Monday, 14 May 2018

Extra Funding Is Required for Affordable Homes in Aylesbury


In my blog about the Aylesbury Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it).

In previous articles, I have spoken at length about the crisis in supply of property in Aylesbury (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.

An efficient and effectual housing market is in everyone’s interests, including Aylesbury homeowners and Aylesbury landlords, so let me explain ..

An average of only 359 Affordable Homes per year have been built by Aylesbury Vale District Council in the last 9 years
The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Aylesbury devoid of the money to allow them a decent standard of housing.
Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Aylesbury tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Aylesbury landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.
Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 home built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year.  As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area.



The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010. 
So, what does this mean for Aylesbury homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Aylesbury landlords find their children are also priced out of the housing market. Also, whilst your Aylesbury home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.
Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Aylesbury housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!

Tuesday, 8 May 2018

Aylesbury Property Market – Asking Prices Up 1.5% in the Last 12 Months


The average asking price of property in Aylesbury increased by 1.5% or £4,422 compared to a year ago, with particularly good demand from landlords and home-movers in the first few months of the year. This takes the current average asking price to £302,133, compared with £297,711 this time last year.

The rise in asking prices is being aggravated by buyers jumping into action looking to benefit from potential stamp duty savings (especially first-time buyers) or beat impending mortgage interest rate rises later in 2018. Of the numerous Aylesbury buyers starting their property hunting in the usually active spring market this year, many face paying even more than ever for the property of their dreams, although as I mentioned a few weeks ago, there are more properties for sale in Aylesbury compared to 12 months ago.

Looking at the different sectors of the Aylesbury property market, splitting it down into property types, one can see what is happening to each sector of the market with regard to their average asking prices now compared to a year ago. Firstly, looking at the Pound note amounts …




Interestingly, when one looks at the percentages, the most upward average asking price pressure is in the semi-detached property type sector.




Now, I must stress this growth in the asking prices of Aylesbury property doesn’t mean the value of Aylesbury property is going up by the same amount ... nothing could be further from the truth.  Only time will tell if the current levels of Aylesbury asking prices is a catch-up abnormality after a couple of months of restrained asking price rises in the first few months of 2018, or is it an initial sign that we are in for a better 2018 Aylesbury Property market than all of us were expecting at the start of the year? 

I believe these asking prices must be viewed with a pinch of salt, as it will be fascinating to see whether Aylesbury properties actually sell at these higher asking prices. Just because house sellers (be they owner-occupiers or landlords liquidating their assets) are asking for more money it doesn’t mean buyers will be enthusiastic to part with their hard earned cash. Like my Mum used to say to me years ago, “You can ask ... but you might not get”.

Also, Aylesbury homeowners and landlords wanting to sell their property need to be aware of progressively strained buyer mortgage affordability and the more those sellers increase asking prices, the more buyers will hit their maximum on the amount they are able borrow on a mortgage.

However, those Aylesbury buyers who need a mortgage (be they owner-occupier or landlord), will paradoxically benefit from lower mortgage payments before interest rates rise … maybe another reason for the uplift in the number first time buyers and landlords buying? Only time will tell!

Tuesday, 1 May 2018

£881 pcm – The Average Aylesbury Rent


The rents paid by Aylesbury tenants are now standing at £881 per calendar month (PCM), a rise of 0.65% year on year and 0.75% higher month on month.

However, this attention-grabbing monthly rent figure masks stark differences in the various different parts of the Aylesbury rental market.  Demand in Aylesbury for high quality family homes with two or three bedrooms in good catchment areas for schools remains really robust due to tenants wanting access to the schools.  Other influencing factors that make certain areas popular are the proximity to transport links. However, I have noticed a drop in demand (and thus rents achieved) for property where the landlord hasn’t kept the property fresh; in terms of decoration, carpets, replacement windows and poor heating.

So, what does all this mean for Aylesbury landlords and tenants?
With the new tax rules for landlords, many believed that the number of rental properties would narrow throughout 2017, as landlords sold up their Buy to let properties and looked to invest their money elsewhere, but evidently this hasn’t happened (yet).  Feasibly Aylesbury landlords are re-mortgaging their Aylesbury buy to let properties instead, as they still believe it’s a safer investment than looking, say at the stock market?
However, demand remained strong in 2017 for Aylesbury private rental properties, meaning the rents being achieved were at a decent level for landlords. Keeping your outgoings low is also an important consideration and so I looked on a well-known financial services comparison site this morning and found a High Street bank offering a 5-year fixed rate for Buy to let landlords with a 40% deposit/equity for 2.17% … I can remember (as I am sure many of my readers of this blog can) when mortgage rates were at 15% - this is cheap money!
Looking at property values in Aylesbury, over the last 12 months and specifically at the lower of the market where buy to let landlords tend to buy their rental properties.  Flats/apartments have fallen in value by 0.15% whilst terraced properties have risen by 0.99%.

Some Aylesbury landlords have seen the yields they are achieving remain squeezed.

However, most landlords can start to feel assured that as capital growth in Aylesbury remains at a more realistic figure (good for long term stability in the property market) and long-term rents are on the rise, the overall corresponding annual return on investment (Annual ROI being annual capital + annual yield) has stabilised in all areas and is now starting to grow.

With additional people seeing renting as a long-term option, even with the challenges of the new tax regime, Aylesbury landlords, with the support of a good advice and opinion, should continue to see renting as a good investment vehicle.

Tuesday, 24 April 2018

Aylesbury Millennials Have Spent £125,840 On Rent By The Age of 35


 The Millennials were born between the mid 1980’s and late 1990’s thus making them between the age of around 22 to late 30’s. They are the imaginative, artistic youngsters who grew up with the newest tech and computers and who are huge aficionados of music festivals, gourmet pizzas, emoji’s, selfies and old school nostalgia. Also known as Generation Rent, many Millennials have discovered that renting is a good choice for their shelter and accommodation needs without the hassle that comes from buying a home. Nonetheless, that is not the only reason they don’t buy property. When they should be concentrating on their profession, putting down roots and starting a family, Millennials are still going through the pressure and strain of student loan liabilities whilst, at the same time, finding it tough to pay rent.
The hot topic at the moment is the cost of renting, as both political parties have seen mileage in wooing these Millennial Generation Renters. The average rent in Aylesbury is currently £881 per month making this a big-ticket item on the monthly budget. I was inquisitive to find out exactly how much Aylesbury Millennials will spend on rent by the time they reach their mid 30’s. The average age people leave home in the UK is 22; so looking at an Aylesbury 22-year-old (or Millennial) who left home in 2005 then between 2005 and today that Aylesbury Millennial will have shelled out £125,840 in rent.
It’s no wonder local Millennials can’t afford to buy an Aylesbury home given their tremendous debt. This means younger Aylesbury Millennials will probably carry on renting for the foreseeable future, simply because the prospect of buying a home is not yet achievable. that is until you look more deeply at the numbers…



Looking at the chart above, the average rent of an Aylesbury property in 2005 was £725 per month (pm)  … if it had risen by inflation, today, that would be £1,021 pm. As I have already mentioned in the article, today it only stands at £881 per month. Looking over the last 12 years, adding up all the differences between what the average actual rent was compared to what it should have been if rent had gone up by inflation, the average Aylesbury Millennial tenant would have paid £137,129.


This means that an average 35-year-old Aylesbury Millennial tenant, who has been renting since 2005, is better off by £11,290 when comparing the actual rent paid compared to what it would have been if it had risen by inflation. In a nutshell, tenants have done well due to the sub-inflation growth in rents.
In fact, if you recall I mentioned in an article a few weeks ago, the older Aylesbury Millennials are starting to use those savings and are gradually shifting towards home ownership. They are finally catching up with the British homeownership dream as Bank of Mum and Dad help with the deposit. Also, the scrapping of Stamp Duty from the Government starts to kick in together with the realisation that if the 5% mortgage deposit can be scrapped together (yes, 95% first time buyer mortgages have been available since 2009), it is still a lot cheaper to buy than rent, meaning this will unquestionably drive demand for Aylesbury homes for sale – good news for Aylesbury homeowners.

… and what does this mean for Aylesbury landlords?

Well the vast majority of younger Millennials are still renters and I foresee this to be the case for at least the next ten to fifteen years. Landlords will need to keep improving their properties to ensure they get the best tenants and they will see a much higher rent achieved. Millennials will pay for a top property. It is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … because as I promised a few weeks ago, the first rule of Buy To Let Investment ….. “You are not going to live in the property yourself”











Thursday, 19 April 2018

Potential for a buy to let investment?

This property seems to have been on the market for a very, very long time but it could be worth a look.

A two bedroom house just off Ellen Road with good links to town, the hospital and Oxford. the property could be the ideal type of property to rent out.

Its marketed by Chancellors with no upper chain and has a guide price of £225,000 but given the length of time this seems to have been marketed for, you might just get a bit of a deal if you are persistent enough.



Rental wise, I would expect this to achieve anywhere between £750pcm 4% gross yield (conservatively) and £800pcm (optimistically).

There must be a reason its sticking around for so long, but the images paint a good enough picture, perhaps its worth a look at in person?

If you do end up looking at this one, I would love to hear your thoughts on it.

Monday, 16 April 2018

Aylesbury Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down ... the Press is full of column inches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.  

… And that made me think … is there just one Aylesbury Property Market or many?

I like to keep an eye on the property market in Aylesbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Aylesbury, be that a buy-to-let property for an Aylesbury landlord or an owner occupier house for a home owner.  So, I thought, how could I scientifically split the Aylesbury housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Aylesbury property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Aylesbury, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile.  Looking at the market, I have calculated that these are the price bands in Aylesbury are as follows:
·       
  Lowest Quartile (lowest 25% in terms of value) … Up to £220,000
·        
Lower/Middle Quartile (25% to 50% Quartile in terms of value) ...  £220,000 to £270,000
·      
   Middle/Upper Quartile (50% to 75% Quartile in terms of value) ... £270,000 to £350,000
·       
  Upper Quartile (highest 25% in terms of value) ... £350,000 Upwards

So, having split the Aylesbury Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening -


The best performing price range in Aylesbury is the lower market. As I would expect, the upper quartile (the top 25%) is finding things slightly tougher. Interestingly for Aylesbury landlords, the middle market isn’t selling as well as the lower sector, so maybe there could be some bargains out there for buy to let investment? Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere). 


It is a fact that British (and Aylesbury’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else ... unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Aylesbury landlord investors to bag a bargain?

Want to know where those Aylesbury buy to let bargains are?  Follow my Aylesbury Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Aylesbury, many local landlords ask me my thoughts, opinion and advice on what (and what not) to buy locally … and I wouldn’t want you to miss out ... would you?










Tuesday, 10 April 2018

50% More Aylesbury Home Owners Wanting to Move Than 12 Months Ago


As I have mentioned a number times in my local property blog, with not enough new-build properties being built in Aylesbury and the surrounding area to keep up with demand for homes to live in (be that tenants or homebuyers), it’s good to know more Aylesbury home sellers are putting their properties on to the market than a year ago.

At the start of 2007 there were 558 properties for sale in Aylesbury but by February 2008, when the credit crunch was really beginning to bite, that number had risen to 1,567 properties on the market at a time when demand was at an all-time low, thus creating an imbalance in the local property market.

Basic economics dictates that if there is too much supply of something and demand is poor (which it was in the Credit Crunch years of 2008/9) … prices will drop. In fact, house prices dropped between 15% and 20% depending on the type of Aylesbury property between the end of 2007 and Spring 2009.

However, over the last five years, we have seen a steady decrease in supply of properties coming onto the market for sale and steady demand, meaning Aylesbury property prices have remained robust.  A stable housing market is one of the foundations of a successful British economy, as it’s all about getting the healthy balance of buyer demand with a good supply of properties. Nevertheless, if you had asked me a couple of years ago, I would have said we were beginning to see there was in fact NOT enough properties coming on to the market for sale … meaning in certain sectors of the Aylesbury property market, house prices were overheating because of this lack of supply.

So, it is pleasing to note, looking at the recent numbers …

There are 50% more properties for sale in Aylesbury today than a year ago

There were 509 properties for sale 12 months ago, and today that stands at 766. Definitely a step in the right direction to a more stable property market.

Even better news, since the Chancellor announced the stamp duty rule changes for first time buyers (FTB), my fellow agents in Aylesbury say that the number of FTB’s registering on the majority of agent’s books has increased year on year. That has still to follow through into more FTB’s buying their first home, however, with the heightened levels of confidence being demonstrated by both Aylesbury house sellers and potential house buyers, I do foresee the Aylesbury Property Market will show steady yet sustained improvement during the first half of 2018.

What does this mean for Aylesbury landlords or those considering dipping their toe into the buy to let market for the first time? Landlords will need to keep improving their properties to ensure they get the best tenants. It is true that demand amongst FTB’s is increasing, albeit from a low base. Even with the new landlord tax rules, buy to let in Aylesbury still looks a good investment, providing Aylesbury landlords with a good income at a time of low interest rates and a roller coaster stock market.

If you are thinking of investing in bricks and mortar in Aylesbury, it is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … and don’t forget the first rule of Buy To Let Investment …..