The 2020 Review of the Lincoln Property Market

“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 TodayAverage Price Paid in the Last Year
Lincoln Detached£292,160£277,110
Lincoln Semi-Detached£184,700£184,000
Lincoln Town House/Terraced£152,860£140,460
Lincoln Apartments/Flats£157,280£126,880

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 Detached£182.16
Lincoln Semi-Detached£183.34
Lincoln Town House/Terraced£158.11
Lincoln Apartments/Flats£175.75

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.

Michael Hollamby – Author The Lincoln Property Blog

As Lincoln First-time Buyers are Being Locked Out of the Lincoln Property Market – Rents Have Risen By 5.7%

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!

Michael Hollamby – Author of the Lincoln Property Blog

Each Lincoln landlord could be hit by a £22,530 bill

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)£4,905
New kitchen£3,543
Bathroom£2,657
Carpets£2,040
Redecorate£2,085
Agents fees£515
Legal fees & court fees£3,500
Mortgage payments£3,286
Total£22,530

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

Michael Hollamby – Author Lincoln Property Blog

What will happen to the value of your Lincoln home in 2021?

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.

Michael Hollamby

Lincoln homebuyers have saved £453,690 thanks to the Stamp Duty Holiday – yet many could miss out

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 michael@walterslincoln.co.uk

Michael Hollamby

Lincoln’s ‘Generation Rent’ to Become ‘Generation Buy’?

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.

Tell me your thoughts on this …

Michael Hollamby

Lincoln landlords – are you footing the government’s tax bill?

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?

Michael Hollamby

Lincoln 2nd & 3rd time buyers finding it tougher to move up the Lincoln property ladder

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

Michael Hollamby

Why are some banks reining in over-enthusiastic Lincoln homebuyers and buy-to-let investors?

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
Detached House60427044.7%
Semi Det House47925653.4%
Terraced/Town House55828150.4%
Apartment2609135.0%
Bungalows44719944.5%

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
Studio/1 bed973233.0%
2 beds59529549.6%
3 beds99650150.3%
4 beds52321841.7%
5+ beds1455336.6%

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

Michael Hollamby

Long live the planning permission rule changes

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

Michael Hollamby

The price is right!

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 michael@walterslincs.co.uk

Michael Hollamby

3 Reasons that will make you want to stop being a Lincoln Buy to Let Landlord

… 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

The 5067 trapped landlords of Lincoln

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 michael@northwoodlincs.co.uk

Are Lincoln Millennials moving back in with Mum and Dad?

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

The Lincoln Property Market Post Lockdown – the first 100 days

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 michael@walterslincoln.co.uk or call me at the office on 01522 525555.

Michael Hollamby
Operations Manager
 

 

 

 

567 Lincoln Movers in Covid Limbo

Are you a Lincoln homeowner trapped in the COVID19 market lockdown?

Lincoln families house moves on hold

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 mshollamby@northwooduk.uk.

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Take a listen whilst on the move