With Lincoln Tenants Deposits Totalling £7,371,230, how will ‘Lifetime Deposits’ Change the Lincoln Rental Market?

The Government’s scheduled publication of their White Paper for the Renter’s Reform Bill, which incorporates proposals to forbid Section 21 evictions and introduce ‘Lifetime Deposits’, has been suspended until 2022.

The additional time is required to give a chance to create a level playing field to reforms for both landlords and tenants in the private rented sector in England.

In this article, I want to look at these lifetime deposits. How could the Lifetime Deposit Scheme work, and how could they benefit both Lincoln landlords and Lincoln tenants?

When a tenant moves between rented homes, they need the deposit for their new home before being released from their old home.

The average deposit for a Lincoln rented

home stands at £830.

This means finding that amount of money at the time of moving home can be difficult for many tenants; thus, they become stuck in their existing rental.

Therefore, Westminster wants to propose in this White Paper a new deposit choice for tenants. A deposit is transferred from the old landlord (letting agent) to the new landlord (letting agent), thus making life simpler as the tenant doesn’t need to save for an additional new deposit every time, they move home.

Now, of course, it’s vital that any new ‘deposit scheme’ does not dissuade Lincoln landlords from making valid claims for damage to properties. Landlords cannot be expected to give up their right of recourse to a security deposit until such time that they are satisfied there will be no need to claim it.  

So how would Lifetime Deposits work?

There would need to be some form of system safeguarding that the new Lincoln landlord is protected by a whole deposit, even if the deposit on the old Lincoln home comes into dispute.

This will be critical and central to Lincoln landlords having conviction in the Lifetime Deposit Scheme. That could be something like an interest-free loan for the tenant on the crossover between the properties.

Another advantage to the scheme is that ‘lifetime deposits’ could be used for tenants to build a deposit for a house for the future.

What about the existing system of deposits?

The rules regarding the amount of deposit held by a Lincoln landlord were changed a couple of years ago, where only five weeks’ worth of rent can be held as a deposit.

The deposits Lincoln tenants have had to save for certainly raises the cost of renting a Lincoln home.

Some say this extra burden puts another nail in the coffin of the dream of homeownership for many Lincoln renters. To give you an idea of the level of deposits held for Lincoln rental properties…

The total of all the tenants’

deposits in Lincoln are £7,371,230.

Yet the other side of the argument contends that if the Lincoln tenant misses more than one month’s worth of rent, the landlord is immediately out of pocket, even before they’ve got the costs of solicitor and any improvement works from the tenant trashing the place.

Does a deposit of just over one month provide Lincoln landlords with a decent level of protection against unpaid rent or damage to the property? When you consider…

The total value of all the privately rented properties

in Lincoln is £1,997,336,900.

Before I conclude my thoughts to the initial question of ‘lifetime deposits’, the need for decent landlord insurance to ensure you are adequately covered as a Lincoln landlord is vital.

So, what are my thoughts on ‘Lifetime Deposits’?

It is my opinion the common need for Lincoln tenants to stump up a ‘two-fold deposit’ is not helping many Lincoln renters when it comes to moving home. It’s clear the standard cash down deposit is not fit for purpose for the 21st Century.

One might suggest the Government’s quest for the ‘lifetime deposit’ could open the door to other deposit alternatives that have come onto the market for tenants in the last few years.

Some landlords don’t require a deposit yet are compensated by asking the tenant to pay a higher rent to cover the risk. Also, there are companies that offer insurance backed deposits where the tenant pays one week’s rent to an insurance firm, and the insurance firm pays out if a loss is incurred by the landlord.

Interestingly, other countries are already offering deposit loans and guarantee schemes. Could this be something for the British Government to contemplate?

We must wait until at least the spring of 2022 for the Renter’s Reform White Paper to be published. Then every stakeholder involved (tenants, landlords and agents, et cetera) can look at it in the cold light of day and decide how this will affect the way they view the landlord/tenant/agent relationship.

Many will say the bigger issue isn’t ‘Lifetime Deposits’ in the White Paper, but the removal of no-fault Section 21 evictions. The removal of Section 21 is something the current Government have pledged to bring in during this parliamentary cycle (i.e., before Q4 2024). 

I am not concerned about removing no-fault Section 21 evictions, but what will replace it to ensure there is suitable redress for landlords if the tenant doesn’t pay the rent?

Of course, a handful of Lincoln landlords will decide to sell their rental portfolio because of the White Paper. The same happened in 2016 when the increase in landlord taxes were announced. 

However, this will reduce the supply and availability of Lincoln rental properties,

meaning rents will rise (classic textbook supply and demand),

thus, landlords return, and yields will rise.

Yet, because tenants still can’t afford to save the deposit for a home and we are all living longer, the demand for rental properties across Lincoln will continue to grow in the next twenty to thirty years. The reason being we are still not building enough homes to accommodate our growing and ageing population. This means we will turn to more European ways where the norm is to rent rather than buy in their 20s and 30’s.

This means new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Lincoln and enjoy those higher yields and returns. Isn’t it interesting that things mostly always go full circle?

Is the Lincoln Property Market Running Out of Steam?

In recent articles on the Lincoln property market, I have been talking a lot about house prices over the last 12 months and 5 years in Lincoln.  

When it comes to newspapers talking about the property market, the headline most people look at is what is happening to house prices.

However, as 2 in 3 (65.1%) of Lincoln home sellers are also home buyers, the price is almost irrelevant. Let me explain.

If your property has gone down in value – the one you want to buy has also gone down in value – so you are no better or worse off (and if you are moving up market – which most people do when they move home – in a suppressed property market the gap between what yours is worth and what you will buy gets lower … meaning you will be better off).

Many property commentators (including myself) consider a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying).

Let’s look at the numbers for Lincoln.

The average number of properties sold in Q1 (Jan/Feb/March) between 2008 and 2020 was 110 properties per month, whilst Q1 in 2021 saw 124 properties sell on average per month (boosted by the March stats where an eye watering 149 homes sold). This meant …

12.4% more houses sold in the Lincoln area in Q1 2021

than the 14-year average

The average number of properties in Q2 (April/May/June) between 2008 and 2020 was 121 properties per month, whilst Q2 in 2021 saw only 93 properties sell on average per month, meaning …

23.6% less houses sold in the Lincoln area in Q2 2021

than the 14-year average

Finally, whilst the exact stats for Q3 2021 for our local authority won’t be published by the Land Registry for a couple of months, I can make certain calculated assumptions from the national data published by HMRC. The number of property sales for our local authority area in Q3 (July/August/September) between 2008 and 2020 was on average 129 properties per month. However, using the HMRC data, I calculate there will only be 93 properties sold on average per month in Q3 2021. This means …

27.9% less houses sold in the Lincoln area in Q3 2021

than the 14-year average

One of the two main drivers of activity in the housing market in the latter half of 2020 (meaning Q1 figures were better than the long-term average) was the battle for space, with many Lincoln buyers seeking larger properties to work from home. The second was the short-lived tax relief measures such as the cut to Stamp Duty Tax meaning property prices were at an all-time high.

But what also might surprise you is the number of people buying for the first time.

1 in 4 mortgages since lockdown have been

for first-time buyers (25.12%)

Lincoln first-time buyers, buoyed by parental help with their deposits, the Government’s 5% deposit mortgage and ultra-low borrowing costs, have also helped to push house price growth since the start of 2021. In fact, if you split down house price growth between second time (third time etc) buyers and first-time buyers, the national annual house price inflation for first-time buyers is 9.2% compared to 8.1% for the second or third etc buyers. 

Yet, the Q2 and Q3 2021 Lincoln property market was worse than the long-term Lincoln average (in terms of property transactions)

The question is – should we be worried?

The UK economy continues to deliver a benevolent framework to the British housing market. 

The labour market has outstripped expectations with the millions expected to join the dole queue at the end of furlough failing to materialise and with the number of job vacancies on the rise.

Of course (and I mentioned a lot in my recent posts), the Bank of England is projected to increase interest rates to dampen inflation in the coming months, with further small rises predicted over 2022, so I do expect the demand for property to cool off as mortgage borrowing costs increase. 

Normally such rises in mortgage costs would mean less property would sell, yet nothing over the last couple of years has been normal.

Many Lincoln property homeowners have held back putting their property on the market in the last 6 months because they were afraid, they would sell their own home but not find another to buy – thus making them homeless (nothing could be further from the truth – yet that is what a lot of people incorrectly believe).

If the Lincoln property market slows and interest rates rise, mortgage costs will still be incredibly low by historical standards.

Also, if the obstacle of raising the 5% deposit can be overcome by first-time buyers plus a confidence that existing homeowners won’t be made homeless because of a cooling property market, many more people could be tempted to enter the property market by placing their property for sale first …

… thus, opening the market to more buyers – which in turn will drive up transaction numbers back to their normal 14-year average. However, raising a deposit is likely to remain the primary obstacle for many.

If you are a Lincoln homeowner or first-time buyer and want my thoughts on the future, then please do drop me a line.

2022 is going to be an interesting year ahead for the Lincoln property market – only time will tell if this will be a brief respite or is it running out of steam?

Please tell me your thoughts on what you think will happen.

AUDIO VERSION – http://ow.ly/ol9u50GORHn

BASE RATE RISE?

The base rate of interest is set to rise in the ‘coming months’ as the Bank of England acts to control the UK economy.

The Bank voted to keep the base rate at its historic low of 0.1% in November, but with inflation 3.1% and predicted to rise to as much as 5% in the first half of 2022, a rise is likely.

Any rise will impact mortgage borrowing costs, although with an estimated 80% of borrowers on fixed rate deals, no significant adjustment to the housing market is anticipated in the short term.

Compared to the Global Financial Crisis in 2008/09, when the base rate was often more than 5%, the rate by the end of 2022 is expected to be a maximum of 1%.

Raising the base rate encourages people to save, not spend. This should slow the increase in prices of household goods.

How far would you go to help your child get on in the world?

Many Lincoln parents move area to ensure their child gets into the best primary school, or to fund their university costs. Many of you reading this have even helped your children with the deposit for their first home from savings.

However, I have come across many Lincoln people in their 50’s and 60’s who have good jobs and incomes, yet don’t have the savings to give to their children to help them buy their first home. It doesn’t help when you consider…

the average value of a Lincoln home has risen by 16% in the last 5 years, from £192,650 to £223,450.

I am therefore seeing increasing numbers of parents who are willing to re-mortgage their own Lincoln home or start a new mortgage (when they own their Lincoln home outright) — to get their children onto the Lincoln property ladder.

So, whilst the Government is trying to turn Britain’s 20 and 30 somethings from ‘Generation Rent’ into ‘Generation Buy’, the Bank of Mum and Dad are mortgaging their retirement to pay for it all. Yet it need not be cost prohibitive borrowing the deposit as you still have access to interest only mortgages.

With an interest only mortgage, your monthly mortgage payment covers only the interest on your mortgage, not any of the original capital borrowed. This means your mortgage payments will be lower than on a repayment mortgage, remembering though at the end of the term you will still owe the original amount you borrowed from the mortgage provider.

1 in 14 new mortgages are interest only and 1 in 5.5 existing mortgages are interest only mortgages, they are extremely popular.

Anyway, many Lincoln homeowners might be worried about having that level of debt in their golden years. However, many plan to pay off the mortgage when they downsize as they get into their 60’s and 70’s.

I talk to many Lincoln homeowners, who are asset rich but cash poor and desire to help their children onto the Lincoln property ladder. Their attitude is their children will inherit their property when they pass away, so it seems practical to give them that money to work harder for them earlier in their life when they need it to buy their first home.

Can you get a mortgage, even if you are retired?

A lot is dependent upon your age and financial position. The mortgage companies will see if you have adequate funds for your retirement and emergencies plus leaving enough equity in the property to enable you to downsize in the future. Like all things, you need to take advice from a qualified mortgage arranger.

So, that then begs the question, is there enough equity in Lincoln homes to borrow against?

In the late 1980s and again in the early 2000s, many Brits saw their homes as a cash machine. Numerous homeowners re-mortgaging at the end of their mortgage’s preliminary term (usually after the initial 2, 3 or 5 years), but when doing so increased their mortgage to enable them to buy a nice car or fancy holiday. Yet, by increasing the borrowing, it created negative equity in the early 1990s and stopped many homeowners moving home between 2009 and 2013 because of their lack of equity.

Therefore, I must ask, have we borrowed too much this time round?

Looking at Lincoln and the specific postcodes LN1 to LN6 combined…

In 2016, the average Lincoln homeowner had a mortgage of £79,687 and today it is £92,343, a rise of £12,656.

Looking at these numbers, one might think we are again over-extending ourselves, yet as regular readers of my blog about the Lincoln property market will know – I like to drill down and look at all the figures.

Initially, I was worried about these stats, until I considered the equity Lincoln people have amassed over the same 5 years.

In 2016, the average equity held in a Lincoln homeowner’s property (whilst still having a mortgage) was £112,963, yet today that stands at £131,107, a rise of £18,144.

Even though mortgages have increased, Lincoln homeowner’s equity has risen even more, meaning as we stand today, mortgaged and owned-outright properties, there is…

£16,670,851,431 of equity held in all Lincoln homes.

Whilst the total value of mortgages has increased slightly since 2016, as a percentage, this has gone down meaning Lincoln homeowners and Lincoln landlords have increased their equity in the last five years.

It can quite clearly be seen that the financial insecurity sparked by the Credit Crunch crisis of 2008/9 has created a generation of Lincoln homeowners and landlords who are savers and improvers rather than movers and excessive borrowers, using excess cash to invest in their property and pay down debt or to excessively borrow on their equity growth.

Only 16.35% of the total value of Lincoln property

is borrowed money with a mortgage.

This is great news for every Lincoln homeowner and Lincoln landlord because irrespective of whether the ‘Post Lockdown Bounce’ is short or long-lived, it shows the Lincoln property market is in a better state to ride out any storm that it might encounter than ever before because less people will be in negative equity or have prohibitively high mortgages.

Before I finish, I fully appreciate money and inheritance is a sensitive subject for many families.

My message to all the Lincoln parents is, just because your children aren’t talking about the subject, it doesn’t mean it’s not on their mind.

The lead must come from you, as a Lincoln parent to ensure the wealth held in your bricks and mortar can be used to your family’s advantage, when they need it most.

If you do, your children will thank you for it and they may even do the same for their children, then, they will do the same for their children’s children … creating a legacy that will go on for generations.

Audio Version – https://lincolnpropertypodcast.buzzsprout.com/1870157/9498795

Lincoln Homeowners to Face Post-Lockdown Mortgage Rate Rise of £600 a Year

With grocery, energy and other household prices/costs rising and hitting everyone’s back pocket, inflation (rising prices) may feel like an unimportant issue when it comes to the cost of keeping a roof over your head.

Yet nothing could be further from the truth for many Lincoln homeowners and Lincoln landlords.

Because inflation over the long-term is bad for the economy, the normal weapon of choice to reduce inflation is to increase interest rates. The Bank of England oversees interest rates.

Should inflation continue to rise, there will come a point later in the year when the Bank of England will need to raise its Base Rate from its 300-year record low of 0.1% and continue to do so with a series of further increases in 2022.

When interest rates go up, the cost of mortgages go up. When the cost of mortgages goes up, that hits the affordability of what people can borrow to buy their homes (and landlords to finance their buy-to-let properties). In essence…

could it be the end of the Lincoln house price boom?

The danger of a base rate rise by the Bank of England on the back of a rise in inflation over the last few months has alarmed banks and building societies into increasing the mortgage rates for both home buyers and landlords.

In the last week alone, lenders have increased the rates of their mortgages, some mortgages by more than one whole percentage point. That doesn’t sound a lot, until you punch the numbers into a calculator.

Lincoln property buyers (be they landlords or homebuyers) have

relished months of cut-price cheap mortgages rates.

Mortgage lenders have played the big game in the last 12 to 16 months to capture the mortgage business of over million Brits that have moved home since the end of Lockdown plus the many millions of re-mortgages, with the cheapest mortgage rates falling below 1%.

Yet, the money markets have already priced into their calculations that the Bank of England will increase the base to 0.25% by December, up from the existing 0.1%. They also anticipate a further two quarter point rise in the Spring of 2022, meaning they believe the base rate will be 0.75% by the end of summer 2022.

So why is this an issue for the homeowners of Lincoln? Looking at the combined totals of the LN1 and LN6 postcode districts

29,515 Lincoln property owners have mortgages

totalling £2.72bn (up from £2.31bn in 2013).

Yet, 6,198 of those Lincoln homeowners with mortgages are on variable rate mortgages, with their mortgage payments rising and falling based on how the Bank of England interest rate shifts. That will cause instant pain if mortgage providers pass on increased mortgage repayment costs. So how much will that be?

The average size of mortgage for a

Lincoln homeowner is £92,342.96.

If the base rate were to rise to 0.75%, the average Lincoln homeowner (with a variable rate mortgage) would be £50 per month worse off (£600 per year).

The mortgage price war the banks and building societies have been fighting recently has resulted in falls in the month-on-month average mortgage rates available to borrowers. The economy is awash with cash looking for a home (mainly down to the Government’s and the Bank of England’s intervention to keep the UK economy going during lockdown). This has meant, mortgages have been available at less than 1%.

However, with reports of a potential Bank of England interest rate rise happening soon, those Lincoln homeowners who are on a variable rate mortgage are probably going to be the first who would feel the influence of any Base Rate increase.

If the Bank of England Base Rate rose to 3%, the average annual mortgage

payment of those Lincoln homeowners on variable rate mortgages

would rise by £2,770 per year.

This could mean homeowners with variable rate mortgages would be spending half their salary on their mortgage should interest rates get up to these levels.

Now the Bank of England won’t increase rates by that amount over night, as that would spook the market. They will probably increase every few months by a quarter of one percent each time.

Thankfully, over the last 4 or 5 years, over 90% of new mortgages have been fixed rate, yet they are only fixed for a certain length of time. If you have less than one or two years left on your mortgage, you seriously need to take advice now from a qualified mortgage broker, as any penalty to change might now be smaller compared to the mortgage rates you might be paying when your deal finishes in the next 12 to 24 months. Again, I am not giving you advice in this article – just making a suggestion.

A further message to the 1 in 5 of Lincoln homeowners on a variable rate, so, please take some advice from a qualified mortgage advisor as well. Mortgage rates can’t get any lower and all the signs are showing they will be going up. The mortgage market is still extremely competitive, there is opportunity for borrowers to lock in ultra-low mortgage rates before any likely Base Rate increases filter through.

Will an interest rate hike crash the Lincoln

housing market like the early 1990s?

The early 1990s saw repossessions go through the roof, as homeowners defaulted on their mortgage payments because of the increased mortgage rates. Also, in the run up to the Credit Crunch in 2008, Northern Rock were lending 125% of the value of the property (we all know what happened to them!). Other banks were recklessly lending 8 or 9 times a person’s income, without the person having to prove that income. Both scenarios were significant contributory factors in the housing market crash.

Thankfully in 2014, the Bank of England, implemented the recommendations of its own Mortgage Market Review. The Mortgage Market Review forced banks and building societies to stress test mortgage borrowers against potential increases of the base rate of up to 3%.

Thankfully, even the most hardened monetary doom-mongers aren’t contemplating base rates of those levels (although I won’t apologise for highlighting what it could cost earlier in the article).

Fundamentally, as we go into 2022, the housing market is built on decent foundations, unlike 2007 with the poor lending practices by the lenders. Yet the increase in base rates will have another influence.

The psychological factor of a perceived increase in mortgage costs, might be enough to cool the enthusiasm and excitement of many buyers to pay top dollar for their next Lincoln home, and that might not be a bad thing. If I am being frank, we could do with something that takes a bit of fizz out of the Lincoln housing market.

Many Lincoln homeowners have been put off placing their house on the market because they are scared, they won’t be able to find another home. A slight increase in Base Rates will take the frothiness out of the Lincoln property market and return it to some form of normality. I would even go as far as to say house prices might ease back ever so slightly in the coming 12 to 18 months.

So dont be alarmed if house prices in Lincoln do drift slightly over the

coming years like they did in the mid 1990s.

It’s just the property market settling down and coming back into some form of equilibrium, which is good for everyone.

My final thoughts,

The mortgage lenders have already priced in the potential Bank of England Rate rises, so even if rates do rise, let’s not panic. And even if they did rise to 3%, that would still leave them at levels that look exceedingly cheap at any other time in history. Many homeowners in their 50’s and 60’s can remember mortgage rates of 15% in 1992, so take advice from your family. (Interestingly, the 50-year Bank of England Base Rate average is 7.2%).

Buying your Lincoln home is a long-term venture. It is a huge financial decision that can give you peace of mind and a superb place to live.

But it is not an investment. I am not saying you should avoid homeownership, however, if you are considering buying because you think you are making a clever investment choice, think again.

The idea that your Lincoln family home can be an investment too comes from the fact that, historically Lincoln property prices have risen. We all have stories of someone in the family, somewhere in the UK, who bought a house for £500 many years ago, for it to be worth 300%, 500%, or even 1000% more today!

If you read some of my past articles on the Lincoln property market, I have proven many times over, there are much better ways to invest your money, for example, buying buy-to-let properties or stocks and shares.

But if you want to bring your family up in a home that is yours, the bottom line is this. Even if interest rates rise to 3% (if not a little more), you will still be able to get on the property ladder with a small deposit (using the Government’s 5% deposit mortgages) and you will still find it’s cheaper to buy than rent.

If you would like to chat to me about anything in this article, do drop me a line. In the meantime, please do give me your thoughts on the matters raised in the article. I would love to know.

Thanks in advance.

Are Lincoln House Prices Set to Fall this Autumn?

The stamp duty tax holiday is over, furlough finished at the end of September, unemployment is due to rise, and inflation is rife … is this the end of the post lockdown Lincoln property boom?

Surely, we are heading for house price correction?

Forecasting what will happen in the Lincoln property market this Autumn may not be as simple as it first appears.

It’s true the Lincoln property market is starting to settle down after an all-time number of property deals were completed in June.

More Lincoln people will have moved home in 2021 than in any year since 2007, with an estimated 1.5 million home buyers nationally having bought a property.

Roll the clock back to last Christmas, and the Government’s Office for Budget Responsibility, projected that national house prices would drop between 6% and 8%.

By Christmas, the price of the average home in Lincoln will be about £236,500 up 7.7% on last Christmas.

Let us not forget there were so many ambiguities at the start of 2021. We were about to start a 5-month lockdown, hospitals were bursting at the seams with patients, the vaccines hadn’t started, 4 in 10 employers had furloughed their staff and we had just had Brexit … things didn’t look good.

Yet, nothing could be further from the truth 10 months later – the Lincoln property market has been on fire. But after a heated summer in the Lincoln property market, things certainly can’t carry on as they have been since the end of lockdown.

So, where are we with the Lincoln property market as it stands? Taking reference from historical data on the website The Advisory (I would certainly recommend you check it out)

65% of properties on the market today in Lincoln are sold subject to contract (sstc).

How does this compare to October 2019 and October 2017?

In October 2017, 39% of Lincoln properties were sold sstc,

 whilst in October 2019, 34% of properties were sold sstc.

Yet how does that compare to the national picture?

In 2017, 39.72% of the country’s properties for sale were sold sstc whilst in 2019, that figure was 38.11%.

Now I love a good league table, so then decided to compare our locality to the rest of the country

So, I chose to look at the LN3 postcode specifically. For information, there are 2,234 postcode districts in the country.

The 2021 sold stats put LN3 in at 533rd place in the country, 1,750th in 2017 and 909th in 2019 

… meaning we have improved from both the 2017 and 2019 figures.

As we enter the last 3 months of the year, there are not so many uncertainties as there were at the start of 2021. On the good news front, 49 million Brits have had at least one jab (45m two jabs) and the UK will be the world’s fastest growing advanced economy this year according to the IMF.

Conversely, the furlough scheme ended at the end of September and with energy prices going through the roof, a real shortage of homes for sale (as I have discussed several times in recent blogs) and rising inflation on the back of a shortage of raw materials and trained staff, forecasting this and what will happen to Lincoln house prices might not be as easy as it seems.

Post stamp duty holiday, it is now recognised that the majority of the demand for people moving home is focused by a profound unhappiness and frustration with the homes we live in, revealed during the first lockdown in 2020.

Buyers (and tenants – so take note Lincoln buy-to-let landlords) want space … in fact, three types of space … and they will pay handsomely for them!

  • Office space (be that bedroom or study)
  • Outside space (gardens or proximity to green areas)
  • Broadband with ‘outa-space’ download speeds

And whilst there is a shortage of properties coming on to the market, demand and supply economics mean…

Lincoln house prices should remain relatively stable going into 2022.

The number of properties coming onto the market in Lincoln is slowly improving, yet not enough to diminish house values.

Also, don’t forget Lincoln first-time buyers still have stamp duty relief all to themselves again and mortgages are cheap. At the beginning of the 2020 lockdown (spring 2020), mortgage providers removed their higher risk 5% deposit mortgages for fear of a housing market crash. Currently, the vast majority of these low 5% deposit mortgages are back, together with the Governments own 5% deposit mortgages.

Yet many Lincoln homeowners are concerned about inflation

and its effect on their mortgage payments.

Inflation is important because if inflation gets too high, the Bank of England will need to raise interest rates to reduce inflation. Because mortgages payments are based on the bank of England interest rate, higher mortgage payments will affect what people can afford. Normally the higher the mortgage rate, the less likely house prices are to increase (and in fact if interest rates are too high, house prices will fall).

Whilst I can’t give you advice, with the Bank of England base rate at a 300-year historic low of 0.1%, I’m still surprised that nearly 3 in 10 Lincoln homeowners with mortgages are not on a fixed rate mortgage. There has never been a better time to get a fixed rate mortgage, as there are deals out there with interest rates as low as 1%. This means even if interest rates do go up in the short term, you will be protected from higher mortgage costs. Anyway, back to inflation.

Inflation did rise quite quickly and steeply in 2008/9

but came back down within a year.

This was because of a shortage of staff and raw materials during the Credit Crunch of 2008/9, the very same issues we’re experiencing at the moment in Q4 2021. The type of inflation (yes, there are types of inflation!) in 2008/9 was called ‘push inflation’. Whilst inflation is not great, ‘push inflation’ could be described the better type of inflation (as long as is it doesn’t go on for too long).

The economic crippling hyper-inflation seen in the 1970s was ‘pull inflation’. The circumstances that create ‘pull inflation’ are not being experienced at the moment in the UK. This is good news because ‘pull inflation’ is bad inflation, which in turn would create massive problems to the UK economy as a whole.

Therefore, whilst inflation will probably rise to 4-5% by Christmas, I don’t believe the Bank of England will raise interest rates substantially as the message we are hearing from them is they see this as a short-term blip.

Opportunities for Lincoln buy-to-let landlords?

Ultra-low mortgage rates and a booming rental market is encouraging more Lincoln buy-to-let landlords to expand their rental portfolios, yet their strategy is changing. Yields are increasing as there is a shortage of rental properties, driving up rents. Also, there are Lincoln landlords looking to exit the rental market, often because they want to liquidate their portfolio for retirement. These portfolios don’t make it onto Rightmove and get sold ‘off market’.

Therefore, if you are a serious Lincoln buy-to-let landlord and you’re looking to expand your own portfolio, it’s really important to put yourselves on the mailing list of estate agents and also build up great one-to-one relationships with the same agents to ensure that you’re at the front of the queue for these off market rental portfolios and not at the back.

To conclude, nobody knows the answer to what will happen to the property market in Lincoln as we go into 2022. There are many factors that could affect the market in a positive and negative way, yet buying property is always a long-term investment (be it for yourself or to rent), so if you need any advice or opinion on what you should do, drop me a line or pop into the office and we can discuss the options you have over a cup of coffee.

#lincolnproperty #lincolndevelopments #waltersproperty #lincolnshireproperty #modernmethodauction #propertyinvestment #callwalterstoday #lincolninvestments #thewaltersway #MovesyoutoMovewithWalters

Audio Version

Buyer Demand Swells

The property market continues to ride the wave as we head into autumn. Buyer demand per property is more than double pre-pandemic levels (Rightmove).

Rightmove report a 14% increase in new listings at the start of September*, but the number of available properties for sale remains low and competition for properties remains strong.

37% of properties sold for above their initial asking price in August, with an estimated 19 buyers per available property currently on the market (Propertymark).

First-time buyers, cash buyers or those buyers who are already sold subject to contract are in the best position to benefit from current market conditions.

Lincoln Buy-to-Let Market on the Rise as Returns Rise by 38.1% in 5 Years

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.

Why Are More Lincoln OAP Homeowners Deciding Not to Move Home?

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.

Lincoln Homes Asking Prices Down 1%

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.

Lincoln Homeowners Have Turned to the Rental Market to Cash in by £13,100 Each

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.

Students in the private rental sector

435,430 first time students have a confirmed place at university in the UK in 2021, this is 5% higher than results day in 2020.

During university, 29% of students live in the private rental sector. Dataloft estimate that 570,000 students will be living in the private rental sector during the next academic year.

In the UK, excluding London, students in the private rental sector spend an average of £508 on their share of rent a month and a total household rent of £1,313.

In London students in the private rental sector spend an average £1,007 on their share of rent, and a total household rent of £2,026.

Source: Dataloft Rental Market Analytics, HESA

How Many Days Does It Take to Sell a Lincolnshire Home?

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?

Only 1 in 19 Lincoln Properties are Bungalows, Despite an Ageing Population. Why?

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 grow by 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?

Lincoln’s Love (and Hate) Affair with the Semi-Detached House

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.

The Average British tenant moves every 4yr 3mth.

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.

#Boston #UKpropertymarket #UKproperty #freevaluation #valuemyhome #houseprices 

#thewaltersway #movesyoutomovewithwalters

Lincoln Home Moves Hit Record High in June

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.

#Lincoln #ForSale #ukhousing #housing #property #propertymarket #ukproperty #freevaluation #valuemyhome #Estateagents #houseprices #thewaltersway

Why Savvy Lincoln Buy-to-Let Landlords Don’t Use 10-Year Mortgages.

And the reason you shouldn’t either

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 has seen their investment rise by an average of £78,800 and 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.

 10-year Mortgage25-year Mortgage
25% Deposit Required£40,625£40,625
75% Mortgage Borrowed£121,875£121,875
Annual Interest Rate1.97%1.97%
Mortgage Length (in years)1025
Mortgage Payment per Month£1,119.78£514.79
Sum of Mortgage Payments£134,373£154,438
Interest Cost£12,498£32,563

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.

£323,520 – ‘Wood’ You Pay That for a Lincoln Terraced House?

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.

Is Lincoln Heading Towards a House Price Crash?

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?

Interest rates!

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.

These are my thoughts … what are yours?

Lincoln Buy-to-Let Landlords Owed £1,615,303 in Unpaid Rent.

Rogues or Saviours?

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?

How Eco-friendly are Lincoln Homes?

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 ofA’ 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 homeowners in 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 to improve 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?

Your Great-Great Lincoln Grandfather Would Have Only Paid £269 8s 9½d for his Lincoln Home in 1871

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.

Demand v Supply

Now is a great time to sell your home as there is a huge shortage of properties available for sale, and house prices are higher than ever.


Housing market demand is up 28.6% yet listed properties to buy are down 20.8% (YTD vs 2020, Zoopla). This is putting upward pressure on house prices, with Nationwide reporting a 10.9% annual increase.


68% of homeowners surveyed at the end of April who were either moving home or considering a move, said this would have been the case even if the stamp duty holiday had not been extended (Nationwide).


As the race for space continues, housing market demand is likely to be maintained, despite the stamp duty deadline.

Source: Dataloft, Zoopla, Nationwide

All the signs are that the Lincoln housing market is sat on good foundations, yet one key hazard could still scupper the market

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 currently stands 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).

If you are a Lincoln homeowner, Lincoln first-time buyer or Lincoln landlord and thinking of buying or selling a Lincoln property in the next few years, then this article will be of interest.”

Will Lincoln House Prices Fall in 2022?

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.

Lincoln Property Market: Is it Time to Stamp Out Stamp Duty?

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.

2,313 Lincoln Homeowners to be ‘Unchained’ From Toxic Leasehold Agreements in Biggest Shake-up of Property Law in Decades

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.

Rental market accelerates

  • 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).

Supply & Demand

  • Rental values are significantly higher across all regions of the UK, except London, than they were a year ago. Excluding the capital, the average monthly rent is £853, up 6.2%.
  • A shortage of supply and growing demand is helping support rental values. New instructions were 9% lower in the first three months of 2021 compared to 2020.
  • Although London has seen an uptick in rents agreed in 2021, oversupply in the market has seen values fall by over 5% year-on-year.
  • Across the UK as a whole, annual growth is currently 2.9%. This is on par with projections for growth over the next year (RICS). Source: Dataloft, HomeLet, April 2020

Average mortgage rate remains historically low

The cost of borrowing remains historically low according to new data released by the Bank of England, the average mortgage rate just 2.09%.

This rate has remained unchanged since the start of 2021, with gross mortgage lending in March hitting its highest ever monthly total at £35.6 billion.

Mortgage approvals remain over 20% higher than the long term (5 year average), as interest in moving home continues.

The UK base rate has now remained at 0.1% for over a year. With inflation remaining significantly below target and the economy still in recovery there is little evidence this will change imminently.