Bexhill Homeowners Are Only Moving Every 14 Years (part 2)

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)”

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23.4% Drop in Bexhill People Moving Home in the Last 10 Years

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”

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Slowing Bexhill Property Market? Yes and No!

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!”

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The Unfairness of the Bexhill Baby Boomer’s £3,403,330,000 Windfall? (Part 1)

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)”

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Bexhill Property Market and Mysterious Politics of the General Election

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”

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How The Rented Sector Has Transformed The Property Market In Bexhill

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

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‘Generation Rent (Forever)’ – 2,832 Bexhill Tenants have no intention of ever buying a property to call home

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).

Continue reading “‘Generation Rent (Forever)’ – 2,832 Bexhill Tenants have no intention of ever buying a property to call home”

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With 7,376 people in Private Rented Properties in Bexhill – Should you still be investing in Bexhill Buy-To-Let?

If I were a buy-to-let landlord in Bexhill today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy-to-let. To add insult to injury, Brexit has caused a tempering of the Bexhill property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Bexhill property prices do drop, the downside to that is that first time buyers could be attracted back into the Bexhill property market; meaning less demand for renting which means meaning achieved rents could go down.

Yet, before we all run for the hills, all these things could be serendipitous to every Bexhill landlord, almost a blessing in disguise.

Bexhill has a population of 41,203, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Bexhill – Accommodation Type and the Number of Occupiers
Owned outright – Bexhill Owned with a mortgage – Bexhill Shared ownership (part owned and part rented) – Bexhill Social rented (aka Council Housing) –  Bexhill Private rented – Bexhill Living rent free – Bexhill
15,839 13,447 223 3,960 7,376 358
38.4% 32.6% 0.5% 9.6% 17.9% 0.9%

Yields will rise if Bexhill property prices fall, which will also make it easier to obtain a buy-to-let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Bexhill landlords add to their portfolio. Rental demand in Bexhill is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Bexhill landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I have just come back from a visit to my wife’s relations after a family get together. I got chatting with my wife’s nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Bexhill and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a home owner and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

So, as 17.9% of Bexhill people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Bexhill – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch – there is nothing like bricks and mortar!

For more views and opinions on the Bexhill Property Market – visit the Bexhill Property Market Blog at www.bexhillpropertyblog.com

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Private renting in Bexhill set to hit 4,919 households by 2021 – Is Buy to Let Immoral? (Part 1)

Can we blame the 55 to 70-year-old Bexhill citizens for the current housing crisis in the town?

Also known as the ‘Baby Boomer Generation’, these Bexhill people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.

Yet some have suggested these Bexhill baby boomers have and are making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.

Between 2001 and today, average earnings rose by 65%, but average Bexhill house prices rose by 121.3%

Continue reading “Private renting in Bexhill set to hit 4,919 households by 2021 – Is Buy to Let Immoral? (Part 1)”

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Bexhill-On-Sea Landlords and Tenants: What does the Tenant Fee Banning order mean for you?

  • Tenant fees set to banned within 12 to 18 months
  • Concern this may cause rents to rise as those fees are passed to landlords
  • Landlords won’t be worse off – and neither will tenants or agents

Our new Chancellor of the Exchequer, Phillip Hammond, revealed a ban on tenant fees in his first Autumn Statement on Wednesday. What does this actually mean for Bexhill-On-Sea tenants and landlords?

The private rental sector in Bexhill-On-Sea forms an important part of the local housing market and the engagement from the chancellor in Wednesday’s Autumn Statement is a welcome sign that it is recognised as such. I have long supported the regulation of lettings agents which will ensconce and cement best practice across the rental industry and, I believe that measures to improve the situation of tenants should be introduced in a way that supports the growing professionalism of the sector. Over the last few years, there has been an increasing number of regulations and legislation governing private renting and it is important that the role of qualified, well trained and regulated lettings agents is understood.

Great News for Bexhill-On-Sea Tenants

So, let’s look at tenants first- surely this is great news for them, isn’t it?

Although I can see prohibiting letting agent fees being welcomed by Bexhill-On-Sea tenants, at least in the short term, they won’t realise that it will rebound back on them.

First up, it will take between 12 and 18 months to ban fees, as consultations need to take place and then it will take an Act of Parliament to implement the change. A prohibition on agent fees may preclude tenants from receiving an invoice at the start of the tenancy, but the unescapable outcome will be an increase in the proportion of costs which will be met by landlords, which in turn may be passed on to tenants through higher rents.

Published at the same time as the Autumn Statement, hidden in the Office for Budget Responsibility’s Economic and Fiscal Outlook on the Autumn Statement (The Office for Budget Responsibility being created by Government in 2010 to provide independent and authoritative analysis of the UK’s public finances), it said on Wednesday …

“The Government has also announced its intention to ban additional fees charged by private letting agents. Specific details about timing and implementation remain outstanding, so we have not adjusted our forecast. Nevertheless, it is possible that a ban on fees would be passed through to higher private rents”

The charity Shelter and Scotland

Scotland banned letting fees in 2012 and the charity Shelter have been a big voice in persuading and lobbying the Government since it managed to persuade the Scottish Parliament to ban fees in 2012. On all the TV and radio shows at the moment, they keep talking about their Independent Research, which they said showed that:

“Renters, landlords and the industry as a whole had benefited from banning fees to renters in Scotland. It found that any negative side-effects of clarifying the ban on fees to renters in Scotland have been minimal for letting agencies, landlords and renters, and the sector remains healthy.”

Going on:

“Many industry insiders had predicted that abolishing fees would impact on rents for tenants, but our research show that this hasn’t been the case. The evidence showed that landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK. It found that where rents had risen more in Scotland than in other comparable parts of the UK in 2013, it was explained by economic factors and not related to the clarification of the law on letting fees”

Only yesterday Shelter were quoting this research from December 2013 to say rents never went up following the tenant fee ban in Q4 2012. I have read that research and I agree with that research, but it was published three years ago, only 12 months after the ban was put into place.

I find it strange they don’t seem to mention what has happened to rents in Scotland in 2014, 2015 and 2016 because that tells us a completely different story!

What really happened in Scotland to rents?

I have carried out my research up to the end of Q3 2016 and this is the evidence I have found…

In Scotland, rents have risen, according the CityLets Index by 15.3% between Q4 2012 and today

scotland-graph

(CityLets are the equivalent of Rightmove North of the Border – which means that they have plenty of comparable evidence to back up their numbers).

When I compared the same time frame, using Office of National Statistics figures for the English Regions between 2012 and 2016, this is what has happened to rental prices:

North East 2.1% increase
North West 2.4% increase
Yorkshire and The Humber 3.2% increase
East Midlands 5.9% increase
West Midlands 5.5% increase
East of England 7.0% increase
South West 5.8% increase
South East 8.2% increase
London 10.5% increase
Scotland  15.3% increase 

Are you really telling me the Scottish economy has outstripped London’s over the last 4 years? Is anyone suggesting Scottish wages and the Scottish economy have boomed to such an extent in the last 4 years they are now the powerhouse of the UK?  because if they had, Nicola Sturgeon would have driven down the A1 within a blink of an eye, to demand immediate Independence.

So, what will happen in the Bexhill-On-Sea Rental Market in the short term?

Well nothing will happen in the next 12 to 18 months … it is business as usual!

and the long term?

Rents will increase as the fees tenants have previously paid will be passed onto Landlords in the coming few years. Not immediately …but they will.

As a responsible letting agent, I have a business to run. It takes, according to ARLA, (Association of Residential Letting Agents) on average 17 hours work by a letting agent to move a tenant into a property. We need to complete a whole host of checks prescribed by the Government; including a Right to Rent check, Money Laundering checks, Legionella Risk Assessments, Gas Safety checks, Affordability Checks, Credit Checks, Smoke Alarm checks, Construction (Design & Management) Regulations 2007 checks, compliance with the Landlord and Tenant Act, registering the deposit so the tenants deposit is safe and carry out references to ensure the tenant has been a responsible tenant in previous rented properties.

All of which the vast majority of lettings agents take very seriously and are expected to know inside out making us the experts in our field. Yes, there are some awful agents who ruin the reputation for others, but isn’t that the case in most professions?

However, business is business and no landlord, no tenant and no letting agent does work for free.

I, along with every other Bexhill-On-Sea letting agent should consider passing some of that cost onto my landlords in the future. Now of course, landlords would also be able to offset higher letting charges against tax, but I wouldn’t want them out of pocket, even after the extra tax relief.

So, what does this all mean for the future?

The current application fee for a single person at my lettings agency, Redwell Estates, is £150 and for a couple £250 meaning on average, the fee is around £200 per property.

I am part of a group of 500+ Letting Agents, and recently we had to poll to find the average length of tenancy in our respective agencies. The Government says its 4 years, whilst the actual figure was nearer one year and eleven months, so let’s round that up to two years.

That means £200 needs to found in additional fees to the landlord, on average, every two years.

In Actual Pound Notes

graph

In 2005, the average rent of a Bexhill Property was £726 per month and today it is £891 per month, a rise of only 22.6% (against an inflation rate (RPI) of 38.5%).

Using the UK average management rates of 10%, this means the landlord will be paying £1069 per annum in management fees.

If the landlord is expected to cover the cost of that additional £200 every two years, rents will only need to rise by an additional 2% a year after 2018, on top of what they have annually grown by in the last 5 years.

So, if that were to happen in Bexhill-On-Sea, average rents would rise to £1092 per month by 2022 (see the red line on the graph) and so the landlord would pay £1310 per annum in management fees which would go towards covering the additional costs without having to raise the level of fees.

but is that bad news for Bexhill-On-Sea Tenants?

Quite the opposite. If the average rent Bexhill-On-Sea tenants pay had risen in line with inflation since 2005, that £726 per month would have risen today to an average of £1006 per month. (Remember, the average today is only £891 per month). Even if inflation remains at 2% per year for the next six years, the average rent would be £1092 per month by 2022 meaning even if landlords increase their rents to cover the costs tenants are still much better off.

Conclusion

The banning of letting fees is good news for landlords, tenants and agents.

It removes the need for tenants to find lump sums of money when they move. That will mean tenants will have greater freedom to move home and still be better off in real terms compared to if rents had increased in line with inflation.

Landlords will be happy as their yield and return will increase with greater rents whilst not paying significantly more in fees to their lettings agency. Letting Agents who used to charge fair application fees won’t be penalised as the rent rises will compensate them for any losses.

And finally, to those Letting Agents that charged the silly high application fees … well that’s their problem. At least I know I can offer the same, if not a better service to both my landlords and tenants in the future considering this announcement from Phillip Hammond.

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