What does this mean for local Landlords and Homeowners?

The balancing act of being a Knutsford Buy To Let landlord is something many do well at. Talking to numerous Knutsford landlords, they are very aware of their tenants’ capability to pay the rent and their own need to raise rents on their rental properties.  Despite the ‘perceived ‘dark clouds of Brexit, evidence suggests many landlords feel more confident than they were in the Summer and Autumn of 2018 about aiming to push rents higher on their Knutsford Buy To Let properties.

Looking at the data for the last 7 years, this shows that throughout the Summer months, the rents new tenants have had to pay on move in have increased at a higher rate than during the colder months of Winter.  This is because the Summer months are normally a time when renters like to move, meaning demand increases for rental properties yet supply remains pretty ridged.

Yet the Winter stats buck that trend and this is great news.

Rents in Knutsford on average for new tenants moving in have risen 0.7% for the month, taking overall annual Knutsford rents 2.9% higher for the year

However, several Knutsford landlords have expressed their apprehension about a slowing of the housing market in Knutsford and I believe, based on this new evidence, they may be overstated.  Before we get the bubbly out though, the other part of investing in property is what is happening to capital values (which will also be of interest to all the homeowners in Knutsford as well as the Knutsford Buy To let landlords).   I believe the Knutsford property market has been trying to find some form of balance since the New Year.   According to the Land Registry….

Property Values in Knutsford are 2.0% higher than they were 12 months ago

Yet, these figures reflect the sales of Knutsford properties that took place in the late Autumn of 2018 and now are only exchanging and completing during the Winter / early Spring months of this year.

The reality is the number of properties that are on the market in Knutsford today has risen by 3% since the Autumn

…and that will have a dampening effect on the property market.  As tenants have had less choice, buyers now have more choice .. and that will temper Knutsford property prices as we head into the middle of 2019.

Be you a Knutsford landlord or Knutsford homeowner, if you are preparing to sell your Knutsford property in 2019, it’s important, especially with the rise in the number of properties on the market, that you are pricing your property realistically when you bring it to the market.  With the likes of Rightmove, Zoopla and OnTheMarket on everybody’s mobile phones and laptops, buyers have access to every property on the market and they will compare and contrast your home with other properties like yours – and will more than likely dismiss your property rather than view it.

To all the Knutsford homeowners that aren’t planning to sell though – this talk of price changes is only on paper profit or loss.  To those that are moving .. most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much.  Look at the deal as a whole, the difference between what you sell yours for and what you buy at.  Finally, all the Knutsford landlords – keep your eye’s peeled – I have a feeling there may be some decent Knutsford buy to let deals to be had in the coming months.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

Improving the energy efficiency of Britain’s 27.2 million homes, which are responsible for more than a quarter of the country’s CO2 and other greenhouse gas emissions, is seen as key to tackling the issues of climate change, fuel poverty and our country’s energy security. This is particularly important as in June the Government announced they were going to make the country carbon neutral by 2050, meaning Britain’s homes need some enormous retro-fitting to meet these ambitious climate targets.

Researchers at Nottingham Trent University said it would cost on average £17,000 per property to retrofit an average UK home to make it carbon neutral with renewable energy and insulation (if done en masse and not piece meal). That would cost the Country £462.4bn (interesting when the NHS costs £154bn per year). Now of course 22.7m homes are privately owned so that would be the responsibility of the owners, but if we look at publicly owned council housing, that would cost the Government in excess of £76.5bn – HS2 is ‘only’ £56bn!

The benefits of making homes carbon neutral go further than saving the planet, as occupants would have much lower gas and electric bills (which total £31.824bn per year), warmer households and a much-lower strain on the NHS, which currently spends about £848m a year treating conditions that arise from cold housing. Also, local authorities would have to spend a lot less than the £5.2bn a year for ongoing property maintenance by the installation of extra insulation and renewable energy such as ground source heating, wind or solar panels.

To improve efficiency ratings, last year the Government banned landlords from renting property with an energy performance rating of F and G (the lowest ratings), yet I don’t think there is an appetite to force private homeowners to do this work (although you never know in the future??). Homeowners would be unenthusiastic to take on the bother and cost of such building works, yet the Government could offer incentives and grants, which along with the funds saved on their energy bills could make the plan more appealing?

So, what about eco credentials of the properties of Knutsford homeowners and landlords?

Every home that has been built, rented out or put on to the market in Knutsford since 2007 has had to have an Energy Performance Certificate (E.P.C), giving it a rating between A and G (rather like those stickers you see on fridges and washing machines). A is highest rating (i.e. most efficient and greener) and G is the worst energy performance rating. So, looking at Knutsford first, then comparing us to the rest of the UK, this is the result…

So, 35% of Knutsford homes are in that eco-friendly A to C energy performance banding ratings, which is proportionally 5.71% lower than the national average.

So, what next? Well the Government will endeavour to make the green revolution as painless as possible with technology developments like LED light bulbs, for example, saving greenhouse gases without people noticing. In the future we might have hydrogen central heating instead of mains gas, all have solar panels for electricity, all triple glazed windows and even ground sourced heating … sounds pie-in-the-sky? Well who would have thought some of the most wanted cars would be electric and hybrid 10 years ago, built by the likes of Tesla?

There is no doubt that the energy efficiency of a property will rise in the coming years as the cost of fuel and people’s opinion on going green changes. You don’t need to spend £17,000 to find out what you can do to make your property greener. Look at your E.P.C and it will tell you what small changes you can make to improve your Knutsford home’s energy efficiency rating and ultimately save yourself money.

Find the E.P.C rating of your Knutsford home here.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

You would think, seeing all the new homes sites around, you could ask are we building too many houses, especially off the back of those impressive 2018 build figures? However, to keep up with the ever-growing population, lifestyles and people living longer, official reports state the Country actually needs 240,000 new homes built every year to just stand still.

It is estimated, by the Chartered Institute of Housing, that the current national backlog of new homes required is in the order of 4.7 million (i.e. because of the bottled-up household formation by younger adults living with parents, shared housing and unaffordability). As a Country, we cannot meet all these needs immediately and it will take time to build up an effectual plan to address these issues.

Looking closer to home, you will also see from the graph below the long-term trend of new homes building (the yellow dotted line) has been going in an upward direction. In fact, the 2018 new homes build stats for Cheshire East are 76.0% above the post Millennium average. (You will see one month is negative, this is because more houses were demolished than built).

The cure is simple: we need more homes… yet who is going to build (and pay) for them. Some Knutsford people will say why can’t the local authority build most of them?

In 2018, 2,298 new dwellings were created in the Cheshire East Council area and of those 2,298; interestingly 605 were Council and Housing Association homes

So, if our local authority had a more ambitious annual target of say an additional 500 homes on top of those figures, where could they be built and how would they be paid for? Of course, there are the normal apprehensions about infrastructure issues such as roads, schools, hospital capacity and doctors’ surgeries but our local authority has a Local Plan and that has the locations of where they envisage the new housing will be built (and the infrastructure that goes with it).

The Tories lifted the cap on what local authorities could borrow to build Council houses in late 2018 meaning Councils could borrow more money to build more Council houses. Let’s say we built those 500 homes a year for the next 5 years in Cheshire East, that would cost the local authority £375 million to build, which would produce in total £17.4 million in rent. At current interest rates, the interest would be £9.5m per year leaving a surplus of £7.9m for property maintenance and management – meaning the Council houses pay for themselves!

Therefore, what does all this mean for Knutsford homeowners and Knutsford buy-to-let landlords?

Wel, the chances of our local authority getting the full funding for an extra 500 homes a year is slim as there is only so much money to borrow. If every UK local authority got funding for 500 additional homes a year for the next 5 years, an impressive 867,500 homes would be built in those 5 years but that would require the councils to borrow £130.1bn – and Central Government doesn’t have that kind of money for Councils to borrow (more like £10bn to £15bn).

The 4.7million long term housing shortage means house prices will remain strong in the long term (despite blips like Brexit etc). Demand for private rental properties will continue to grow and if you read my recent article on rents, this can only be good news for Knutsford landlords. This attention on the housing crisis by the Government is good news for all Knutsford homeowners and Knutsford buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and stability on house prices.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

If you have been reading my articles on the Tarporley property market recently, you will see that in the three years since the referendum of the ‘B’ word (that word is banned in our household), we have proved beyond doubt that it (whose name shall remain nameless) has had no effect on the Tarporley property market (or the UK as a whole).

So one might ask, what does affect the property market locally? Well many things on the demand side include wages, job security, interest rates, availability of mortgages, confidence in the economy, inflation, speculative demand … the list goes on. Yet as my blog readers will note, I like to delve deeper into the numbers and I have found an interesting correlation between unemployment and the number of properties sold (i.e. transactions).

Why transaction levels and not house prices? Well just looking at Tarporley house prices as a bellwether has flaws. Many property market commentators and economists believe transaction numbers (the number of properties sold) give a more accurate and candid indicator of the health of the property market than just house values alone. The reason is twofold. First most people when they sell also buy, so if property values have dropped by 10% or risen by 10% on the one you are selling, it would have done the same on the one you are buying – meaning to judge the health of a property market is very one dimensional. Secondly, the act of moving is very much a human thing.

Property habitually conveys a robust emotional connection with homeowners – a connection that few would attribute to their other investments like their savings or stock market investments. Moving home could be described as a human enterprise, moving from one chapter of one’s life to another. When people move home, it shows they are moving forward in their lives and so this gives a great indicator of the health of the property market.

Looking at Cheshire West and Chester’s figures on the graph, you can see an inverse relationship between unemployment and housing transaction levels.

Property transactions in Tarporley dropped by 52.93%, whilst unemployment in Tarporley rose by 53.04% during the 2007 to 2009 Global Financial Crash

There is clearly a relationship between conditions in the Tarporley job market and the number of people who move home … interesting don’t you think?

As a country (and indeed here in Tarporley) over the last 40 years, we have seen a shift in the outlook over the purpose of housing and the development of the religion of following house prices (and I appreciate the irony of me writing these articles on Tarporley – feeding that habit!)

Yet, when did owning a home turn from buying a roof over your head to an out and out investment vehicle?

I do wish people would stop fretting about their intrinsic value being associated with their Tarporley home.

Now of course, I am not dismissing the current levels of Tarporley house prices – we just have to take into consideration other metrics alongside them when judging the health of the property market locally.

I am not suggesting unemployment is the only factor influencing the Tarporley property – but it has to be said there is a link.

One final thought, looking on a broader scale in the UK, those towns and cities whose property markets bounced back after the Global Financial Crash had high levels of employment and low unemployment whilst places with high unemployment and relatively low employment have, on the other hand, typically underperformed.

So the next time you are considering a house move or buying a buy to let property in Tarporley … don’t make your judgement on house price growth alone.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys