Buy to let mortgage rates continue to fall

Research from independent market monitor Moneyfacts shows that the average two-year fixed BTL rate has fallen by 0.31 per cent in one year, and even though the pace of the fall has slowed in recent months, the market has now recovered from the significant drop in products that was seen at the start of this year.

The number of BTL mortgage products now available has risen from 1,408 in January this year to 1,610 now - a rise of around 15 per cent in just six months.

As regular readers will know, I have been encouraging Oxford buy to let landlords to consider re-mortgaging for several months now.  The market for BT mortgages has been improving with the range of products increasing and the level of interest rates falling.  At a time when landlord costs have been rising, and look set to continue to rise, this is a way for landlords to reduce their monthly costs and lock-in the historic low interest rates for years to come.

Too many Oxford landlords have a misplaced sense of loyalty to their current lender, instead of grasping the opportunity to look after their own interests.

For any reader interested in discussing the opportunities for re-mortgaging I would be happy to make a referral to a registered and regulated mortgage broker for a no-commitment telephone assessment to determine whether you could save money by re-mortgaging.

The Waitrose effect

A recent study commissioned by Lloyds Bank shows that houses in close proximity to a Waitrose, Marks and Spencer, Sainsbury’s or Iceland are most likely to gain a higher house price premium than the town average in which they are located.

Properties close to an M&S have the second highest premium at £29,992 than hoes further away.  Proximity to a Sainsbury’s add £26,767 and Iceland £22,767.  Waitrose reigns supreme, however, with a typical £36,480 uplift.

On average walking proximity to a supermarket adds an average 9% according to the study, with Aldi, Lidl, Morrison’s or Asda adding on average £21,400.

Regular readers will recall that in a recent article I outlined changes that I expect to see in Oxford’s private rented sector, with tenants renting for longer periods of their life and increasing demand for homes that allow their young families to grow with 3 beds, and proximity to schools and supermarkets.

The Lloyds report is a two-edged sword for Oxford’s landlords, as it suggests there will be a cost premium to buy properties that will be demanded by this group of tenants, but equally landlord’s should have confidence that that premium will be maintained over the medium to long-term, most likely increasing demand from tenants and allowing a premium rent to secured.

Owners of central Oxford properties should hope that a similar ‘John Lewis’ effect will be felt once the Westgate development completes.  Experience from Cardiff where a comparable John Lewis-led development occurred, suggests that the John Lewis effect could be even more significant than the Waitrose effect.  Owners of properties in Oxford Castle, Tennyson Lodge, Empress Court, The Lion Brewery and Castle Mews should see an uplift in capital values once the new apartments in Mill Stream Edge are sold-out.

6,564,678 People use Oxford Train Station a year - How does that affect the Oxford Property Market?

It might surprise you that it isn’t always the nicest most picturesque villages around Oxford or the most desirable Oxford streets where properties sell or let the quickest. Quite often, it’s the ones that offer the best transport links. There is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Oxford, I am frequently confronted with queries about the Oxford property market, and most days I am asked, “What is the best part of Oxford to live in these days?”,.  Now, the answer can be different for each person – a lot depends on individual factors e.g. the age of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released show that, in total, 9,017 people jump on a train each and every day from Oxford Train station. Of those, 2,811 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,724 a year.

The bottom line is that property values in central Oxford would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it allows access north and south of the City

Rail is becoming increasingly important, as the costs associated with car travel continue to rise and as the roads are becoming more and more congested. This has resulted in a huge surge in demand for rail travel.  

Overall usage of the station at Oxford has increased over the last 20 years. In 1997, a total of 3,064,352 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 6,564,678 people using the station (that’s 18,035 people a day).  Hence the huge investment in capacity at Oxford parkway station where parallel investment in bus routes to/from Oxford has driven house prices in and around Kidlington, meaning that house price growth continues to track above the average for Oxford.

A property’s location relative to the train station has an important effect on its value and saleability in Oxford. It is also significant for tenants – allowing car-free living to be realistic in a City that wishes to limit car usage.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website – they know it is in the top 5 criteria applied by buyers and tenants alike.  To illustrate this, recently a couple came to me looking for a property 5 minutes’ walk from Oxford station and 5 minutes’ walk to the central shops, restaurants and bars.  They wanted 2 bedrooms, one bathroom and wanted to keep the monthly rent to around £1,000.  In the event, they achieved their perfect location, but had to raise their budget by 20%, reflecting the premium that proximity to the stations carries.  They are now living just off St Thomas Street, just a few hundred yards from the Central station.

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!

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.