The 2020 Review of the Rugby Property Market

Looking back at the Rugby property market for 2020, it certainly can be seen as a frenetic game of two halves, albeit with a very long half time in the spring. Between the General Election in mid-December and Christmas, many Rugby agents saw an unusually higher uplift in activity in the property market just as we were getting ready for Christmas 2019. Yet once the New Year festivities were out of the way, that pre-Christmas uplift in the local property market was nothing when compared to the bang on Monday 6th January 2020 with the fabled ‘Boris Bounce’ of the Rugby property market. January, February and most of March were amazing months, with pent up demand from people wanting to move following the Brexit uncertainty of 2018/9 being released in the first few months of 2020.

The pandemic hit mid-March, and the Rugby property market was put on ice for nearly three months (as was almost everyone else’s lives). Yet at the end of spring, the property market was one of the first sectors of the economy to be re-opened. Every economist predicted house price drops in the order of 10% in the best-case scenario and 25% in the worst, yet nothing could be further from the truth.

When the lockdown restrictions were lifted from the property market, those three months allowed Rugby homeowners to re-evaluate their relationships with their homes. The true worth of an extra bedroom (for an office) became priceless, as people working from home were having to take calls and work from the dining room table. Rugby properties with gardens and/or close to green spaces all of a sudden became even more desirable. More fuel was put on the fire of the Rugby property market with the introduction of the Stamp Duty Holiday, meaning buyers could save thousands of pounds in tax if they moved before the end of March 2021. This stoked the local property market and now …

Property values in Rugby are set at 6.4% higher today compared to a year ago.

The fallout of that increased demand for a new home meant those Rugby properties on the market coming out of lockdown in early summer with those extra rooms and gardens were snapped up in days for ‘full’ price. Rugby buyers were having to spend their Stamp Duty savings on paying top dollar for the home of their dreams. Yet the increased number of properties coming onto the market in the late summer quenched a lot of that demand and the prices being achieved became a little more reasonable and realistic. This increased the number of properties sold (stc), so much so that nationally, almost two thirds more homes have been sold (stc) than would be expected at this time of year!

However, as we all know, just because a property is sold (stc), it doesn’t mean the property is actually sold. The number of people who have moved home in the last 12 months in Rugby, is as you would expect, much lower. Over the last 10 years, on average 1,484 Rugby homes have changed hands per year, compared to only 678 Rugby homes in the last 12 months.

So, what is a Rugby property worth today? Drilling down to the four types of homes locally, some interesting numbers appear. Looking at the table, you can see what the average property types are worth locally, and within each type, the average price paid in the last 12 months. (So, if the average price paid for the last 12 months is higher than the overall average, that means more higher priced property in that type has sold in the last year compared to the overall average – and vice versa

 Average Overall Value TodayAverage Price Paid in the Last Year
Rugby Detached£364,080£379,030
Rugby Semi-Detached£209,630£240,290
Rugby Town House / Terraced£165,100£184,760
Rugby Apartments/ Flats£133,790£137,780
Stats from the Land Registry, Zoopla, Office of National Stats and Denton House Research

Of course, these are the overall average values. To give you an idea of what Rugby properties are selling by their square footage, these are those averages values …

Average Value per sq. ft (internal)
Rugby Detached£234.63
Rugby Semi-Detached£226.60
Rugby Town House / Terraced£194.97
Rugby Apartments/ Flats£208.05
Stats from the Land Registry, Zoopla, Office of National Stats and Denton House Research

So, what about 2021? Well normally when the Country’s GDP drops like a stone (as it did in the Summer of 2020), the property market follows in unison. Yet as the economy went south, the house price growth and activity in the property market went north. This would appear to be a quite remarkable outcome given that economic framework, but it is gradually becoming clear that, as far as the Rugby property market is concerned, people’s time in lockdown has been spent reflecting on what they really wanted from their home and has meant that the normal rules of the game simply do not apply… for now.

Each Rugby Landlord Could be Hit by a £25,070 Bill

… and the 5 ways on how all Rugby landlords can escape the worst of the coronavirus downturn on their Rugby rental property.

With the second lockdown starting on the 5th November 2020, does this mean Rugby landlords can wave goodbye to their Rugby buy-to-let investment and see it go up in smoke on the bonfire of buy-to-let dreams, like a Guy Fawkes puppet? 

With many Rugby tenants at risk of losing their jobs after the furlough scheme ends in March and as the reverberations of the coronavirus recession hit this winter, what does this all mean for Rugby landlords and what can they do to mitigate the risks?

Since the spring, most Rugby tenants and buy-to-let landlords have been protected from the coronavirus crisis thanks to the banks with their mortgage payment holidays and job support schemes. 

Before the second lockdown was announced on the 31st October, it was expected that as the furlough and mortgage payment holidays were due to end on Halloween, there would be some serious fallout from those schemes finishing. One silver lining from the lockdown (if you can call it that) is that mortgage payment holidays and furlough have been extended, yet does all that just kick the can down the road?

The question is, what can Rugby landlords do to mitigate the financial risk on their Rugby buy-to-let investment? 

  1. Help Your Rugby Tenants get the Financial Support They are Entitled To 

Billions of pounds are being spent by the Government to help those people whose income has been hit by coronavirus. The better Rugby letting agents and self-managing landlords are supporting, guiding and helping those Rugby tenants in financial difficulty to gain a better understanding of the Universal Credit (UC) processes, systems and payment levels, to enable their tenants to pay the rent and ultimately indirectly help their Rugby landlord. Also, if you are a Rugby tenant, and that support isn’t given when you ask, don’t forget Rugby District Council do hold special cash reserves for discretionary housing payments, which can be utilised to close the gap in rent between what UC pays and your current rental commitments. Also, the Government’s Money Advice Service & Citizens Advice are a good online resource for what you are entitled to.

  1. Adopting, Adapting & Improving Your Rugby Buy-to-Let Property

Demand for gardens or office space means Rugby landlords will need to think outside the box. Those Rugby homes with tenants sharing (e.g. HMO’s and shared houses) might need to price their pre-coronavirus 4 bed sharing house to maybe a 3 bed sharing house plus a work/office room and, if you haven’t already, installing a top of the range, fast and dependable internet connection could be the thing that swings it. Outdoor space and gardens are really high on housebound tenant’s wish lists, in fact I have come across some Rugby tenants demanding that new rental properties have a landscaped garden or those that bought a dog or cat for company during the first lockdown, are looking for their landlords to relax their ‘no pets policy’.

  1. Hold On to Your Good Rugby Tenants

Those Rugby buy-to-let landlords with decent tenants, who find themselves in financial dire straits should consider attempting to keep them, even if their own monetary circumstances mean they have to decrease their rent somewhat over the short term. Now of course, I would expect that tenants need to prove their circumstances, yet if their plight was real, surely it would be a wise choice to reduce the rent by perhaps £50 a month and support your tenants? You know they are taking great care of your Rugby rental property and rather than risk the issue of advertising your empty buy-to-let property  – particularly when there is no assurance you will achieve your existing rent and ultimately risk drawn-out void periods with no rent coming in at all. What I would suggest therefore,  in such circumstances, is that you create a new Assured Shorthold Tenancy agreement with a longer term with your existing tenant at a lower rent – a temporary measure but with peace of mind for both parties which can then be reviewed once that tenancy is up for renewal.

  1. Carry out Firmer Checks on Your Prospective Rugby Tenants 

Many private Rugby landlords and a few slipshod Rugby letting agents tenant checks are somewhat lacking in their depth. Trust me, there is tenant referencing … and then there is ‘proper’ forensic tenant referencing. As certain parts of the British economy have been hit harder than others, Rugby landlords must consider when choosing their new tenants, the type of work they do or who their employer may be, to enable them to decide on their future capacity to meet their rental commitments.

  1. Rent Guarantee Insurance for your Rugby Rental 

There are still insurance companies offering landlord rent guarantee insurance if your tenants become unable to pay the rent. Many insurance firms removed these insurance products in the first lockdown, yet some have returned to the insurance market although insurance premiums have gone up in price. Remember to check the small print of the insurance, although you will get a lower insurance premium if you can show stringent tenant referencing (as per the previous point). 

The Nuclear Option – Eviction

Rugby landlords need to be conscious that, should their tenancy run into trouble, the Government have changed the rules when it comes to eviction during the coronavirus pandemic. Going into the first lockdown, there was already a backlog in the courts and now, just before going into the second lockdown, bailiffs have been instructed not to enter rental properties in high risk Tier-2 and Tier-3 Covid-19 areas.

Eviction really does have to be the very last option. Negotiation or arbitration will nearly always deliver quicker and improved outcomes for both parties. Rugby landlords who do come to mutually agreeable arrangements with their tenants by briefly reducing the rent, or allowing payment holidays with legally enforceable pay back schedules should ensure they get the agreed terms in writing and run by a solicitor or their agent (feel free to drop me a note if you need advice).

However, if eviction is required, it doesn’t mean the tenant gets off ‘scot free’. Evicted tenants, depending on their circumstances, will either be placed temporarily into an inexpensive B&B, asked to move in with family or given one of the local authorities temporary accommodation properties, with the goal to then move them into long term council accommodation (as the chances of obtaining private rented accommodation would be slim with agent’s heightened reference checks – more of that at the end).

The Potential Cost of Evicting a Problem Rugby Tenant

The average rent for a Rugby property currently stands at £730 per calendar month. 

Thankfully, evictions are very rare.  Last year before lockdown, tenants from 201.4 rental properties were evicted each working day in the UK … but if yours was one of those, that is still a potentially large cost.

Working on the basis that most evictions from the first rent not being paid, through to eviction, refurbishment of the kitchen, bathroom, carpets and décor (because often these do need sorting/replacing) were taking on average between eight to nine months before coronavirus hit, (plus the mortgage payments), this means a Rugby landlord could be hit by a £25,070 bill, broken down as follows:

Missing rent (8½ months)£6,205
New kitchen£3,706
Bathroom£2,587
Carpets£2,398
Redecorate £1,865
Agents fees£652
Legal fees & court fees£3,500
Mortgage payments£4,157
Total£25,070

What that would be now is anyone’s guess – yet it could be a lot more.

This is why it is so important to get the best tenant from day one. Many Rugby tenants, who know they wouldn’t pass the references of letting agents, are attracted to those private landlords who don’t use a letting agency, as they know their referencing checks are not as strict and may be a softer touch. That’s not to say going with a letting agent is a guarantee you won’t need to evict; it just means the chances are much, much smaller. Like anything in life – it’s a choice. 

Whether you are a Rugby landlord who uses a letting agent or not, and feels their reference checks are not to the standard or level you might hope or want and you need a  chat about the best rental guarantee insurance, then give me a call … what have you got to lose?

Rugby Homebuyers Have Saved £198,050 Thanks to the Stamp Duty Holiday – Yet Many Could Miss Out

Rugby homebuyers and Rugby landlords purchasing residential property have saved £198,050 since the Chancellor reduced stamp duty on 8th July 2020, yet many more Rugby homebuyers could miss out.

My analysis of properties sold in Rugby from the Land Registry between the introduction of the stamp duty holiday on 8th July 2020 and 14th August 2020 (which is the most up to date sales data), reveals that many Rugby homeowners have saved a considerable amount of money in stamp duty. According to my research…

since the stamp duty holiday was launched, 42 Rugby homeowners have saved on average £4,715 each.

That’s a total Rugby property value of £12,361,000.

Mind you, it’s not all good news as I estimate 92 Rugby homebuyers risk missing out on stamp duty savings (worth as much as £15,000 each) due to solicitors/conveyancers and mortgage lenders struggling with demand and failing to hit the 31st March 2021 deadline.

The short-term tax relief, together with the easing of lockdown restrictions, has seen demand for Rugby property soar this summer as Rugby property buyers race to move home.

Chancellor Rishi Sunak introduced a stamp duty holiday in the summer, with the stamp duty holiday due to end on 31 st March 2021. Yet, I fear the combined pent-up demand caused by…

  • the post Boris Bounce
  • people wanting to leave the metropolitan city centres for homes in the countryside
  • property with gardens
  • property with extra rooms for working from home
  • and the stamp duty savings

…has created a certain amount of constipation and backlog in the Rugby property market.

I know 31 st March 2021 seems an age away, however nothing could be further from the truth. The average Rugby property sale was taking 19 weeks between the offer price being agreed and the keys/monies handed over BEFORE THE POST-LOCKDOWN. So with as many as 40% to 50% more Rugby homeowners in that same sales pipeline of agreeing the offer and the legal and finance to be sorted as we speak, solicitors/conveyancers and mortgage lenders are really struggling with demand for their services, meaning the average time will increase. Hence, I believe as many as…

92 Rugby people could miss out on the £433,820 stamp duty tax savings.

There is time left to sell and legally complete your Rugby property sale before 31st March stamp duty deadline if you put the property on the market now with a realistic asking price, a decent marketing plan and razor sharp reflexes when it comes to the legal and mortgage work.

Yet with 40% to 50% more home movers in the system, those looking to sell their Rugby home should be very suspicious of agents being too optimistic on their initial asking price (many estate agents get a commission to put a property on the market, meaning they over-egg the pudding on the suggested asking price to flatter you, only to badger you to reduce the asking price weeks later).

Those wasted weeks at an inflated asking price will mean the difference between you securing a buyer and you then buying your next Rugby home with or without the stamp duty savings, which are up to £15,000 per home move and whilst many Rugby buyers seem ready, willing and able to pay top dollar prices for Rugby properties that match their changed post-lockdown home needs, speaking privately to many Rugby agents, some Rugby homeowners’ price expectations for their Rugby homes are now becoming too optimistic, meaning they will undoubtedly lose out.

We also can’t forget as many as 1 in 5 mortgage surveys are being down valued by the surveyor, meaning unless all parties are willing to negotiate, the sale falls through and the homeowner has to go back to ‘Square One’.

My best piece of advice for those currently sold and in the sales systems with lawyers and mortgage brokers is to speak to your solicitor and mortgage broker every single week and ask if there is anything you need to do to ensure the sale proceeds smoothly and expediently. Also, if you are asked for any information from your solicitor or mortgage broker in between times, drop everything and respond quickly to their request. The odd day here and there will make all the difference.