How the rented sector has transformed the property market in Shefford

People

The Shefford housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Shefford tenants and Shefford 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 Shefford population.

In 1981, the population of Central Bedfordshire stood at 211,700 and today it stands at 274,000.

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Currently, the private rented (B-T-L) sector accounts for 9.64% 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.

64.03% Shefford people owned their own home in 1981

26.28% Shefford people rented from the Council or Housing Association in 1981

9.44% Shefford people rented from a private landlord  in 1981   

 

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 Central Bedfordshire set to grow to 349,266 by 2037 – it is imperative that Central Bedfordshire 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 (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, 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 home builders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Shefford 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 Shefford 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 Shefford and Central Bedfordshire, be it B-T-L or B-T-R, has the prospective to play a very positive role.

Modern apartment in Shefford – great rental potential!

This property has gone onto the market with Country Properties in Shefford.  Priced sensibly at £191,000, making it an ideal purchase for an investor with a potential yield pushing 5.3%.  View ASAP before it goes.  Take a look at their advert here and give them a call quick!

Shefford First Time Buyers borrow £3.2m in the last 12 months

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Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Shefford property market, not just from your point of view, but also from every player’s point of view. Over the last 12 months, 235 properties have sold (and completed) in Shefford, worth £75.5m. Interestingly the number of properties changing hands in Shefford has also dropped when compared to a decade ago.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Shefford buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Shefford property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

Q4 2015 – £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 – £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 – £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 – £827m buy-to-let mortgages vs £1.42bn for first time buyers

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When looking at the figures for Shefford itself, first time buyers have borrowed more than £3.2m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Shefford economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at Shefford, at this moment in time there are 47 properties for sale, compared to 35 properties a year ago. All this will be welcome news amongst Shefford first-time buyers with a combination of a proportional reduction in new investors and landlords.

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.

With 1,610 people in Private Rented Properties in Shefford- Should you still be investing in Shefford Buy To Let?

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If I were a buy to let landlord in Shefford 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 Shefford 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 Shefford property prices do drop, the downside to that is that first time buyers could be attracted back into the Shefford property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Shefford landlord, almost a blessing in disguise.

Shefford has a population of 11,868, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Shefford 153 Table

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Yields will rise if Shefford 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 Shefford landlords add to their portfolio. Rental demand in Shefford is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Shefford landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

At a recent party, I got chatting with a couple in their mid/late twenties, both have decent jobs in Shefford 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 40 something, 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 11.9% of Shefford 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 Shefford– 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!

Shefford’s ‘Generation Trapped’ and the £607.6M legacy

Generation Trapped Pic 3

Last week, I wrote an article on the plight of the Shefford 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Shefford homeowners and Shefford landlords alike, as I discussed a couple of months ago, is our mature members of the population of Shefford. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Shefford were sitting on £322.5m of residential property … however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Shefford people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.

In Shefford, there are 454 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £160.4m. There are an additional 353 mortgage free Shefford households, owned by 50yr to 64yr olds, worth £124.7m in today’s prices, meaning…

Shefford Baby Boomers and Shefford OAP’s are sitting

on £607.6m worth of Shefford Property

Shefford 156 Graph

These Shefford Baby Boomers and OAP’s are sitting on 1,720 Shefford properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to de-clutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Shefford (and the Country) homeowners to downsize at the right time will also enable younger Shefford people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Shefford and the Planning Dept. should play their part, as should landlords and property investors to ensure Shefford’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.

Property of the week – Shefford. High specification two bedroom apartment….

Front Elevation

Take a look at our latest property of the week video in which we look at a luxury two bedroom apartment in a popular “River View” development.  This apartment will appeal to investors and first/second time buyers alike and at £199,950 the potential rental yield is around 5%.    Call Satchells on 01462 813235 to view ASAP!

41 properties a year need to be bought in Shefford to satisfy tenant demand!

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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 Shefford (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 Shefford 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 Shefford. 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 Shefford (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Shefford population choose to be tenants as it better suits their plans and lifestyle. Local Government in Shefford (including the planners – especially the planners), land owners and landlords need an adaptable Shefford residential property sector that allows the diverse choices of these Shefford 20 and 30 year old’s to be met.

This means, if we applied the same percentages to the current 1,610 Shefford tenants in their 678 private rental properties, 618 tenants have no plans to ever buy a property – good news for the landlords of those 260 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Shefford in the next 12 months?

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Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Shefford, we will in fact need an additional 325 private rental properties over the next eight years (or 41 a year) … meaning the number of private rented properties in Shefford is projected to rise to an eye watering 1,008 households.

Investment property of the week -Shefford

A high specification one bedroom apartment which for a landlord investing is well worth considering. For more information please visit our website at www.satchells.com or contact our Shefford office on 01462 813235. Click this link to see video in YouTube: https://youtu.be/J5n2gsNHCgk

Immaculate “nearly new” three bedroom house in Shefford

Harrow Way

Our Satchells sales team in Shefford are advertising this attractive and “nearly new” three bedroom property for sale at £289,950.  This a property a tenant can literally move their furniture into – rental yield of around 4%.  Take a look at the advert here  and call our sales team on 01462 813235.

Superb top floor flat in Shefford with great rental potential!

River View1

Our Satchells sales team in Shefford have just started marketing what looks like a fantastic one bedroom top floor apartment in a sought after development.  At £175,000 and with potential rental yields of around 5% this is a must see for investors!  Call the Satchells team on 01462 813235.  Take a look at the advert here