Warrington Property Blog: January 2020

Friday, 31 January 2020

43 Warrington Landlords each risk a £5,000 fine in Spring 2020

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Washing Machine Energy Ratings for Houses was the phrase one Warrington landlord told me a few years ago when we were talking about the colour bar chart graphs that every property has had for over 10 years now. Now these weren’t brought in to use the whole palate of ink in people’s printers, but to increase the energy efficiency of the UK’s housing stock. The vast majority of Warrington landlords are, by now, acquainted with the legislation that came into force on the 1^st of April 2018, that means all new and renewed private tenancy agreements must have an Energy Performance Certificate (EPC) rating of E or above, otherwise it would be illegal to rent the property out (EPC ratings go A to G – A being the best and G the worst).

Yet, from 1^st April 2020, those rules will be extended to also cover existing Warrington tenancies, meaning that under the new legislation, properties with an EPC rating of F or G will be classed as unrentable – meaning it will be illegal to rent the property and the landlord will be liable for a fine of £5,000.

It will be illegal for any landlord to let any Warrington Rental property with an EPC rating of F & G from April 2020

Back in 2018, there was a loophole for Warrington landlords of F & G rated rental homes on new tenancies, where they did not need to upgrade the property for five years if it cost them money (called the ‘no cost to landlord’ exemption rule) – yet back in April 2019 this exemption to improve rental properties was removed – so they too are included in these new rules.

Therefore, this means that Warrington landlords must use their own cash to cover the cost of improving their Warrington property to at least an EPC band E….

43 Warrington (WA1) properties will be illegal

to rent out from the 1st April 2020

.. as they have energy ratings of F and G.

Now this requirement to upgrade the property is subject to a spending cap of £3,500 (including VAT) for each rental property, as landlords only need to spend what they need to, to improve their Warrington property to EPC rating E.

In cases where a Warrington landlord is unable to improve their Warrington property to EPC rating E within the £3,500 cap, then they still need to spend their hard earned cash and carry out the most appropriate measures which can be installed up to the £3,500 cap, and then register an exemption (with 3 quotes from 3 contractors) for their property on the basis that all relevant improvements have been installed and the property remains below an E.

Warrington homes such as some F rated flats on Wilson Patten Street or some G rated terraced houses on Cairo Street, Church St and Salisbury St will all be illegal to rent out by April

If you are a self-managing Warrington landlord or a landlord with another Warrington agent, then feel free to pick up the phone and chat through any concerns with regard to these new regulations, how to read a EPC graph, how to find the EPC rating of your home, in fact anything – call me. The last thing you need is a £5,000 fine on top of the £3,500 improvement bill.

One final thought though – it might be wise for Warrington landlords who have had their rental properties for a while now to get a new EPC carried out on their property (something we can help with irrespective of whether you are a landlord of ours or not) as recent research has also acknowledged that some early EPC’s understated the thermal efficiency of solid walls. As countless Warrington rental properties are pre 1925, which is when most (not all) new properties were built with cavity walls, the Dept for Business, Energy and Business Strategy have now recalibrated EPC’s to give a truer result. This probably means that some solid wall properties, Victorian and Edwardian terraced houses and converted flats, presently rated F under an EPC will no longer demand any improvement works and certainly less building work may be required in the case of a G rated rental property.

If you are looking for an agent that is well established, professional and communicative, whether you’re buying, selling or looking for an investment opportunity, then contact us to find out how we can get the best out of the Warrington property market.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235 338 – we are based on the Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.

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Friday, 24 January 2020

OK ‘Warrington’ Boomer Warrington House Prices Have Risen by 159% as a Proportion of Household Income Since 1980

Have the Baby Boomers (people between the ages of 55yo to 75yo) messed things up for the Millennials in terms of getting on the Warrington property ladder? They bought their own council houses in the 80’s and 90’s, meaning there are no affordable homes for today’s youngsters, thus driving up the demand for rental homes and the price of homes (making them unaffordable). So, I decided to look at the figures, which do not make for good reading.

In 1980, the average Warrington household income was just under £6,000 per annum and the average Warrington house price was £17,650; whilst today, the average Warrington household income is £28,928 per annum, yet the average household value is £220,600, meaning...

the average value of a Warrington home was 2.94 times more than the average household income in 1980 compared to today, where it is 7.63 times a Warrington household income

… it’s no wonder then that Millennials are pointing the finger at Baby Boomers!

And the problems don’t just stop there. Not only do the newspapers state there is a housing crisis of affordability, but also a crisis of the availability of homes for people to live in. The political parties using housing as a ‘vote getter’ mentioned stats such as in 1981 there were 5.1 million council houses and today that stands at 1.6 million. This is important because, as a substantial number of people will never be able to afford to buy, social housing plays a significant role in homing them.

It all looks rather damning and the phrase ‘OK Boomer’ looks quite apt.

(The phrase ‘OK Boomer’ become fashionable as it started as a way of showing Baby Boomers that things were "easier in the past", yet now it has become just a way for younger people to discredit the views of older people).

Well, checking the stats, the political parties seemed to forget the number of housing associations homes (which are also social housing) has risen from 0.4m to 2.6m homes in that time, therefore, whilst there is a drop in social housing, it’s a net figure of 2.3m fewer social-rented houses, instead of the 3.5m in the paragraph above.

Baby Boomers simply did the best they could with the circumstances given - it's not like that these older generations have been conspiring in the food aisles of Waitrose or M&S on how to mess things up for the next generation. There are fundamental underlying problems in British society that means things are difficult for our younger people - it's everyone’s responsibility to solve those underlying problems - we can't just blame the Baby Boomers. Millennials aren't morally superior to Baby Boomers just because they didn't grow up in the same era of economic growth and house price inflation.

What some people seem to forget is whilst Warrington property values were lower, so were salaries. The true cost of affordability is the mortgage payments. Assuming an average property was purchased in 1980 and again in 2019, using a 95% mortgage at the prevailing mortgage rate of 17.8% in 1980 and the current 1.65%, today in Warrington the mortgage accounts for 35.3% of the household income (assuming a single income) compared to 50.4% in 1980.

Things were much tougher for homeowners in 1980….

The issue here is something much deeper. Baby Boomers say it is the Millennials' own fault they can't afford to buy their own home because they spend all their money on three holidays, avocado on toast, going out down the pub 3 times a week and buying the latest iPhone or suchlike whilst Millennials accuse the Baby Boomer generation for ruining the housing market ‘per se’ by being selfish. Both are right and both are wrong.

In my own involvement with friends and family, many Warrington Baby Boomers are trying their best to help out their now grown up children with a deposit. They are fully aware of current Warrington house prices compared to when they bought their own homes.

I am not a fan of attaching labels, be it Millennials, Baby Boomer or Gen-X. It’s really a point of attitude and behaviour and circumstance rather than the date of your birth. Every generation has had its fair share of feast and famine and whilst I appreciate the irony of the title of this article, let’s stop labelling people and making assumptions, everyone needs to understand each generation’s issues and be more ungrudging to each other.

Friday, 10 January 2020

43,468 People Live in Rented Accommodation in Warrington

That number surprised you didn’t it? With the General Election done, I thought it time to reflect on renting in the manifestos and party-political broadcasts and ask why?

As the best way to tell the future is to look at to the past, so we decided to look at the number of people who rented a century ago (1920’s), and surprisingly 76% of people rented their home in the UK (as renting then was considered the norm). Yet in the latter part of the 1920’s, builders of the suburban housing estates with their bay fronted semis started to sell the dream of home ownership to smart renters.

Up until the mid 1920’s, the mortgage had been seen as a millstone around your neck. Now, due to some clever marketing by those same builders, it was started to be seen as a shrewd long-term investment to buy your own home with a mortgage. It fuelled the ambitions and goals of the up and coming well-to-do working class who reclassed themselves as lower-middle class. Meanwhile, the Government encouraged (through tax breaks) people to save in Building Societies whom in turn lent the money to these up and coming new homeowners thorough mortgages.

Roll the clock forward to the decade of the young Elvis, Chuck Berry, and Bill Haley (1950’s) and still 72% of Brits rented their home. Homeownership had boomed in the preceding 30 years, yet so had council house building. Then, as we entered the 1960’s and 1970’s homeownership started to grow at a higher rate than council housing.

The rate of homeownership started to drop substantially after the mid 1990’s, and now we roll the clock forward to today, there is no stigma at all to renting ... everyone is doing it. In fact, of the…

163,873 residents of Warrington, 43,468 of you rent your house

from either the council, housing association or private landlords - meaning 26.5% of Warrington people are tenants. Yet read the Daily Mail, and you would think the idea of homeownership is deeply embedded in the British soul?

118,326 Warrington people live in an owner-occupied property

(or 72.2%)

So, we have a paradox - homeowners or renters? The reason I suggest this, is, I noticed on the run up to the Election that housing was used at the General Election as way to get votes. This is nothing new, as all parties have always used housing to get votes, although previously it was about which party would build more council houses in the 1950’s through to council Right to Buy with Thatcher (and everyone since) - running election campaigns promising everybody their own home in one way or another.

Yet, did you notice at this election something changed? The parties weren’t talking so much about increasing homeownership but about protecting the tenant. It seems the link between homeownership as the main goal of British life is starting to change as we are slowly turning to a more European way of living. Renting is here to stay in Warrington and incrementally growing year on year. You see, in Britain there is no property tax based on ownership, which many other western countries have. Instead Council Tax is paid by the occupier of the home (meaning the tenant pays - not necessarily the owner).

Both parties wanted to end no-fault evictions (which is a good thing), yet Labour went further and mentioned rent controls in their manifesto. As I have mentioned before in other articles on the Warrington property market, rents since 2008 (even in central London) have not kept up with inflation - so again was that another headline to grab votes/election bribe? The fact is the majority of new British households formed since the Millennium can now expect to rent from a private landlord for life - therefore the parties focus on this important demographic.

Yet even with the new mortgage relief tax rules for landlords and the 200+ of legislation that govern the private rental sector, buy to let is still a viable investment option for most investors in Warrington. There has never been a better time to purchase buy to let property in Warrington … but buy wisely. Gone are the days when you would make a profit on anything with four walls and a roof. Most importantly do your homework, take advice and consider your options.