As OAP’s set to rise to 1 in 4 of Rugby’s population by 2037 – Where are they all going to live?

With constant advances in technology, medicine and lifestyles, people in the Rugby area are, on average, living longer than they might have a few decades ago. As Rugby’s population ages, the problem of how the older generation are accommodated is starting to emerge. We, as a town, have to consider how we supply decent and appropriate accommodation for Rugby’s growing older generation’s accommodation needs while still offering a lifestyle that is both modern and desirable.

In 1997 in Rugby, around one in every six people (16%) were aged 65 years and over (and the local authority area as a whole), increasing to nearly one in every five people (19%) in 2017 and it is projected to reach around one in every four people (24%) by 2037, meaning..

Over the next 19 years, the growth of the over 65 population in Rugby will grow by 26.3% – a lot more than the overall growth population of Rugby of 11.2% over the same time frame.

In fact, the number of those over 90 is expected to more than double in our local authority from 1,125 (1.1%) in 2017 to 2,583 (2.2%) by 2037.

And looking at the proportional percentage changes over those years..

Looking at Rugby and the local authority as a whole, there is a distinct under supply of bungalows and retirement living (i.e. sheltered) accommodation. The majority of sheltered accommodation fit for retirement is in the ex-local authority sector whilst the majority of private sector bungalows were built in the 1960s/70s/80s and are beginning to show their age (although that means there is often an opportunity for Rugby investors and Rugby buy to let landlords to buy a tired bungalow, do it up and flip it/rent it out).

In the medium to longer term, we need to build more bungalows and sheltered accommodation and, if we do that, that won’t only be of benefit to the elderly population of Rugby – it will have a direct knock-on effect to the younger and middle-aged population by unlocking those family homes the older generation homeowners live in.  

There have been 17 Housing Ministers since 1997. No one ever seems to stay in the job long enough to create a consensus and direction in Government Policy on the vital issue of the country’s housing shortage, yet the sound bites and White Papers seem only to focus exclusively on first-time buyers when there is an even more severe and disregarded shortage in suitable housing for the older generation.

This scantiness affects both mature homeowners trapped in unsuitably big family properties, unable to find smaller bungalows or suitable retirement apartments, whilst the waiting list for Council sheltered accommodation is putting a strain on other aspects of social care. In both circumstances, policy coming (or not coming) out of Government is repressing the supply and type of accommodation mature people desire, need and want, whilst at the same time, increasing the cost (and taxes) for social and NHS care.

Maybe we need tax breaks for people to downsize or planning permissions that stipulate bungalows only. Whichever way you look .. there are challenging times ahead for us all.

The £5,068,520 Ticking Time Bomb for Rugby Landlords

I just love looking over and keeping up to date the 108 pieces of legislation that govern the rental of residential property in the UK”  

…No Rugby Landlord, ever

If you are one of the 1,861 Rugby landlord’s that manages your own property, would it surprise you to know that there are 108 separate pieces of legislation that govern the rental of private houses to tenants. Oh, and on top of the 108 pieces of law, there are further 300+ regulations in the mix. Whilst Rugby landlords may once have preferred to manage their Rugby buy-to-let properties themselves to boost their profits, many Rugby landlords are starting to see this as a false economy.

In the last four years, an additional 716 landlords in Rugby have converted from self-managed to having their property managed by a letting agent in Rugby, taking the total number of properties under management in Rugby to 2,910 (out of a total of 4,771 private rental properties in Rugby).

Now, don’t get me wrong, self-managing your Rugby rental property can be a very fulfilling experience, allowing you, as a Rugby landlord, to build a deep relationship with your tenant and your emergency 24 hour plumber, builder (happy to do small jobs at a drop of a hat), decorators, first name terms with their deposit provider, lawyer and EPC provider to name but a few. (Wow!)

Also, did you know if your tenants deposit isn’t registered, or doesn’t continue to be registered after the end the periodic tenancy upon renewal … you could be fined up to three times your deposit? With the average rental deposit in Rugby being £908, each self-managed landlord in Rugby could be fined £2,724 per tenancy if the deposit isn’t currently registered. Therefore…

…if every deposit of every Rugby self-managed landlord’s property wasn’t registered, the total fines would amount to £5,068,520

Now of course, I am not suggesting for one minute all the self-managed landlords of Rugby haven’t registered their deposits, yet almost on a daily basis, I come across horror stories to that effect. Another two (but by no means all) hot issues that the Courts are cracking down on, are doing immigration ‘Right To Rent’ checks on all tenants (yes all tenants) and confirmation proving the tenant received the ‘How to Rent’ guide. If that second issue cannot be proved (a ‘sent’ email won’t suffice), the landlord cannot serve the section 21 Notice, meaning the tenant cannot be served notice to vacate the property.

To many, it’s really a case of DIY or getting a qualified professional in … as those additional Rugby landlords mentioned above have done since 2014. You might say, “Of course you are going to say all this – you are a Letting Agent”. Well the choice really comes down to your time and your knowledge. If a Rugby landlord is not equipped, or able, to devote time keeping up-to-date of legislation and law nor doesn’t want to be bothered 24/7/365 about a blown light bulb, dripping taps, have that confrontational conversation with their tenants about missing rental payments, or arbitrate arguments and disagreements between your tenant and the neighbours, it is perhaps better to pass this accountability/responsibility onto a letting agent.

One thing I would say is all letting agents aren’t the same. Would it surprise you to know that letting agents aren’t regulated?

Rugby landlords that do use a letting agent should not forget that passing over management to a letting agent doesn’t mean they can disregard legislation and they are still responsible for deposit/rent repayment legal directives, civil fines or action if the letting agent makes a mistake. Therefore, it’s important to pick a respectable letting agent from the start.

Nevertheless, for those Rugby landlords that see their job as a professional landlord and want to be intricately involved in the day to day administration of their rental properties, it can be worthy pursuit.

If you are a self-managed landlord in Rugby, and want to know if your paperwork is in order please feel free to drop me a line and I am more than happy to do an ‘MOT’ on it to ensure you are the right side of the law.

2 bed or 3 bed homes – Which Sell the Best in Rugby?

A few months ago, I wrote an article on the Rugby Property Blog about the length of time it took to sell a property in Rugby and the saleability of the different price bands (i.e. whether the lower/middle or upper local property markets were moving slower or quicker than the others). For reference, a few months ago it was taking on average 25 days from the property coming on the market for it to be sold subject to contract (and that was based on every Estate Agent in Rugby) … and today … 49 days  .. does that surprise you with what is happening in the UK economy?

Well, a number of Rugby landlords and homeowners, who are looking to sell in the coming months, contacted me following that article to enquire what difference the type of property (i.e. Detached/Semi/Terraced/Apartment) made to saleability and also the saleability of property by the number of bedrooms) As I have said before, whether you are a Rugby landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home; finding a buyer and selling your property can take an annoyingly long time… but anything you can do to mitigate that is helpful to everyone.

So, I did some research on the whole of the Rugby property market .. and these were my findings …  to start with by type (i.e. Detached/Semi/Terraced/Apartment)….

As you can see, the star players are the semi-detached variants of Rugby property, whilst apartments seem to be sticking in Rugby.

Next I looked at what the number of bedrooms does to the saleability of Rugby property..

… and as you can see the five bed properties seem to be taking the longest time to sell ..and to answer the question in the title .. it’s three bed properties!

So, what does this mean for Rugby buy-to-let landlords and homeowners?  

There is no doubt that there is a profusion of properties on the market in Rugby compared to 18 months ago … it’s not because more houses are coming on to the market, it’s because they are also taking a little longer to sell. This makes it slightly more a buyer’s market than the seller’s market we had back in 2014/5/6. Therefore, in some sectors of the Rugby property market, it is much tougher to sell, especially if you want to sell your Rugby home fast.

Therefore, to conclude, on the run up to the New Year, if you are looking to buy and plan to stay in the buy to let market a long time, perhaps take a look at the Rugby properties that are sticking as there could be some bargains to be had there? Want to know where they are .. drop me a line and I will tell you a nifty little trick to find all the properties that are sticking.

Rugby First Time Buyers Need 7.5 Times Annual Salary to Get on Housing Ladder

What is it to be British? Our stubbornness, long-suffering stoicism, our vexation at injustice, our obsession with football and rugby, we are weather obsessed external awkward noncommittal modest people whilst underneath seething like a volcano because someone jumped the queue….. and our No.1 obsession is with the property ladder.

This ‘love affair’ with owning our own home has been both good and bad for the UK as a whole; giving people financial freedom in their later years whilst also reducing the quantity (and quality) of housing provision whilst adding the extra pressure of a ‘them and us’ society. Strong words I know .. but let me explain more.

I honestly believe that most Governments since the end of the 1970’s, Conservative and Labour, have attempted to nourish our addiction to home ownership (to keep the housing market on track) with the Council House Right to Buy sell off in the 1980’s, tax relief of mortgages, relaxation of the mortgage rules in the late 1990’s/early 2000’s and most recently, the Help to Buy scheme.

But the Brits haven’t always had this obsession.

Roll the clock back 100 years and, in 1918, just under a quarter of all Brits owned their own homes and the other 77% rented. Go back 50 years to 1968, and only 46% of people owned their own home, the rest rented. This homeownership thing is quite a recent phenomenon.

According to my research, anyone looking to get a foot onto the property ladder as a first-time buyer in Rugby today, AS A SINGLE PERSON, would need to spend 7.5 times their earnings on a Rugby first time buyer property.

Using the numbers from the Office of National Statistics (ONS), the average value of a first-time buyer property in Rugby today is £155,000, compared to £124,000 in 2007. If we divide those property values by the average annual earnings of first time buyers – in 2007, that was £16,722 pa and that has risen to £20,699 pa .. giving us the ratio of 7.5 to 1.

However, what must be remembered is that these are raw statistics from the ONS and don’t take into account other factors, like most people buy their first home as a couple. Also, mortgage rates are at an all-time low and who can remember mortgage rates of 15%+ in the 1990’s, meaning borrowing today is relatively cheap. Also, 95% Loan to Value first time buyer mortgages have been available since the end of 2009  (i.e. you only need to save a 5% deposit) and first timebuyer rates of 2.19% fixed for 5 years can be obtained (correct at time of writing this article)… it is cheaper to buy than rent .. fact!

I believe there has been a mind-set change to owning a home. Home ownership was the goal of the youngsters in the latter half of the 20th century. Britain is changing to a more European model of homeownership, where people rent in early to mid-life, wait to inherit the money from their parents when in their 50’s and then buy.. thus continuing the circle – albeit in a different way to the last Century.

This means the demand for privately rented accommodation will, in the long term, only continue to grow. If you would like to know more about where the hot spots are for that growth in Rugby, if you want to drop me an email or telephone call, feel free to pick my brain on the best places to buy (and not to buy) in Rugby to ensure your rental investment gets you want you want. The choice is yours!

Rugby Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Rugby property market appeared to be doing the reverse and was already starting to cool down.

17.96% less people moved home in the Rugby area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 140 homes a month.. yet in the same time frame in 2018, only 115 (on average) sold and moved.

 

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Rugby property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Rugby property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Rugby homeowners that have been selling their Rugby homes, renting and wagering that, in the next few years, the Rugby property market will tumble by more than what they spend on their short-term rental home, before they buy another Rugby home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Rugby property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Rugby homeowners and Rugby Buy To Let landlords?

Well, in the short term, demand for middle to upper market Rugby rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Rugby landlords buying in this sector of the Rugby property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Rugby properties, you might have lesspeople wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Rugby properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 218 in the month of March 2016? That was all the Rugby buy to let landlords snapping up buy to let properties before the stamp duty rules changed!

7 Reasons Why Rugby Buy To Let Landlords Shouldn’t Be Criticised ​

There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Rugby has been nothing short of extraordinary.  Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties for their buy to let property empires. Government has been blamed in the past for giving landlords an unfair advantage with the tax system. It is also true many of my fellow professionals have done nothing to avail themselves in glory, with some suspect, if not on some rare occasions, downright dubious practices.

Yet has the denigration and unfair criticism of some Rugby landlords gone too far?

It was only a few weeks ago, I read an article in a newspaper of one landlord who had decided to sell their modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were pure hate, and certainly not deserved.

Like all aspects in life, there are always good (and bad) landlords, just like there are good (and bad) letting agents … and so it should be said, there are good tenants and in equal measure bad tenants. Bad letting agents and bad landlords should be routed out … but not at the expense of the vast majority whom are good and decent.

But are the 1,865 Rugby portfolio buy to let landlords at fault?

The Tories allowed people to buy their own Council house in the 1980’s, taking them out of the collective pot of social rented houses for future generations to rent them. Landlords have been vilified by many, as it has been suggested by some they have an unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’. There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s.

To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) … meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem started.

Secondly, in the early 2000’s, those same building societies and banks were relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages 8 times their annual salary, and very helpful interest only mortgage deals helped to keep repayments inexpensive.

Thirdly, the totally inadequate building of Council Houses (aka Local Authority Housing) in the last two decades and (so I’m not accused of Tory bashing) – can you believe Labour only built 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have built 20,840 Council Houses since they came to power in 2010 (although still woefully low when compared the number of Council Houses built in the 1960’s and 1970’swhen we were building on average 142,000 Council Houses per year nationally). This meant people who would have normally rented from the Council, had no Council House to rent (because they had been bought), so they rented privately.

And then 3rd, 4th, 5th, 6th and 7th … 

– Less of private home building (again look at the graph) over the last two decades.

– A loss of conviction in personal pensions meaning people were looking for a better place to invest their savings for retirement.

– Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was cheap.

– A massive increase in EU migration from 2004, when we had eight Eastern European countries join the EU. That brought 1.4m people to the UK for work from those countries – and they needed somewhere to live.

Thus, we got the perfect storm conditions for an eruption in the Rugby Private Rented Sector.

Commercially speaking, purchasing a Rugby property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Rugby have risen by 254.25%…

…and basing it on the average rental in Rugby, earned £190,944 in rent.

Yet, the younger generation have lost out, as they are now incapable to get on the property (especially in Central London).

The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Rugby landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Rugby – but not anymore.

Being a letting agent has evolved from being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on each landlord’s buy to let portfolios. I had a couple of instances recently of a couple of portfolio landlords, one from Braunston who wanted income in retirement from his buy to let’s and the other from Dunchurch, who wanted to pass on a decent chunk of cash to his grandchildren to enable them to buy their own home in 15/20 years’ time.

Both of these landlord’s portfolios were woefully going to miss the targets and expectations both landlords had with their portfolios, so over the last six/nine months, we have sold a few of their properties, refinanced and purchased other types of Rugby property to enable them to hit their future goals (because some properties in Rugby are better for income and some are better for capital growth) … And that my blog reading friends is what  ‘portfolio strategy planning’ is! 

If you thik you need ‘portfolio strategy planning’, whether you are a landlord of ours or not (because the Dunchurch landlord wasn’t)  … drop me line or give the office a call. Thank you for reading.

Rugby House Prices vs Rugby Rents since 2006

The Rugby housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Rugby, the market has certainly changed for both buyers and sellers alike (be they Rugby buy to let landlords, Rugby first time buyers or Rugby owner occupiers looking to make the move up the Rugby property ladder).

Rugby house values are 6.9% higher than a year ago, and the rents Rugby tenants have to pay are 1.6% higher than a year ago

When we compare little old Rugby to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back…

Since 2006, Rugby house values are 42.8% higher, yet the rents Rugby tenants have had to pay for their Rugby rental property are 17.7% higher

…which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Rugby tenants are 24.3% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Rugby house values (in red) in the years of 2008 and 2009 … yet as Rugby property values started to rise after the summer of 2009, see how Rugby rents dipped 6/12 months later (the yellow bars)…. Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Rugby property.

However, maybe an even more interesting point is for the long-term Rugby buy to let landlords. The performance of Rugby rental income vs Rugby house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Rugby landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Rugby buy to let portfolio. More and more I am sitting down with both Rugby landlords of mine and landlords of other agents who might not be trained in these skills – to carry out an MOT style check on their Rugby portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time against peace of mind – the choice is yours.