Decreasing Numbers of Younger Homeowners in Shefford

184 graphic one

Tom Smith, 35-year-old father of two from Shefford, was out house hunting.  It was a pleasant August Saturday afternoon and our man cycles along on his bike. He cycles up a street of small cottages, where he spots a few retired mature neighbours, chatting to each other over the garden fence. He leans his bicycle against a lamppost and launches softly into his property search.

Anyone on the road contemplating moving?” Tom asks, “I am not a landlord or developer, I’m just a Shefford bloke trying to get out of renting, buy a house, do it up and live in it with my wife and two children

The only way I will leave here is in a box”, answers an 80-something lady, wearing her fading Paisley patterned housecoat from the 1970’s.

I‘ve lived here since before you were born, its lovely up here .. we aren’t moving, are we Doris?” (as her neighbour sagely shook his head at his wife).

Tom, like many Shefford people born in the late 1970’s to the early 1990’s, is keen to get a slice of prime Shefford real estate. Yet people like Tom in Generation Y (or the Millennials as some people call them i.e. born between 1977 and 1994 and needing family housing now) are discovering, as each year passes by, they are becoming more neglected and ignored when it comes to moving up the property ladder.

Looking at the graph for the UK as whole …

 

184 FIXED GRAPH.png

 

Over 75 percent of Brits aged 65 and above (the baby boomers) are owner-occupiers, the biggest share since records began and a proportional rise of over 48.3% since the early 1980’s. Looking at those Baby Boomers (the current 65+year olds)  .. and roll the clock back 36 years (to when they were in their 30’s and 40’s and two thirds (65.6%) of them owned their own home.

Whilst today, just under a half of 25 to 49 year olds (47.3%) own their own home.

However, the biggest drop has been in the 18 to 24-year old’s, where homeownership has dropped from a third (32%) in the 1980’s to less than one in ten (8.9%) today. Looking at the Shefford statistics, the numbers make even more interesting reading.

 

184 table shefford

 

184 graph 2 shefford

 

Government policy contributes to the generational stalemate. Stamp Duty rules prevent older Brits from moving as the price of land and planning rules make it harder to build affordable bungalows that are attractive to members of the older generation who want to move.

The average value of an acre of prime building land in the UK is between £750,000 and £800,000 per acre. Bungalows are the favoured option for the older generation, but the problem is bungalows take up too much land to make them profitable for new homes builders. The housing market is gridlocked with youngsters wanting to get on (then move up) the property ladder whilst the older generation, who want to move from their larger houses to smaller, more modern bungalows, can’t. The problem is – there simply aren’t enough bungalows being built and the high price of land, means they are prohibitive to build.

So, what is my point? Well, all I would say to the homeowners of Shefford is that one solution could be to start to talk to your local councillors, so they can mould the planners’ thoughts and the local authority thinking in setting land aside for bungalows instead of two up two down starter homes? That would free the impasse at the top of the property ladder (i.e. mature people living in big houses but unable to move anywhere), releasing the middle aged gridlocked people in the ladder to move up, thus releasing more existing starter homes for the younger generation.

To Tom, the wandering new home searcher – if things are going to change, it will be years before they do so keep going out and spreading the word of your search for a new home for your family.

 

 

Shefford Property Market and Mysterious Politics of the General Election

180.png

The dust has settled 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.

Housing has always been the Cinderella issue at General Elections.  Policing, NHS, Education, Tax and Pensions etc., are always headline grabbing stuff and always seem to go ‘the ball’. However, housing, which affects all our lives, always seems to get left behind and forgotten.

Nonetheless, the way the politicians act on housing can have a fundamental effect on the wellbeing of the UK plc and the nation as a whole.

One policy that comes to mind is Margaret Thatcher’s Council House sell off in the 1980’s, when around 1.4m council houses went from public ownership to private ownership.  It was a great vote winner at the time (it helped her win three General Elections in a row) but it has meant the current generation of 20 somethings in Shefford (and elsewhere in the Country) don’t have that option of going into a council house.  This has been a huge contributing factor in the rise of the private renting and buy to let in Shefford over the last 15 years.

Nevertheless, looking back to the start of the Millennium, Labour set the national target for new house building at 200,000 new homes a year (and at one point that increased to 240,000 under Gordon Brown for a couple of years).  In terms of what was actually built, the figures did rise in the mid Noughties from 186,000 properties built in 2004 to an impressive 224,000 in 2007 (the highest since the early 1980’s) as the economy grew.

houses

Then the

screen

HIT

It is interesting, that the 2010 Cameron/Clegg government did things a little differently.  The fallout of the Credit Crunch meant a lot less homes were built, so instead of tackling that head on, the coalition side-stepped the target of the number of new homes to build and offered a £400m fund to help kick start the housing market (a figure that was a drop in the ocean when you consider an average UK property was worth around £230,000 in 2010).  The number of new houses being completed dipped from 146,800 in 2011 to 135,500 the subsequent year.

So, one might ask exactly how many new homes do we need to build per year?  It is commonly accepted that not enough new properties are being built to meet the rising need for homes to live in.  A report by the Government in 2016, showed that on average 210,000 net additional households will be formed each year) up to 2039 (through increased birth rates, immigration, people living longer, lifestyle (i.e. divorce) and people living by themselves more than 30 years ago).  In 2016, only 140,600 homes were built … simply not enough!

Looking at the numbers locally in Shefford and the surrounding area, it is obvious to me, that we as an area, are not pulling our weight either when it comes to building new homes. In the 12 months up to the end of Q1 2017, only 1,390 properties were built in the Central Bedfordshire Council area.  Go back to 2009, that figure was 690, 13 years before that in 1997, 1,160 new homes and further back to 1988, 1,170 new homes were built.

 

Shefford 180 graph

 

Who knows if Teresa May’s Government will last the five years?  She will think she has bigger fish to fry with Brexit to get bogged down with housing issues.

Let me leave you with one final thought.  The conceivable rewards in providing a place to live for the public on a massive house building programme can be enormous, as previous Tory PM’s have found out.  Winston Churchill in 1951, asked his Minister for Housing (Harold Macmillan) if he could guarantee the construction of 300,000 new properties a year, he was notoriously told: “It is a gamble—it will make or mar your political career, but every humble home will bless your name if you succeed.”

Isn’t it interesting, that the Tories remained in power until 1964!  Mrs May will have to work out if she wants to be the heiress to Harold Macmillan or David Cameron?

 

 

52.8 miles – The average distance people go to escape living in Shefford

Baldock 170

“How far do Shefford people go to move to a new house?”  This was an intriguing question asked by one of my clients the other week.  Readers of my property blog will know I love a challenge, especially when it comes to talking about the Shefford property market.

 For the majority, the response is not very far.  It is much more common for homeowners and tenants in Great Britain to move across town than to the next town or county.  Until now, it’s been hard to say how many homeowners and tenants moved from and to relatively far away to buy or rent their new home.  However, I carried out some research and requested some statistics from the Royal Mail and what came back was fascinating.

Using statistics for the 12 months up to the middle of Autumn 2016, 204 households moved out of Shefford and the average distance was 52.79 miles, the equivalent of moving from Shefford to Coventry as the crow flies.  The greatest distance travelled was 665 miles, that’s almost 25 marathons, when someone moved to Gorseness in Scotland.

Shefford 170 pic 2

Considering there were 173 property sales in SG17 in the year and countless tenant moves, the numbers seems consistent.  Once you find a town you like, you tend to want to settle down and if you do move, you might only move to a different neighbourhood, a better transport links or to be closer to the school you want to get your children into.  The likelihood is however is that you won’t travel far.

I then turned my attention to people moving into Shefford.  Using the same statistics for the 12 months up to the middle of Autumn 2016, 247 households moved into Shefford and the average distance was 32.90 miles, the equivalent of moving from Newmarket to Shefford, again as the crow flies.  The greatest distance travelled again was 428 miles, that’s the same as 16 marathons when someone moved from Magheragall in Northern Ireland to Shefford.

I have looked at the data of every person moving into Shefford and these have been plotted on a map of the UK. Looking at the map below, it shows exactly where most people come from, when moving into Shefford.  As you can see, there are a high proportion of people moving from London and from the South West.

Shefford 170 pic.3

What does all this mean for the landlords and homeowners of Shefford?

When an agent markets a property for rent or let, it is vital to know the tenant or property buyer well, that the properties they are letting / selling fit those tenants / buyers, so they almost sell themselves.  These days that means not only knowing how many bedrooms, reception rooms a property offers but the budget buyers and tenants want to spend on a property in that area as well as where they come from.

The estate and lettings industry loves the mantra “location, location, location”.  I say it might be helpful to factor in where and how far people are moving from, so the property can be sold or let more easily.  Many say knowledge is power and whilst I do enjoy writing my blog on the Shefford property market, I also use the information to help my clients buy, let and sell well.  So for example, the information gained from this article will enable my team and I to be more efficient in where to direct our marketing resources to ensure we maximise our client’s properties sale-ability or rent-ability.

For more information on the Shefford property market, give us a call on 01462 894565 or pop into the office for a cuppa

What will the General Election do to 3,364 Shefford Homeowners?

168 image

In Shefford, of the 4,816 households, 1,495 homes are owned without a mortgage and 1,869 homes are owned with a mortgage. Many homeowners have made contact me with asking what the General Election will do the Shefford property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 … in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections:

168 Graph One.png

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

I then wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line):

168 Graph Two

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

Finally, what does this mean for the landlords of the 388 private rented properties in Shefford?  As I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Shefford will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Shefford, making it imperative that Shefford landlords are realistic with their market rents.  However, in the long term, as the younger generation still choose to rent rather than buy the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet.  If you want to find out more about the Shefford property market please feel free to pop into the office, call us on 01462 894565 or e-mail us at: lettings@satchells.co.uk.

 

Flipping’ heck! Shefford property values rise by £50.15 a day

158 image3

Investing in Shefford 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 Shefford’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 Shefford, 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 and   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 Shefford property has risen by £91,526 (equivalent to £50.15 a day), taking it to a current average value of £356,900.

Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

cropped-shefford.jpg

However, something I have not   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 Shefford buyer paid £345,000 for a four  bedroom house  in Hoo Road, Meppershall  in April  2016.

Some shots of the property before the work was completed:

Some shots of the property after the work was completed:

Some cosmetic work was done to the property and it has recently been resold  for £390,000 – 13.04% return before costs .

As my article mentioned a few weeks ago, more and more Shefford people maybe giving  up on owning their own home and instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and what would not) make a decent buy to let property in Shefford, then please continue to visit our blog and contact us for any further advice.

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.

Graph 157 Biggleswade

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.

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

Pounds2

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

154 Graph

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?

153 Biggleswade image.png

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

Shefford Graph 2Shefford Graph1

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!