67.9% of Rotherham Voters voted to leave the EU – What now for the 32,861 Rotherham Landlords and Homeowners?

67.9% of Rotherham Voters voted to leave the EU – What now for the 32,861 Rotherham Landlords and Homeowners?

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made .. what next for the 27445 Rotherham homeowners especially the 14482 of those Rotherham homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

Rotherham Referendum Vote

Rotherham Property Values

Rotherhamproperty values will probably drop in the coming 12 to 18 months – but by 18% – I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.

Since the last In/Out EU Referendum in June 1975, property values in Rotherham have risen by 1189.2%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The Rotherham landlords of the 4,701 Rotherham buy to let properties have nothing to fear neither, nor do the 11,612 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of your Rotherham property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

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7.4% slump in Central Rotherham Property Transactions

7.4% slump in Central Rotherham Property Transactions

In this post credit crunch world of sub-terrain low interest and annuity rates so low a limbo dancer would smart, the growth of buy to let since 2009 has been phenomenal. So much so, there has been an evolution in purchase of property in the UK from that of just buying the roof over one’s head to that of a buy to let investment where it is seen as a standalone financial asset to fund current and future (ie pensions) investment. So recently, a few days before the release of latest Land Registry data of property transactions, quite a few market commenters were anticipating a huge increase in the number of properties sold in January as the 1st of April 2016 stamp duty deadline got closer.

Looking at the most recent set of data from The Land Registry, it seems there has been a rise in the number of completed property sales in the Rotherham Metropolitan Borough Council area. Year on year, completed property sales in January (the latest set of data released) rose by 16.85% to 208 compared with 178 in January 2015. Nationally though the number of completed house sales fell by 5% in January 2016 compared with January 2015. So, some might say this bucks the trend that there was a rush by landlords to buy ‘buy to let’ property ahead of the 1st April 2016 deadline …

But, looking closer to home though, in the S60 postcode in January 2016, 25 properties changed hands, whilst 27 properties did so in January 2015. It’s even more interesting when you look at the average price paid, in January 2016, it was £154,019 yet in January 2015, the average price paid was £165,536.

Is the buy to let dream over for Rotherham landlords?

.. but as ever my Rotherham Property Blog readers, the devil is in the detail. The 3% stamp duty surcharge for buy to let landlords was announced in the Autumn Statement on the 25th November 2015. Anyone who has bought a property knows from their offer being accepted to receiving the keys and monies paid is a long drawn out affair, taking on average 8 to 12 weeks, as the Land Registry only get notified upon completion of the sale. We also need to factor in that Solicitors seem to have the last two weeks of December off anyway.

So if there was a rush in the last few days of November/early December in the Rotherham property market, we would only see the results of that in the February figures (released in June) and more probably March’s (released in July).

So why all the doom and gloom? Simple .. bad news sells newspapers and gets the headlines. Let’s be honest, the headline to this article is designed to be eye catching. However, when we look at both the bigger and smaller picture; nationally, property values dropped (month on month) by 0.5%; in the Yorkshire and Humber region they dropped 2.6%, whilst in Rotherham they rose by 1.1%. The year on year figures tell a completely different story to that.

Untitled

It just goes to show you should look deeper into something before making a judgment! For more thought provoking commentary on the Rotherham property market keep an eye on our social media pages for blog updates!

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3,265 Rotherham Properties Lie Empty – An Injustice for the 5,371 People on the Council House Waiting List?

3,265 Rotherham Properties Lie Empty – An Injustice for the 5,371 People on the Council House Waiting List?

Easy problems should have easy solutions – shouldn’t they?

Problems like Rotherham’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people … the answer is clearly to build more property in Rotherham – but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions?

Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you (as I did with those at the dinner table).

The most recent set of figures from 2015 state there are 3,265 empty homes in the Rotherham Metropolitan Borough Council area. So it begs the question … why not put them back onto the system and help ease the Rotherham housing crisis? Whilst they stand empty, 5,371 Rotherham households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.

But a different story emerges when you look deeper into the numbers. Of those 3,265 homes lying empty, only 1,132 properties were empty for more than six months. The local authority has to report a property being empty, even if it’s for a week. So many of the Rotherham properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.

And this is where its gets even more interesting. Of the 1,132 long-term vacant properties (those empty more than six months), 426 belong to the council. However, before we all go Council-bashing, anecdotal evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 108,293 properties in the area covered by Rotherham Metropolitan Borough Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Rotherham housing needs.

So what does this mean for all the homeowners and landlords of Rotherham? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.

These are interesting times in the Rotherham property market!

£2,500 Boost to Rotherham First Time Buyers

£2,500 Boost to Rotherham First Time Buyers

There’s a whole legion of wannabe Rotherham first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Rotherham landlords with cash at the ready.

Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Rotherham buy to let landlords has dropped away, in the interim, it offers Rotherham first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

Looking at the average value of a terraced house in Rotherham currently standing at £85,200, that means if our Rotherham FTB went up against a Rotherham landlord, the landlord would have to pay an additional £2,556 in stamp duty. Early anecdotal evidence from fellow property professionals in the town is suggesting landlords are reducing their offers slightly on Rotherham properties to reflect the extra stamp duty.

Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Rotherham property market as a whole.

Since 2011/12, the Rotherham property market has performed very well indeed. Over the last 12 months, £322,602,861 has been spent buying 2,317 Rotherham properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 1.1% higher, yet 5.3% higher year on year. These figures are nowhere near the heady days of 2004 (November to be exact), when Rotherham property prices rose by 28.8% in 12 months.

So as property values in Rotherham (and the UK as whole) start to stabilize and come back to some kind of balance, I am beginning to see savvy landlords view the Rotherham property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading this blog, take advice on what or not to buy and what to pay, meaning Rotherham landlords are being more calculated with their Rotherham BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Rotherham, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

Now I know a lot of Rotherham landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Rotherham investors will return for the right Rotherham property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Rotherham FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!

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Rotherham Property Market in Crisis : Who is to blame?

Rotherham Property Market in Crisis : Who is to blame?

‘An Englishman’s Home is his Castle’ is the phrase that was coined in Victorian times as the UK has a reputation for being a country of homeowners .. but the truth could be further from the point, because in a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

As I mentioned a couple of weeks ago, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation .. so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

When we look at the Rotherham figures of homeownership, looking back to 1991, 53.01% of Rotherham households were owned by the homeowner, whilst 6.18% of Rotherham households were privately rented, whilst the 2011 census showed home ownership in Rotherham had risen slightly to 56.02% and private rented had increased to 12.21%. Much of the recent rise in the occurrence of private renting in Rotherham since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Rotherham Property Market Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Rotherham.

So if you want blame anyone .. blame the Grocer’s daughter from Grantham – Mrs T …. but before you do – do remember in the 1970s, the UK was called the “sick man of Europe” by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9 and if it hadn’t been for her we wouldn’t be where we are today.

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The Rotherham Property Market and £1,300,000,000,000,000,000 in loose change

The Rotherham Property Market and £1,300,000,000,000,000,000 in loose change

The 5th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Rotherham, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Rotherham friends and Rotherham landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Rotherham landlords have been investing some of that cash into Rotherham bricks and mortar, as they search for a low risk investment opportunity.

Buying a Rotherham buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Rotherham house prices have been extraordinarily robust, increasing by over 1413.7% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

.. but before you go out and buy any old Rotherham property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.

Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Rotherham and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in a terraced house on Brown Street, close to Rotherham town centre .. a excellent investment this 2 bed mid terraced house has accommodation over 3 floors, 108 sq metres inside (1162 sq ft in old money) sold in January 2007 for £60,000. In the summer, it only obtained £46,500, a drop of 22.5% or 2.95% a year – a very disappointing result.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Rotherham Property Blog where I have similar articles to this about the Rotherham property market and what I consider to be the best buy to let deals around at any one time in the town, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Rotherham .. you are missing out!

Rotherham Property Deals

Find the latest hot property deals in Rotherham here.


Rotherham Property Market Research

Find the latest hot property deals in Rotherham here.

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