Warrington Property Blog

Friday, 26 January 2018

My thoughts on the future of the Warrington Buy-To-Let Market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due to increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes; as Westminster wants to heighten standards in the Private Rented Sector.

Interestingly I was chatting with a self-managed landlord from Lymm, when I was out socially over the festive period, who didn’t realise the other recent legislations that have hit the Private Rented sector, including the ‘Right to Rent’ regulations which came in to operation last year. Landlords have to certify their tenants have the legal right to live in the UK. This includes checking and taking copies of their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you (as they will with the redress scheme when that is implemented).

If you are a self-managed landlord though, the consequences are severe because if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000. That same Lymm landlord popped into my offices in the New Year, and I checked all his paperwork and ensured he was on the right side of the law going forward – and I offer the same to any landlord in the Warrington area if you want me to cast my eye over your buy to let matters (and at no cost – ok just bring in some chocolates for the girls in the office!)

But what of all these extra properties being dumped onto the market in Warrington? When I looked at the records the number of properties on the market in Warrington now, as opposed to a year ago, the numbers tell an interesting story …

	1st Jan 2017	1st Jan 2018
Detached	117	80	-32%
Semi	183	118	-36%
Terraced	143	117	-18%
Flat	97	75	-23%
Plots + Other	54	23	-57%
Total	594	413	-30%

Overall, Warrington doesn’t match the national trend, with the number of properties on the market actually dropping by 30% in the last year. It was particularly interesting to see the number of semis on the market drop by 36%.

However, speaking with my team and other property professionals in the town, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords (a subject I will write about soon in my Warrington Property Market blog later this Spring?). You see, for the last ten years, each month there has always been a small number of Warrington landlords who have been releasing their monies from their Warrington buy to let properties - as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some Warrington landlords will want to release the equity held in their Warrington buy to let properties in 2018. All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!). This means you have an empty property, costing you money with no rent coming in. However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Warrington area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids).

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

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Thursday, 18 January 2018

Youngsters unable to buy their first home in Warrington – Are the Baby Boomers and Landlords to Blame?

Talk to many Warrington 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Warrington for say £15,000 in first quarter of 1977, today it would be worth £227,343, a windfall increase of 1415.6%.

But to blame the 60 and 70 year olds of Warrington for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don't believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Warrington area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Warrington society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago ... but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Warrington buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Warrington house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Warrington buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Warrington property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Warrington housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Warrington homes they provide for Warrington people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes ... homes that were provided to Warrington by these buy to let landlords.

One side of the argument is that 626 homes are being bought up by buy to let landlords each year in the Warrington Borough Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 4,379 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.

Many of you reading my blog ask why I say these things. I want to share my thoughts and opinions on the real issues affecting the Warrington property market, warts and all. If you want fluffy clouds and rose tinted glasses articles – then my articles are not for you. However, if you want someone to tell you the real story about the Warrington property market, be it good, bad or indifferent, then maybe you should start reading my blog regularly.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 11 January 2018

Warrington Property Market and Hammond’s Budget Promise to Build 300,000 more homes

I miss the good old days of George Osborne as Chancellor, with his hardhat and hi-vis jacket. He must have visited every new home building site in the UK with his trademark attire! For the last few years, the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party. However, with what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 492 ‘net additional dwellings’ in the last 12 months in the Warrington Borough Council area, a small increase of 31% on the 2010 figure.

The figures show that 95% of this additional housing was down to new build properties. In total, there were 469 new dwellings built over the last year in Warrington. In addition, there were 52 additional dwellings created from converting commercial or office buildings into residential property.

While these all added to the total housing stock in the Warrington area, there were 29 demolitions to take into account.

Net additional dwellings in Warrington in the last 12 months
New build	Conversions	Change of use	Demolitions	Net Additions
469	0	52	-29	492

I was encouraged to see some of the new households in the Warrington area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had reutilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Warrington housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and 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.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 7 December 2017

Increase in Interest Rates to cost Warrington Home Owners £204.71 a year

Warrington homeowners will be among those affected by the latest rise in the Bank of England interest rates. The first increase in 10 years; they have just been raised from 0.25 percent to 0.5 per cent. This uplift comes as inflation hits a 51-month high of 2.9 per cent whilst the national unemployment rate is at an all-time low of 4.3 per cent.

Interestingly, the Governor of the Bank of England has indicated that the interest rate is likely to increase again over the next couple of years, but Mr Carney said mortgages and savings would not be affected in the short term. However, look at all the big banks and just about all of them have increased their standard variable mortgage rate..

The average Warrington mortgage is £81,883

I have to ask by how much Warrington homeowners (on variable rate or tracker mortgages) will see their repayments increase?

In the WA1-WA5 postcodes there are 35,958 homeowners with a mortgage, of which 15,448 have a variable rate mortgage (the remaining have fixed rate mortgages). The total amount owed by those WA1-WA5 homeowners with those variable rate mortgages is £1,264,898,595, meaning the average monthly mortgage payment for those home owners on variable rate mortgages before the interest rate rise was £638.46 per month and now its £655.52 per month … meaning

The interest rate rise will cost Warrington

homeowners on average an extra £204.71 per year

Whilst this is the first raise in interest rates in over 10 years, it must be noted it is at a significantly low level compared to figures in the 1970s and early 1990s. Many of my readers talk of interest rates at 17 per cent when Sir Geoffrey Howe increased them to try and combat the hyperinflation (from the fallout of the financial crisis that hit Britain in the 1970’s) and Norman Lamont in September 1992 with the infamous Black Wednesday crisis, when interest rates were raised from 10% to 15% in just one day.

So, what will this interest rate actually do to the Warrington housing market?

Well, if I’m being frank – not a great deal. The proportion of Warrington homeowners with variable rate mortgages (and thus directly affected by a Bank of England rate rise) will be smaller than in the past, in part because the vast majority of new mortgages in recent years were taken on fixed interest rates. The proportion of outstanding mortgages on variable rates has fallen to a record low of 42.3 per cent, down from a peak of 72.9 per cent in the autumn of 2011.

If more Warrington people are protected from interest rate rises, because they are on a fixed rate mortgage, then there is less chance of those Warrington people having to sell their Warrington properties because they can’t afford the monthly repayments or even worse case scenario, have them repossessed.

However, and this will be of interest to both Warrington homeowners and Warrington buy to let landlords …

.. for every 1% increase in the Bank of England interest rate, it will cost the average Warrington homeowner on a variable rate mortgage £68.24 per month

So, what next? Because UK inflation levels are at 2.9 per cent (the country’s highest rate since April 2012) and the Bank of England is tasked by HM Government to keep inflation at 2 per cent using various monetary tools (one of which is interest rates) – you can see why interest rate rises might be on the cards in the future as increasing interest rates tends to dampen inflation.

Now of course there is a certain amount of uncertainty with regard to Brexit and the negotiations thereof, but fundamentally the British economy is in decent shape. People will always need housing and as we aren’t building enough houses (as I have mentioned many times in the Warrington Property Blog), we might see a slight dip in prices in the short term, but in the medium to long term, the Warrington property market will always remain strong for both Warrington homeowners and Warrington landlords alike.

If you are a landlord who may have a void property over winter, then feel free to get in touch and let us at Hamlet Homes provide you with a fully reference checked and credit checked tenant in your property before the weather gets even colder, to ensure your property is protected.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 30 November 2017

Warrington Rents Set to Rise to £659 pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Warrington peaked at 1.9%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Warrington rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Warrington rents will regain their upward trend and continue to increase as demand for Warrington rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Warrington). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Warrington, that Warrington landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Warrington buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Warrington landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin).

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth. It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Warrington? In my considered opinion,

Rents in Warrington over the next 5 years will rise by 9.3%, taking the average rent for a Warrington property from £603 per month to £659 per month.

To put all that into perspective though, rents in Warrington over the last 12 years have risen by 15.2%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Warrington economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

In the past, making money from Warrington buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Warrington property market, as a Warrington landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Warrington, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Warrington Property Market blog - www.warringtonpropertyblog.co.uk

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 23 November 2017

Top Tips – Protecting Your Warrington Property Over Winter

Just how quick has this year gone by, did we even get a summer? Im not sure why i am even complaining, I really enjoy the Winter season, dark at 4pm the morning chore of de – icing your car and taking each step with caution in case you slip! Winter can be a tough time for everyone – but none more so than landlords.

These colder months present potential risks to your rental properties, which could lead to costly problems.However, taking some time now to check your properties can help with un-expected costs and help ease you through a disaster free winter.

The key to protecting your rental property over winter is making sure you have good tenants living inside them - if a house is being lived in, that means its warm, safe and providing the tenants are good it means your investment will be looked after.

Void Periods

Void periods are a major threat during the cold months. If you know that your property is likely to be empty over the winter, you need to make extra plans to ensure its upkeep. Make sure that you visit regularly to open windows and check on the heating. If you can’t do this yourself, make sure that you arrange for someone else to visit.

If your property is likely to be unoccupied over the Christmas period, either while students are returning home or your tenants are taking a long holiday, ensure that you take the following precautions as expensive items on display are an easy target for thieves.

Invest in theft deterrents such as alarms (visible from the exterior of the property) and motion sensors. Ensure that the locking mechanisms meet the insurance policy requirements (usually 5 lever mortise locks but this may vary from policy to policy).

It’s also worth checking if there are any neighbourhood watch groups operating in the area and advise them of any void periods over the festive season.

Prevention

Even before you get to winter, get things checked out well in advance.If you are not covered by a guarantee or warranty it will probably cost more to get stuff fixed at Christmas time (and even if you do have a warranty it will take longer.) So, if the boiler is making a wheezing noise or the washing machine is clanking, have it checked out now.

Keep Tenants Informed

Well-informed tenants are the best protection against winter property damage. Don’t assume that your tenants know how to deal with the cold weather; many won’t. Similarly, you should remember that it is your responsibility as a landlord to make sure they have the information they need.

Consider putting together an information pack, including things like the location of stopcocks, basic boiler operation, and so on. Remind tenants to periodically turn the heating on (using the timer system if one is available) if they go away over Christmas, in order to ensure that pipes don’t freeze. Another great way to warm up your property is to bleed the radiators. This releases any trapped air, allowing hot water to fill every part of your radiator and warm the property more efficiently. It may be worth dropping off some radiator keys to your properties and showing your tenants how to use them.

Make sure they know where the fuse box is and that they know how to turn off the gas. Tell them to keep a note of the number 0800 111 999 – they should call this if they smell gas.

Ask friends for names and phone numbers of good plumbers, heating engineers and other trades people. Have some portable electric fan heaters you can use to give your tenants to keep them warm if the heating conks out and no one can come out and fix it promptly.

Getting the Work Done

Only use properly qualified tradesmen who are member of a national body of association. Check what membership of the body gives you and check they really are members by asking for ID. For example, all gas engineers should be listed on http://www.gassaferegister.co.uk/(the new name for Corgi)

Decent plumbers and some heating engineers should be in http://www.ciphe.org.uk/(which also has a list of plumber and heating engineers who are available over the Christmas period) or the Association of Plumbing and Heating Engineers. Some white good suppliers are closed for only one day at Christmas.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

About Me

I have been in the Warrington property market since 2004, owning and running, the Hamlet Homes office in Warrington with my excellent team.

I have always shared my thoughts on the local property market in Warrington with my landlords, but now I want to share with everyone with an interest in property in Warrington.

In my blog, I will talk about what is happening in the Warrington property market itself, even looking at specific streets or housing estates. At other times, I will post what I consider decent buy to let deals. I like to look at the whole of market and give you, what I consider to be, the best buy opportunities.

If you see a potential deal, and want a second opinion, email the link to manoj@hamletwarrington.co.uk and I will always give you my honest opinion on the property and its investment potential – good or bad.