crunch (2011), rents in Oxford have risen by an average of just 2.4% a year way below the c6% per annum increases in house prices experienced over the same period of time.

The view I am trying to portray is that while renting is often portrayed as the unfavourable alternative to home ownership, many young Oxford professionals like renting as it gives them adaptability with their life. But, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents debunking the myth that landlords have profited from hiking rents above either inflation or the increases in costs in house ownership.  In reality, landlords have been prudent and cautious recognizing that their tenants have been living through an economic downturn.

However, there is a tightrope for landlords to walk balancing the preservation of stable income from known tenants vs. increasing rents above the long-term trend to re-balance their returns.