Why is Oxford the UK’s least affordable City?

On average a UK City home costs 7 times annual average income, not since 2007 has property been less affordable when the average was 7.5 times annual average income.

Contrary to popular belief London is not the least affordable City when property price is compared to average income, that dubious accolade goes to Oxford, out on its own at 11.5 times average earnings.  Next comes our other world-famous city of learning Cambridge at 10.5 times earnings.

Each of London, Oxford and Cambridge have average house prices above £400,000 with Oxford average price being £422,055 over the last 12 months.

Whilst London property has stagnated during 2017, the Capital has also experienced the strongest earnings growth, rising out of the credit crunch malaise faster and stronger than Cities such as Oxford, Cambridge and Bath.  Cities popular with commuters to London such as Brighton and Winchester have also experienced property price inflation with people benefitting from London earnings demanding property and widening the gap for people who live and work locally.

Despite fewer completed sales, demand for Oxford homes has remained strong.  In north Oxford, Kidlington property saw increases as high as 25% during 2015 and 2016 due to the new Oxford Parkway station making the village a commuting hotspot, and whilst price growth stagnated in 2017, Kidlington remains a buoyant local market.

So why is Oxford so expensive?  First and foremost, Oxford offers a superb built environment combining historic and modern architecture and vibrant sports and leisure attractions.  It is a Cit that attracts 30,000 students annually many of whom live in private rented properties, and is a world recognised seat of learning and centre for the knowledge industries.  It is strategically located in the Centre of England offering easy access North, South, East and West, and is surrounded by beautiful Cotswold countryside.  Who wouldn’t want to live in Oxford?

But, the City and County Councils have failed to enable and encourage sufficient new build homes, resulting in a supply constrained property market.  In 2017, less than 1% of the homes sold in Oxford were new build.  That under-supply of new affordable homes to suitable for first-time buyers and/or to down-sizing retired residents, is causing there to be a chronic under-supply of 2 and 3 bedroom homes.  Whlst Government policy aimed at helping first time buyers is positive, in Oxford first time buyers are not limited by stamp duty, but rather the size of deposit required by mortgage lenders.

For people who own an Oxford home the strength in values is an important part of their wealth planning, for the city as a whole it is the biggest strategic risk that the City faces.  At present it is hard to see how local or national public policy will address this crisis.

Young proferssionals are unable to buy their first home in Oxford – Are the Baby Boomers and Landlords to Blame?

Talk to some Oxford 20 something, for whom home ownership appears a vague dream, and they are vexatious towards the Baby Boomer generation and their pushover walk through life, their free university education, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you bought a property in Oxford for £25,000 in first quarter of 1977, today it would be worth £549,429, an increase of 2097.7%.

But to blame the 60 and 70 year olds of Oxford for that seems a little unfair. The mature generations joined the property party in the 1970’s and 1980’s when they were allowed to take out huge mortgages, protected by the knowledge that inflation would corrode the real value of the mortgage, increase property prices, while boosting wage growth enhancing their ability to repay.

Unlike Government, neither do I blame the multitude of Oxford buy to let landlords, buying up their 10th or 11th property to add to their buy to let portfolio. They too, merely reacted to the peculiar historic inducements of the UK property market.

Surely someone is to blame?

Margaret Thatcher and Nigel Lawson are also good people to blame - selling off millions of council houses at knock-down values and delaying ending of the MIRAS tax relief in 1987. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precluding a more equitable distribution of current housing stock. And, our current Government has had plenty of opportunity to change the stamp duty rules to incentivise those mature Oxford house movers to downsize, but have failed to act.

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Oxford housing market is because of private landlords. Yet, I believe they are undervalued.  With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up homes we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have cut services, and haven’t had enough money to build new homes.  Homes that were provided to Oxford instead by buy to let landlords helping to reduce the scale of the current crisis.

657 homes are being bought by buy to let landlords each year in the Oxford City Council area when otherwise they might have been available to other buyers.  But at a time when the current national average deposit is £51,800, most young people are simply unable to meet lenders’ demands. And, homes bought by local landlords are not standing empty, instead they equate to 4,596 of homes for local people, most of whom either see renting as a preferred option given the flexibility required by the early years of their professional lives, or accept that they cannot yet meet lender demands for deposits. 

Oxford Homeowners and their £2.78 billion Debt

The housing and mortgage market has shown a noteworthy resilience. There has been a notable improvement of macro-economic conditions - in July, for example, it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more new properties than last year, there has still been a disproportionate increase in demand for housing.  Repossessions too are also at an all-time low at 3,985 for the last Quarter from a high of 29,145 in Q1 2009. All these things have resulted in property values in Oxford being 6.4% higher than a year ago according to the Land Registry.

So, what does all this mean for the homeowners and landlords of Oxford, especially in relation to property prices moving forward?

One vital bellwether of the property market is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and is representative of 13,314,512 mortgages (the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans).

Uncertainty causes banks to stop lending – it took a few months throughout the autumn of 2007, before the credit crunch started to hit the Oxford property market, but in late 2007, and for the following year and half, Oxford property values dropped each month causing Oxford property values to drop by 22.9%

Thankfully, after a period of stagnation, the Oxford property market started to recover in 2011 as certainty returned to the economy and Oxford property values really took off in 2013.  Throughout 2016, we saw a return to realistic and stable medium-term property price growth, and now property prices have recovered in Oxford and are now 85.6% higher than they were in 2009.

During the summer of 2017, with the Conservatives having been re-elected on their slender majority, the Oxford property market has experienced some softening, but now appears set to avoid the negative growth experienced in London.  There has been some aggressive competition among mortgage lenders, which has driven mortgage rates down to record lows, which is good news for Oxford homeowners and landlords with the rates on new deals at the lowest they have ever been.  For example, last month, HSBC launched a 1.69% five-year fixed mortgage!

Since 1977, the average Bank of England interest rate has been 6.65%, making the current rates a of 0.25% very low indeed – in fact it is a 323-year record. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?

In the Oxford postcodes of OX1 to OX4 & OX33, if you added up everyone’s mortgage, it would total £2,785,488,264.  If Bank of England rates returned to their trend rate of 6.65% current Oxford borrowers would have to find £178.3m more to just to keep-up their payments

In my opinion, interest rates can only go one way from their 300-year ultra 0.25% low level.  Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser to lock-in the historically low rates.

Agents remain a little pessimistic about the lettings market

Around one fifth of all households in England and 14% of households in Scotland and Wales live in private rented accommodation. Using results from the monthly Royal Institute of Chartered Surveyors survey of agents, above I look at how agents view the current state of the rental market. Much like the sales market, the quarterly (seasonally adjusted) figures from the RICS survey suggest a subdued rental market.

Nationally, agents report a marginal increase in tenant demand over the quarter but at its lowest rate for nearly twenty years. Over the same period, landlord instructions declined, with a net balance of agents reporting a fall in listings. The story was reversed in London where a small net balance of agents reported a rise in listings but a fall in tenant demand. Affordability remains a key pressure on the London market.

Agents expect rental growth to be low over the coming months and in London agents continue to expect rents to fall. Back in October 2016, a net balance of 28% of agents expected average rents to rise over the following quarter but by July 2017 the net balance expecting rental growth in the next quarter was just 10% - the lowest level since mid-2009. For the sixth consecutive month agents across London expect prices to fall, with a net balance of agents across both the South East and Scotland also anticipating decreases.

While agents’ expectations are low for the short term, the outlook improves over the longer term. Nationally rents are expected to rise by just under 2% over the next year, but rise to an average of just over 3% per annum by 2022.

In Oxford, this National picture has been mirrored.  Rent increases at tenancy renewal has been muted and well below the 2 to 3% average growth of recent years.  Demand since April 2017 through to the end of July 2017 has been below the level achieved in the same period last year.  However, August has been strong month, with demand strong and the number of relets returning to the level experienced in 2016.  Overall, the market has become more ‘last minute’ with applicants looking to move in to properties within 4 weeks of making an offer, which is causing some landlords to get rather nervous as it is a change on the more usual 6 to 8 weeks between offer and move-in.

Whilst demand in August has been good, rent increases continue to be subdued.  There are signs that August demand will push in to September, further indicating that prospective tenants have waitd as long as they dare before committing to a new tenancy.

There’s never been a better time to remortgage

The number of mortgage products is continuing to rise, with the number of deals on the market having increased by 61% in just five years, according to Moneyfacts.

Since April 2009, the number of products on the mortgage market hit an all-time low of 1,209. The volume of live deals now stands at 4,657, which is up on 3,814 products in August 2016 and almost 2,000 higher than the number of products on the market five years ago.

This month’s boost to product numbers means there have been 15 months of consecutive increases in residential mortgages, according to the Moneyfacts UK Mortgage Trends Treasury Report, which provides an in-depth monthly review of changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.

 Moneyfacts observes: “The numbers this month were boosted by several lenders entering the three-year fixed rate market, which saw the number of three-year fixed rate deals increase by 48 products to 439.

The two-year fixed rate sector has seen heavy competition, causing providers to look elsewhere. The three-year fixed rate market offers providers an opportunity that some have used to branch out.

Widespread talk of a base rate rise means that borrowers are starting to look at their options to protect themselves from a potential rise in monthly repayments. Since a five-year fixed rate can be too long for some, a three-year deal can bridge the gap for those wary of fixing for longer.

The average three-year fixed rate is 2.54% in August, so borrowers will need to decide whether the extra year’s security is worth a 0.31% premium compared to the average two-year rate of 2.23%.

Any readers who have not yet reviewed their mortgage arrangements, should do so without delay.  Too often we Brits have a misplaced sense of loyalty to our mortgage lender, instead of recognising the risk of increased costs as Bank of England rates begin to rise.  If you don’t know who to call, please email me on info@oxfordpropertyblog.co.uk and I will happily make a referral to London & Country who have access to the UK’s largest panel of lenders.  L&C offer a no-commitment telephone based assessment, which will enable you to determine your own position.  L&C can assist owner-occupiers and buy to let landlords with mortgage products to suit their needs.

Oxford is a favourite place for people moving out of London

The number of people leaving the capital has reached a 5-year high, with net departures to homes elsewhere in the UK reaching 93,300 people in the year to June 2016 – an increase of more than 80% on five years previously according to the ONS.

Apart from people in their 20’s there is a net outflow across all age groups with thirty-somethings being most likely to look for somewhere more affordable to buy a family home.

Those who live in the Capital’s richest boroughs are more likely to move to more affluent areas.  People in Kensington and Chelsea tending to move to Cambridge; Westminster residents heading to Oxford and those in Hammersmith and Fulham moving to Elmbridge in Surrey.  Other popular places for relocation include St Albans and Slough.

It is perhaps no surprise that the popular new places remain within communing reach of London, and have vibrant community, social and cultural attractions.  As I have predicted in this blog, these people are looking for family homes or 3 beds or more, ease of access to train and road links to London, and proximity to open spaces, supermarkets and social venues. I expect to see these properties to increase in popularity for both buyers and renters over the coming 2 or 3 years.

Oxford is one of 13 UK cities experiencing lower growth in house prices than a year ago according to Hometrack

13 cities have a lower annual growth rate than a year ago with London, Bristol and Oxford recording the greatest slowdown as affordability and political uncertainty impact demand.

The average prices of a house in the UK’s largest cities increased by 5.1% in the 12 months to June 2017, but growth in London slowed to 2.6%, the lowest rate for over five years.

The annual growth is down from the 8.8% recorded in June last year although it is still robust in larger northern cities such as Birmingham, Manchester and Edinburgh, according to the figures from the latest Hometrack cities house price index.

Growth in the first half of 2017 ranged from 0.2% in Aberdeen to 6.1% in Birmingham and while price growth is higher in seven cities, the scale of the increases compared to June 2016 are more modest.

Prices in Cambridge were up just 1.9%, in Oxford by 2.1%, in Newcastle by 2.4% and in Aberdeen were down 2.7%.

Sustained house price growth in large regional cities has pushed house prices ahead of their 2007 peak in 16 of the 20 cities covered by the index.

Looking ahead to the second half of 2017 the report suggests that even with a material slowdown in the rate of house price growth across south eastern England, house price inflation is holding up despite the squeeze on real incomes and uncertainty around Brexit.

At the end of 2016 Hometrack predicted that city house price growth over 2017 would be 4% but on current trends the firm now expects this to be closer to 6% or 7%. ‘There remains material upside for house prices outside south-eastern England.

Cities such as Bristol, Oxford and Cambridge are seeing slower growth but this is probably due to prices having risen strongly over the last decade, widening the gap with average earnings and impacting affordability for many people.  Major University towns are also braced for reduced demand from foreign nationals for places in their institutions.

It is worth pointing out for readers’ clarity that the headlines sometimes mask the fact that it is a reduction in GROWTH as opposed to an absolute reduction in house values.  At 2.1% Oxford house prices struggled to keep pace with inflation, but continued to grow ahead of earnings, exacerbating the affordability gap for many people, forcing many to live outside of the City commuting in daily by car, train and bus.

It’s time for Our Civic, Business and Academic leaders to step-up to the plate

There is now little doubt that UK domestic political uncertainty is combining with Brexit to undermine demand for homes across Oxford.  It is time for Oxford to take a stand and make clear at home and abroad that Oxford is open for business and remains a welcoming, international city of academic excellence and knowledge based services, as well as a European centre for manufacturing and automotive excellence.

The recent UK election was widely expected to be a time-limited period of uncertainty, which, like previous elections, would create a short-term softening of demand for rented accommodation and create a drag on new homes listed for sale.  It now seems certain that the sense of uncertainty will continue as parliament wrestles with the implication of a government with no overall majority in the House of Commons.

The uncertainty created by the UK election result, seems likely to exacerbate press attention on Brexit both in the UK and internationally.  To date, the press has highlighted immigration as the central issue, with much commentary creating an impression that the UK is no longer a safe nor welcoming place for foreign nationals to come to study and work.  For Oxford, this has unquestionably undermined demand from foreign nationals wanting to live, study and work in our great city.  Nationally demand for University places from the EU has fallen by 7% compared to last year.  Over the same period, demand for places from the UK has also fallen by 5.6%.  This ‘double whammy’ is evident in Oxford by the number of rental properties that are available in areas typically popular with foreign students and downward pressure on rents that have typically increased at 2 to 3% per annum.

With Brexit certain to dominate the political headlines over the coming 18 months, places that depend on their international reputation as centres of excellence for learning, knowledge-based services and manufacturing must take direct responsibility for communicating their multi-cultural values, their openness and their desire for sustained immigration for work and learning.

Oxford must take a leadership position in this, reflecting its pre-eminent position as one of the World’s best academic centres of learning.  It is time for our civic leaders to step-up and take control of Oxford’s narrative.  The leaders of our big businesses and Universities must take every opportunity to jump on planes and promote the unique, welcoming environment for which is Oxford is rightly known around the world.  The City’s international alumni need to be called-on to ensure our positive message is heard around the World.

On 23^rd June 2016 Oxford voted by 70% to remain in the EU.  As a City dedicated to excellence, with a rich contribution to politics, science, the arts, medicine and engineering globally, it is incumbent on us all to make our voices heard, making clear that Oxford is and will remain a place of inclusion, security and culture for people from around the world.

Commisery vs. Home sale regret – which estate agency model is best?

Which model of estate agency is best – online or traditional, and how do they differ?  Which model serves its clients best? Does an estate agent have a fiduciary duty? (a ‘fiduciary’ being a person who holds a legal or ethical relationship of trust with one or more other parties) and, does either model undermine that duty?  Finally, which offers the best value?

I will consider these and other questions from the perspective of a property owner over the next couple of weeks.

How do the models differ?

Traditional estate agency is based on no-sale, no-fee.  If the agent fails to sell the property their client pays nothing.  If they secure an offer that proceeds to an exchange of contracts, they claim their pre-agreed fee.  Typically, that fee is quoted as a percentage of the achieved sale price. For an average Oxford home that sells for £408,500, the current average commission paid is 1% or £4,080. 

With online agents, the client pays an up-front fee which covers in advance the cost of marketing, and pays the agent its profit margin.  If the property sells both parties benefit, but if the house does not sell the client has still paid the agent’s fee.  In Oxford currently, the average paid for an online agent is c£995.

Both approaches typically advertise a property via the same online portals, but typically the online model is less comprehensive in terms of the support provided for example some online agents expect clients to conduct their own viewings, and provide only rudimentary sales progression, others offer a menu whereby the client can pay a larger fee for a fuller service.  The traditional agency model is more uniform and includes all aspects of marketing, viewing management, negotiation of offers, sale and chain progression.

Some sellers prefer to work with multiple agents, believing that competition between agents ensures that they work harder to ensure that they (as opposed to their competitor) achieve the sale.  Others prefer to select just one agent who they trust to provide them an effective service. 

Where two traditional agents work in competition only one fee will be payable by the client to whichever agent secures the sale.  Typically, the fee paid using multiple agents is higher than the fee paid to a sole agent.  Where an online agent and a traditional agent work alongside each other, two fees may be paid i.e. the online agent charges their standard up-front fee, but the 2^nd agent secures the sale, making their fee additionally apply.  It could therefore be argued that the up-front nature of online agent fees discourages the appointment of multiple agents.

Currently online agents have around a 4% market share which is growing steadily, traditional agents have a 96% market share.

What is the agent’s responsibility?

A recent Opinion, prepared for the UK PropTech Association (UKPA) by Ian Rees Phillips of 6 Pump Court, explores how the nature of up-front payment for estate agency services may create a conflict of interest between the online estate agent and property vendors.

The opinion concludes that the online agents and traditional agents owe a fiduciary duty to their home seller clients, and that there is a “significant danger that breach of fiduciary duty is baked into the online estate agent model.” 

What causes this potential conflict of interest? The fact that the fee is paid up-front, and is paid irrespective of whether the home is sold or not is the central concern.  But, there is a further concern, that once paid, the agent no longer has an incentive to put every effort into securing the best sale price for their client.

Whilst the traditional agent is typically more expensive, because it is a proportion of the sale price achieved, the agent’s financial interest is aligned its client’ interests.  Because it is only payable for success, it requires the agent to accept and manage a greater level of risk, encouraging a more realistic initial valuation or else risking incurring cost without succeeding in achieving a sale.

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.

The Chancellor must change stamp duty policy for the good of Oxford’s property market

As regular readers will know, I have previously identified that Oxford needs close to 7,000 new private rental properties over the coming 3 to 5 years to meet forecast demand for quality private rented properties.  Readers will also know, that the nature of demand is changing in Oxford.  For example, as property prices continue to rise, there is an increasing demand from young professionals for good quality rooms in houses of multiple occupation (HMO’s).  These tenants require en-suite facilities, large bedrooms with double or king-size beds, and good quality kitchen and living accommodation.  In other words, large properties that have been professionally converted for young professional singles and couples to live privately and comfortably.

Current Government policy in relation to Stamp Duty Land Tax (SDLT) is distorting the market, and threatening to exacerbate the imbalance of excess demand vs. insufficient supply.  The Chancellor should grasp this nettle before it’s too late.

Over recent years the volume of transactions for higher-value homes (over £2m value) has fallen by 70%.  Where a home valued at over £2m is bought as a second property, the SDLT due is £213,750…Ouch.  Should the same investor instead choose to buy two second properties each worth £1m, the SDLT falls to £147,500.  Still a lot of money, but a saving of £66,250.

Why does this matter in Oxford?  Put simply, it is distorting the local property market.  Over the last 12 months transaction volumes are down 11%.  This largely reflects lower levels of investment by buy to let landlords since the 3% SDLT surcharge was introduced for second properties.  However, so far prices are holding firm, with transactions over the last 12 months having an average value 11% up on the previous 12 month period.  This means the market has less choice (fewer properties being sold) and is no more affordable for private owner occupiers. 

Whilst landlord investment is down in terms of volume, that which has been sustained is concentrated in the sub £1m property band as landlords try to limit their exposure to SDLT.  This concentration means average property values continue to rise in this critical property band, driving more private buyers out of the City because they can’t pull-together the size of deposit demanded by their lender.

Worse-still, because landlords have a taxation disincentive to invest in larger more expensive properties, the Oxford market is failing to respond to changing demand, meaning the high-value young professionals who are attracted to Oxford for its knowledge-rich economy, can’t find the high quality HMO options they require to make Oxford an attractive and affordable place to live.

Until Oxford increases new house building by a factor of 10, the local economy will depend on a strong, diverse and high quality private rental market.  Current stamp duty policy places that at risk, distorting property values by artificially increasing competition for property in the £400,000 to £1m price bracket.

Oxford First Time Buyers borrow £76.2m in the last 12 months

Over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Oxford property market.  Over the last 12 months, 1,586 properties have sold (and completed) in Oxford, worth £780.9m. Interestingly the number of properties changing hands in Oxford has also dropped when compared to a decade ago.

It might also surprise you that first time buyers in 2017 will benefit from a decline in purchases by Oxford buy-to-let investors.

Those looking to buy a home in the spring of 2017 will face a far less competitive Oxford property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped by around 12%. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months:

When looking at the figures for Oxford itself, first time buyers have borrowed more than £76.2m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Oxford economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords.

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at the Oxford market, at this moment in time there are an impressive 729 properties for sale, so plenty of choice, which is welcome news to all potential buyers.

2017 will be an interesting year for homeowners, be they buy-to-let landlords, existing homeowners or future homeowners. 

The housing white paper – some positives, some missed opportunities, and some confusion!

The Government’s much vaunted and long awaited white paper was published this week, and it seems to signal a shift in Government thinking away from the mantra ‘home-ownership = Good; renting = Bad’ to a recognition that both ownership and renting need to be encouraged.  That is something that I have been arguing for several months.  This shift is to be applauded.

We should also applaud the Government’s desire to protect legitimate tenants from rogue landlords.  However, there is still no recognition of the need to protect legitimate landlords from rogue tenants. 

The recognition of the value of build to rent schemes in our cities is certainly a welcome new innovation, and this should help to meet the rising tide of demand for affordable rental properties.  However, the white paper is mute on measures to encourage smaller landlords to continue to invest to expand the supply of available properties in the short to medium term.

Since the white paper was released, many of the headlines have centred on Government’s desire to promote longer-term 3-year tenancy agreements to provide a more stable environment for young families living in rental accommodation.  However, the Housing Minister has subsequently been forced to clarify that those longer-term tenancies will not apply to small buy to let landlords, who are often unable to offer tenancy terms longer than 12 months due to limitations placed on them by mortgage lenders and insurance providers. 

The measures to ease the bureaucracy of decision making and improve transparency of local authority planning policy is also welcome.  New housing is desperately needed across the UK particularly in larger towns and Cities where under-supply is driving prices above wage inflation.

It seems to me that the Government is too focused on popular measures which it believes may result in votes, rather than taking time to think fully about the market, and how best to improve fairness and supply over the short, medium and long-term.  For example, the proposed ban on fees charged to tenants by letting agents, risks landlord costs escalating and rents rising above trend as a result.  Already rents are proving unaffordable, with growing numbers of tenants being unable to pass credit/affordability checks.  Anything that makes that harder has to be unwelcome.  There is certainly a need to bear down on unscrupulous letting agents charging exorbitant fees, but a blanket ban which stops all fees will have unwanted consequences.  The Royal Institute of Chartered Surveyors (RICS) has warned that following last year’s increase in stamp duty for landlord investors, the forthcoming restrictions relating to mortgage interest rate relief will force many smaller landlords to reduce their portfolios and for many discourage further investment.  This at a time when rental supply is so restricted (as recognized by the Government) also seems unwise.

So, a mixed-bag of measures which are directionally correct, but when populism has trumped analysis and clarity of purpose.   Yes there are 4 million voters living in rented accommodation, and protecting them from exploitation is absolutely correct.  But, basing policy on the assumption that all letting agents, all landlords and most developers are exploitative risks undermining stability and supply over the coming decade.

The UK buy to let sector reflects our experience in Oxford’s property market

The latest research from Connells Survey and Valuation has found that, during August, activity in the buy-to-let sector saw a surge of 12.7%.

Encouraging economic data, high levels of employment and fading fears of a recession appear to have injected life into the sector. August’s surge in activity highlights the resilience of the the buy-to-let sector, albeit we can still see the impact of the Government’s poorly considered BTL legislation.

According to Connells, first-time buyer activity saw the strongest overall increase in valuations and has driven August’s housing market, with valuations up by 6.8% on July and by 19.6% on an annual basis.

Remortgaging activity has also seen an increase in valuations on both a monthly and an annual basis. On a monthly basis, remortgaging valuations saw a growth of 4.2% and a 1.5% increase year on year to August 2016.

Across all sectors of the housing market, overall valuation activity has risen by 5.1% on a monthly basis, between July and August. On an annual basis, there was also a slight increase of 0.2% more valuations carried out than in August 2015.

Overall market activity remains steady and fears of a post-Brexit slump has failed to emerge. In the first full month after the Bank of England’s decision to cut interest rates, the buy-to-let market has seen a surge in activity. Powered by revised low interest rate deals announced by major mortgage lenders, landlords have taken the opportunity to remortgage and/or acquire new properties.