2017 has started with some positive interest in the Rotherham property market. Taking a snap shot of the property market during the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.
Let us first consider the number of properties for sale, compared to 12 months ago:
So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 768 properties for sale today compared with 853 a year ago, a drop of 10%.
Rotherham asking prices are 6% lower compared to a year ago
With that in mind, I wanted to look at what property was actually selling for in Rotherham.
Taking my information from the Land Registry, the last available six months property transactions for S60 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.
So what does all this mean for the property owning folk of Rotherham?
Well, with less property on the market than a year ago and asking prices 6% lower, those trying to sell their property need to be mindful that buyers have much more price information about the Rotherham property market at their fingertips than ever before.
Those in the area who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market.
Over the last 12 months, I have noticed the approach of a few Rotherham estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books.
The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer.
When the price is reduced a few months later, the property has become market stale and continues to be ignored.
Whilst the property market here in Rotherham has an unassailable demand for property there is one saying that always rings true…
…as long as the property is being marketed at the right price it will sell.
If you want to know if your Rotherham property is being marketed at the right price, send me a link and I will give you my honest opinion.
Investing in Rotherham buy-to-let property is different from investing in the stock market or depositing your hard-earned cash in a building society.
Investing in a building society is considered by many to be a safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!)
Another investment is the stock market, which can give good returns, but unless you are on the phone every day to your stockbroker, most people invest in stock market funds. As a result, the investment is quite hands off and one always has the feeling of not being in control.
However, with buy-to-let, things can be more hands on.
One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar.
It is this factor that attracts many of Rotherham’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.
I always say investing in property is a long-term game.
When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Rotherham. The value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.
Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.
So, over the last five years, an average Rotherham property has risen by £22,950 (equivalent to £12.58 a day), taking it to a current average value of £141,900.
Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).
Flipping property – a different way to make money?
However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping – buying a property, carrying out some minor cosmetics and reselling it quickly).
I have seen several investors recently who have made decent returns from this strategy. For example …
This demonstrates how the Rotherham property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy-to-let Rotherham landlords and investors to become particularly wealthy.
As my article mentioned a few weeks ago, more and more Rotherham people may be giving up on owning their own home and are instead accepting long term renting. Buy-to-let lending continues to grow from strength to strength.
If you want to know what (and what would not) make a decent buy-to-let property in Rotherham, then please get in touch with me. I am happy to give advice. More in-depth insight and knowledge is of course available within this blog and on my Twitter and Facebook pages.
My concern for the Rotherham landlords and homeowners is the older members of the population in our town.
I recently wrote an article about the plight of those in their 20s who are often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent.
In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament.
The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.
However, my real concern for Rotherham homeowners and landlords, as I discussed a couple of months ago, is our mature members of our population. In that previous article, I stated that the current OAPs (65+ yrs in age) in Rotherham were sitting on £1.59bn of residential property.
However, I didn’t talk in depth about the ‘Baby Boomers’ in the 50-64 age bracket.
Baby Boomers: what are their properties are worth – and more importantly, how is this current state of affairs holding back the younger ‘Generation Rent’?
In Rotherham, there are 6,664 households whose owners are aged between 50 and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £947.2m.
There are an additional 8,110 mortgage free Rotherham households, owned by Baby Boomers which is worth £1.15bn in today’s prices.
This means that, in total…
Rotherham Baby Boomers and Rotherham OAPs are sitting
on £3.64bn worth of Rotherham Property
These Rotherham Baby Boomers and OAPs have 25,626 Rotherham properties. Many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’ in the title to this article.
Recently, the English Housing Survey stated 49% of the properties owned by the Generation Trapped are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed).
These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize. Compare this with the USA where one in five downsize.
The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving.
The United for all Ages charity suggested recently that people are put off by
- the lack of housing option
- the hassle and cost of moving
- having to declutter their possessions
- family reasons such as staying close to children and grandchildren.
Helping mature Rotherham homeowners to downsize at the right time will also enable younger Rotherham people to find the homes that they need.
This would mean that every generation wins, both young and old.
However, to ensure downsizing works across the country we need to provide more choices for these ‘last time buyers’.
Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers. Additionally, our local Council and the Planning Dept. should play their part, as should landlords and property investors to ensure Rotherham’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.
If you need advice about downsizing I would be happy to help. Please get in touch with me.
Please follow me on Twitter or Facebook to hear about the latest goings on in the Rotherham property market. Let me know what you think of the blog and my thoughts about ‘Generation Trapped’
Are houses becoming less affordable in Rotherham?
A Rotherham homeowner emailed me last week following my article about the change in attitude to renting by the youngsters in our town. They thought it was too expensive for first time buyers to buy in our town.
There can be no doubt that buy-to-let landlords have played their part in driving up property values in Rotherham (and the UK) and from that made housing a lot less affordable for those in their 20s and 30s.
Should the BoE be charged with containing buy-to-let housing market?
In the email they asked if the Bank of England (BoE) should be tasked to control house price inflation in the same way as the BoE controls inflation. The BoE has a target for the annual inflation rate of the Consumer Prices Index of 2%, whilst it is also required to support the Government’s economic policy, including its objectives for growth and employment. The BoE could get involved by possibly changing the rules on the loan-to-value (LTV) ratios.
Let’s look at how affordable Rotherham is.
The best measure of the affordability of housing is the ratio of Rotherham Property Prices to Rotherham Average Wages – the higher the ratio, the less affordable properties are. (eg. looking at the table below, for example in 2014, the average value of a Rotherham property was 5.02 times higher than the average annual wage in Rotherham)
The deterioration in affordability of property in Rotherham over the last couple of years has been one of the reasons why the younger generation is deciding more and more to rent instead of buy their own house.
… but it’s not the only reason.
A quick look on Money Supermarket today found 169 lenders prepared to offer 75% LTV buy-to-let mortgages and none at 85% LTV. Lenders have self-imposed a high level of entry for buy-to-let landlords (i.e. putting down at least 25% of the purchase price in cash). The BoE don’t need to meddle there!
In addition, the Tories have certainly done lots to level the playing field in favour of first time buyers. For nearly a year now, landlords have had to pay an additional 3% in stamp duty on any buy-to-let purchase. Over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket. It also doesn’t help that the local authority sold off council houses in the Thatcher years meaning that for so many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).
It’s easy to look at the headlines and blame landlords.
First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 3 bed terraced in Rotherham for around £100,000 and would only need to find £5,000 deposit.
Yes, a lot of money, but first time buyers need to decide what is important to them. Reducing in other areas of life (such as foreign holidays or the latest iPhone with expensive contract) can free people up to save for a deposit.
I think we as a country have changed… renting is returning to be the norm.
So my opinion is this: landlords have it tough.
Let’s not blame them for the perceived woes of the nation.
At the end of the day, if we are really honest we haven’t always been a country of homeowners. Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord. Today the national figure is only 15.3%.
If you are an existing landlord or someone thinking of investing in buy-to-let property I am happy to give you advice. Get in touch with me here. In the meantime, please follow me on Facebook and Twitter for the latest insights into the property market here in Rotherham.
The Rotherham housing market has gone through a sea change in the past decades. In particular, the Buy-to-Let (B-T-L) sector has been evolving for both Rotherham tenants and landlords.
A few weeks ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Rotherham population.
In 1981, the population of the Rotherham Council area stood at 253,200 and today it stands at 260,800.
Currently, the private rented (B-T-L) sector accounts for 11.8% of households in the town. The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people.
Interestingly, when we look at the 1981 figures for homeownership, a different story is told:
- 45.94% Rotherham people owned their own home
- 45.78% Rotherham people rented from the Council or Housing Association
- 8.28% Rotherham rented from a private landlord
The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in.
With the population of the Rotherham area set to grow to 277,000 by 2037, it is imperative that the council and the UK Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.
One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.
To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.
Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Rotherham landlords need to be aware of as there will be greater competition for tenants.
Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed.
These youngsters expect ‘on demand’ services thanks to Amazon, Dating Apps and Netflix.
Many Rotherham youngsters see that renting more than meets their accommodation needs as it combines the freedom from a lifetime of property maintenance and financial obligations. For them, this is an attractive lifestyle option.
Private rented housing in Rotherham, whether that’s through B-T-L or B-T-R, has the prospective to play a very positive role.
You can hear about my latest thoughts on the property market here in Rotherham and across the UK by following me on Facebook or Twitter.
Everyone should own their own home – that was the message of the Margaret Thatcher government.
In 1971, around 50% of people owned their own home. However, as the baby boomers got better jobs and pay, that proportion of homeowners rose to 69% in 2001. Homeownership was here to stay.
Thanks to TV programmes such as Homes Under The Hammer, baby boomers started to jump on the buy-to-let bandwagon – people in Rotherham invested in these properties as an investment. Now Rotherham first time buyers were in competition with the landlords to buy these smaller starter homes. This pushed up house prices in the 2000s (as mentioned in Part One). When combined with economics, banks and government policy, the prices are now beyond the reach of many first time buyers.
But are the Rotherham landlords fanning the flames of the housing crisis bonfire?
My opinion is that the landlords of the 5,416 Rotherham rental properties are not exploitive. In fact, they are making many positive contributions to Rotherham and the people who live here. Like I have said before, Rotherham (and the rest of the UK) isn’t building enough properties to keep up the demand caused by high birth rates, job mobility, growing population and longer life expectancy.
According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.
It doesn’t sound a lot of difference, but let us look at what this means for Rotherham …
For Rotherham to meet its obligation on the building of new homes, Rotherham would need to build 399 households each year.
Unfortunately we are missing that figure by around 167 households a year.
For the Government to buy the land and build those additional 167 households, it would need to spend £24,473,638 a year in Rotherham alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year… I don’t know if you’ve noticed but the country hasn’t got that sort of money
With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes. These are either rented privately to Rotherham families or to those people who need council housing because the local authority hasn’t got enough properties to go around.
The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head.
Rogue landlords do need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for them. The system should ensure that tenants can rely on good landlords providing them high standards in a safe and modernised home.
As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.
So only you, the reader, can decide if buy-to-let is immoral, but first let me ask this question:
If the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade… where would these tenants be living now?
The alternative doesn’t even bear thinking about!
Have you enjoyed my two part blog series on the buy-to-let market? Let me know on Twitter or Facebook.
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