Lincoln landlords are becoming progressively more self-assured about expanding their rental portfolios; as Lincoln rents rise, mortgage interest rates fall and demand for decent Lincoln rental properties outstrips supply.
Several reports nationally would suggest around a third of UK ‘portfolio’ landlords (i.e. landlords with more than one rental property) are actively looking to expand their rental portfolios in the next 12 to 18 months, which would locally mean …
1,181 Lincoln ‘portfolio’ landlords are looking to add to
their rental portfolio by the end of 2022.
The pandemic has had a substantial change to what we want from a home. Many people think that relates just to homeowners, yet nothing could be further from the truth as it also applies to tenants.
Homeowner or tenant, many of us have spent a lot of time away from places of work. Many office workers face the outlook of the combination of working from home as well as at the office, meaning a change in what people look for in their home. People (including tenants) are looking for larger properties, with extra rooms for office space and decent sized gardens or to be closer to outside green space.
So, let’s look at the ‘scores on the doors’ as to why Lincoln landlords are on the up …
Lincoln house prices are 24.4% higher than 5 years ago.
Because some Lincoln first-time buyers are being priced out of the market due to these house price rises, they are being forced back into the rental market. Add the extra demand of the 1 in 10 Lincoln house sellers who, in the last 12 months, have had to go into rented accommodation instead of buying, and this has created increased demand, meaning …
Rents today in Lincoln are 10.8% higher than a year ago
and 13.7% higher than 5 years ago.
The average rent of a Lincoln property today is £696 pcm.
In previous articles on the Lincoln property market, I was talking about the lack of properties to buy – yet that issue is also there in the British rental property market. Now let’s look at the supply of rental properties.
Would it surprise you that the number of private rented homes in the UK has fallen in the last 12 months by just over 2.5%?
Why? One reason has been many ‘accidental’ landlords have used this housing market to sell their property for a good price. That means the supply of available rental properties has decreased. The perfect storm of increased demand and lower supply, and with many Lincoln tenants competing for those larger Lincoln homes, they may find Lincoln rental prices pick up even more over the next year.
What about buy-to-let mortgages for Lincoln landlords?
The banks all but withdrew from buy-to-let lending in the first lockdown. Yet, since last summer things have settled down and during 2021 there has been a mortgage price war.
Lincoln landlords can borrow 60% of the value of their BTL property on a two-year fixed rate of 1.18% from Platform and even those with a 20% deposit (that’s borrowing 80%) can borrow that money at 2.49% 2-year fixed rate from The Mortgage Works. Those looking to fix for a little longer can get 1.44% from The Mortgage Works and 1.79% at 75% loan to value from Santander.
(It must be noted there are some fees to these mortgages, and you must take advice from a qualified mortgage advisor before deciding which mortgage is best for you).
So, is now the best time to invest in Lincoln buy-to-let property?
If you are attracted to invest in Lincoln buy-to-let, it’s vital to do your homework first – particularly if you are new to the game.
When estimating the expected rental returns on investment, capital growth and yields, many Lincoln landlords look to what has happened with house prices and rental prices, yet past performance does not always deliver a future guaranteed return.
Smart Lincoln landlords will speak with agents like myself and others in Lincoln, prudently researching the Lincoln property market to discover what types of properties are in high demand (and short supply) from tenants.
Whether you are a landlord of ours or not, please feel free to drop me a line via email or social media for no nonsense advice on the important matters to look out for before investing in Lincoln buy-to-let.
A recent report by Legal & General stated that since the pandemic, many older homeowners had put their plans to move home ‘on ice’. It said that fewer OAP homeowners are planning to downsize from their large family homes after the pandemic made them realise the actual value of their local community and space.
Historically, many OAPs move home to another part of the country to live near their grown-up children. Yet the pandemic has shown that OAPs can live quite well locally without moving to a strange new town to live near their children. The support networks of their friends in their existing community have emphasised the significance and importance of having friends close by.
Yet this trend isn’t just for OAPs moving away. Many Lincoln OAPs who aren’t moving away from Lincoln (because their family is still local) are also deciding to stay put longer for the same reasons. Even though they are rattling around their large 3 and 4 bed detached family homes, they love the space their large Lincoln homes offer.
And for those Lincoln OAPs who are wanting to move, the issue is that the choice of properties they could buy to downsize is limited. This scarcity of properties for sale, called the ‘housing crunch’, can be seen by that lack of choice of properties for OAPs to move to.
Only 126 bungalows are for sale
within a 5-mile radius of Lincoln
In a ‘normal’ Lincoln property market, I would expect this to be double or even triple this number.
All these factors combined means these OAP “eternal homeowners” threaten to make the scarcity of properties coming on to the market even worse!
So, why is this an issue for everyone else?
Well, because Lincoln OAPs aren’t moving from their large 3 and 4 bed detached homes to smaller bungalows or ground floor apartments, this is creating a blockage on the housing ladder. Lincoln families, in their 30’s and 40’s, are desperate for larger 3 and 4 bed detached homes for their ever-expanding families. But if the OAP sellers of those family houses aren’t moving, they will remain overcrowded in their existing homes.
Let’s look at the numbers first.
There are 4.42m UK over-65 property owners, and their properties are worth a combined £1.53 trillion (which covers just under three-quarters of the national debt).
71.3% of those aged 65 and over own their home (although 1 in 10 still has a mortgage).
There are 9,777 Lincoln homes occupied by OAPs, representing 23.1% of all the households in Lincoln (notable compared to the UK average of 31%).
86.9% of those Lincoln OAPs are retired, meaning the rest are still working! (The national average is 83.4%).
The total value of the property in Lincoln owned by OAPs is £1.55bn.
63.9% of Lincoln OAPs own their home outright (compared to the national average of 65.8%), and 5.4% of Lincoln OAPs own their home, albeit with a mortgage (compared to the national average of 5.5%).
Many Lincoln OAP homeowners simply love the house and neighbourhood they live in, often living in their homes for over 25+ years. I talk to many mature Lincoln homeowners who say they are afraid to put their home on the market, because they believe (incorrectly) if they find a buyer for their home and can’t find another property to go to … they would be made homeless.
I can only share my opinions on the matter. The one thing I have seen in my years in the property market is that so many Lincoln people leave it too late to move home. So, when they do move, they aren’t fit enough to do all the jobs in their new home. Indeed, is it better to move home in your late 60’s/early 70’s, meaning you can still do the little things to make your new house a home, rather than in your late 70’s/early 80’s and find the jobs are much harder to do?
Also, if you are worried about finding your next home, get yourself on the mailing lists of all the Lincoln estate agents. A recent study showed only 1 in 6 buyers were on an agent’s mailing list for the property they bought. Therefore, by being on the mailing list, you will get to know of any suitable properties coming on the market before most others. This is important in this housing market; a property is often sold STC before it hits Rightmove (to a buyer that put themselves on the agent’s mailing list).
By downsizing, you could use the additional funds to top up your pension, take the family on a holiday of a lifetime (once it’s safe to do so of course), or help your children get on the housing ladder themselves with a deposit for their own home.
I fully appreciate many of the 6,770 OAP homeowners in Lincoln have many reasons to stay, be that sentimental, friendship, support networks etc. My advice to all of you is to do your homework, put yourselves on the mailing lists of agents (in case the property of your dreams comes up) and do what is best for you. By downsizing, you are giving yourself better options for your quality of life and massive opportunities to spend more time on the things you enjoy like your family, holidays, or even helping others.
The choice, as they say, is yours.
If you are a Lincoln homeowner and want to ask me anything about what I have said, please drop me a line to discuss the matter further at no cost or obligation.
With Rightmove announcing a national drop of 0.3% in average asking prices in August, some are asking if the steam has been let out of the property market. Yet with the gains we have seen in the last 12 months, is this just a minor bump in the road? Alarm bells normally ring when new homeowners coming to the market for the first time are having to lower their initial asking price when compared to the market as a whole.
So, what is actually happening in the national and local property market to asking prices and the number of properties for sale, and where does that leave Lincoln homeowners and Lincoln landlords?
1 in 7.4 homes already on the market today have reduced
their asking price in the last two weeks
That means new sellers bringing their property to the market for the first time, are having to curtail their initial asking price to remain competitive. Normally, this should ring alarm bells, particularly when this is the first time this has happened in 2021. Therefore, it’s vital to ‘look under the bonnet’ of the figures and see what, exactly, is happening locally.
Average asking prices for Lincoln homes
are 1% down compared to July
However, that figure hides some interesting anomalies – the average asking price of Lincoln semi-detached houses are 1% lower than in July (that doesn’t mean they have dropped in value by that much – just the headline asking prices) whilst apartments/flats have seen the average asking price rise by 3% in the last month.
So, if this is what is happening to Lincoln asking prices, what about the number of properties for sale. Looking nationally first…
there are currently just 285,970 properties for sale in the UK,
which means 1 in 67 British homeowners are presently on the market
interesting when compared to 2005, it was 1 in 13.5 homeowners on the market.
With such little supply of properties for sale nationally, demand remains robust. Yet the property buyers in the market are being a little more reserved with the offers they are making compared to the Stamp Duty holiday frenzy times seen earlier in the year. They will pay handsomely, and yet top dollar won’t offer the ‘crazy price’ levels some Lincoln buyers were offering in the spring – hence the recent reduction in asking prices to a more realistic level.
Looking at the movement in the available properties for sale and to rent in Lincoln over the last few months, an interesting picture arises.
The number of Lincoln properties for sale (and rent) is still at record lows when compared to the 30-year long term average.
The choice for Lincoln tenants is limited as well, as many tenants aren’t moving home. With the additional increase in demand from 1 in 10 Lincoln homeowners choosing to go into rented accommodation (albeit temporarily) Lincoln landlords with exceptional properties are getting decent rents, as discussed in a recent article I wrote about the level of rents in Lincoln.
With the current level of Lincoln properties for sale being around 40% to 50% below the long-term average (depending on the type of Lincoln property you own), it means when a Lincoln property is properly priced, given the intense competition, often it comes down to the position of the buyer and not the price they are prepared to pay.
When I say, “position of the buyer”, I mean, do they have a chain, do they have to sell their own property to buy another property?
Many Lincoln house sellers are selling their home before they buy. Selling before you buy can be a fruitful approach in a fast-moving property market. That does mean your own purchaser will have to demonstrate a certain amount of patience whilst you wait for the right home to come on to the housing market.
However, because it is currently taking on average 19 weeks between sale agreed and exchange of contracts, with mortgage providers and solicitors taking their time due to the backlog, this often allows you to potentially play catch-up if it takes a couple weeks to find the right property for you.
Many home sellers are going even further by selling their Lincoln home first and then going into transitional rented accommodation. This subsequently puts them in pole position when their forever home comes up for sale as they have no chain. Although this takes a lot of determination and resilience, it does mean you will be in the very best position when the property of your dreams comes up.
The choice they say, as always, is yours!
If you would like a chat about the Lincoln property market and the best thing for you and your personal circumstances, do drop me a line. In the meantime, what are your thoughts on the current Lincoln property market? Do share in the comments.
Should you sell or should you buy in this most interesting Lincoln property market?
I have calculated that at least 220 Lincoln house sellers have rented a home to break their house chain in the last 12 months, although at a cost as they face paying many thousands of pounds in rent.
There are several reasons behind this. One is because they cannot find another Lincoln property to buy amidst a continuing shortage of new Lincoln properties coming to the market. Although, there are others who have achieved such a high price for their home they have decided to cash in and are (hopefully for them) waiting for the Lincoln property market drop?
Or will it drop? (More on that later).
Those selling their home have seen the…
average Lincoln home rise in value in the
last 12 months by £13,100.
Yet, if they have had to go into private renting, they have paid for that privilege in the rent they have had to pay.
The average cost of a six-month rental agreement in Lincoln is £3,809, meaning accidental Lincoln tenants have pumped £837,998 into the Lincoln rental market in the last 12 months.
The unevenness between the number of properties for sale and demand for them is at its widest since the early 2000’s. Whilst we have seen a slight improvement in the number of properties for sale in Lincoln, there are still…
34% fewer homes up for sale today in Lincoln,
compared to August last year.
This serious shortage of Lincoln property for sale is discouraging some hesitant Lincoln homeowners from putting their property on to the housing market, anxious they will not be able to find their next home and will be left renting.
Yet some savvy Lincoln homeowners are moving into a rented property as a way to navigate the shortage of properties to buy. If you have someone offering you top dollar for your Lincoln home, whilst you will have the hassle of two moves, the increase in value of your Lincoln home will more than offset the rent.
Also, when you come to buy your next Lincoln home, you will be chain free and in pole position to buy your ‘forever home’, rather than being overlooked for the home because you are sold stc and burdened with a chain.
Yet this trend has made life tougher for long-term Lincoln tenants.
On average there were normally 1,200 to 1,500 properties available
to rent in Lincoln on Rightmove at any one time (pre-pandemic),
today there are only 606 available.
To give you an idea of how this has affected the Lincoln rental market, with heightened demand and lower supply, demand for rental properties has grown to such an extent…
the average rent in Lincoln has grown from £635 per month a year
ago to £685 per month today.
Tenants are suffering from less choice and higher rents in the Lincoln property rental market, with few indications it’s going to significantly ease on the run up to Christmas.
So, what is going to happen to the Lincoln property market?
Well, those of you that follow me know I regularly write about the Lincoln property market in my property blog. If you would like some recent articles I have written about the future of the local property, either drop me a line and I will send you some links to those posts, send me a DM or contact me by telephone.
In the meantime, please do share your thoughts on the matter in the comments.
Whether you are a Lincoln homeowner, first-time buyer, or landlord; the last 15 months has been a roller coaster ride when it comes to the Lincoln property market.
With 213,120 UK house buyers and 58,580 UK tenants moving home in June, the summer has been manic for many people. Meaning some Lincoln homeowners are asking if they should be staying put? Or should they wait for the best home to come onto the market before putting their home up for sale or find a buyer but be unable to find a property – it’s all rather confusing.
Then we have some Lincoln landlords who are asking themselves if they should buy another property investment (and some even wondering if they should sell and cash in on the boom) and then finally, with 95% mortgages back, first-time buyers are asking if they should look to take the plunge and buy their first home or wait.
In this article, I hope I can help you with the decisions you might want to make and to navigate this unusual post lockdown housing market. Let me start with some stats to show you what is happening at the moment in Lincoln.
The average time it takes to sell a Lincoln property in
this housing market is 43 days.
Interesting when compared with nearby Washingborough at 54 days, Nettleham at 45 days, Skellingthorpe at 82 days and Branston at 41 days.
Look back five years, it took 97 days on average to sell a Lincoln home – the local property market is now certainly ‘cooking on gas’!
The property market has certainly solidified a little over the last few weeks. The Stamp Duty holiday rush has seen its run and the pent-up post-Brexit and more importantly post-lockdown demand has receded and although I am still observing competing offers on most Lincoln properties, I can certainly get a feeling of a small shift in the balance-of-power between the seller and buyer.
Many people have put their house hunting on hold as they go on their first holiday since 2019, be that glamping in Cornwall or having days out on a ‘staycation’. That means between now and mid-September, depending on what type of property you are looking for, many buyers could well discover that there are fewer competitors for their next home than there might be.
Also, July and August are notoriously barren months for estate agents putting new properties up for sale. Yet since the typical ‘seasonal property market’ is so out of kilter because of the pandemic, many agents are taking on a decent number of particularly good properties now, which is not something that characteristically would have happened in the summer months.
The important thing is not to wait for the property to hit the portals (i.e. Rightmove etc). Yet research shows, nearly 5 out of 6 people who bought their home were not on the agents mailing list before they viewed the home they eventually bought. That’s OK in a normal property market as you can wait until it hits Rightmove or Zoopla, yet these are unprecedented times and if you are not on an agent’s mailing list – you will miss out on properties.
If you don’t put yourself on the agent’s mailing lists, you will
end up losing out on the property of your dreams.
So, the question is should you put your Lincoln home on the market first or wait for the right property to come along?
Roll the clock back a few years and it was standard practice for people to wait for their dream home to come onto the market, then put theirs on and hope that it would sell in time. This housing market is different and only those who are in a position to proceed (cash buyers or those sold subject to contract) will be considered as serious buyers.
Yet, nobody wants to be homeless if they do sell.
Estate agents are returning back to their old skills from the 1980s and 1990s by chain building. By starting at the bottom of the chain of the smaller house and building up a chain, waiting for everybody to find their next homes, nobody needs be made homeless.
This is not an issue because most house sales are taking on average between 20 and 25 weeks and as long as everybody communicates with each other and everyone knows where they are, then normally things go through, albeit slower. Can you believe it – estate agents really are earning their money with this!
So what Lincoln homes are selling the fastest?
Lincoln landlords, there are some bargains to be had on some apartments with that length of time on the market? Again, do your homework or even consider picking up the phone to me for a chat.
So, there you have it. The lessons I hope you have now learnt from this are to put yourself on agent’s mailing lists, talk to agents about your requirements so you get the heads up first when a property is coming on to the market (don’t just do everything over a computer screen) and once you have found a property be a little bit more patient with how long it takes to build a chain and then get the property through to an exchange and completion so you get the keys to your forever home.
Whether you are a Lincoln homeowner, Lincoln landlord or first-time buyer and would like some advice and opinion on your circumstances in the current Lincoln property market, please don’t hesitate to either pick up the phone or drop me a message.
To everyone else, what are your thoughts on the Lincoln property market?
The bungalow is a building that has represented a more leisurely, gentler way of life since the early 1900’s. Bungalows have been sold as an aspiration for those about to retire, saving them the annoyance of having to climb stairs. With an ageing population, one would think they would be building more bungalows, yet nothing could be further from the truth. In fact, this could be one of the main issues that is holding back many mature homeowners moving home thus creating a bottleneck in the Lincoln property market for the younger families who are being held back and unable to move into the larger homes they so need to grow their families.
So, before I answer that question, let me share this fascinating fact about bungalows. The word ‘bungalow’ originated in India, not the UK. The name is derived from the Hindi word ‘baṅglā’ or the Gujarati word ‘baṅglo’, both of which seem to refer to a home occupied by a Bengali person. The colonial English started to use it for themselves in the late 1600s to describe the same sort of basic lodgings that sailors and staff of the invading East India Company used.
Anyway, back to the here and now in Lincoln.
There are 2,270 bungalows in Lincoln.
When you consider there are 42,368 properties in Lincoln, that
means only 5.36% of property in Lincoln are bungalows.
To give you an idea of the age demographic of Lincoln homeowners, there are 10,203 Lincoln homeowners aged 65 years old (and over) and 11,646 Lincoln homeowners aged between 50 and 64 years of age.
You can see demand for bungalows is only expected to grow. Yet new homes builders are having to deal with soaring land prices, meaning to get a profit from the site they are under pressure to build more vertically than horizontally as with bungalows (as bungalows take up so much more land).
The last available data is from 2018 and only 1.6% new builds in the UK were bungalows, interesting when it was just over 7% in the middle of the 1990s. As British people are living longer, those existing Lincoln bungalow homeowners will be living in them longer, thus creating even more of a bottleneck in the Lincoln property market.
So, what is the answer?
Well with building land in Lincoln at a shortage, maybe new homes builders should be forced under planning rules to reserve ground floor apartments to be set aside for older people to encourage them to move out of larger houses. I would challenge the long-held point of view that building more bungalows in Lincoln is the pre-eminent way to urge growing numbers of mature ‘last-time buyers’ to move out of their under-occupied Lincoln homes and free up their large homes (where their children have flown the nest) for younger Lincoln families to grow.
With the new Planning Regulations due to be in place in a couple of years, local authorities could require builders to set aside a share of homes for mature residents, as they are already obligated to subsidise local community facilities or low-cost social housing in return for obtaining their planning permission to build in the first place.
Another option would be to convert all those empty shops in our town and city centres up and down the country into residential use. There is no need for planning permission to change offices to residential property and the Government are considering the same for shops (although I have heard of some horror stories of those office to residential developments making rabbit hutches look spacious) – so again, it comes down to the planning laws and making them fit for purpose.
There are no doubt consequences of not designing our housing stock for the 21st Century and beyond for older people.
The population of Lincoln is set to growby 17,868 to 111,910 by 2040.
As the UK population gets older in the coming decades, as life expectancy is set to grow from 81 years 2 months to 83 years 3 months by 2040, I fully appreciate the need for more Lincoln homes to be built for families, yet one must ask if the planning authorities are focusing too much on new housing for the younger generation, when they in fact should be encouraging new homes builders to develop larger, ground floor two-bedroom homes and decent accessible transport links.
These are my thoughts, what are yours the good people of Lincoln?
The Semi-Detached House – the icon of middle-class aspiration, the pinnacle of liberalism yet at the same time compromised individuality, the ‘semi’ as it is colloquially termed is, for many Lincoln homeowners, the highpoint of modern domestic bliss.
Britain’s gift to architecture is the humble ‘Semi-Detached House’. This type of property has been exported around the world with – the ‘Doppel Haus’ in Germany, the ‘Duplex’ in the USA, Canada and Australia.
For those young, hip, and trendy people living in your converted warehouses with strobe lighting and exposed brickwork, it might surprise you the semi is the dream home of an immense number of Lincoln people. In fact, it is the most common dwelling type in the British Isles, with 8,060,657 semi-detached homes occupied by Brits alone (representing 31.68% of all occupied property) compared to 23.81% detached, 25.49% terraced and 19.02% flats.
In Lincoln alone, there are 13,124 semi-detached houses meaning …
30.0% of properties in Lincoln are semi-detached.
So, when did the semi-detached house first come into play? Many people think the semi-detached boom started with mass swathes of the suburban mock Tudor Bay fronted semis being built between the first and second world wars. The fact is that it was actually rich landowners in the post Great Plague (1665+) years wished to house their farm labourers as inexpensively as possible, yet making their grand estates look as imposing as possible.
And that’s the point of a semi-detached house. Only half the property is yours, yet you ‘feel’ like you own it all.
The next phase of the semi-detached story, and a phase that really pushed home the point, were many of the late Georgian houses built around the Kensington Gardens area in West London. Many upper-middle class Georgians were wanting something more than the classic Georgian terraced house yet couldn’t afford a large, detached home. Therefore, architects took the humble semi-detached house to the next stage of its evolution by masquerading the building itself as one home by slipping its two front doors down opposite sides of the building, making it look like one home from the front, to complete the impression of total ownership.
By Victorian times, semi-detached houses fell out fashion as the railways were building many of them for their railway workers and they became associated with the lower working classes, but speculative builders continued building semi-detached homes for the new lower middle class, which is the reason why ultimately the country is full of semi-detached homes today.
The semi-detached house was saved from the annals of history by the Bedford Park development in Ealing (London). Referred to as the world’s first ‘garden suburb’ and started in the 1870’s, the architect of Bedford Park used influences of the ‘Aesthetic Movement’, the precursor to the ‘Arts and Craft Movement’ to make the buildings look more pleasing on the eye. The architect also took reference from the style of properties from British history such as Queen Ann to be seen in such features as a sweep of steps leading to a carved stone door, rows of painted sash windows in boxes set flush with the brickwork and bright coloured brickwork with limestone stone quoins emphasising the building’s corner.
As the car enabled people to commute to work from further away, people wanted to get out of the big cities, thus giving rise to the interwar semi, with its mock Tudor fronted, rosemary tiled roof, oak beamed, herringbone brickwork and the leaded and stained-glass windowpanes that we all recognise. It was Bedford Park that gave the green light for architects up and down the country to use old styles of building design to make their semi-detached houses look the part.
And now, in more modern times, the semi-detached house has gone from strength to strength.
7,650 of Lincoln semi-detached houses have changed hands since 1995, many upwards of 5 times (and a handful even more).
The semi continues to appeal, both to big national builders and smaller Lincoln developers, and most importantly to home buyers. The advantage of semi-detached houses over town houses/terraced houses or apartments is they afford access to their (typically bigger) gardens without having to pass through the house, and they have natural sunlight on three sides of the property, are easily extendable and quite often have a driveway.
And that’s at the heart of what a semi-detached house is all about, the schism or divide of the semi reveals the tension at the heart of owning your home, which on one side of the coin is a commodity/way to make money and on the other side, a vision to have your own castle, a piece of ground to call your own. It articulates both the craving for personal freedom and the inevitability of socio-economic life. What do I mean by that?
We may dream of owning a castle in many acres, with a drawbridge and moat, yet real life means we can only afford half a building plot sliced out by a volume national builder next to the A158.
I just love a semi-detached house! Style and substance combined.
What are your thoughts? Share your stories and opinions on the humble semi-detached house.
Moving home is the ultimate double-edged sword. Of course, you get to enjoy new neighbourhood, perhaps a bigger home, and all the excitement that comes with making your Lincoln home your own.
Yet to get that point, there is the weeks and weeks of changing utility suppliers, weeks of packing and several sleepless nights wondering if you have done the right thing.
Would it surprise you that on average 1,164,970 homeowners move home every single year in the UK, yet only 703,000 private tenants move home each year?
So, it appears that homeowners move home more often than tenants, until you realise that there are 18.14 million owner occupied homes and 5.62m private rented homes in the UK
Meaning every private rented home changes hands every 4.25 years what every owner occupier home changes on average every 15.5 years.
Nevertheless, we were surprised to learn the average British tenant moves home every 4 years and 3 months.
We at Walters’ Property understand the stresses and strains of finding and then moving into your new Lincoln home, yet with our help and guidance we will make it as smooth as possible, both from the tenants and landlords’ point of view.
as 184.7% more people sell in June compared to the Lincoln area 10-year average
June 2021 was the busiest month ever for UK estate agents, home removal companies and conveyancers since monthly records began, as HMRC logged 213,120 residential transactions in June, a jump of more than 216% nationally on the same month last year (when the housing market had just reopened after the initial lockdown).
The cause of this was all the homebuyers trying to complete their property purchases before the approaching Stamp Duty Holiday deadline finished at the end of June. This was important as house buyers had until 30th June to complete their sale to save up to £15,000 in Stamp Duty Tax.
Many property market commentators believed the property market would slump after the Stamp Duty Holiday finished. Yet, I haven’t observed many property sales falling through or renegotiations because the buyer had to pay the extra Stamp Duty, and talking to other property professionals around the UK, neither have they.
Let’s not forget that the Stamp Duty Holiday isn’t totally over as it is a tapering off until 30th September. This means homes and apartments sold under £250,000 will still profit from the Stamp Duty Holiday.
So, what sort of property transaction numbers are we talking about here in Lincoln?
An average of 163 properties a month in the Lincoln area have sold in the last 12 months, compared to the 10-year rolling average of 277 properties sold per month.
The best month ever before this June was March 2016, when there was a rush by Lincoln buy-to-let landlords to secure a property before the introduction of a 3% Stamp Duty surcharge for second homes. In March 2016, 635 Lincoln properties changed hands.
My calculations show 790 Lincoln households sold in June 2021, 184.7% more than the long-term average.
So, what has driven this? The Stamp Duty changes caused some Lincoln people to bring their home moves forward from 2022/3 to take advantage of the tax savings. Yet the most significant thing, talking to many Lincoln homebuyers and sellers, is the pandemic has changed the way people live. Working from home and needing additional office space has meant many Lincoln families (and others from out of the area) are seeking larger properties with more extensive gardens and better access to the countryside. I really can’t see this social trend changing for a long time. I believe this means Lincoln property prices in the medium term will not be markedly different over the next couple of years yet…
Don’t be alarmed to see volatile short-term changes in the run-up to Christmas (both up and down) with Lincoln house prices.
I have always been a believer in the medium-term (i.e. over a couple of years) house price trends instead of the monthly trends, which can sometimes be like a yo-yo. I have always said the best bellwether to the health of the Lincoln property market is the number of property transactions rather than the house prices.
Finally, I can only see this continuing as Banks scrabble to give money away in the form of cheap mortgages. A few weeks HSBC and TSB launched a 0.94% two-year fixed rate deal for those wishing to borrow 60% or less. More recently, the Nationwide Building Society launched a 0.99% five-year fixed-rate mortgage deal (again on a maximum of 60% loan to value basis).
If you would like a chat about the Lincoln property market, your options and where you stand in the Lincoln property market – please do not hesitate to give me a call.
In the meantime, I would love your thoughts on this.
Has the pandemic made you move home earlier?
What do you think will happen in the coming years to property in Lincoln? Share your views.
I know of many Lincoln buy-to-let landlords who fell into property investing by accident. Many didn’t want to sell their family home when the Lincoln housing market crashed in the Credit Crunch of 2009/10, yet still needed to move (often for work). They thought they would keep their Lincoln family home in case they ever moved back to Lincoln. Yet by keeping it, it couldn’t remain empty (there was still a mortgage to pay on it), so they ended up renting their home out.
And that was the start of many Lincoln buy-to-let landlord’s journeys!
Many of you Lincoln landlords reading this have had your fair share of problems, from tenants doing a midnight flit, rent arrears and troublesome tenants, yet also had your rewards.
The average Lincoln landlord in the last ten years hasseen their investment rise by an average of £78,800and has earned in rent (before costs) £95,760.
Many of you reading this have started to learn about investing and creating a property portfolio by buying additional Lincoln homes to rent. The average Lincoln buy-to-let landlord now owns 3.38 properties that generate an impressive passive monthly income with the bonus of growing their household net-worth through growth in the value of their buy-to-let portfolio.
With the average Lincoln buy-to-let landlord in the 56-to-58-year age range, one thing I learned about savvy buy-to-let investing, the shrewd Lincoln landlords tend to want longer-term mortgages.
Taking longer-term mortgages reduces the risk to the landlord.
It sounds counterintuitive, yet it comes down to leverage. Let me explain that whilst leverage is formidable in buy-to-let, it is also quite risky.
Before I explain why some readers might not know what leverage is and how it relates to mortgages and buy-to-let, two-thirds of landlords are debt-free, yet those landlords who have come into the property investment game in the last 10 or 20 years have had to use borrowed money (mortgages) to finance their deals. Therefore, by putting down a small amount of say 20% and borrowing the other 80%, if you calculated your return on an investment base only the money that you put into the deal, then that is what is called leverage (i.e. using borrowed money as a funding source when investing in property and generate greater returns on borrowed money).
You would think, as, say a typical 55-year-old Lincoln landlord, you would want to be only taking a mortgage out for however long you intend to work (say ten years at most) – meaning your portfolio would be all bought and paid for by the time you retire. Yet the clever buy-to-let Lincoln landlords I talk to don’t see their portfolio as having to be paid off (and mortgage-free) by the time they retire. They have understood how to utilise and administer their mortgage debt rationally to enhance their returns without taking on unwarranted risk.
By taking a short-term mortgage of say ten years, compared to a 25-year mortgage, during those ten years, your monthly mortgage payments will be particularly high (because the longer the mortgage term, the smaller the monthly payments will be).
Also, you can pay off a 25-year mortgage in 10 years, but you cannot pay off a 10-year mortgage in 25 years.
Longer mortgage terms mean lower monthly mortgage payments, which in turn means greater cash flow and more elasticity within your rental portfolio. Now to some Lincoln landlords, possessing their rental properties debt-free is particularly important. Yet, I would still seriously consider taking the 25-year buy-to-let mortgage and make additional payments every month to help you to pay the mortgage off early.
Therefore, as an example, if you have a bad couple of months without any rent coming in or unexpected bills, you can return to making the mandatory lower monthly mortgage payments without getting your property repossessed.
So, by taking on the longer-term mortgage, you decrease your risk because it has the lower required payments.
Let me give you an example – if our Lincoln landlord wanted to buy a Lincoln terraced house property for say £162,500 and put down a 25% deposit of £40,625, the best buy-to-let deal I found online on the day of writing this article was a 1.79% Santander 5-year fixed-rate buy-to-let mortgage.
Looking at the mortgage payments per month when comparing the mortgage terms; on the 10-year mortgage, the mortgage payment would be £1,119.78 per month. Therefore, our landlord would have to top up from personal savings to make up the monthly mortgage payments. Whilst if they choose the 25-year mortgage, the mortgage payment would be £514.79 per month. This would mean our landlord would be in profit from day one.
Some might say though the longer term means more interest payments, as it’s 25 years and not 10 years. Yet, at today’s low interest rates, that would only mean an additional £20,065 in interest payments spread over 15 years – not much in the grand scheme of things.
25% Deposit Required
75% Mortgage Borrowed
Annual Interest Rate
Mortgage Length (in years)
Mortgage Payment per Month
Sum of Mortgage Payments
Therefore, by taking the longer-term mortgage, as a savvy Lincoln landlord, you are ‘cash flow positive’, meaning you can build a reserve fund for every one of your rental properties to enable you to deal with any unforeseen voids and repairs.
The best way to deal with a buy-to-let property is to see it as a small mini-business, and as with all businesses, you need to grow your income and reduce your expenses whilst in the background provide a decent rate of return for your investment.
The greater the amount of mortgage debt you carry, the greater your monthly mortgage payments, and the simple fact is, the shorter the mortgage term, the higher the monthly mortgage payments. So, if you take on a sensible level of mortgage debt and be ‘cash flow positive’, you can profit from much better returns without taking on excessive risk.
These are my thoughts – please share yours.
P.S. Before I go, I have to say this to cover my proverbial. My comments are only a very brief commentary on the issues raised and should not be relied on as financial advice and that no liability is accepted for such reliance, and that anyone needing such advice should consult a qualified financial adviser or other authorised person.
The value of an average Lincoln terraced house has increased in value by £13,185 in the last 12 months, an increase in value of 8.64%.
Yet the costs of building a Lincoln home have shot up even more in the last 12 months, meaning the price of Lincoln new homes and any building works you do to your Lincoln home in the coming months and years could be a lot higher.
The British house building profession is experiencing a building materials supply problem. Everything from cement to bricks, timber and roof tiles, plastic guttering, copper wire and pipe to insulation, even kitchen sinks have become scarce – and when people can find them, they are costly.
For example, looking at the timber industry, three-quarters of the UK’s building timber comes from abroad, so lockdowns around Europe put a restraint on the timber processing industries of Sweden, Lithuania, and Latvia throughout 2020. In addition, building material supply chains were interrupted due to the application lockdowns imposed by their governments, resulting in many sawmills in those countries restricting shift work to comply with their country’s social distancing rules. Some mills even stopped all work for eight weeks last year, meaning they were incapable of cutting, milling or treating timber, causing their existing stocks of building wood to run dry.
Yet, whilst we were all in lockdown, everyone started doing DIY projects, so the public demand for building timber in the UK remained high, giving little opportunity for UK sawmills (let alone North-eastern Europe) to catch up and restock to the levels previously held before the pandemic.
Building timber costs 112% more than a year ago, steel RSJ’s are a lot more expensive because iron ore has gone up 120.1% whilst aluminium is up 56.8%, and copper is up 59.7%.
All the blame cannot be laid at the feet of the virus and lockdown. The ‘B’ word caused issues with supply at the start of the year. Building materials are a worldwide supply chain issue; this spring’s Suez boat crisis, when many boats were diverted around Africa (as the length of time the blockage was going to last was unknown), exacerbated the problem. All this has combined to make the cost of sending a 40ft container from China to Tilbury Docks £7,576 today, compared to £1,195 just before the crisis. Also, supplies of sand and cement are particularly low with massive demand from the large £98bn High Speed (HS2) rail project. All this combined is affecting many building projects, big and small, across the UK.
If an average Lincoln terraced house had risen by the price of building timber in the last 12 months, today it would be worth £323,520, not the current £165,789.
RSJ (steel joists) take twenty weeks to arrive, compared with the typical five weeks, whilst plasterboard is being rationed with weeks of delays for the ‘good stuff’ and MDF wood, usually takes seven days to arrive; now it takes over a month. Roof battens need to be ordered a month in advance, whilst pre-lockdown they were commonly held in stock by every building merchant.
Demand for building materials has increased so quickly because many British homeowners are driving the explosion. Those people in safe jobs with little opportunity to spend money on foreign holidays and fancy restaurants decided to invest in their property and gardens. According to the Bank of England, this craving for home improvement has particularly exploded since the mature generation have started to be double jabbed (their savings accounts having increased by £180bn during the pandemic).
As I have explained in previous articles, these increases in the price of raw materials will fuel inflation, affecting interest rates upward. An increase in interest rates will make a material difference to the value of Lincoln property. To what extent? Please read my previous articles on the Lincoln property market.
Please do share your stories of issues with builders and building materials over the last 15 months in the comments. I appreciate any stories you can provide to help others in Lincoln.
Lincoln house prices rose by 1.4% last month, according to the Land Registry.
This means the annual rate of house price growth in Lincoln has increased to 7.1%.
Looking at the national figures, many people were concerned the UK property market was overheating as spring saw annual growth of 9.9%, the highest rate of house price growth documented since June 2007 (when national house prices were rising by 10.8% p.a.). It was only a matter of a few months later the Credit Crunch hit, and the average value of a UK home plummeted from £190,032 to £154,452 in 18 months, a drop of 18.7%.
Government economic measures such as the Furlough Scheme and the Stamp Duty Holiday have so far shielded the Lincoln property market from the worst economic recession since 1709.
So, the question is, can this growth in Lincoln house prices
continue, or is this the start of a house price crash?
One thing is for sure, looking at the number of For Sale boards going up and turning to sold just as quick, shows this market is not maintainable for the long term. Most of the Lincoln people looking to move home have brought forward their home-moves from 2022/3 to this year because of the Stamp Duty Holiday and the lifestyle choice of wanting a bigger garden/office space at home.
Nonetheless, the doom-mongers in the press say there will be a second wave of house sellers that will flood the Lincoln property market in the autumn and winter when furlough ends. They believe many of the 3.4m people still on furlough will be made redundant when furlough finishes at the end of September 2021 forcing them to move home.
This was the catalyst for the house price slump in 2008/9 mentioned above, when many Lincoln homeowners dumped their homes onto the Lincoln housing market.
After all, many Lincoln homeowners lost their jobs and had
mortgages paying 6% to 7% in interest payments.
However, the devil is always in the detail. The industry groups with the highest take-up rates of furlough are the hospitality (public houses) sector, where 70% of staff are furloughed. 65% of hotel staff are furloughed, and 44% people in the creative arts and entertainment industry are furloughed. Most employees in these sectors are in their 20’s and early 30’s and are tenants, not homeowners. This is going to be more of an issue for landlords than homeowners.
And of those furloughed homeowners who do unfortunately get made redundant later in the year, looking at the last four most recent house price crashes, buyers were wrestling with significant declines in mortgage affordability. For example, back in 1988, average mortgage rates were 13.9% before that crash and in 2007 (the Credit Crunch crash) 6.5%. Whilst today, they are under 2%, meaning the mortgages are a lot more affordable, and most Lincoln homeowners who get made redundant will be able to ride out the storm better.
But surely, if Lincoln house prices are rising, won’t
Lincoln homes become unaffordable?
Well, with low-interest rates, this means Lincoln homes are still relatively affordable. In 1989, the house price to earnings ratio was 5.4 to 1 (i.e. the average house was 5.4 times the average UK salary), whilst today that stands at 8.8 to 1. It’s no wonder some people are concerned there will be a house price crash (as there was in 2008 when that ratio hit 7.5 to 1).
However, it doesn’t matter what the house price to earnings ratio is ….
it is what percentage of your income is required to pay your mortgage.
In 1989, 74.6% of your income was required to service an 80% loan to value mortgage on an average UK home (i.e. you borrowed 80% of the value of your house on a mortgage). In the 1990s that percentage dropped yet rose steadily over the next decade and a half, so by the time we got to 2008, that was an equally eye-watering figure of 61.6% of your income to service an 80% mortgage.
Today, it’s only 35.9% of your income to service an 80% mortgage because of low interest rates.
So, if the issue is not the affordability of houses, what is the problem for Lincoln homeowners?
Bank of England interest rates will affect what people pay on their mortgage (higher interest rates normally mean higher mortgage payments). Interest rates are used to reduce inflation, so if inflation rises, interest rates also rise to bring inflation back under control.
UK inflation has just gone through the 2% barrier, and I believe by the end of this year or early next, it will touch 4% or 5%. In normal circumstances, this would trigger the Government (or now the Bank of England) to raise interest rates. Yet, we had a similar scenario in the late 1980s/early 1990s with a spike in inflation to 8.5% due to a shortage of raw materials and labour, but this was soon sorted out, and inflation dropped quite quickly thereafter.
In the coming year, a shortage of raw materials might be an issue. If there is a shortage of raw materials (supply problems are being found in key items such as timber, concrete, aggregates and steel), this will fuel construction and manufacturing costs upwards.
Next, will there be a shortage of labour? Some say it won’t be an issue (as unemployment will be higher), yet there are certain sectors of the economy that have an imbalance of trained staff of specialised jobs or people not wanting work in that type of job in the first place.
For example, many hospitality and dining establishments are reporting a shortage of staff because they were often filled with hard-working European migrants. I have read reports of London restaurants advertising for chefs and waiting staff, who would have received 1000+ enquiries for such jobs pre-pandemic to only be receiving applications that could be counted on two hands this summer. The hospitality and dining sector was hit harder than most, having to stop trading during the three lockdowns and working under firm restrictions. This led to the majority of staff being placed on furlough (as mentioned above, 7 in 10 are still on furlough), which has prompted some to ride out the pandemic in their own country.
The question is – will they return? If not, to entice them back restaurants will have to increase the wages they pay to attract the staff, which in turn will mean they will have to put their prices up (i.e. inflation). If businesses have to put their wages up and the cost of raw materials continues to rise, prices for everything will rise, and at this point, higher interest rates will kick in.
But how will increased interest rates affect the
Lincoln property market?
Thankfully, 91% of all new mortgages being written are fixed interest rate mortgages and 78% of all existing UK mortgages are fixed-rate (compared to 32.8% in the credit crunch) … meaning we won’t have so many houses being dumped on the housing market like we did in the Credit Crunch, because on a fixed rate mortgage if interest rates rise – mortgages don’t follow suit.
And that’s the key … unemployment combined with high-interest rates caused many Lincoln homeowners to put their property on to the market in 2008/9. Tied in with curtailed demand for property, because it was really difficult to get a mortgage (that’s why it was called the Credit Crunch) … we had an oversupply and subdued demand of Lincoln homes – causing house prices to drop by 16% to 19% depending on what type of property you owned.
So, a good bellwether and indicator on what will (or will not) happen to Lincoln property prices is the number of properties for sale at any one time.
There are only 566 properties available to buy in Lincoln today, low when compared to the 14-year average of 976 properties for sale in the city, whilst at the height of the Credit Crunch, there were 1,684 properties for sale at one point in Lincoln.
As we look to the future, if you want a crystal ball of what will happen to the Lincoln property market … you won’t go that far wrong by getting yourself on the property portals and seeing how many properties are for sale.
There is no getting away from the fact that the rise in the number of buy-to-let properties in Lincoln has been nothing short of astonishing over the last twenty years. As a result, many in the press have said Britain is a broken nation, with many twenty and thirty-somethings unable to buy their first home. The press has named this group ‘Generation Rent.’
Lincoln landlords have been accused of scooping up all the smaller Lincoln properties for their buy-to-let property empires. Others blamed the Government (of both persuasions) for pouring petrol on the buy-to-let fire for giving landlords an unfair advantage with the way buy-to-let has been taxed in the past. Many have said these landlords have priced out Lincoln’s ‘Generation Rent’. Many say they are rogues, and you can see why there is little sympathy for landlords, especially as…
Lincoln landlords receive £87,708,756 a year in rent – easy money or what?
So, as we come out of lockdown, I want to make a stand for Lincoln landlords and talk about the magnificent work they have been doing during the pandemic.
Since lockdown, it has been (almost) illegal to evict a tenant from private rented property. Yet, in the last few weeks, this ‘ban on evictions’ has begun to be eased, making some commentators forecast a ‘tsunami of homelessness’ as landlords ready themselves to kick out the tenants who cannot pay their rent.
You might say they can afford it, yet I need to highlight an often-untold story in the massive numbers of Lincoln landlords who have co-operated with their Lincoln tenants to evade eviction.
The personal finances of some Lincoln landlords and tenants have been ruthlessly strained during the last 16 months — something that is going to have ramifications on the back pockets of both landlords and tenants, as well as the attraction of being a buy-to-let landlord (more of that later).
799 Lincoln tenants are in arrears with their rent
to the tune of £1,615,303.
That’s money these landlords need to pay their mortgages with and even to live off themselves.
The eviction ban was imposed in March 2020 and the Government has expected private landlords to stand the cost of their tenant’s rent if they could no longer pay. It was estimated over 1 in 5 landlords with mortgages had requested a mortgage payment holiday in 2020. Thankfully, that now stands at 1 in 100 as most Lincoln landlords with shortfalls in rent have been using their own personal savings to cover the mortgage payments.
I have seen so many landlords giving their Lincoln tenants rent breaks and discounts to help them through these times. However, most landlords I talk to acknowledge that it is better to have a tenant paying something rather than a tenant paying nothing, hoping that total rent will start flowing as the economy recovers.
Going into the pandemic, 1 in 25 Lincoln tenants were in arrears, yet that now stands at 1 in 11.
So, are we going to see lots of evictions? I would go as far as to rebuff the idea that we will see a rush to the courts of landlords to obtain possession orders now the eviction ban has been lifted. I have always viewed evictions as a last resort.
Before the pandemic, it took about 12 months for courts to hear rental repossession cases, so this backlog will be nearer two years (if not more). Nonetheless, the threat of a County Court Judgement (CCJ) often makes tenants pay up as it will demolish their credit rating, making it particularly challenging for them to rent another home.
I feel for those Lincoln tenants under furlough or reduced hours as they have the quandary of wanting to reduce their outgoings by moving to a cheaper rental property, yet whose rental deposits will be sacrificed to cover their rent arrears. However, some have said that because house prices have exploded during the last 16 months, Lincoln landlords should write off their tenants’ arrears as a goodwill gesture.
The issue is, 1,424 Lincoln landlords only have a sole property for rent, so the arrears would have to be funded by their personal savings.
For them, the pandemic experience could be the incentive to sell up for good.
A National Residential Landlords Association survey found around a third of all landlords were now more likely to sell their buy-to-let properties altogether or sell some of them. This would mean fewer properties for tenants to rent, thus driving up the rent.
According to government and industry data, evidence suggests that a tenant who rents a property directly through a landlord and not through a letting agent is between two and three times more likely to go into arrears of 2 months or more. Is this because tenants know that private landlords who advertise directly for tenants on Gumtree and other platforms don’t carry out the checks letting agents do on them?
Many of those landlords are switching the management of their property to an agent, and for those landlords sticking with self-management of their property, there is circumstantial evidence they are starting to become a lot pickier when starting new tenancies. Even though illegal, spurning tenants on benefits is woefully all too common. I also worry there could be a stigma about renting properties to self-employed people because of the erratic nature of their income.
Looking into the future, I envisage a growth in the use of ‘rent guarantor contracts’, whereby the tenant is called upon to provide a 3rd party person to pay the rent if the tenant doesn’t. These are common for student lets and those on certain benefits, and it wouldn’t surprise me if these are used more often for self-employed tenants and regular professional lets.
That is why I believe Lincoln landlords should be celebrated … most of them have been saviours. These are my thoughts – what are yours?
And how new Gov’t rules will mean draughty low-eco Lincoln homes will drop in value
‘It’s Not Easy Being Green’, was the song that Kermit sang on Sesame Street.
Yet now being green is a normal way of life for most of us. Walking or cycling places instead of taking the car, recycling and even shunning meat are some of the things most Lincoln households are trying to do their ‘bit’ for going green.
Our conduct may have improved but when it comes to our Lincoln homes, there is still a long way to go. It is estimated around a fifth of carbon emissions come from home energy usage (nearly three quarters from heating and lighting). The country is releasing 37% less carbon into the atmosphere than in 1990, yet we have legally binding targets to hit 100% by 2050 — and the Committee on Climate Change has stated the UK will need to eradicate greenhouse gas emissions from homes to meet that target.
Landlords were hit first because since April 2018, the Minimum Energy Efficiency Standards (MEES) regulations with regards to eco-friendliness of the rental properties have required all rental properties to have a minimum Energy Performance Certificate (EPC) rating of ‘E’ or above otherwise it is illegal to let out a property, bar a couple of exceptions. This has meant Lincoln landlords have had to spend many thousands of pounds to improve their rental property’s EPC rating (an EPC rating of ‘A’ being the best eco rating through to a ‘G’ for the worst – just like washing machine or fridge ratings).
But new Government plans could hit Lincoln homeownersin the pocket as well.
The Government is planning to force banks and building societies to penalise people wanting a mortgage of draughty low-eco homes with an energy performance certificate (EPC) rating of D or lower. For those properties not hitting the correct level of EPC rating, it is suggested some form of levy will be placed on the mortgage provider, who in turn will pass that on to the home buyers in the form of higher mortgage payments. Some are describing this charge as an ‘eco-mortgage levy’.
Just over 6 in 10 (62.6%) homes in Lincoln would be hit by this ‘eco-mortgage levy’, thus potentially reducing the value of those homes
Interesting when you compare this with the national average of 60.6%.
In real numbers, 32,854 homeowners and landlords in our local authority area would either struggle to get a mortgage from a bank or building society or it would cost them more because they were a ‘D’ rating on their EPC or below.
Looking at the stats broken down for Lincoln
43 properties are classified as A on the EPC register
3,487 properties are classified as B on the EPC register
11,764 properties are classified as C on the EPC register
15,398 properties are classified as D on the EPC register
5,780 properties are classified as E on the EPC register
1,186 properties are classified as F on the EPC register
252 properties are classified as G on the EPC register
So, what can Lincoln homeowners and landlords do toimprove their EPC rating?
Well surprisingly, it need not cost a lot to improve the EPC rating of your Lincoln home. One of the most inexpensive ways to help improve your Lincoln home’s energy efficiency is low energy light bulbs with an estimated cost of just under £40 per UK property. Other efficiencies can be gained by insulating your hot water cylinder, draught proofing any single glazed windows, increasing your loft insulation, and upgrading your central heating controls, all of which can be done for a total of around £750 to £850 per property.
If you want to know the EPC rating of your home, either google the phrase ‘EPC register’ or send me a message and I will find out for you.
Finally, as Kermit famously also said, “Life’s like a movie. Write your own ending”. If you are a Lincoln homeowner or Lincoln landlord, why not look at your property’s EPC rating and look at the recommendations. You are going to have to spend the money sometime, so why not do it now and enjoy lower energy bills and when you come to sell, you won’t be penalised .. a win-win situation for you and the planet?
Would it surprise you even more when I said the ratio of house prices to wages are still lower today when compared to 1871? Yes, you read that correctly, as a proportion of average wages British house prices are 17.6% proportionally cheaper today than they were in 1871.
I wish to talk about the last 150 years of the British property market and later in the article, the Lincoln property market. I will also touch on why, before the 1900s, buying a home in Lincoln was considerably more expensive than today and why that changed.
So, let’s look at some interesting stats to get us started :
– In 1871, each house was occupied by an average of 5.33 people (i.e. for every 100 houses, 533 people lived in them), whilst today that stands at 2.39 people per house.
– In 1871, there were 4.5 million properties in the UK, whilst today that stands at 27.9 million
– In 1871, the weekly average wage was 13s 8½d (68p) whilst today it is £585.50
– In 1871, only 20% of people owned their own home, whilst today its stands at 65%
I stated in the first part of the article it was more expensive to buy in the latter parts of the 19th Century than today. It may only be of historical interest, but back in 1871, the ratio of average house prices to average wages was 10.5 to 1 (i.e. the average house was worth ten and half times the average person’s wage), whilst today it stands at 8.8 to 1.
Interestingly, for the next 45 years, that ratio went on a downward trend relative to wages and only stopped falling after WW1, where the average house was worth only 2.2 times the average wage. This made houses more affordable and set the foundations for the homeowning passion we Brits have today.
So why did this happen, what can we learn from it and what does it mean for Lincoln homeowners and Lincoln landlords?
There are three significant drivers that made property a lot more affordable between 1871 and 1911: the Victorians built more property, made them smaller and people’s wages rose significantly.
– In the 40 years between 1871 and 1911, the number of properties in the UK rose from 4.5 million to 8.9 million. To give you some perspective, there were 18 million properties in the UK in 1981. If the UK had grown by the same rate between 1981 and today that was experienced between 1871 and 1911, there would be 35.6 million households in the UK (and not the 27.9 million mentioned above).
– In 1871, the average plot size of a property was 0.23 acres, yet by 1911, that was down to 0.06 acres (or a plot of 72ft by 40ft). This came about from building smaller types of property (i.e. a change away from larger Georgian detached houses towards the infamous rows of Victorian terraces), and a downshift in the average size of houses within each category.
– The average value of property dropped by 26% between 1871 and 1911, whilst wages rose by 85% over the same period.
So, by 1911, the average Lincoln property had dropped in value from £269 in 1871 to £200.
N.B. – you might have noticed I wrote £269 in a slightly different way in the title of the article. Up to 1971, a pound was split not into 100 pence but 240 pence. There were 12 pence in a shilling and 20 shillings (or 240 pence) in a pound. It was expressed in the form £ s d and spoken as “pounds, shillings and pence”. I dropped that into the title as it’s the 50th anniversary this year of when the UK decimalised its currency (younger readers – do google the story – it’s a fascinating topic).
So back to the property market and at the end of WW1, four in five people still rented, virtually all from private landlords. Politicians were concerned about the poor living standards of people’s homes, and this led to the ‘homes fit for heroes’ 1919 Housing Act which delivered subsidies for local councils to build council houses. The average value of a Lincoln property in 1922 was £315.
The 1930s – By 1930, the average value of a Lincoln property stood at £397. With the country building a third of a million houses per annum, interest rates fixed at 2% and hardly any planning regulations, supply of property was outstripping demand, so the average Lincoln home dropped ever so slightly in value to £367 by 1938.
The 1940s – With the bombing of many towns and cities and housebuilding being stopped because of the war, this created a perfect storm to increase house prices after the war. By 1947, the average Lincoln home had risen in value to £1,228 because just as food was rationed during and after the war, so were building materials. Builders could spend no more than £350 on building materials for a new home (and that lasted until 1954).
The 1950s – The ’50s were all about building council houses – a quarter of a million of them each year. By 1959, the average Lincoln home had risen steadily to £1,704.
The 1960s – This decade saw even more houses being built in the UK, with an average of a third of a million houses a year being built. Lincoln is full of 1960’s council houses and now even more owner-occupied housing, meaning by the end of the decade Britain had as many homeowners as renters. The average Lincoln house had risen in value to £3,126 by 1969.
The 1970s – We experienced the first boom and bust housing bubble in the early 1970s with house prices rising by over 30% a year in the early years of the decade (so the current 10% a year is child’s play!) but prices dropped in 1974. They recovered quickly in the following years, not because of increased demand but due to hyperinflation, making the average Lincoln house price rise to £15,894 by 1980.
The 1980s – This was the decade of council tenants being able to buy their own homes, although few people know it was an idea from Labour. They decided against the idea, but it was seized upon by the Tories, who made it the cornerstone of their 1979 election manifesto. The property market helped improve the economy, and by 1988, Lincoln property values increased to £33,246 (only to drop by 32% a couple of years later).
The 1990s – The housing market crash of the early 1990s was painful for all, exacerbated by mortgage interest rates being raised to 15% on Black Wednesday (16 September 1992) and left there for 12 months. Unemployment went from 1.5m to 3m for the second time in ten years, and many of those homeowners who had taken out large mortgages in the late 1980s housing boom could no longer afford the repayments because of the high interest rates, meaning repossessions went through the roof. The crash also made builders nervous, and they only built 150,000 houses on average a year in this decade. Yet, by the mid-1990s, things started to improve. So much so, the average Lincoln home was worth £62,322 by the turn of the millennium.
The 2000s – The decade of cheap mortgages and the rise of buy-to-let, together with a severe drop in the number of new homes being built, contributed to the UK’s third big housing bubble since WW2. The average Lincoln house price more than doubled to £166,894 by 2008, before the Credit Crunch brought the boom to an end, and a year later (2009), the average Lincoln property had dropped to £148,235.
The 2010s – The property market started to come back to life in the early 2010s with property values steadily rising throughout the decade, yet builders were only building around 135,000 new homes a year. It also might surprise you that by 2015/6, the number of homeowners was starting to rise quite significantly, meaning today, as we enter the 2020s decade, the average value of a Lincoln property now stands at £212,235.
So, now we are back to 2021.
Yes, your Great-Great-Grandfather might have been able to buy their Lincoln house for a shade over £269 in 1871. Taking inflation into account since 1871, that same Lincoln house today would be £32,455.92 yet if his wages had increased by inflation at the same rate, the average wage today would be £81.91 per week, not the current £585.50 per week.
I appreciate there are plenty of other factors involved with this topic, such as the cost of renting, raising a deposit, changing lifestyles and the biggest point, the cost of borrowing money on a mortgage.
All this begs the question, what does the future hold for the Lincoln property market?
It’s obvious since the mid-1980s, house prices have sustained a period of impressive growth (even withstanding a couple of property crashes). The Bank of England has gone on record to say that much of the rise in average house values, comparative to wages, between 1985 and now can be seen because of a sustained, dramatic, and consistently unexpected decline in real interest rates and additionally concludes that: ‘An unexpected and persistent increase in the medium-term real interest rates will generate a fall in real house prices.’
Cheap mortgages and a lack of building have created this situation. So as long as interest rates don’t go back to their long-term average of the 5% to 7% range, or the Government decides to increase building new homes to half a million a year (from the current 240,000 per year) … things will carry on as they are in the medium to long-term.
These are my thoughts … I would love to hear any stories of your family buying property in the late 19th Century or early 20th Century and what they paid for it, together with the affordability of Lincoln property and the future of it.
Will the Lincoln Property Market Continue to Boom?
All the signs are that the Lincoln housing market is sat on good foundations, yet one key hazard could still scupper the market.
‘UK Property Prices Rising at Record Levels’ is the headline of many newspapers. In the last few weeks, the Halifax reported they had grown by 6.5% in the last 12 months, whilst the Nationwide said 7.1% and not to be outdone, the Government’s own Land Registry said 8.6%. Nothing new there then you might think, don’t UK house prices always increase?
Actually, they don’t, as many Lincoln homeowners will remember 2009, when they dropped by 19%. Also, some more mature Lincoln homeowners will remember the early 1990’s where house prices dropped just over 40% over 4 years (after the 1989 property crash). So, the increase in UK house prices over the last 12 months has mystified all the forecasts made by most economists as…
house prices were forecast to drop during the pandemic because during the previous six UK recessions experienced since WW2, house prices have always fallen sharply in real terms.
Yet 2020 was different with house price growth increasing at its highest rate since 2014 as the substantial Government support programmes (including Bounce Back Loans, grants and furlough) has mollified the hit to household incomes. Add to that the pent-up demand from the Boris Bounce, all the people working from home wanting an extra room for an office and therefore needing to move, plus the stamp duty tax holiday, with the cherry on the cake of 0.1% Bank of England interest rates keeping borrowing affordable. This has meant…
Lincoln property values are 3.9% higher than a year ago.
Yet the affordability of property is a big issue going forward. By the time of the height of the last property boom in 2008, the national ratio of average property values to earnings had risen from 5.1 in 2000 to 8.8 (i.e. the average house price was 8.8 times the size of the UK’s average person’s annual earnings). We then had the property crash in the proceeding years, and the ratio dropped to around late six’s/early sevens. However, over the last few years, the ratio has been steadily rising and now with the recent growth in demand for property (the five reasons mentioned in the previous paragraph), the ratio has now smashed past nine. Looking locally…
the ratio of average property values to earnings in Lincoln as a comparison was 2.5 in 2000, rising to 5.7 in 2008, dropping to 5.0 the year later when the Credit Crunch hit, and now currentlystands at 5.6.
So, are we heading for another house price crash? Maybe, maybe not – because the House Price to Earnings ratio only tells us part of the story. Another indicator of the property market is mortgage affordability, which measures the proportion of mortgage payments to average incomes. For all mortgage holders, in 2015, this stood at 24.13% and today it is only just above the national long-term average of 25%, demonstrating that property is still affordable.
Yet, the life blood of the property market are first-time buyers. The long-term average percentage of income which goes on mortgage payments for first-time buyers is 33%. Just before the 1989 property market crash, this stood at 54%. Whilst just before the 2008 property crash, it reached 49%. Today, it stands at 31.7% (and the reason it’s so low even with record high property prices is low interest rates, because when mortgage interest rates are low, this permits people to afford larger mortgages, which enables them to bid up house prices).
As 1 in 6 Lincoln homes are selling within a fortnight of coming to market.
One of the most astounding things that has happened in the last 12 months was something that did not happen. Even after the country saw the deepest recession since the Great Freeze of 1709 with GDP dropping 28% in one quarter, one would have expected a large fall in Lincoln house prices would follow. Yet…
Lincoln house prices are 3.9% higher than 12 months ago.
Even though buying and selling Lincoln property was put on ice for the first time in the history of the Lincoln property market last spring due to the Covid 19 outbreak, as the Lincoln property market wobbled on the edge of deep recession, it stepped back in early summer and now it is rocketing upwards as…
15.8% of Lincoln homes are selling within a fortnight of coming to market.
Some commentators have suggested the end of the Stamp Duty holiday together with the ending of the furlough scheme on the 30th September 2021 could be the catalyst for a drop in house prices. Even the Government’s own regulator of finances expects UK house prices to fall around a couple of percentage points in 2022 whilst some others have predicted around a 5% drop as unemployment levels increase post furlough.
However, other property market forecasters believe that property values in 2022 won’t drop against the background of robust British economic recovery in Q3 and Q4 of 2021.
What do I think will happen to the Lincoln property market in the next 12 months?
On the positive side, what I do know is the Stamp Duty holiday enabled Lincoln homebuyers to spend those tax savings on the price paid for their Lincoln home and that certainly accounts for some of the uplift in house prices mentioned above.
Also, the historically low interest rates that have supported Lincoln homebuyers’ affordability for the last 13 years since the Credit Crunch has continued. Secondly, with people spending many months working from home, this has seemed to have polarised people’s inclination to make lifestyle changes. Finally, the Government has recently introduced 5% deposit mortgages for first-time buyers. All these factors will fuel demand and hence may cause house prices to rise.
On a more cautious note, I do not believe these very sturdy Lincoln house value rises of the past year will persist at these levels for the next 12 months. With buyers having to use many thousands of pounds on Stamp Duty, the price they pay for their Lincoln home will be curtailed, meaning property values by definition will ease.
The simple fact is the British economy has yet to feel the full effect of its largest recession since 1709, and we must remain considerate about the long-term effects of the economy (and unemployment levels) on the property market.
These are interesting times for the Lincoln property market. If the price you want to achieve for your Lincoln home is the most important thing, now as opposed to 2022 might be a good time to consider placing your property on the market.
Don’t forget, you can still put your Lincoln property on the market, find a buyer and then go and see what is available to buy. Many buyers will wait for you to find a property, yet if they can’t/won’t – you won’t be made homeless. English property law means you can still come away from the sale and you won’t be forced to sell. If you would like to know a bit more about that or any aspect of buying or selling property in Lincoln, drop me a message or call me.
Most people pay Stamp Duty Tax when they buy a property, house, apartment or other land and buildings over a particular price in the UK. The Chancellor, Rishi Sunak (quickly followed suit by the Welsh and Scottish Governments), announced last July that Stamp Duty was partially being suspended on all English property transactions up to £500,000 (£250,000 in Wales and Scotland) – a Stamp Duty Holiday.
That meant only 1 in 8 English buyers would pay any Stamp Duty Tax on their home purchase (if it was over £500,000), saving any buyer up to £15,000 in tax on the purchase. The problem is the property needs to have been purchased and bought by the 31st March 2021. Complete the transaction a day later, and those buyers will have to pay Stamp Duty.
The issue is local authorities are snowed under with local search requests, mortgage companies and conveyancing staff are working from home, so property transactions are taking much, much longer. This means many Lincoln (and UK) buyers who have currently sold (subject to contract) will miss out on the stamp duty saving.
Most (not all) estate agents have been warning the buyers and sellers in their property chains that some deals might not make the 31st March 2021 deadline and pleasingly, most people aren’t moving because of the Stamp Duty Holiday (they are moving because they need extra space because of the pandemic). However, it only takes one person in the chain not to be ‘singing off the same hymn sheet’ for the whole chain to collapse … so keep in touch with your estate agent.
A campaign by one of the national newspapers and an online petition to extend the stamp duty holiday has meant the topic could be debated in Parliament in the next few weeks, after 100,000 home buyers and sellers signed that petition, asking for an additional six-month Stamp Duty Holiday. The home buyers and sellers are worried the property market will collapse after March 31st when the Stamp Duty Holiday is removed.
The last time British home buyers were conscious of upcoming Stamp Duty changes, it distorted the number of properties sold. The bigger question though is, did it change the overall number of people moving home?
In November 2015, the then Chancellor, George Osborne, announced in his Autumn Statement that buy to let landlords would have to pay an additional 3% in Stamp Duty (over and above owner occupiers) for all property bought after the 1st April 2016. As shown in the graph below, this caused a surge in property buying (which we have seen since this summer with the Stamp Duty Holiday), with many Lincoln buy to let landlords completing their property purchase in March 2016, as they dashed to complete their property purchase before the tax increase.
In the 3 years of 2015/6/7, the average number of Lincoln properties sold (transactions) per month was 143 per month, yet in the month before stamp duty was changed in March 2016, transactions rose to 277, an uplift of 93.6% from the average or an extra 134 transactions in that month alone. Yet, look at the months of April and May, the property transactions numbers slumped, meaning in those two months combined, there were 62 less transactions.
So, if the Stamp Duty Holiday isn’t extended, what will that mean for the UK and Lincoln property market?
London and the South East seem to be particularly exposed to the removal of the Stamp Duty Tax break because it has such a high proportion of property priced between £300,000 and £500,000. These areas benefit from the highest tax savings relative to house price.
Yet, with the average value of a Lincoln home at £214,600, the stamp duty cost if the sale is delayed after the 31st March 2021 is £1,792 – a figure that shouldn’t break the bank
So, if the Stamp Duty Holiday isn’t extended – it might not be such the nightmare scenario as some people believe.
My advice to all buyers and sellers is to be constantly talking to your estate agent, your solicitor and your mortgage broker. With your estate agent to ascertain if they have asked every person (or asked the other agents in the chain to ask the question), “What if we don’t meet the stamp duty deadline?” With your mortgage broker and solicitor to give them all the information they need to ensure there are no delays with any information they request from you.
One final thought, some mortgage providers allow insurance policies to be purchased by your solicitor in case your searches (from the local authority aren’t back in time) … the cost of those will be much lower than the cost of the stamp duty … again, speak with your solicitor. Irrespective of whether you are a client of mine or not, if you would like a chat about anything mentioned in this article, don’t hesitate to contact me.
When William the Conqueror invaded our fair shores in 1066, like all good kings, he needed to buy loyalty and raise cash to build his castles and armies. He did this by feudal law system and granted all the faithful nobles and aristocrats with land. In return, the nobles and aristocrats would give the King money and the promise of men for his army (this payment of money and men was called a ‘Fief’ in Latin, which when translated into English it becomes the word ‘Fee’… as in ‘to pay’).
These nobles and aristocrats would then rent the land to peasants in return for more money (making sure they made a profit of course) and the promise to enlist themselves and their peasants into the Kings Army (when requested during times of war). The more entrepreneurial peasants would then ‘sublet’ some of their land to poorer peasants to farm and so on and so forth.
The nobles and aristocrats owned the land, which could be passed on to their family (free from a fee i.e. freehold), while the peasants had the leasehold because, whilst they paid to use the land (i.e. they ‘leased it’ which is French for ‘paid for it’), they could never own it. Thus, Freehold and Leasehold were born (you will be pleased to know that in 1660 the Tenures Abolition Act removed the need of Freeholders to provide Armies for the Crown!).
4.3 million properties in the UK are leasehold
… and 2,313 properties in Lincoln are leasehold. By definition, even when you have the leasehold, you don’t own the property (the freeholder does). Leasehold simply grants the leaseholder the right to live in a property for 99 to 999 years. Apart from a handful of properties in the USA and Australia, England and Wales are the only countries of the world adhering to this feudal system style tenure. In Europe you own your apartment/flat by using a different type of tenure called Commonhold.
The average price paid for leasehold properties in Lincoln over the last year is £155,414.
The two biggest issues with leasehold are firstly, as each year goes by and the length of lease dwindles, so does the value of the property (particularly when it gets below 80 years). The second is the payment of ‘ground rent’ – an annual payment to the freeholder.
Looking at the first point on the length of lease, the Government brought in the Leasehold Reform Act 1967, which allowed tenants of such leasehold property to extend their lease by upwards of 50 years. However, this was awfully expensive and as such only kicked the can down the road for half a century (when the owner would have to negotiate again to extend another 50 years – costing them more money, time, and effort).
Ground rents on most older apartments are quite minimal and unobtrusive. The reason it has become an issue recently was the fact some (not all) new homes builders in the last decade started selling houses as leasehold with ground rents. The issue wasn’t the fact the property was sold as leasehold nor that it had a ground rent, it was that the ground rent increased at astronomical rates.
Many Lincoln homeowners of leasehold houses are presently subject to ground rents that double every 10 years.
That’s okay if the ground rent is £200 a year today, yet by 2121, that would be £204,800 a year in ground rent, meaning the value of their property would almost be worthless in 100 years’ time. One might say it allows for inflation, yet to give you an example to compare this against, if a Lincoln leasehold property in 1921 had a ground rent of £200 per annum, and it increased in line with inflation over the last 100 years, today that ground rent would be £9,864 a year.
This is important because the majority of leasehold properties sold in Lincoln during the last 12 months were apartments, selling for an average price of £154,007.
So, without reforms, the value of these Lincoln homes will slowly dwindle over the coming decades. That is why the Government reforms announced recently will tackle the problem in two parts.
Firstly, ground rents for new property will effectively stop under new plans to overhaul British Property Law. Under the new regulations, it will be made easier (and cheaper) for leaseholders to buy the freehold of their property and take control by allowing them the right to extend the lease of their property to a maximum term of 990 years with no ground rent.
Secondly, in the summer, the Government will create a working group to prepare the property market for the transition to a different type of tenure. Last summer the Law Commission urged Westminster to adopt and adapt a better system of leasehold ownership – Commonhold. Commonhold rules allow residents in a block of apartments to own their own apartment, whilst jointly owning the land the block is sitting on plus the communal areas with the other apartment owners.
These potential leasehold rule changes will make no difference to those buying and selling second-hand Lincoln leasehold property.
Yet, if you are buying a brand-new leasehold property, most builders are not selling them with ground rent (although do check with your solicitor). The only people that need to take any action on this now are people who are extending their lease. If you are thinking of extending the lease of your Lincoln property before you sell to protect its value, your purchaser may prefer to buy on the existing terms and extend under the new (and better) ones later (meaning you lose out).
Like all things – it’s all about talking to your agent and negotiating the best deal for all parties. Should you have any questions or concerns, feel free to pick up the phone, message me or email me and let’s chat things through.
Tenant demand is rising substantially. For agents in the lettings market, the busy season is approaching.
Analysis of tenancy start dates based on data from the past 5 years indicates the market starts to accelerate in June, with nearly one third of all tenancies starting between July and the end of September.
The demand for rental properties increased significantly in the three months to April according to RICS, however new instructions remain low, supporting rental price growth.
Affordability, outside space and broadband are priorities for renters. 87% of tenants are keen to know running costs and 79% broadband speed; information is not always included in property marketing. (Dataloft, Property Academy 2020).
“In this week’s article on the Lincoln property market, I review what has happened to Lincoln house prices and what is likely to happen in 2021.
Looking back at the Lincoln property market for 2020, it can certainly 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 Lincoln 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 Lincoln property market.
January, February and most of March were amazing months, with the pent up demand from people wanting to move from the Brexit uncertainty of 2018/9 being released in the first few months of 2020.
The pandemic hit mid-March, and the Lincoln 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 Lincoln 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. Lincoln 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 Lincoln 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 Lincoln are set at 1.4% higher today compared to a year ago.
The fallout of that increased demand for a new home meant those Lincoln 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. Lincoln 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 Lincoln, is as you would expect, much lower.
Over the last 10 years, on average 3,316 Lincoln homes have changed hands per year, compared to only 1,434 Lincoln homes in the last 12 months.
So, what is a Lincoln 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 Today
Average Price Paid in the Last Year
Lincoln Town House/Terraced
Of course, these are overall average values. To give you an idea what Lincoln properties are selling for by their square footage, these are those averages …
Average Value per sq. ft. (internal)
Lincoln Town House/Terraced
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 Lincoln 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.
I’d love to know your thoughts on how you’ve found the market this year – post me a comment in the box below
I’d also like to take the opportunity to thank one of my readers and supporters of my blogs, who is a property business owner and local landlord, who has kindly allowed me to use a photograph he took of Lincoln Cathedral. Its a great photo I’m sure you will agree.
With the banks reducing the number of low deposit mortgages (i.e. deposit of 10% and below) since Covid-19 hit in the spring, this has meant that the number of Lincoln first-time buyers has been decreasing quickly, meaning many of those would-be Lincoln buyers wanting to make the first step on the Lincoln property ladder will stay in the Lincoln rental sector.
This has caused demand to grow amongst Lincoln renters for larger homes to ride out Covid, as they hunker down for the long haul to wait for normality to return to the property market. This has caused
Lincoln rents to rise from £546 to the current £577 per month over the last 12 months, an increase of 5.7%.
Interestingly, the opposite is happening in Central London, where the rents tenants are having to pay have dropped by 3.8% in the last 12 months, as demand has dropped like a stone. It appears Central London tenants are looking to move out to the suburbs, in search of bigger homes, gardens and green open spaces. For example, the average rent for a 1-bed apartment in St. John’s Wood currently stands at a very reasonable £1,817 per month whilst a 2-bed apartment in Kensington and Chelsea is currently at an average bargain rent of £3,715 per month (yes, they might be low compared to last year, yet for us in Lincoln, that still seems like a lot of money!). Also, there has been further downward pressure on Central London rents, as many Airbnb landlords have dumped their short-term holiday let properties onto the long-term rental market as the tourism in the capital has dwindled because of the pandemic.
This has been the sharpest drop in Central London rents since the summer of 2009, when the property market was still stumbling from the Credit Crunch.
This means there is a reverse of the trend of the 2010’s (2010 to 2018 to be exact), when initially the London property market was shooting up whilst the rest of the country was in the doldrums. Then, when the rest of the UK did start to rise slowly in 2013, London kicked on even further like a rocket … yet now it appears the opposite is happening. Getting back to Lincoln, according to the Land Registry property values currently stand 1.4% higher than a year ago; this is split down as follows:
Detached Lincoln homes 1.8% higher
Semi-detached Lincoln homes 2.4% higher
Townhouse/terraced Lincoln homes 0.9% higher
Lincoln apartments/flats 1.5% lower
Yet, do remember, these figures do NOT take into account the prices paid by desperate Lincoln buyers this summer, often paying top dollar to secure the property. This will only filter through in the figures released in the spring.
So, why are the banks curtailing the number of low deposit mortgages, meaning that first-time buyers must find a much larger down payment before they are able to buy their first Lincoln property?
The reason is the banks are fearful of a house price crash in 2021 (although if you recall I wrote about that a few weeks ago and the reasons why that is less likely to happen). They too are afraid of the frothy nature of the property market since the end of the first lockdown in late spring. The bank is lending its own money to buyers and no mortgage lender wants to be holding an enormous amount of these types of high percentage mortgages if house prices fall in 2021, because the bank would be saddled with negative equity and repossession on their hands (and we all know what that did to the housing market in the late 1980’s and early 1990’s as repossessions rocketed).
This can quite clearly be seen in the pricing and availability of low deposit mortgages. As the Bank of England has reduced its base rate to 0.1%, in the last 12 months 10% deposit mortgages rates have actually increased from 2% to 2.8%. Also, when lenders have been offering 10% mortgages throughout the summer, borrowers have had only a 24-hour window to commit before the lender withdraws the mortgage product from the market because of oversubscription. As with all economics, if demand is greater than supply, the price goes up. That extra 0.8% doesn’t sound a lot until you realise a first-time buyer would have to pay an additional £167 per month in interest payments on a 10% deposit mortgage, assuming they borrowed £250,000.
However, it’s not all doom and gloom for first-time buyers as there are embryonic signs that the 10% deposit mortgage market could gradually be returning to normal, as I have recently heard some lenders taking up to a week for their 10% deposit mortgage offers to run out. Fingers crossed!
So, what does all this mean for Lincoln landlords?
Those Lincoln landlords with properties with gardens and larger rooms will be seeing increased demand. The ability to have pets in the rental property is also an advantage, and depending on the property, can add a decent premium to the rent that can be charged.
One final thought though for all homebuyers in Lincoln, be aware it’s going to be very challenging to get your house purchase through in time to meet the 31st March 2021 stamp duty holiday cut off if you are starting the process in November. Make sure your lender and solicitor have the capacity to meet that deadline and when you are asked for information, you drop everything to provide it. The odd days’ delay here and there will mean the difference between you getting the keys for your new Lincoln home before the end of March 2021 and saving thousands of pounds in Stamp Duty Tax … or feeling a fool from the 1st April 2021 and having to pay the tax!
With the second lockdown starting on the 5th November 2020, does this mean Lincoln landlords can wave goodbye to their Lincoln buy-to-let investment and see it go up in smoke on the bonfire of buy-to-let dreams.
With many Lincoln tenants at risk of losing their jobs after the furlough scheme ends next March and as the reverberations of the coronavirus recession hit this winter, what does this all mean for Lincoln landlords and what can they do to mitigate the risks?
Since the spring, most Lincoln 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 finish 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 Lincoln landlords do to mitigate the financial risk on their Lincoln buy-to-let investment?
Help Your Lincoln 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 Lincoln letting agents and self-managing landlords are supporting, guiding and helping those Lincoln 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 Lincoln landlord. Also, if you are a Lincoln tenant, and that support isn’t given when you ask, don’t forget Lincoln City 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 and Citizens Advice are a good online resource for you to find out what you are entitled to.
Adopting, Adapting & Improving Your Lincoln Buy-to-Let Property
Demand for gardens or office space means Lincoln landlords will need to think outside the box. Those Lincoln homes with tenants sharing (e.g. HMO’s and shared houses) might need to price their pre-coronavirus 4 bed sharing house to say 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 Lincoln housebound tenant’s wish lists, in fact I have come across some Lincoln 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 Lincoln landlords to relax their ‘no pets policy’.
Hold On to Your Good Lincoln Tenants
Those Lincoln 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 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 Lincoln 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.
Carry out Firmer Checks on Your Prospective Lincoln Tenants
Many private Lincoln landlords and a few slipshod Lincoln 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, Lincoln 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.
Rent Guarantee Insurance for Your Lincoln 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
Lincoln 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. Lincoln 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 Lincoln Tenant
The average rent for a Lincoln property currently stands at £577 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 Lincoln landlord could be hit by a £22,530 bill, broken down as follows:
Missing rent (8½ months)
Legal fees & court fees
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 Lincoln 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 Lincoln landlord who uses a letting agent or not and feels their reference checks are not to the standard or level you might hope or if you want a chat about the best rental guarantee insurance, then give me a call … what have you got to lose?
As always feel free to contact me through the comments box below or call me directly on 07487683696
What will a no deal Brexit on the horizon, the end of the stamp duty holiday in March, mortgage payment holidays coming to an end, unemployment set to rise after furlough and ongoing on/off coronavirus restrictions do to the Lincoln property market and the value of your Lincoln home?
In the late spring of 2020, every man and his dog were forecasting impending doom on the British property market. Drops of 10% were considered optimistic as we all held our breath after lockdown was relaxed. Yet, the property market didn’t listen to the forecasters. UK property values today are 2.5% higher than they were a year ago, and more locally, Lincoln house prices are only 1.4% higher than a year ago
So, what exactly is going to happen to the Lincoln property market in 2021?
Well, with the end of furlough and 1.7m people still on the furlough scheme at the start of October, a number of economists are saying that unfortunately many of those furloughed will become unemployed.
Unemployment currently stands at 4.5% in Q3 2020 (compared to 3.8% in Q3 2019). The Government’s independent Office for Budget Responsibility believes the unemployment rate will peak at 9.7% in early 2021, and then return to pre-coronavirus levels in 2022. In the past recessions of the early 1980’s, early 1990’s and Credit Crunch of 2009, when unemployment went up, the property market went down.
Yet, in this recession, the link between unemployment and property values may not be so direct.
So why is the link between unemployment and house prices potentially broken? It comes down to interest rates.
The reason Lincoln house prices have gone up by 343.73% since the middle of the 1990’s isn’t because the labour market has got so much sturdier, nor that the economy has outperformed every G8 country, or that the UK has had less boom and bust economic cycles than the previous decades. Instead, it’s because of the fundamental and underlying decline in the Bank of England (BoE) interest rates.
High BoE interest rates equal high mortgage payments which holds everything back regarding the property market. In the 1980’s, the average BoE interest rate was just over 11%, making mortgage payments very expensive and keeping property prices dampened. In the 1990’s, the average BoE interest rate was a little over 6%, in the 2000’s just over 4%. However, in the 2010’s, it had been a really low 0.5%. Now with interest rates down to 0.1% because of coronavirus and the BoE threatening negative interest rates, there appears little threat of an eruption in mortgage repayment costs.
With mortgage payments at an all-time low of just under 30% homeowners’ disposable income (compared to 48% in 2007), those middle-aged people lucky enough to still be in a job (who are mainly made up of workers whom are spending a lot more time working from home), they could be more inclined to dedicate more of their monthly income to mortgage payments than they did pre-coronavirus for a bigger garden or a move out of the big cities?
So, if unemployment isn’t going to make a huge difference to the Lincoln property market, what is?
Most commentators believe a no deal Brexit will have hardly any short-term effect on the property market (apart from certain upmarket parts of central London).
The stamp duty holiday ends at the end of March 2021 and that certainly will reduce the number of Lincoln people moving (as many moved their plans forward to beat the deadline) meaning there will be less Lincoln people moving in 2021, yet that will curtail the supply of property for sale and hence keep Lincoln property prices higher.
Next, the Help to Buy scheme, (started in 2013 and where the Government underwrites part of the mortgage for the first time buyer, meaning they can obtain a 95% mortgage) ends in April next year, yet the Tories indicated at their conference last month they would probably create ‘Help to Buy – Part 2’.
The bottom line is in the early 1980’s and 1990’s recessions, when interest rates were over 15%, obviously home owners couldn’t afford to keep up the mortgage payments when made redundant or on reduced wages, so many handed in their keys to the bank and homes got repossessed, thus exacerbating the issue with falling property values.
However, with interest rates so low, this will not be the case. I envisage that UK property prices will be between 4% to 5% higher by December and Lincoln values just behind that at 2% to 3% higher, before levelling out in 2021 (although we might see a modest dip in certain sectors and types of Lincoln homes depending on location and condition).
My advice to Lincoln buy to let landlords is to wait on the subs bench until April 2021. Something tells me there will be some Lincoln landlords who will be looking to exit the rental market after having their fingers burnt after the eviction ban has been lifted.
I also suspect those Lincoln first time buyers, eager (and able) to break free the rental-rat-race will want to take up the anticipated ‘Help to Buy – Part 2’ scheme, particularly if the BoE base rate stays low. The other winners in 2021 will be low mortgage/equity rich households upsizing to the countryside or leafy suburbs to test out their boss’s promise of ‘flexible-working’.
Yet the losers will be the 18yo to 29yo renters … most likely to be made redundant and least likely to buy a home.
My advice to the Government for this cohort is to not ignore them once the country is out of this coronavirus situation. It’s all very good keeping the Home Counties Tory voting Baby Boomers happy with green belt policies and other policies to keep their property values higher, yet as the Generation X and Millennials get older and take over as the largest demographic to keep happy (for the polls), the hitherto inconceivable action of the Government levying Capital Gains Tax on your main home may come to fruition.
I mean, we have £400bn to pay back because of coronavirus … it has to be repaid and it has to come from somewhere. Those denied real access to buying their own home in the last 10 years, because of massive house price gains over the last 25 years, could vent their anger via the ballot box — if not at the 2024 General Election, maybe in 2029, when they realise that the futile housing policies of both Labour and Tories of the last 23 years have left them with enduring financial diffidence.
Maybe we should all look to the grocer’s daughter from Lincolnshire who in 1979 set out a bold vision of home ownership for everybody. Whichever political party truly picks up the batten and reframes it for the current 2020’s generation and comes up with the goods, will be the ultimate winner in this game.
As always, I’d love to hear what your thoughts or concerns over next year are- get in touch by adding a comment below.
Lincoln homebuyers and Lincoln landlords purchasing residential property have saved £453,690 since the Chancellor reduced Stamp Duty on 8th July 2020, yet many more Lincoln homebuyers could miss out.
My analysis of properties sold in Lincoln 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 Lincoln homeowners have saved a considerable amount of money in Stamp Duty. According to my research…
since the stamp duty holiday was launched, 130 Lincoln homeowners have saved on average £3,490 each.
That’s a total Lincoln property value of £35,073,845.
Mind you, it’s not all good news as I estimate 286 Lincoln homebuyers risk missing out on the 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 Lincoln property soar this summer as Lincoln 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 31st March 2021. Yet, I fear the combined pent-up demand caused by…
the post Boris Bounce
people wanting to leave their metropolitan city centres for homes in the countryside
property with gardens
property with extra rooms for working from home
the stamp duty savings
…has created a backlog in the Lincoln property market.
I know 31st March 2021 seems an age away, however nothing could be further from the truth. The average Lincoln 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 Lincoln 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 286 Lincoln movers could miss out on the£998,110 stamp duty tax savings.
There is time left to sell and legally complete your Lincoln property sale before the 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 Lincoln 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 Lincoln home with or without the Stamp Duty savings, which are up to £15,000 per home move.
And whilst many Lincoln buyers seem ready, willing and able to pay top dollar prices for Lincoln properties that match their changed post-lockdown home needs, speaking privately to many Lincoln agents, some Lincoln homeowners’ price expectations for their Lincoln 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.
As always, I’m here to offer any advice if you are thinking of moving or are in the process yourself already and need some no obligation advice.
Simply make a comment below or drop me an email at firstname.lastname@example.org
Boris Johnson has attracted both praise and horror in equal measure with a new plan for 95% mortgages to help beleaguered first time buyers to get on the property ladder, but would that expose UK taxpayers to too much risk? In this article I discuss the implications of what that would mean both nationally and locally in Lincoln.
With the Lincoln property market taking off due to the stamp duty holiday introduced in the summer, Boris Johnson announced at the recent Tory Conference a plan to offer first time buyers long-term low interest rate 95% mortgages (meaning they would only need to raise a 5% deposit). Yet when someone borrows more than 75%, the banks normally take out insurance in case the buyer defaults and the bank lose money if the property gets repossessed.
When the economy is good, the risk is low – so the insurance premiums are also low for the banks – meaning they are happy to lend high percentage loans. Yet, nobody could deny we are entering a period of uncertainty in the coming 12/18 months, meaning the insurance premiums for the banks have gone through the roof.
Mortgage companies have avoided riskier high percentage first time buyer mortgages since the start of the Coronavirus predicament. At the end of February 2020, there were just under 400 95% loan-to-value mortgage products accessible for first time buyers, yet today that figure stands at just 26.
Another reason for removing the number of 95% mortgages was that the demand for lower percentage loans exploded after lockdown was lifted, and with many mortgage staff still working from home, the banks and building societies focused their attention on getting those (less risky) mortgages sorted first. Therefore, they removed the higher percentage loans from their books, so they weren’t swamped with too much work … so, one must ask, should the Government take on the risk from mortgage providers in the form of a guarantee from the Government — sparking concern among economists the Government is already burdened with debt – does it need anymore?
Yet taxpayers have been funding a similar scheme for years. The Help to Buy scheme, which allows first time buyers to buy a home with a 5% deposit (and the Government guaranteeing between 20% to 40% of the loan) has been in operation since 2013. Taxpayers are already guaranteeing £16.049bn of loans for 224,133 first time buyers, and when we look closer to home locally, since 2013 …
108 first time buyers in Lincoln have used the Help to Buy scheme to help buy their home, relying on the Government to guarantee them on average £35,588
That means in Lincoln alone, £3,843,504 is at risk if those Lincoln homeowners’ default on those pre-existing Help to Buy Loans … yet the default rate is quite low.
So, should the Prime Minister be playing with the housing market? Ought he instead allow open market forces to be applied to the property market, allowing it to find its own normal and leave the mortgage providers to decide on mortgages based on risk, because all the Prime Minister will potentially achieve is a synthetic rise in property values?
Some in fact have argued it would be better to spend that
public money on delivering affordable rental properties?
However, isn’t it better in the long run for the country as a whole that British people own their home rather than rent because the Government will have rent to pay for those tenants when they retire if they are on the basic (low) state pension?
Personally, I don’t disagree with the initiative, yet all I am querying is, what are the Lincoln first time buyers going to be able to buy? The Lincoln property market is already quite drawn-out, as ultra-low interest rates have augmented the gap between the first home and the second home, the second home to the third and so on and so forth, so is this initiative fashioning a massive demand that will inflate property prices up the Lincoln property ladder still further and ultimately lead to even more frustration down the line?
However, could this be the very thing that saves the Lincoln property market in 2021?
Firstly, with the stamp duty holiday due to finish by the end of March, there are suspicions the property market will stall. And secondly, the very popular Help to Buy scheme mentioned above also finishes at the end of March 2021. This boost instead of fuelling house price inflation could stabilise the property market.
In fact, the Government are hoping the property market will help power us out of recession. The early signs are good as the Lincoln housing market has exploded as a result of the stamp duty holiday introduced in the summer. It certainly needs to as the country’s GDP only grew by 2.1% in August, down from 6.4% in July, 9.1% in June and 2.7% in May.
As a country, our GDP is still 9.2% below the levels seen pre-Covid. With the property market doing well, the country remains on course to leave recession in Q3, yet with the impending triple peril of rising unemployment (after furlough), further lockdown restrictions and a messy end to the Brexit transition period does this mean we are potentially in for an interesting ride?
Only time will tell if ‘Generation Buy’ will help save the property market, the economy and ultimately Boris? In the meantime, I think it will be a safe bet that people still need homes to live in … and irrespective of what happens to the property market, with that simple fact, the winners in all of this will be Lincoln buy to let landlords.
For the last thirty years, the Government have passed the responsibility of housing the masses from local authorities (i.e. council housing) to the estimated 1.5 million British buy-to-let landlords.
However, since 2015/16, Lincoln landlords have faced increasing tax burdens as each year goes by, with the removal of mortgage interest rate relief on income tax (Section 24), the introduction of the 3% surcharge on stamp duty, and the reduction of the letting relief on capital gains tax.
My research has calculated the total income tax contribution by 3,416 Lincoln private landlords in the tax year 2015/16 was £8,915,158
However, the eradication of higher rate mortgage interest relief (also known as Section 24) announced in 2015 by George Osborne has been estimated to add a further £1.9 billion nationally to landlord’s tax liability. Whilst raising money from landlords is an easy target, and the tax receipts attractive, it does make the landlords financial burden even heavier.
And by 2021/2, when the full extent of the Section 24 relief kicks in, that income tax liability will rise to £13,016,130 for those Lincoln landlords
This doesn’t even take into account additional liabilities such as Capital Gains Tax, the 3% additional duty on top of the prevailing Stamp Duty Land Tax and VAT.
Ambiguity and a lack of certainty is the foe of all investment, which has been seen with Brexit. With the pent-up demand released with the ‘Boris Bounce’, the last thing we need as a ‘collective’ property industry is for the Government to see landlords as a constant cash cow. This current government must acknowledge the value the majority of private landlords offer by housing in excess of 9.45 million people in the country.
Westminster needs to take a balanced approach to the significant issues of possession, especially with the recent changes relating to section 21 evictions, taxation and all rental properties needing to be at least an ‘E’ energy efficiency rating, to connect the value the private rented sector offers the country by effectively housing over a fifth of the population and avoid unintentional consequences by making renting a private rented property harder for the tenant, because, it’s not financially viable to buy (or retain) a buy-to-let property with the way things are going against the landlord.
I would love to know your thoughts on this.
If you are a Lincoln landlord, how are you finding things at the moment?
Post lockdown, the need for Lincoln families who want bigger homes has meant Lincoln homebuyers must now pay considerably more to trade up to that larger home…
One thing that has come out of lockdown has been the inexorable movement of Lincoln households wanting to upsize to a larger home. Often considered to be first time buyer properties, the smaller 1st step on the property ladder one and two bedroom properties are selling quite well, yet demand for those properties on the 2nd and 3rd step rungs on the Lincoln property ladder (i.e. the three or four bedroom homes) has been even greater.
This demand has been driven by Lincoln buyers looking for more living space, especially those looking for an area or room to work from home (be that a bedroom, reception room or even an outbuilding converted into a study).
The average asking price of a 3 bed Lincoln home is £206,000, whilst for a 4 bed Lincoln home it stands at £307,700
As you can see, quite a jump for an extra bedroom! The heightened contest for 2nd and 3rd step Lincoln homes for that extra bedroom has pushed demand to a record in October for those looking to take the next step up the ladder. Historically, as a family and its household income grow, the need for more space has permanently been the No.1 reason for moving home, yet now there is a new need for additional space to facilitate people working from home. This means not only do we have growing families wanting larger Lincoln homes, there are also the people needing the same larger homes for space for a home office. Therefore, looking at the current stats, as you can see, the Lincoln property market is doing quite well…
50.3% of all 3 bed and 41.7% of all 4 bed homes in Lincoln are sold (subject to contract)
Roll the clock back to pre-Covid and ask any Lincoln homeowner who had enough bedrooms for their children if they wanted an additional bedroom, and most homeowners would say that was very much a ‘nice to have’, yet not a ‘must have’. With us all being cooped-up over the spring this year, demand for additional rooms is at a high, with those presently looking for their next larger Lincoln home are probably going to find that only offers close to (if not sometimes over) the asking price will be accepted.
Even though no properties sold during lockdown, putting the Lincoln (and UK) property market on hold for many months, many more people buying their next Lincoln home will have more than made up for it since lockdown was lifted as the portals have stated if the UK property market remains at its existing trajectory, then the number of properties sold YTD by the end of October 2020 will be greater than YTD October 2019.
Yet all these properties sold are causing another issue. Just because a property becomes Sold Subject to Contract (SSTC) doesn’t mean the property is actually “sold”. Before going into Covid, it was taking approximately 19 weeks between agreeing a sale price (and instructing lawyers) to completing the sale. Yet, because we are nationally running at 140% to 150% of properties SSTC (than where we normally are at this time of year), many of my estate agents colleagues are having to manage expectations with buyers and sellers, and tell them that the date they are going to move will take a little longer.
The elephant in the room is that the temporary stamp duty holiday ends on the 31st March 2021
It sounds an age away, yet trust me, nothing could be further from the truth. Adding an extra month for the additional homes in the bottleneck means even if the sale of your Lincoln home was agreed today, that would take us to the 3rd week in March … that’s cutting it very close for the stamp duty holiday.
It is so fundamental for buyers and sellers of Lincoln homes to work meticulously with their estate agent, solicitor and mortgage lender. For example, there are less staff in the local authorities to do the local searches, bank staff are working from home meaning mortgages are taking much longer to get approved, and conveyancer/solicitors are snowed under with work. Therefore, if you get a document that needs filling in, are asked to provide documents, pay disbursements or questions need answering, do it immediately and without delay. A day here and day there will snowball and could mean you miss the Stamp Duty holiday … and that could cost you thousands and thousands of pounds.
The bottom line is that we haven’t seen this sort of pressure on the UK property market since 1987, when dual-MIRAS was abolished. Now, as we are slowly starting to come out of Covid, with many legal and banking staff working remotely or still on furlough, the perfect storm has occurred with unprecedented demand from buyers looking to move post lockdown. The best advice I can give is, as soon as you put your property onto the market, find a solicitor that has the capacity to work with you, then instruct that solicitor to start work immediately to prepare the paperwork, so once you have a buyer, things can move more smoothy and quickly. The last thing you want is to lose out on saving thousands of pounds by missing the stamp duty holiday by a whisker.
As always, feel free to comment or share your thoughts
The Lincoln property market is an enigma and chock-full of contradictions.
Notwithstanding an economic recession and forecasts of property values dropping, nobody seems to have informed the Lincoln homeowners selling their homes and those Lincoln people looking to buy them. As I have discussed in many recent articles on the locality, the Lincoln property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.
However, before we talk about the banks and surveyors, let’s look at what is happening in the Lincoln property market now.
Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.
The average value of a Lincoln home rose by 3.9%in the year to June to £211,900
Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Lincoln property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.
Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ – as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.
Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell – yet some over-enthusiastic Lincoln buyers are paying over the odds for certain types of properties.
So, let’s look at what is happening to the Lincoln property market (Lincoln plus 3 miles) by house type and the number of bedrooms…
Number of Lincoln properties on the market
…and of those – how many are Sold STC
% Sold STC compared to those for sale
Semi Det House
And when we look at the number of bedrooms …
Number of Lincoln properties on the market
…and of those – how many are Sold STC
% sold STC compared to those for sale
As you can see, the best performing type of property in Lincoln is the semi-detached house and the best-selling properties when it comes to bedrooms are 3 beds.
These are quite impressive figures for the Lincoln property market, yet some of the banks are having none of it
They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage).
It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages – and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).
One small note to Lincoln landlords – I am also hearing that some overzealous Lincoln buy to let landlords who are over-egging the potential rental figures on their buy-to-let purchase in order to obtain the mortgage, are also being reined in by the banks.
Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).
The bottom line is the highest bidder might not be the best buyer for you.
It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Lincoln property.
If you would like a chat about any aspect of the Lincoln property market – please do send me a message or pick up the phone – 01522 512513
The 1st July 1948 heralded a new dawn in how property was built, as the Town & Country Planning Act 1947 came into force, meaning no property could be built without the say so of the local authority. Boris Johnson announced a substantial change to that, by in effect, ending planning permission.
The decision of what gets built, and what doesn’t, will be removed from the City of Lincoln Council and replaced by Westminster governed ‘Zoning Commissions’. The anticipated reform will give presumptive building rights to any piece of land outside areas of outstanding natural beauty, green belt and national parks, although in the press release there was mention of protection for the countryside.
The principles of the planning rule changes are a departure away from looking at each planning application as a standalone application to a ‘zone-system’ of planning. Land will be divided into three classes: 1st for growth, 2nd for protection and 3rd for renewal. Anyone applying for planning permission to develop homes, offices and shops on land zoned for growth, will automatically be granted planning permission; whilst land zoned for renewal planning permission will be granted in principle while Government officers perform checks. Local authorities have until 2024 to designate areas for the three classes and once agreed, planning departments will have little or no say over individual applications that fit the rules.
Interestingly, these changes come on top of new planning regulations coming into force this September which gives implied rights to demolish any office building and replace with a block of flats, and the right to build extra floors/storeys on your home.
The Housing Secretary has specified the motive behind the changes to the planning system is not to make planning permissions easier to get (although 88% of planning applications are approved by local authority’s already). Instead, they have been done to make the planning process quicker, less expensive and less likely to be held up by special ‘interest’ groups.
96% of planning permissions in the City of Lincoln Council were approved last year, compared to the national average of 88%
Noteworthy, the planning rules were changed in 2016 to turn disused shops and office space into residential homes (called ‘permitted development’ rights), yet the regulations announced by Boris will took that right even further. This is important because in 2019, there were 241,340 new households created in the country, yet 29,260 of those households came from turning disused shops and office space into residential homes (i.e. the planning permission rule changes made in 2016).
My concern is that the planning rule changes do not make shop or redundant space into the new 21st Century ghettos. An RICS report in 2018 showed a massive difference between the conversion of office blocks with planning permission and those without (i.e. permitted development). What was interesting is that only 1 in 5 properties met the national space standards, a non-legally binding suggestion on the minimum size of home, minimum dimensions of bedrooms, natural light, storage & floor to ceiling height, whilst 3 in 4 of office block conversions that did obtain planning permission met the standard.
These planning changes cannot be a charter for cowboy builders or developers, otherwise your children or grandchildren could end up renting one of these sub-standard homes, thus stealing human dignity from thousands of youngsters who will end up renting these homes.
So, what does this all mean to Lincoln homeowners and Lincoln landlords? If you have been reading my articles you will know that one of the most important factors holding back the Lincoln property market is the lack of new properties being constructed and when they are, the lack of infrastructure surrounding them.
Since 1995, only 10,621 properties have been built in LN1 to LN5
Yet, these new planning changes will also introduce a new method of taking a lot more money off landowners and builders, as the Government will take a larger share of uplift in land value (i.e. the increase in value from farmland to building land) to finance infrastructure around the development. This would mean new housing developments would come with upgraded roads, GP surgeries, primary schools and shops that these new communities need to be viable. Also, communities will be asked to decide on their own standards on style and design for new developments in their area, allowing residents a greater say on the development in their locality.
Like all things, the devil is in the detail. All of us in Lincoln cannot deny that we need to build more homes to keep up with the ever-growing population and the fact that people are living longer. This new planning system should lead to more housebuilding, which in turn would increase the supply of property for those trying to get on the property ladder. Also, in the proposed legislation is the new ‘First Homes’ scheme, which would allow key workers, first time buyers and people who live or work in the Lincoln area to purchase their new home at 30% less than its market value and when they come to sell it, that 30% discount would be passed on to the new buyer (if they also met the criteria).
With regard to what can be built and where, Lincoln people will have a say upfront (i.e. between now and 2024 when the zoning rules are drawn up) and hopefully we can construct the Lincoln homes we are proud of for our children and for Lincoln generations to come.
Please do let me have your thoughts on this matter. Comment in the box below
Getting your initial asking price right is key to getting sold and moved before the end of the stamp duty exemption
Cast your minds back and see if you remember when on th 8th of July 2020, the Chancellor announced the first £500,000 of any property bought was exempt from Stamp Duty until 31st March 2021. This also included buy to let landlords (although they would still need to pay the additional 3% stamp duty level for second properties).
Talking to many of you Lincoln homeowners, I know lots of you have brought forward your home moving plans to take advantage of this tax cut. Also, many Lincoln portfolio landlords are looking to save paying the tax by bringing their portfolio purchases forward. Yet how do you ensure you sell and buy your Lincoln property whilst the tax cut applies (a saving of up to £15,000 of stamp duty on your next Lincoln home?).
The biggest issue whenever you are selling your Lincoln property is the properties that you are in competition with. Plenty of Lincoln homeowners have jumped onto the stamp duty holiday bandwagon since the announcement and there are 6% more properties for sale in Lincoln than there were during lockdown. The number of properties for sale in Lincoln can split down into type…
Detached Lincoln homes – down 3%
Semi-detached Lincoln homes – no change
Terraced / Town houses Lincoln homes – up 12%
Apartments in Lincoln – up 9%
So, now you know what you are up against, what do you need to know?
The most important factor is the time issue.
It currently takes on average 18 weeks between a sale price being agreed and the keys being handed over, meaning you need to have found a buyer before the end of November or early December to enable you to complete the sale by the 31st March 2021. That means you really need to have placed your property on the market by the end of September and early/mid-October at the very latest to take advantage of the stamp duty holiday.
Don’t get me wrong though, you could put your Lincoln property on the market after that date, yet the price you will be able to achieve for your property could be affected.
There are 1,190 properties on the market in Lincoln, of which 551 have sales agreed on them
Talking of price, or more specifically the asking price. There is a window of opportunity for Lincoln homeowners to take advantage of this stamp duty tax cut, yet don’t let local estate agents curry favour with you by tempting you with a high initial asking price to win the right to put their for sale board outside your Lincoln home.
A Which report stated in 2017 that many estate agents routinely over inflated the asking prices of the properties they brought to market. One might ask why this is an issue for Lincoln property sellers, as surely, they can just reduce their asking price at a later date? The excellent report proved that those estate agents who on the face of it appear to be doing you some kindness by endeavouring to get more for your home with a suggested higher asking price, the property often ended up selling for much less than similar properties that were realistically priced properties from day one and also, they ultimately took longer to sell!
This Which report compared the original asking price with final selling prices for 370,000 properties to ascertain how many estate agents had reduced the initial asking price of properties in order to sell them. Which found that 70,300 (19%) of all 370,000 properties sold had to be reduced by at least 5% in order to get the property sold, whilst the other 81% (299,700) had no or very minimal reductions to get them sold.
Of the 299,700 sold properties that weren’t reduced or reduced by less than 5%, the average initial asking price was £261,000, yet they eventually sold for an average sale price of £260,000. For those 70,300 homes whose asking prices were reduced by over 5%, whilst the average listing price was £266,000, their eventual sale price was only £241,000, a loss of £20,000 each. Even worse, those properties with the heavy price reductions (5% or more) took an average of nine weeks and one day longer to sell (when compared to the other properties with no or minimal reductions).
What that means is by over inflating your initial asking price of your Lincoln home, it will cost those Lincoln homeowners an extra nine weeks to find a buyer and they will lose out on the final sale price by some considerable margin (meaning you will also probably lose out on the stamp duty holiday).
Assuming your asking is price is realistic, you aren’t out of the woods yet. Other things that will help you get the best price for your Lincoln home in the best possible time (and thus save you money with the stamp duty holiday) are…
Everyone searches on the portals for their next home. Photos are therefore very important (a picture speaks a thousand words). If the weather isn’t good on the day of the photoshoot, ask the agent to revisit when the sun is out (and even tell them to hold off marketing the property until those pictures are perfect) … as you only get one go at being ‘new to the market’, with all the excitement and interest that causes.
Employ the services of a solicitor at the same time as instructing the estate agent. Bringing together the legal paperwork of the property you are selling. By doing so, you will save weeks between the sale agreed and completion. Also, solicitors will be really busy, juggling many property transactions at the same time in the next 200+ days. Anything you can do to get a head start on others can only help your cause.
Kerb side appeal. Look at your property from across the road. Does the front door need painting? Could a tonne of gravel spruce up your driveway? Maybe adding some hanging baskets and planted pots will help to make a home stand out for the best reasons?
The final piece of advice I can give you is if you are planning to sell your Lincoln home, make sure your Lincoln estate agent can show you proof of similar Lincoln properties and what they actually sold for to back up their suggested asking price. If the asking price isn’t realistic, the chances are you end up losing many thousands of pounds and wasting everyone’s time.
If you would like to chat about selling your Lincoln home, please do – usual contact details folks – 01522 512513 or email me at email@example.com
… and the six reasons that will make you want to become one!
The buy-to-let market in Lincoln is about to enter a challenging 12 to 24 months. Yet by looking back at the last recession and what is happening now, there are vital lessons all Lincoln landlords can learn to protect themselves, and in fact create opportunities for themselves both in the short term and ultimately the longer term.
For the purposes of this article, I would like to split these and look at the challenges and then the opportunities.
So, let’s consider the challenges ahead for Lincoln landlords …
Overall, the impending rise in unemployment stands to encumber tenants’ ability to pay their rent, the rents being achieved and the possible Capital Gains Tax changes might mean an increase in tax paid by Lincoln landlords when they come to sell their Lincoln buy-to-let properties.
Lets look at these three points in greater detail. Firstly looking at your Lincoln tenants ability to pay the rent; the Furlough Scheme certainly did help soften the blow, helping out 8.9 million people in May (out of 30.5 million who were eligible for it) and at the last count in early August, this thankfully had reduced to 5.3 million people (meaning 15.86% of workers are still on furlough). However, it cannot be denied the economic fallout from Coronavirus has already placed some tenants under economic strain. As the Furlough Scheme finishes at the end of October, commentators are suggesting the number of tenants either incapable of paying their rent, or requesting a reduction in their rent, is predicted to increase as we go into autumn and early winter.
The ultimate sanction against non-payment of rent is legal proceedings although guidance from the Government has recommended that landlords and tenants should work together and deplete all possible options before starting eviction proceedings. Yet many Lincoln landlords are feeling the pressure as many mortgage payment holidays will be coming to a close at the end of September. Some Lincoln landlords can indisputably see that their tenants are finding it tough and they are willing to work with them, but they can only make allowances go so far. Landlords aren’t running a charity and I would stress to any tenant that finds themselves being made unemployed in the months to come to apply for Universal Credit as soon as possible, which should help with their rental payments. With regard to the eviction process, the Government have changed the rules a number of times in the last few months, so if you want an update, don’t hesitate to contact me, whether you are client or not – I am just happy to help.
Secondly, it’s interesting that in central London, there has been a glut of Airbnb properties coming onto the market because of lack of tourists to rent them on a short-term let. A greater supply of rental properties has meant a downward pressure on rents in London of 2.1%. I don’t think this is so much of an issue in Lincoln as
Lincoln rents are 2.38% higher year on year
Thirdly, there is talk that the Chancellor, Rishi Sunak, is looking at changing the Capital Gains Taxation rules. As property is the biggest asset that most people own, this is also reason for concern for Lincoln buy-to-let landlords. Currently, Capital Gains Tax on sales of buy-to-let property is levied at 18% for basic income tax rate payers and 28% for higher rate income taxpayers. There is talk the capital gains made on the landlord selling their buy-to-let property could be taxed at the landlord’s income tax rate.
Yet before you all start selling your Lincoln portfolios before November’s budget, any changes in Capital Gains Tax would be immediate. That means to ensure you didn’t come foul of the potential rise in the tax, you would have to have to sell your Lincoln portfolio at a ‘fire sale price’ in days and have a solicitor that could do the conveyancing in 3 weeks (whilst it is taking 19 weeks on average for buyers to sort their legal work out) and the buyer be a cash buyer because banks are taking months, not weeks to sort finance. This is just something we are going to have to take on the chin!
Let us now consider the opportunities ahead for you Lincoln landlords …
As the country officially entered its first recession since 2009, uncertainty in any markets (be it property or stocks and shares etc.) causes investors to vacillate over whether or not to take the jump. Nevertheless, there are numerous indicators that appear to show this is, indeed, a good time either to become a buy-to-let Lincoln landlord or expand one’s property empire and buy more property … let me explain.
Firstly, assets (such as gold and stocks and shares) are great, yet if they aren’t producing income and cash – that doesn’t pay for your day-to-day living. Gold doesn’t create any income and many FTSE companies won’t be paying dividends for a while. Government Bonds are currently earning their investors 0.2% (no – that isn’t a typo) and the best savings accounts are achieving 1.1% with a 120-day notice period, so where are you going to invest your hard-earned money?
The average Lincoln buy-to-let property will earn a monthly return of 4.53%
Of course, deciding on the right Lincoln property is crucial to get a good rental income and return. I have seen so many Lincoln first-time landlords buy with their heart and not their head. Buying your own home is more heart than head but buy-to-let is a completely different kettle of fish. There is the inverse relationship between income (rent) and capital growth (how much it will go up in value in the future) i.e. as one goes up, the other tends to go down – so getting the balance for your needs is vital. Again, I can advise on that for you.
Secondly, with the stamp duty holiday and the pent up demand for people wanting to move home in Lincoln (discussed many times recently in this blog), the Lincoln property market is certainly very buoyant at the moment, yet even the most optimistic agents say it cannot last. Whether the market goes pop or has a slow and steady puncture, the market will cool in 2021. The recession will mean some people are less able to afford a mortgage. This means that if Lincoln property values do ease off in 2021, you may be able to get a great buy-to-let deal if you are planning on becoming a Lincoln landlord or expand your property empire as an existing landlord.
Also, if the property market does find property prices realign to a new normal in 2021/2, house sellers may find it difficult to get a good price on their Lincoln home during a recession, meaning many house sellers may be more agreeable to sell their property at a lower price.
Third, if people aren’t buying, they still need a roof over their head and the council aren’t building any council houses, meaning the private sector will need to take up the slack.
Rightmove reported tenant demand grew by a third in
May 2020 when compared to the same month in 2019
Therefore, if you are still unsure about becoming a Lincoln landlord, knowing that more Lincoln people want to rent should help you feel more comfortable as the risk of ‘running out’ of renters interested in your Lincoln property is minimal. Yet again, please don’t go buying any old Lincoln property, as it’s fundamental that you make a good investment from the start in order to see a good return on your investment.
If Lincoln property values do fall in 2021 (as in 2009),
tenant demand for Lincoln property will only go up
Fourth, the Government reduced Stamp Duty with the sole aim to benefit the property market. The purchase needs to complete by the end of March 2021, which means you will need to have bought the property by November at the latest (as obtaining finance and legal work is taking at least 19 weeks). A word to the wise though, that whilst the saving in Stamp Duty delivers some up-front saving for those buying a buy a let property, don’t get carried away and use that saving in the purchase price you pay. Certain sectors of the Lincoln property market are seeing some very inflated prices, meaning if you go into battle for a show home quality semi-detached house within a stone’s throw of the best school, you will be fighting against buyers who want it for themselves and are prepared to pay top dollar for it, meaning some landlords could end up paying more for a property. My advice, if you want to save on the Stamp Duty, there are bargains to be had – you just have to know what you are looking for (again, as mentioned in point 1 – I am here to help on that whether you are a client of mine or not). The other option would be ‘just hold back’ until after 31 March 2021, when Lincoln property prices could ease.
Fifth, reports that the mortgage lenders are imposing stricter conditions are true, yet even during Covid, many lenders are seeing buy-to-let landlords as a safer option to lend their money to. In June alone, the number of buy-to-let mortgage products rose by 19.2% (to just over 1,700) meaning if you have a decent deposit of 30% upwards, you are likely to find something that fits your needs (at the time of writing this article, the Birmingham Midshires had a buy-to-let 5-year fixed rate mortgage at 1.94% and Santander at 2.04% … this is cheap money in anyone’s language). Mortgage rates are ever becoming more economical, which is a great motivation for anyone wanting to get a foot on the Lincoln buy-to-let property ladder.
Finally, words cannot portray the feeling of being able to see and touch one’s investment like the sensation of bricks and mortar. Buy-to-let investment has to be seen as a long-term investment yet, for many, that is a source of financial security. Of course property values might go south next year (but they might not!) whereas there may be intervals where it’s more problematic to sell because property values will be too low, as is normally the situation throughout a recession, there will also be times where Lincoln landlords will make a nice profit when selling their buy-to-let homes. Like all things in life – it’s all about the timing.
Lincoln property values are 204% higher than 20 years ago
If you’re looking to invest but are not interested in stocks and shares (and you understand that your money may be tied up for a while) then the Lincoln buy-to-let market could be for you.
To conclude, buying the right Lincoln property at the right price to start with, presenting the property in the best way to get the best tenant, fully checking out and referencing the tenant to ensure they have a good track record of being a good tenant that doesn’t trash the property and has always paid the rent on time in the past and then finally, managing the property to ensure your property complies with the 200+ legislations and regulations of rental property, so you can sleep well at night … all to ensure the property is returned at the end of the tenancy to you in good order is what nirvana looks like.
Of course, buy-to-let does come with some risks and challenges, but it’s all about mitigating those risks. Also, there is no denying that buy-to-let also comes with a lot of opportunities as well. If you are a landlord with another agent or even a Lincoln landlord that manages the property themselves, feel free to drop me a message, email or pick up the phone and let’s chat about your personal goals when it comes to buy-to-let … because what have you got to lose? Surely 15/20 minutes of your time to get great insight and inside track is worth it?
Remember, the choice is yours!
As always, feel free to comment or give me a call if I can help – 01522 525555
Going into lockdown in March, the Government proclaimed a ban on tenant evictions, pledging that no tenant in a private rented home, who had lost their wages due to Covid-19 would be kicked out of their private rented home until the late summer.
Fast forward to August and the press were being briefed as late as Wednesday 19th August that this freeze in evictions in England and Wales would cease on the 23rd August. That was until just after 4pm Friday 21st August when Mr Jenrick, the Housing Minister, announced that the eviction ban would be extended for a further four weeks and also buy to let landlords must now give their tenants six months notice to gain possession.
Hard to swallow for all the 5,067 Lincoln landlords
I know many Lincoln landlords became landlords between 2000 and 2009 because they preferred bricks and mortar to investing in the stock market or gilts/bonds market. All they were looking for was a small pension income to top up their meagre state pension. Official estimates suggest there are 1.8m to 2.1m landlords in the UK, the vast majority doing the right thing by their tenants, many of whom have helped their Lincoln tenants in financial trouble during Covid-19 by acquiescing to short-term rent reductions or rent-payment holidays.
Also, many Lincoln landlords have mortgages (in fact, if we added all the UK buy to let landlord’s mortgages, they would add up to £216.65 billion). The Government and the Bank of England have applied political influence on the mortgage companies to be a little more flexible and sympathetic on landlord’s mortgage interest payments, yet the mortgage interest is still adding up. The issue is, some tenants are in arrears with their rent, meaning landlords aren’t receiving their rent, which means many buy to let mortgages aren’t being paid either.
So, how many tenants are in arrears?
The National Residential Landlords Association stated that just 3% of landlords recently surveyed reported tenants are in arrears. This was backed up recently when Goodlord stated …
“3.72% of tenancies in the UK are in arrears“
These are only slightly above the pre-Covid arrears levels, yet still a strain for the landlords involved. Also, the two-month notice period of the section 21 Notice has been extended to six months, meaning it will be March before any tenants are made to leave, even if the notice was issued now.
So, does this leave Lincoln landlords trapped?
With regard to the arrears, only 1 in 17 landlords rent their property through a limited company, meaning the rest (i.e. the vast majority) rent their property as a person, thus giving themselves unlimited personal liability should their rental portfolio fail (i.e. the mortgage company could make a claim on the landlords own assets, including their main residence, if the property was repossessed and the shortfall wasn’t made up). Also, if the building society’s and Banks turn against the Government advice and are too lenient with landlords with buy to let mortgages, there could be situations where the rental properties are repossessed, meaning the tenant will be made homeless.
“I am particularly concerned about the fate of the
1,424 self-managing Lincoln landlords(i.e. they don’t use an agent)“
They should seriously consider taking out rent guarantee insurance to protect themselves against any potential defaulting tenants (so many don’t). Reasonably priced rent guarantee insurance products, even on existing tenancies are still available to landlords via agents, even in these Covid-19 times (whether you are a client of mine or not do not hesitate to pick up the phone and have a chat or send me an email). Whilst the policies aren’t inexpensive – they do give you peace of mind with the rental payments.
One thing that this does also remind me of is the 2008 Credit Crunch. There were an awful lot of Lincoln homeowners who were unable to sell their home in 2008/9, so they converted their Lincoln property into a buy to let investment. There are going to be an awful lot of Lincoln landlords who will also want to sell in the next six to nine months, yet are unable to do so until the middle of next year without having to take a hit on the value of their home. For those Lincoln landlords that can relate to that, maybe we should chat to consider your options so you can mitigate any losses?
It seems Lincoln landlords have been used to saving the Government from a PR disaster of homeless tenants on the streets at Christmas, the least we should do in the country is stop disparaging landlords and lift them up from their pariah status.
Lincoln landlords are housing 21,063 Lincoln
people in private rented accommodation…
… and so it is my opinion that the contributions made by these Lincoln landlords should be recognised. My fear is always of a danger of a widening schism between the landlords and tenants. Truth be told, both need each other, and I hope the Government extend help to landlords as they have with tenants, otherwise the Government won’t have any homes to house the British people if all the landlords decide to sell up. It is especially important that the supply of private properties doesn’t drop in Lincoln going forward when you consider…
Lincoln needs an additional 3,806 private rental homes by 2029
In the meantime, the Government have bigger fish to fry sorting out the economy as a whole, so if you are a self-managing landlord or even a landlord with another agent in Lincoln, feel free to pick up the phone or make contact with me and we can discuss your options without any obligation.
There is no need to feel trapped, there are options for you and it is better to consider them now – set the foundations and motions going in the right direction promptly before it becomes a bigger issue in the future.
Get in touch by calling me on 01522 525555 or email me on firstname.lastname@example.org
Roll the clock back 20 years and any self-respecting late 20/early 30 something would never say on their first date that they lived with their mum and dad.
It was seen as a sign of immaturity being tied to your mother’s apron strings as a failure to leave the family home. Yet over these last two decades, the age of leaving home has been increasing steadily from 20 years and 11 months in the late 1990’s to 22 years and 7 months today.
However, as with all the stats, the devil is in the detail. Although the age of leaving home has only risen by 8% between 1997 and today, those that didn’t leave home in their early 20’s tended to stay much, much longer.
In 1997, 11.26% of 25 to 34 year olds still lived at home with their parents,
yet last year that had risen to 15.74%, an increase of 391,000
‘stay at home’ Millennials
However, before we deride these Millennials for still being tied to their mother’s apron strings, I would say those very same Millennials (the mid 20’s to 30-year olds) have been pragmatic, being attracted to sacrificing independence in order to achieve their long-term life goals as they have seen rents rise and an inability to save for the mortgage deposit. All of this has seen the first-time buyer levels in this millennial age range rise for the last three years … so good news for everyone!
However, is all that about to change?
Just as mum and dads in Lincoln had thought their late 20 something/early 30 something offspring had flown the nest, Covid-19 has blown some Lincoln ‘chickadees’ back into the nest. Back in March, the lockdown saw many Millennials flee the big UK cities, with their constrained and poky shared HMO’s and flat shares, swapping their city centre private rented home for their parents’ Lincoln home.
Yet with lockdown lessening, it isn’t just remote workers who are unenthusiastic and disinclined to return to the big cities (fearful of a second lockdown) — many of these Coronavirus blow-ins are deciding to stay put too! A recent YouGov poll asked Millennials of private rented homes what their plans were and 1 in 6 tenants planned to hand their notice in on their rented home and fly back to the nest of mum and dad. The advantages are quite plain, especially as it could enable them to save for a deposit to buy their future home.
There are 42,368 households in Lincoln, made up of 14,298
single person households and 24,399 family households
(the remainder being made up of shared houses etc.)
Yet how many of those Lincoln family households had non-dependent children before Covid-19?
3,335 Lincoln households have children
that haven’t flown the nest
That’s 13.67% of Lincoln families whose kids are still to leave home … and it’s only going to get worse!
So, what does this mean for Lincoln homeowners and Lincoln landlords?
It will mean that Lincoln parents and their children will get to know each other better, build stronger relationships and it will enable their children, if they are wise, to save for their deposit for their first home purchase – who knows maybe in Lincoln, as working from home could become the norm.
Also, with remote working, many tenants are looking for properties with bigger gardens which could translate into greater demand for property with bigger gardens? It will also change the property needs of those Lincoln parents and potentially could mean instead of those parents moving down market, they could end up staying longer or moving up market?
Now of course these polls could be a load of hot air? What I do know is that this thing has not played out yet and only time will tell if this will make a concrete change to the way people live, rent and buy property.
These are interesting times and thank you for reading this. Do let me know your thoughts on this matter.
Michael Hollamby – Operations Manager – Northwood & Walters, Lincoln
With only around 1 in 6 Lincoln house sellers actually selling their home in the last month, Lincoln sellers and buyers will need to continue to be pragmatic if the surprisingly strong current levels of activity in the Lincoln property market are to be sustained.
To start, we had the once in a lifetime event of the credit crunch in 2008, we then had another once in a lifetime event with the Brexit vote in 2016 and now the mother of all ‘once in a lifetime’ events, Coronavirus in 2020 – three once in a lifetime events in the space of 3 Olympic Games! The doom-mongers forecast that the British property market would drop like a lead balloon on the scale of the 1989 housing crash, where property values dropped by 30.87% in a couple of years, but would be nothing compared to the tsunami that was Covid.
Yet in the first 100 days of the property market coming out of lockdown, behavioural and economic changes mean that many Lincoln homebuyers are now even more dedicated to moving home and the Lincoln property market is doing quite well.
Going into lockdown, the effect on activity in the Lincoln property market during those two months was expectable and predictable as it was placed in suspended animation during April and May. When the Lincoln property market re-opened in mid-May, nobody predicted what happened next. Of course, many of us in the property industry estimated some release of pent-up demand from the Boris Bounce, yet nobody anticipated such a ricochet in activity in the Lincoln property market.
This is particularly interesting when one considers GDP dropped by 20.4% in Q2 2020 (fascinating when compared to notable historic times when it dropped by 13.8% in WW2 and 16.7% in WW1), yet amidst the largest contraction in the UK economy ever in a single quarter, what wasn’t expected was an increase of potential property buyers and sellers wanting to move post-lockdown.
Some have cited this boost to the property market on a number of factors.
Firstly, we have had the Stamp Duty Holiday, others have pointed at the never seen before 0.1% Bank of England base rates making mortgages cheap, then we had the furlough scheme which protected so many jobs and finally, the pent-up demand from the Boris Bounce.
Yet, when one actually talks with Lincoln buyers and sellers, whilst all of them cite one or two of the above reasons, all of them mention and talk about how the lockdown has made them re-evaluate and reconsider how they want to live, their work-life balance and where they want to live. This is also reflected with tenants changing their requirements when looking for a property to rent.
Demand for apartments in the centre of Lincoln has eased off, whilst demand for property with a good-sized garden or other outside space has increased. One question we get asked all the time is also the broadband speeds, although they are quite decent in Lincoln (the average broadband in our local Council area being 57.6Mbps download and 9.7 Mbps upload).
So, with record numbers of Lincoln properties coming on to the market – is it boom time for Lincoln homeowners?
Of the 350 properties that have come onto the market in Lincoln over the last month, only 60 of them have agreed a sale – a percentage of only 17.1%
That means around 5 out of 6 Lincoln people that have placed their property onto the market have not found a buyer yet.
Yes, the Lincoln property market is good, yet the number of people who have placed their property on the market has also gone up. Lincoln estate agents have never been so busy putting property on the market and I feel sorry for the chap who is putting up all the for-sale boards – his wife hasn’t seen him in daylight for weeks!
But that does mean you are in competition with so many other properties on the market (the number of properties coming on to the market typically at this time of the year is about a third to half less). The Stamp Duty boost ends in March 2021, so that means you need to have found a buyer by November at the very latest. By overegging your asking price, to test the market, might mean you will lose out on this hiatus and could end up missing the boat!
The prices being achieved for the Lincoln properties that have been selling have been fair and realistic and have stood up much better than many were originally predicting.
Yet as the country looks forward, given the ambiguous nature of the outlook for the British economy and the possibility that Covid-19 may be with us for a little while yet, I must implore Lincoln property sellers to be realistic with their asking price so a greater number of you who want to make the move, are able to do so.
If you would like to know more about the current market or would like some free and impartial advice – drop me a line at email@example.com or call me at the office on 01522 525555.
An immediate fallout of the Coronavirus pandemic is that it has placed many Lincoln families’ house moves on hold. Government guidelines state all home buyers and home sellers who are in the process of selling their Lincoln home and moving to a new home must adapt to these temporary arrangements, adjusting their usual practices, agreeing on different dates to the house move after the removal of the stay at home actions we are all adopting. In essence, putting the home move ‘on ice’ during the lockdown.
However, where the home being moved into is vacant, Government guidance states that you can continue with this transaction although you must observe the Government guidance on home removals. There are also exceptions allowed where existing accommodation becomes unfit to live in (e.g. flood or fire) or occurrences of domestic violence. Thankfully, the Government has asked mortgage companies to extend the expiry date of any mortgage offer and the Law Society has implemented a standard legal process for delaying completion dates.
So, what does all this mean for the people of Lincoln?
This means the home moves of 567 Lincoln families have been put on hold since the coronavirus restrictions brought the UK housing market mainly to a halt in late March.
These are Lincoln properties where a sale was agreed between October 2019 and February 2020. During the time between sale agreed and completion, the properties are classified as sold subject to contract. Interestingly, it has been taking upwards of 14 to 19 weeks from agreeing a sale to the move-in over the last few years. This means typically, these 567 property transactions mentioned above would have completed between April and June/July 2020, yet have now been placed on hold after the Government asked buyers and sellers to delay house moves where possible.
The value of Lincoln property sold, subject to contract, amounts to £123,436,000
The pandemic hit just as the Lincoln market had been experiencing the Boris Bounce following his General Election landslide in December. It appears talking to my team and other agents in Lincoln, just about every buyer and seller is happy to wait until the restrictions are lifted because they had been holding back their house move because of Brexit. Interestingly, many of the Lincoln homeowners in limbo mentioned above are moving up the property ladder, and whilst being ‘in limbo’, it has made them realise more than ever that the homes they are moving from are too small for their needs and they are keen to crack on with the sale once restrictions are lifted.
Finally, we cannot forget the tenants of Lincoln.
Currently there are 73 families looking to make that move, yet unable to as tenants are under the same restrictions as homebuyers.
This means they too cannot do a physical viewing nor can they move home during a lockdown unless the existing accommodation becomes unfit to live in e.g. flood or fire or occurrences of domestic violence or the person moving is an essential worker. That doesn’t mean tenants cannot view the property and prepare the paperwork in advance. In fact, many agents think the first Friday after lockdown will be the busiest ever moving day in the history of the UK as there will be a huge pent up demand to move on that date.
If you have any questions or opinions then get in touch. Email firstname.lastname@example.org.