“Who would want to move to Rotherham in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon.
It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Sheffield and this was the earliest he could do.
It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.
For those Rotherham landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the ‘Right to Rent’ rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.
Our landlord from Sheffield wanted to know how much of a real issue was ‘Right to Rent’ in Rotherham. I was able to tell him, the last available figures (from a couple of years ago) show that 99 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Rotherham Metropolitan Borough Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £297,000 to the landlords of the town.
It doesn’t sound a lot when you think there are 109,691 residents in Rotherham Metropolitan Borough Council area, and of those, 100,349 people (or 91.48%) were born in the UK. But Rotherham is a cosmopolitan town as the country of birth of the residents in the Rotherham Metropolitan Borough Council area can be split down as follows:
- UK 48%
- Ireland 30%
- Europe 66%
- Africa 13%
- Middle East and Asia 22%
- Americas and Caribbean 16%
- Australia and Pacific region 04%
However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 2,921 Europeans in the area necessarily have the right to live in the UK either.
In a nutshell, Rotherham landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ….
- UK Passport
- EEA Passport/Identity card
- Travel document or Permanent Residence Card showing indefinite leave to remain
- Paperwork from Home Office stating their Immigration status
- Certificate of registration or naturalisation as a British citizen.
I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.
So what did our landlord do?
Well after our chat, he asked us to find a tenant and manage the property for him – he had been reading the Rotherham Property Blog for a while and because of the knowledge we impart to the landlords of Rotherham, we obviously know what we are talking about. Even better news for him, even though this would cost him agency fees, I was able to get him an additional £35 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.
I had the most interesting chat with a mature couple (in their early/mid 50’s) from near Moorgate Road the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing.
Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Rotherham property market and how they had bought their first property in the town just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.
Their son, like many 20 to 30 year olds in Rotherham, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Rotherham is huge. There are in fact 5,416 private rental properties in Rotherham at the last count, impressive when you consider there are 9,803 council houses in the town. However, let us not forget 27,445 properties are owner occupied (14,482 with a mortgage).
Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.
Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the mid £20,000’s in the Eastwood area of Rotherham (meaning a modest deposit of £1,500 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Rotherham in 1988, the ratio of house prices to salary was 3.56 to 1 in Rotherham … and here was the surprise for both of us, today’s ratio is still only 4.44 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.
Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low … but now it’s the norm.
So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£1,500 in Rotherham as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.
Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you by the right property, at the price, in the right location.
Well as the nights draw in, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me!
Interestingly, the game was originally invented at the turn of the 20th Century (in 1903) and the game was initially called ‘The Landlord’s Game’! Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.
So whether you are a homeowner or landlord in Rotherham, what would a Monopoly board look like today in the town? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Rotherham today.
Initially, I have focused on the S60 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Rotherham today would be Winifred Street, with an average value £53,400 (per property) and Whitechapel Road would be Duncan Street, which would be worth £55,100. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at S60, Park Lane would be Queensway at £368,700 and Mayfair would be Guiltwaite Hill at £505,400. Also, I can’t forget the train stations (my favourite squares), and over the last 12 months, the average price that property within a half a mile of the station sold for was £74,780.
So that got me thinking what you would have had to have paid for a property in Rotherham back in 1935, when the game originally came out?
- The average Rotherham detached house today is worth £223,920 would have set you back 405 Pounds 2 shillings and 9 old pence.
- The average Rotherham semi detached house today is worth £124,040 would have set you back 224 Pounds 8 shillings and 6 old pence.
- The average Rotherham terraced / town house today is worth £87,580 would have set you back 158 Pounds 9 shillings and 2 old pence.
- The average Rotherham apartment today is worth £103,670 would have set you back 187 Pounds 11 shillings and 5 old pence.
If that sounds like another currency, you must be in your 20’s or 30’s, because it was back in February 1971, that Britain went decimal and hundreds of years of everyday currency was turned into history overnight. On 14th of February of that year, there were 12 pennies to the shilling and 20 shillings to the pound. The following day all that was history and the pound was made up of 100 new pence.
Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Rotherham property market, you should consider the Rotherham property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.
As I reminded a soon to be first time landlord from Whiston the other week, Buy to let in Rotherham (as in other parts of the Country) is very different from owning your own home. When you become a Rotherham landlord, you are in essence running a small business – one with important legal responsibilities. On that note, I want to remind landlords of the recent and future changes in legislation when it comes to buy to let. This year, rules have changed about tenant deposits, carbon monoxide detectors and early in the New Year, landlords will have responsibilities to do immigration checks on all their tenants. Failure to adhere to them will mean a minimum of heavy fines in the thousands or in some cases, prison … it’s a mine field! That’s why I write the Rotherham Property Blog, where it has an extensive library of articles like this one, where I talk about what is happening in the Rotherham property market, what to buy (and sometimes not) in Rotherham and everything else that is important to know as a Rotherham landlord. Please visit the Rotherham Property Blog
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!
Many landlords have been asking me my thoughts on the Rotherham property market recently, and in particular, what is happening to property values.
My calculations show property values in Rotherham quite interestingly dropped in the month of September by 0.9%. When one looks at the annual growth, Rotherham values are 0.5% higher (when comparing Sept 14 to Sept 15), impressive when you consider the annual growth of property values dropped to only 0.1% per annum in March. On the other hand, there are signs that the fundamental growth of property values in Rotherham has now peaked, despite those average property values being below levels recorded in 2007 (just before the 2008 crash).
Whilst the Rotherham headline rate appears to be better, i.e. the year on year (Sept 14 to Sept 15) growth rate of 0.5% is obviously better than the drop to 0.1% in March 14 to May 15), this impressive rise of Rotherham property values masks the underlying truth in what is really happening to local property values in the town. Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature. For example,
· September 2015 0.9% drop
· August 2015 0.7% rise
· July 2015 0.9% rise
· June 2015 0.3% drop
· May 2015 1.3% rise
· April 2015 0.4% rise
· March 2015 1.6% drop
This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).
The outlook for the Rotherham property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Rotherham property values are still running ahead of salaries and average property values are 18.7% below the levels recorded in 2007.
Talking to fellow property professionals in the town, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.
Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Rotherham Synchronised Swimming team at the Rotherham Leisure Complex Swimming Pool! Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s. Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Rotherham property values are 0.5% higher than a year ago (as mentioned above), Sheffield property values are 4.2% higher than a year ago, yet Barnsley’ s is 2.4% higher. (Time to bag some bargains me thinks!)
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!
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