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”
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!
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.
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
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.
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