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Friday 22 January 2016

Landlord housing takes over mortgage owner occupiers

Hello all,


The total value of UK landlord owned housing has now overtaken that held by mortgaged owner-occupiers, that’s according to a recent survey carried out by international property consultants Savills.
Savills calculations show that around £1,077bn of net equity, that is the proportion of the home owned as opposed to mortgaged, is held in those homes owned by private landlords.

This compares with just under that figure; £1,067bn in mortgage owned owner-occupied homes, according to a recent report published in the Financial Times. It shows the true scale of the problem facing the government with its priority home ownership policy.

The “Baby Boom” generation of owner-occupiers, those born just after WW2 and either retired our retiring now, are the real beneficiaries of the housing boom, with around £2,097bn of equity held mortgage-free. They are the real winners in what Savills claims is a 300% increase in average property values over 20 years, while the younger “Generation Rent” is struggling to get onto the housing ladder.

It is no secret that the government's key initiative is to boost housing ownership but in light of these figures it may prove to be a tough nut to crack even with recent incentives such as 'Help to Buy'.

The shift in housing ownership is also reflected in how money is now spent on housing, with more spent on rents that on mortgage payments by home-owners. £74.8bn combined is...
now spent on private and social rents, which just exceeds that spent on mortgage payments at 73.2bn. An interest rate rise could easily alter that balance though.

With housing shortages, rising rents and home ownership declining in most Western economies, the trend really does seem structural and the various UK government schemes, such as “Help-to-buy”, could struggle against this.

I would think that the various government initiatives will help the buyer market to a certain extent but whilst the Bank of England continues to guard against a debt ridden housing market I am not sure we will see an about turn in the short term. No doubt you will recall my most recent comments regarding 2016 forecasts for investor buyers in light of the recent Autumn announcements and these figures support the theory entirely.

Best regards

Thursday 21 January 2016

Strong sales activity in January 2016

On the back of my recent post regarding proposed activity in the market for 2016 this year is commencing with significant optimism, as prices have risen 0.3% across England and Wales in the last month; the highest rise observed for January since the onset of the financial crisis.

Housing activity has been unseasonably buoyant, according to the latest Home.co.uk asking price index. Greater London house prices have jumped 0.9% since December, meaning the average property price in this area has increased by around £15,000.

This is primarily due to low housing stock, with just over 386,000 properties are currently on the market; 47% less than in 2008. 

Price rises have been recorded by the index in every location beside the East, Scotland, Wales and Yorkshire in the last month.

The UK’s supply-demand crisis has meant that properties are also spending less time on the market. The average time recorded was 117 days, nine days less than a year ago; which only looks to become shorter across 2016. Whilst a significant long term spike is not anticipated (at least by me) due to the recent stamp duty announcement I imagine this will contribute to a spike in Oxford in the short term, but time will tell.

If you are interested in what your options are or what your property might be worth or you would simply like some advice please feel free to contact me.

Best regards

Richard

Wednesday 20 January 2016

Investment opportunity in Oxford

Well folks I will admit that nowadays it is a little harder to find a property that stacks up against both yield and a positive history of capital appreciation but you can still find 'em.

Demesne Furze, Oxford

I found this little beauty and it does the numbers nicely. On with Chancellors for £280,000 you can expect to see a rent in the region of £1050 - £1075 per calendar month. That would give you a 4.5% return for starters and in the Oxford market this represents a cracking yield.

Turning my attention to purchase history the most recent property sold on this development fetched £271,000 on the 24th September 2015. This property was previously purchased for £170,000 on the 1st August 2006. More interestingly and an even better indication of the capital appreciation potential is the property sale prior to this which sold on the 9th September 2015 for £220,000 (smaller one bedroom property in need of work) which was previously sold for £175,000 on 17th December 2010. In this 5 year period its growth stood at 2.5%. Interestingly over the 10 year period of the most recent purchase it shows a 7% return against its sold price.

This property is good to rent in its current condition as well. It screams of being low maintenance with nice laminate wood flooring and it also has nice furnishings. The demand for one bedroom property is huge and this will attract tenants in big numbers which would make the risk of void non existent (assuming you use a good agency of course ;)

If you would like more information on this or investment in general please call me.

Good day people.

Monday 18 January 2016

Reasons to be cheerful (even if you're involved in buy to let)

It is fair to say that at the back end of 2015 property investors and landlords could have been forgiven for going a little off radar after the Chancellor took a sizable swipe at the private rented sector. The reasons for being a little disillusioned have been plain and simple - We have had the Right to Rent proposals, the ongoing saga with HMO and additional licensing for landlords, the likelihood of mortgage constraints and the removal of tax breaks. And then just as you thought it couldn't get any worse good old George throws the increase in Stamp Duty Land Tax at us. It is enough to make even the most experienced landlord down tools and walk away.

But the way I see it there are at least a few reasons to feel optimistic and hopefully enough to ensure the majority of landlords continue to keep the faith:

Firstly the Office National Statistics (ONS) are forecasting significant growth in the UK population and that it is to go beyond 70 million in the next 12 years. This growth is both direct and indirect based on migration and procreation.

How might this be of benefit to landlords I hear you ask?

Well statistics show that the migrant population are heavily into the rented sector rather than purchasing property. This would mean a surge in the rented market and certainly in areas of high employment.

On another note recent research shows that the renting population has become very diverse in recent years, so no longer are you just seeing 20 somethings taking up rented property. Increasingly it is stretching across the entire spectrum from 40 and 50 years olds to couples and families alike. 

Thirdly—as has been explored before – the swelling population of the UK will easily outpace the supply of purpose-built institutionally-funded homes, thus confirming that there is room for Build To Let without damaging Buy To Let. They can operate side-by-side.

All of this suggests what I and we all know already - that the private rented sector provides an invaluable service to the public and as our population grows I expect this to become more and more apparent. If I am right then hopefully in time Mr Osbourne may reflect on his recent announcement as a job not very well done. Either way I still think there is cause for optimism amongst landlords and I don't necessarily share the notion that selling prior to April 2016 will spike on a consistent level nor do I think the majority of landlords will be discouraged from purchasing for investment either.

Only my opinion of course.

Friday 15 January 2016

Average rental prices rise again in Oxford

Morning all,

You may recall that last year I ran my eyes over the statistical differences in the average rents across the UK and in particular my interest was naturally drawn to the South East to see how we stack up against the rest. Well, fast forwarding to the latest annual figures from the Homelet Rental price index I found as follows:

HomeLet data shows that on average, rental prices are 7.0% higher in the South East compared with a 4.2% rise from the year previous.

Once again nine out of 12 UK regions have recorded higher rental prices in December 2015 compared to the same month last year, and in the 3 months to December 2015 the UK (minus London) showed a 5% increase in average rents compared with a 0.6 per cent decrease in UK average rental prices since October 2014.

Regions that have experienced the highest growth compared to this time last year include us and Greater London, with rental prices 7% and 8% respectively on the year previous. Not surprisingly we saw the biggest upturn across the UK during the spring and summer periods.

The increase in average rental prices in Oxford in hardly surprising given the very well documented supply and demand issue, which is very good news for Oxford landlords, and giving consideration to Oxford's continued popularity in addition to the continued development of the city centre and surrounding areas I am sticking my neck out for an even better 2016. 

(Naturally if I am wrong I am hoping that people will forget they ever read this)!

Best regards

Richard