2018: my thoughts on the future of the Rotherham buy-to-let market

2018: my thoughts on the future of the Rotherham buy-to-let market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due to increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes as Westminster attempts to heighten standards in the Private Rented Sector.

Interestingly, I was chatting with a self-managed landlord from Braithwell, when I was out socially over the festive period, who didn’t realise the other recent legislations that have hit the sector, including the ‘Right to Rent’ regulations which came in to operation last year. Landlords have to certify their tenants have the legal right to live in the UK. This includes checking and taking copies of their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you (as they will with the redress scheme when that is implemented).

If you are a self-managed landlord though, the consequences are severe because if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000.

That same Braithwell landlord popped into my offices in the New Year and I checked all his paperwork and ensured he was on the right side of the law going forward – and I offer the same to any landlord in the Rotherham area if you want me to cast my eye over your buy-to-let matters (and at no cost – ok just bring in some chocolates for those in the office!)

But what of all these extra properties being dumped onto the market in Rotherham?

When I looked at the records the number of properties on the market in Rotherham now, as opposed to a year ago, the numbers tell an interesting story …

Overall, Rotherham doesn’t match the national trend, with the number of properties on the market actually dropping by 14% in the last year. It was particularly interesting to see the number of terraced drop by 16% and the number of detached on the market drop by 27%.

However, speaking with my team and other property professionals in the town, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market.

The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords.

You see, for the last ten years, each month there has always been a small number of Rotherham landlords who have been releasing their monies from their Rotherham buy-to-let properties – as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

What could 2018 look like?

Nevertheless, some Rotherham landlords will want to release the equity held in their Rotherham buy to let properties in 2018.

All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!)

This means you have an empty property, costing you money with no rent coming in.

However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Rotherham area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids).

Please get in touch if you need my help or advice this year. You can also follow the blog on Facebook and Twitter for the latest information!

The most sellable streets in Rotherham…

The most sellable streets in Rotherham…

Towards the end of 2017, on a wet and blustery day in the Lake District, we announced our brand new feature. In 2018 we will be visiting the most sellable streets in Rotherham, giving tips about where is best to own property in our area.

We’ve been looking at Land Registry documents and are pleased to announce that our first video is now live!

Watch it here:

Introducing the 30 most sellable streets in Rotherham

We teased our latest feature at the end of last year but now we're ready to post the first video! Here it is… an introduction to the 30 most sellable streets in Rotherham. Tune in soon as we visit different postcodes in the Rotherham area.

Posted by Rotherham Property Blog on Thursday, 11 January 2018

Be sure to visit our Facebook page to get the latest videos and posts directly to your newsfeed.

Next stop… S63!

 

Are baby boomers to blame for the housing crisis?

Are baby boomers to blame for the housing crisis?

Home ownership for those aged 20-30 in Rotherham has seemed a vague dream. Talk to many of this generation and they have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life. They’re jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Rotherham for say £15,000 in first quarter of 1977, today it would be worth £177,447, a windfall increase of 1082.9%.

But to blame the 60 and 70 year olds of Rotherham for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don’t believe they can be censured or made liable for that.

A few weeks ago, I discussed in my blog the number of people in the Rotherham area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members in our area rattling around in large 4/5 bed houses where the kids have flown the nest years ago… but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970s and 1980s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

So… who is to blame?

Firstly, hyperinflation.

Hyperinflation in the 1970s meant the real value of people’s mortgages was whipped out (as mentioned above).

Secondly, politicians.

In the 1980s Margaret Thatcher sold off millions of council houses and Nigel Lawson delayed ending the MIRAS tax relief in 1987. During the New Labour years, the Blair/Brown combination doubled stamp duty in 1997 and again in 2000. As a tax off property transactions, this precludes a more efficient distributions of the current housing stock – the government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Rotherham house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing.

Are landlords to blame?

I don’t directly blame the multitude of Rotherham buy-to-let landlords, buying up their 10th or 11th property to add to their buy-to-let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

The new breed of Rotherham buy-to-let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Rotherham property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Rotherham housing market is because of these landlords. Yet I believe landlords have been undervalued with the Rotherham homes they provide for Rotherham people.

With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes … homes that were provided to Rotherham by these buy-to-let landlords.

Providing 5,000 new homes for local people

In the Rotherham area there are 714 homes being bought up by buy-to-let landlords each year. One side of the argument is that these houses might otherwise have become available to other buyers. However, the other side of the argument is that the current national average rage deposit in £51,800 – by far the greatest barrier to those wanting to buy their first home. Those homes bought by local buy-to-let landlords are not left idle – they equate to 4,997 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60s/70s/80s, people thought that you were a failure unless you owned your own home. This traditional perspective has now all but disappeared. If you ask many young people they would probably say renting was the perfect option for them at certain times of their life.

Rotherham Apartments: More affordable than you think?

Rotherham Apartments: More affordable than you think?

My research shows that certain types of Rotherham property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Rotherham property values plummet like a lead balloon… the property market had reached a peak with prices for property in Rotherham hitting their highest ever level. Between 2008 and 2010, Rotherham property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Rotherham property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Rotherham flat/apartment stood at £99,623. Today, it has risen to £106,971 – this rise of £7,348 amounts to 7.4%.

However, between 2007 and today, we have experienced total price inflation of 25.97% (according to the Government’s Consumer Price Index). This means that in real spending power terms, our apartments are actually 18.6% more affordable than 10 years before. Looking at it another way, if the average Rotherham apartment (valued at £99,623 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £125,495 (instead of the current £106,971).

Rotherham property is more affordable than many people think

The point I’m trying to get across is that Rotherham property is more affordable than many people think. Rotherham first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Rotherham first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property they will be on to a winner. This is especially true with these ultralow mortgage interest rates – a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Rotherham 20 somethings buying their own home?

Back in the 1960s and 1970s, renting was considered the poor man’s choice in Rotherham (and the rest of the UK). A huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting – meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit those in their twenties are choosing to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Rotherham will continue to rise.

Therefore, everyone in Rotherham has a responsibility to ensure that an adequate number of quality Rotherham rental properties are safeguarded to meet those future demands.

Rising expectations

Interestingly, what I have noticed over the last few years are the expectations of tenants on the finish and specification of their Rotherham rental property.

I have perceived that in the past, what a tenant wanted from their Rotherham rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, the expectations of tenants in Rotherham are becoming more discerning as each year goes by.

I have also noticed the length of time a tenant remains in their Rotherham property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Rotherham landlords not to keep the rental payments at the going market rates – maybe a topic for a future article for my blog?

The bottom line is this… Rotherham landlords will need to be more conscious of the needs and wants of tenants and consider their financial planning for future enhancements to their rental properties over the next five, ten and twenty years (e.g. decorating, kitchen and bathroom suites etc.)

The present-day and future situation of the private rental property market is important, and I frequently liaise with Rotherham buy-to-let investors looking to spread their Rotherham rental-portfolios.

I also enjoy meeting and working alongside Rotherham first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition. If I can help, please get in touch!

This will be my final post of 2017 – I hope you have a great Christmas and New Year. I’ll see you in 2018 for more insights into the Rotherham property market. In the meantime, I’ll be fairly active on social media over the Christmas break so please do follow me if you are interested in keeping up with the latest local news.

Budget Analysis: is there room for 300,000 houses?

Budget Analysis: is there room for 300,000 houses?

The fallout from the recent Budget rolls on! I was chatting to a couple of movers and shakers from our area the other day, when one said, “There isn’t enough land to build all these 300,000 houses Philip Hammond wants to build each year”.

Daily Mail readers may be forgiven for thinking that the UK is at bursting point… but is this true?

The bigger picture

60 years ago the first satellite, Sputnik, was launched. Originally they were used by countries to spy on each other but these days satellites and their high-powered cameras are being used for more peaceful purposes. The European Environment Agency (EEA) have been taking high definition pictures of the UK from outer-space to give us a focused picture of what every corner of the country really looks like… and the findings may come as a surprise.

As my blog readers know, I always like to ask the important questions relating to the Rotherham property market.

If you are a Rotherham landlord or homeowner, this knowledge will enable you to make a more considered opinion on your direction and future in the Rotherham property market.

Like every aspect of all economic life, it’s all about supply and demand, because over the last twenty or so years, there has been an imbalance in the British (and Rotherham) housing market – demand has outstripped supply, meaning the average value of a property in Rotherham has risen by 227.94%. This takes an average value from £40,800 in 1995 to £133,800 today.

Using the information from the EEA and data crunched by the University of Sheffield’s Corine-Land Cover project, I posed them a few questions about the local area, interesting questions I would like to share with you…

1. What proportion of the whole of Rotherham has actually been built on?

21%

That answer surprised you, didn’t it?!

In the study, land classified as ‘urban fabric’ has between 50% and 100% of the land surface built on (meaning up to a half might be gardens or small parks, but the majority is built on).

2. How much land is intensively built on locally?

Of that amount mentioned above, how much of it is high-density urban fabric? (i.e. where 80% to 100% is built on – still leaving 20% for gardens)

The answer: 0.37%

3. So how is the land used locally?

Industry: 5.16%
Sports Facilities: 1.62%
Arable Farmland: 56.27%
The rest: various other minor types (such as mineral extraction, forests, waterways etc)

Greener than you think

Rotherham and the surrounding areas are greener than you think!

In fact, I read that property covers less of the UK than the land revealed when the tide goes out.

The assumption that vast bands of our local area have been concreted over doesn’t stand up to inspection. However, the effect of housing undoubtedly spreads beyond its actual footprint, in terms of noise, pollution and roads.

Now I am not suggesting for one second we concrete over every inch of the locality, but the bottom line is we, as a country, are growing at a quicker rate than the houses we are building.

I appreciate the emotional effect of housing is greater than other land use types because most of us spend the vast majority of our time surrounded by it. As Brits, we live our lives driving along roads, walking on footpaths and working and living in buildings – as a result we tend to considerably overemphasise how much of it there is.

Yet anyone who has looked out of the window of a plane above the country realises how green our country actually is.

The bottom line is this: Rotherham people and the local authorities are going to have to put their weight into building more homes for people to live in.

There is going to have to be some give and take on both sides, otherwise house prices will continue to rise exponentially in the future. It’s about balance but if Rotherham youngsters can’t buy their own Rotherham homes, rents and demand for private rented accommodation in our area will continue to grow exponentially. Not good news for anyone.

That’s why the recent Budget emphasised housebuilding. We clearly have a long way to go, but there definitely is room for those houses to be built – in Rotherham and the rest of the country.

If you live in Rotherham or are interested in the property market, please consider sharing this article to your social media profiles using the links below. You can also follow us on Facebook or Twitter for the most up-to-date Rotherham property news!

Announcing our new feature

Announcing our new feature

Over the next few weeks we’ll be posting several videos identifying the 30 most saleable streets in Rotherham.

It will hopefully prove useful to all those involved in the Rotherham property market.

Watch this announcement video from a very wet Chris who has been away in the Lake District. Make sure you follow us on Facebook so you can see the videos as we post them.

Chris is in the Lakes! Announcing our new feature – the most s…

In the coming weeks we'll be posting a series of videos about the most saleable streets and areas in Rotherham. Useful information for all those interested in the local property market!Here's a video of a very wet Chris in the Lakes introducing this new feature!

Posted by Rotherham Property Blog on Wednesday, 13 December 2017

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