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)”
I was having a lazy Saturday morning, reading through the newspapers at my favourite Blueberries coffee shop in Bexhill. I find the most interesting bits are their commentaries on the British Housing Market. Some talk about property prices, whilst others discuss the younger generation grappling to get a foot-hold on the property ladder with difficulties of saving up for the deposit. Others feature articles about the severe lack of new homes being built (which is especially true in Bexhill!). A group of people that don’t often get any column inches however are those existing homeowners who can’t move! Continue reading “23.4% Drop in Bexhill People Moving Home in the Last 10 Years”
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”
50 years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year Sweden switched from driving on the left-hand side to the right-hand side of the road. The average value of a Bexhill property was £3,664, interest rates were at 5.5% and The Beatles released one of my favourite albums – their Sgt Peppers album … but what the hell has that to do with the Bexhill property market today?? Quite a lot actually … so with my CD Player turned up loud – let me explain my friends!
I have been doing some research on the current attitude of Bexhill first-time buyers. First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). If they buy, demand for Bexhill property goes up for starter homes and that enables other Bexhill homeowners to move up the property ladder.
In November 2015, George Osborne disclosed plans to restrain the buy-to-let (BTL) market, implying its growing attractiveness was leaving aspiring first time buyers contesting with landlords for the restricted number of properties on the market. One of things he brought in was that tax relief on BTL mortgages would be capped, starting in April 2017.
In November 2015, George Osborne disclosed plans to restrain the buy-to-let (BTL) market, implying its growing attractiveness was leaving aspiring first time buyers contesting with landlords for the restricted number of properties on the market. One of things he brought in was that tax relief on BTL mortgages would be capped, starting in April 2017. Before April 2017, a private landlord could claim tax relief from their interest on their BTL mortgage at the rate they paid income tax – (i.e. 20% basic /40% higher rate and 45% additional rate).
So, for example, let’s say we have a Bexhill landlord, a high rate tax payer who has a BTL investment where the rent is £900 a month and the mortgage is £600 per month. In the tax year just gone (16/17), assuming no other costs or allowable items …
- Annual rental income £10,800.
- Taxable rental income would be £3600 after tax relief from mortgage relief
- Meaning they would pay £1,440 in income tax on the rental income
And assuming no other changes … the landlord would have income tax liability’s (at the time of writing May 2017) in the tax years of …
- (17/18) £1,800
- (18/19) £2,160
- (19/20) £2,520
- (20/21) £2,880
Landlords who are higher rate tax payers are going to have be a lot smarter with their BTL investments and ensure they are maximising their rental properties full rental capability. However, there is another option for landlords.
The Bexhill landlords who own the 3,489 Rental properties
in the town could set up a Limited Company and sell their
property personally to that Limited Company
In fact, looking at the Numbers from Companies House – many landlords are doing this. In the UK, there are 93,262 Buy To Let Limited Companies, and since the announcement in November 2015 – the numbers have seen a massive rise.
- Q2 2015 / Q3 2015 – 4,193 Buy to Let Limited Companies Set Up
- Q4 2015 / Q1 2016 – 5,403 Buy to Let Limited Companies Set Up
- Q2 2016 / Q3 2016 – 3,007 Buy to Let Limited Companies Set Up
- Q4 2016 / Q1 2017 – 7,149 Buy to Let Limited Companies Set Up
So, by selling their buy to let investments to their own limited company, owned 100% by them, these landlords could then offset the costs of running their BTL’s as an ‘allowable expense’ – effectively writing off the cost of 100% of their mortgage outgoings, wear and tear and upkeep, letting agent’s fees etc.
I am undeniably seeing more Bexhill landlords approach me for my thoughts on setting up a BTL limited company, so should you make the change to a limited company?
In fact, I have done some extensive research with companies house in the 15 months (1st January 2016 to 31st March 2017 and 136 Buy To Let Limited Companies have been set up in the TN postcode alone).
Well if you are looking to hold your BTL investments for a long time it could be very favourable to take the short-term pain of putting your BTL’s in a limited company for a long-term gain. You see, there are huge tax advantages to swapping property ownership into a limited company but there are some big costs that go with the privilege.
On a more positive note, what I have seen though by incorporating (setting up the Limited Company) is landlords can roll up all their little buy to let mortgages into one big loan, often meaning they obtain a lower interest rate and the ability to advance new purchase capital. Finally, if the tax liability is too high to swap to a limited company, some savvy buy to let investors are leaving their existing portfolios in their personal name whilst purchasing any new investment through a limited company? Just an idea (not advice!).
It’s vital that landlords get the very best guidance and information from tax consultants with the right qualifications, experience and insurance. Whatever you do, always get the opinions from these tax consultants in writing and you shouldn’t hurry into making any hasty decisions. The modifications to BTL tax relief are being progressively eased in over the next three years so there is no need to be unnerved and rush into any decisions before finding out the specifics as they relate precisely to your personal situation, because with decent tax planning (from a tax consultant) and good rental / BTL portfolio management (which I can help you with) … whatever you do – let’s keep you the right side of the line!
According to the Land Registry’s latest House Price Index for Bexhill and the surrounding locality, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.
Values of apartments in Bexhill have increased by 8.22% over the past year, which is proportionally 20% more than the Bexhill average rise of 6.85%. The last time flats/apartments in Bexhill out performed all the other types of property, by such a gulf, was back in winter 2002/spring of 2003. For comparison, the other property types performed as follows…
- Detached homes rose by 6.38%
- Semi-detached homes rose by 6.35%
- Terraced/Town-Houses rose by 6.24%
This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Bexhill property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Bexhill on a number of occasions in my Bexhill Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.
The average property value in Bexhill now stands at £272,900.
When split down into property types…
- Bexhill Apartments at £170,400
- Bexhill Detached at £381,400
- Bexhill Semi-Detached at £250,600
- Bexhill Terraced/Town-House at £212,000
So why have Bexhill apartments performed so well, and is it just a Bexhill thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.
So, should Bexhill apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Bexhill house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.
Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.
So, what next for the Bexhill Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.
I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all. HMS Bexhill Property Market…. “Nice and steady as she goes”, says the Captain
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
The Bexhill housing market has gone through a sea change in the past decades with the Buy-to-Let (BTL) sector evolving as a key trend, for both Bexhill tenants and Bexhill 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 Bexhill population.
In 1981, the population of Rother stood at 76,500 and today it stands at 92,900
Currently, the private rented sector accounts for 17.3% 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 home ownership, a different story is told.
71.8% Bexhill people owned their own home in 1981 whilst 16.13% Bexhill people rented from the Council or Housing Association in 1981 and 12.07% Bexhill 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 Rother set to grow to 109,000 by 2037 – it is imperative that Rother District Council and Central 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 (BTR) sector (instead of the BTL sector). These include allowing local authorities to proactively plan for BTR schemes, and making it simpler for BTR developers to offer inexpensive private rented homes.
To do this, the government will invent a distinct affordable housing class for BTR, 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 Bexhill 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 from click and collect, Amazon, dating apps and TV with the likes of Netflix. Many Bexhill youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.
Private rented housing in Bexhill and Rother, be it BTL or BTR, has the prospective to play a very positive role.
Old Town image courtesy of Sharon Webster