In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 20 years. The biggest reason being that confidence was low and many homeowners didn’t want to sell their home as Bexhill property prices plunged after the onset of the financial crisis in 2008. However, since 2009, the rate of home moving has increased (see the table and graph below), meaning today: Continue reading “Bexhill Homeowners Are Only Moving Every 14 Years (part 2)”
My thoughts to the landlords and homeowners of Bexhill…
The tightrope of being a Bexhill buy-to-let landlord is a balancing act many do well at. Talking to several Bexhill landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does however suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their Bexhill buy-to-let properties. Continue reading “Slowing Bexhill Property Market? Yes and No!”
Recently I was having a chat with one of my second cousins at a big family get-together. The last time I had seen them their children were in their early teens. Now their children are all grown up, have partners, dogs and children. Wow – how time flies!
So, I got talking over a glass of lemonade with my 2nd cousins and a couple of their children, about the times of 15% interest rates and how the more mature members of our family had to endure the 3 day week, 20% inflation and the threat of nuclear annihilation in 4 minutes … so, foolishly, I said what with all the opportunities youngsters had to day, they had never had it so good! Continue reading “The Unfairness of the Bexhill Baby Boomer’s £3,403,330,000 Windfall? (Part 1)”
As the dust starts to settle on the various unread General Election party manifestos, with their ‘bran-bucket’ made up numbers, life goes back to normal as political rhetoric on social media is replaced with pictures of cats and people’s lunch. Joking aside though, all the political parties promised so much on the housing front in their manifestos, should they be elected at the General Election. In hindsight, irrespective of which party, they seldom deliver on those promises. Continue reading “Bexhill Property Market and Mysterious Politics of the General Election”
There are 23.4 million properties in England and Wales with 64% being owner occupied and 36% being in rented either from a private landlord, local authority or housing association.
Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting, nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.
It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards to doing that.
This was a question posed to me on social media a few weeks ago, after an interesting discussion with some clients about our mature members of Bexhill-On-Sea and the fact many retirees feel trapped in their homes. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle around in a big house. Many feel trapped in their big homes (hence I have dubbed these Bexhill home owning mature members of our society, ‘Generation Trapped’).
So, should we force OAP Bexhill homeowners to downsize?
Well in the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s to do so?
One of the biggest reasons OAP’s move home is health (or lack of it).
Looking at the statistics for Bexhill-On-Sea, of the 11,176 homeowners who are 65 years and older, whilst 6,146 of them described themselves in good or very good health, a sizeable 3,806 home owning OAPs described themselves as in fair health and 1,224 in bad or very bad health.
10.95% of Bexhill home owning OAP’s are in poor health
But if you look at the figures for the whole of Rother District Council (not just Bexhill), there are only 696 specialist retirement homes that one could buy (if they were in fact for sale) and 636 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.
My intuition tells me the majority ‘would be’ Bexhill downsizers could certainly afford to move but are staying put in bigger family homes because they can’t find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Bexhill population and specialist retirement properties for the ones who aren’t in such good health … we need to build more appropriate houses in Bexhill.
The Government’s Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offer tax breaks for downsizers. Who knows – but something has to happen?
…and come to think about it, isn’t the word ‘downsize’ such an awful word? I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).
The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Bexhill is … more houses and apartments need to be built in the Bexhill area, especially more specialist retirement properties and bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.
And a message to my Bexhill property investor readers whilst this issue gets sorted in the coming decade(s) – maybe seriously consider doing up older bungalows – people will pay handsomely for them – be they for sale or even rent? Just a thought!
Headline image used with the kind permission of Sharon Glam Ma Webster.
A Bexhill homeowner emailed me last week, following my article posted in the Bexhill Property Blog about the change in attitude to renting by the youngsters of Bexhill and how they thought it was too expensive for first time buyers to buy in Bexhill. There can be no doubt that buy to let landlords have played their part in driving up property values in Bexhill (and the UK) and from that made housing a lot less affordable for the 20 and 30 somethings of Bexhill.
In the email, they said they thought the plight of the first-time buyers in Bexhill was like a novice tennis player, playing tennis with Andy Murray. If you played him once you will unquestionably lose and if you were to play him 100 times you would lose 100 times. That is what they thought it was like for all the 20 something’s first time buyers of Bexhill going against all the buy to let landlords.
They continued by asking 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. So, should BoE be charged with containing buy to let housing market, by possibly changing the rules on the loan-to-value (LTV) ratio’s?
So, let’s look at how affordable Bexhill is? The best measure of the affordability of housing is the ratio of Bexhill Property Prices to Bexhill Average Wages, (the higher the ratio, the less affordable properties are). (i.e. looking at the table below, for example in 2014, the average value of a Bexhill property was 11.82 times higher than the average annual wage in Bexhill).
This deterioration in affordability of property in Bexhill 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! Also, 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 and over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket. Neither, it doesn’t help that the local Authority sold off council houses in the Thatcher years and so for 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 2 bed apartment in Bexhill for around £125,000 and only need to find £6,250 deposit. Yes, a lot of money, but first time buyers need to decide what is important to them.
I think we as a Country have changed … renting is returning to be the norm. So my opinion is, landlords have it tough. Let’s not blame them for the ‘perceived’ woes of the nation … because to be frank … 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 – its only 15.3% nationally.
If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or what not to buy in Bexhill), one source of information is the Bexhill Property Blog at www.bexhillpropertyblog.com
Investing in Bexhill buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the 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, making the investment 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 Bexhill’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 Bexhill, but 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 5 years, an average Bexhill property has risen by £54,600 (equivalent to £29.92 a day), taking it to a current average value of £280,900. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).
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 re selling it quickly). I have seen several investors recently who have made decent returns from this strategy. For example:
- One Bexhill Investor paid £160,000 for a 3 bed terrace on Windsor Road in December 2014. It appears some cosmetic work was done to the property and it was resold a few months ago (November 2016) for £225,000 … 40.63% return before costs (or compound annual return equivalent of 19.24% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=61778042&sale=4689049&country=england
- Another Bexhill Investor flipped a 2 bed terrace on Sidley Street, paying £133,000 in March 2015 and selling it again after some doing some cosmetic works, sold it for £169,500 a few months ago (November 2016) … 26.97% return before costs (or equivalent 15.30% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=56840608&sale=89139900&country=england
This demonstrates how the Bexhill 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 Bexhill landlords and investors to become particularly wealthy.
As my article mentioned a few weeks ago, more and more Bexhill people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to go from strength to strength. If you want to know what (and what would not) make a decent buy to let property in Bexhill, then one place for such information would be the Bexhill Property Blog at www.bexhillpropertyblog.com
The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts … those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?
Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Bexhill (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Bexhill property ladder.
However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Bexhill. Whilst these are important factors and barriers to home ownership, I also believe there has been a generational change in attitudes towards home ownership in Bexhill (and in fact the rest of the Country).
It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.
Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Bexhill are 0.23% down month on month (and the month before that, they had barely grown with an increase of only 0.63%) – so is this the time to panic and run for the hills?
Doom and Gloom then? Well, let me consider the other side of the coin.