Huddersfield’s ‘Generation Rent’ to grow by 2,659 households by 2021

“The growth of the private rented sector, and the arrival of an investor class of buy to let landlords within it, is an issue that won’t be going away anytime soon, no matter what you read in the Daily Mail”, I said, as I chatted over a coffee with a landlord client of mine at Espresso Corner on Kirkgate in the town. Whether you are a landlord of mine (or not as the case maybe), I am always happy to look over any properties you are thinking of buying for buy to let purposes and more so over a coffee!

Some commentators are saying buy to let is about to die, with the new stamp duty changes and how mortgage tax relief will be calculated. Some say 500,000 rental properties will flood the market nationally in the next 12 months as landlords leave the rental market. Have you heard the phrase ‘Bad news sells newspapers’? Let me explain why buy to let in Huddersfield is only going in one direction – and not the direction the papers say they are going.

According to Sheffield University, buy to let landlords will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% (today it is 63.7% in Huddersfield) by 2032, while the rate of private sector renting will increase to 35% (interestingly, in Huddersfield it stands at 18.8% today).

Therefore, the demand for rental accommodation in Huddersfield will grow by 2,659 households in the next five years ... and these are the reasons why, irrespective of the distractions set out in the newspapers

         

Huddersfield property values over the last six years have risen a lot more than average wages/salaries, meaning as homeownership and mortgage availability is dependent on your ability to pay has served to push home ownership further out of reach for many, at a time when the stock of council houses has actually withered. (Nationally, the number of council houses in the last ten years has dropped from 3.16m to 2.18m households - a drop of 31.1%).

Now it’s true the Tory’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy Isa, and Starter Homes Scheme, an initiative offering a 20% discount for first time buyers … but if you are unable to save for the deposit ... none of this means anything to the ‘20 something’s’ of Huddersfield ... and they still need a roof over their heads!

Currently, 28,364 people live in private rented accommodation in Huddersfield

These are big numbers and a sizeable chunk of the electorate. So whilst it appears Huddersfield “Generation Rent” youngsters will continue to rent and to not to buy for the reasons set out above, Huddersfield buy-to-let landlords will be lifted by the projections of greater rental demand. Huddersfield and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a lively and desirable place to live. You see, with the new rules on tax, more and more landlords will be looking to move away from the previous honeypot of central London, because its higher prices meant lower rental yields. With the new tax rules and central London’s cooling of house price inflation, more and more landlords will look further afield, including Huddersfield (interestingly, I have already been chatting to a few central London landlords after they read the Huddersfield Property Blog).

So, by 2021, the number of rental properties in Huddersfield will rise to 18,292

This prediction in growth of the Huddersfield rental market is even on the back of the government clamping down on tax reliefs for landlords. The point is this, gone are the days of making guaranteed returns on BTL property. For the last 20 to 30 years, irrespective of which property you bought, making decent money on buy to let property was like shooting fish in a barrel – anyone could do it  - but not now. You must take a more considered approach to your existing and future portfolio, especially in Huddersfield. The balance of capital growth and yield, especially in this low interest rate world we live in, means Huddersfield landlords need to do more homework to ensure the investment in property gives the desired returns. One place for Huddersfield landlords and homeowners to visit for such information is the Huddersfield Property Market Blog. http://huddersfieldproperty.blogspot.co.uk/

3.2% rise in Huddersfield Property Values adds weight to the town’s Housing Crisis

Huddersfield’s continuing housing shortage is putting the town’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the town.   In fact, I was talking to my parents the other day at a family get together; the subject of the Huddersfield Property market came up in the conversation (as I am sure it does at many family parties in Huddersfield) after the weather and politics. My parents said It used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year, you would save for a pension.   But now things seem to have changed?

Back in the Autumn, George Osborne, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses).    If you look at the graph (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960’s.

How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Huddersfield house building figures, in the local authority area as a whole, only 360 properties were built in the last 12 months, split down into 340 privately built properties and 20 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Huddersfield property values have continued to rise, meaning they are 3.2% higher than 12 months ago, rising 0.2% in the last month alone.

I was taught at school (all those years ago!), that’s it’s all about supply and demand, this economics game.   The demand for Huddersfield property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Huddersfield homebuyers and Huddersfield landlords alike). You see Huddersfield’s economy is quite varied, meaning activity is expected to remain relatively strong into the early Summer of 2016, especially as some Huddersfield buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

.. and of supply, well we have spoken about the lack of new building in the town holding things back, but there is another issue relating to supply.   Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Huddersfield was 680, whilst 2 years ago, that figure was 872 whilst four years ago it stood at 1,311… a massive drop!

With demand for Huddersfield property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Huddersfield.   For more articles like this, please visit the Huddersfield Property Market Blog http://huddersfieldproperty.blogspot.co.uk/

£110,000 inheritance - Is buying Huddersfield Property still the best place for my windfall?

I had an interesting email from someone in Huddersfield a few weeks ago that I want to share with you (don’t worry I asked his permission to share this with you all). In a nutshell, the gentleman lives in Newsome, he is in his mid 60’s and still working. He has a decent pension, so that when he does retire in a couple of years’ time, it will give him a comfortable life. He had recently inherited £110,000 from an elderly aunt. One option he told me was put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%; meaning he would get £2,090 in interest a year. One of his other options was to buy a property in Huddersfield to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords.

Notwithstanding the war on Huddersfield landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the intricate cut to mortgage interest tax relief that will diminish, or even eradicate, the profits of many Huddersfield landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.

I told him that buying a Huddersfield buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £2,090 a year or, as he rightly suggested, invest in property in Huddersfield. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Huddersfield is 3.27% per annum, meaning our potential F.T.L (First Time Landlord) should be able to, depending on what he bought in the town, earn before costs £3,597 a year. (However, I told him there are plenty of landlords in Huddersfield earning half as much again (if not more), if he was willing to consider more specialist investment types of properties – again, if you want to know where – look at my blog or drop me an email).

The bottom line is that the success of investing in Huddersfield buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Huddersfield have risen in the last twelve months by 3.2% meaning, that if our chap had bought a year ago, not only would he have received the £3,597 in rent, but also seen an uplift of £3,520 …meaning his overall return for the year would have been £7,117 (not bad when compared to the Post Office!).

..  but the doom mongers amongst you will say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in Kirklees currently stand 16.66% below the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Huddersfield, we are well above these sorts of levels.

… and what would that £110,000 get you in Huddersfield? A decent 3 bed terrace in Fattown or a decent 3 bed semi in Deighton or a very nice 1 bed apartment close to the town centre .. in fact, the world is your oyster. But which Oyster? Well, my blog reading friends, if you want to read similar articles like this and what I consider to be the very best of buy to let deals in Huddersfield, irrespective of which agent is selling it, then you need to visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

8,113 Huddersfield Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?

There I was, out with the family at Greenhead Park last weekend, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person writes that Property Blog aren’t you? We have met before at that Business Networking event in Huddersfield a few months ago’. I did then recognise him and, whilst I wont mention his name, he runs a small but perfectly formed well known independent retailers in the town ... It’s amazing who you see when out walking! Anyway, I was at a loose end for five or ten minutes as the other half was sorting things with the family, so we had a chat.

He wanted to know my thoughts on the future of the Huddersfield property market, and I would now like to share with you that conversation, my Huddersfield property Blog reading friends. People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the town have a choice to what type of roof they have ... they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s/80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Huddersfield youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering ... and I want to share them with you.

Roll the clock back 20 years and Huddersfield was a different place. There were 63,410 households in Huddersfield and 40,877 of those were owner occupied. Move to the present, and with all the building in the town, the total number of households has increased by 9.04% to 69,144 and quite surprising (to me at least), the number of owner-occupiers has increased to 43,744 (although as a proportion, it is only 63.2% compared to 64.4% twenty years ago).

However, it’s rented sector that is truly fascinating … twenty years ago, only 4,860 properties were privately rented in Huddersfield ... and now its 12,973, a rise of 8,113.

The twentysomethings of Huddersfield housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 11,327 to 8,322 over the same twenty-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy to Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Huddersfield and those who educate themselves and treat it as a business will survive and prosper.

The best way Huddersfield landlords can protect their income from property (and mitigate the affects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last three or four years, Huddersfield tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Huddersfield (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.

... And just as the other half had sorted the family, he asked ‘What of the news of Stamp Duty changes for Landlords coming in April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Huddersfield property values will see much impact – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to buy to let landlords in the coming decade as the the housing market should return to balance. For more in-depth thoughts on the Huddersfield Property Market, which have a library of similar articles like this, all on the Huddersfield Property Market, please visit my blog http://huddersfieldproperty.blogspot.co.uk/ 

Private Renting in Huddersfield increases by 146.03% in 20 years

You find me in a reflective mood today as I want to talk about the future of investing in property in Huddersfield. The truth is that we have got fat and lethargic, with many people having mistaken the ever rising Huddersfield (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.

The days of making money from property as easy

as falling off a log, like taking candy from a baby are sadly

over my Huddersfield Property Blog reading friends

Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You see, I have always seen investing in the Huddersfield buy to let market (as I would anywhere in the UK), as I might see mother nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.  You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be … remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?

Nobody knows the future, and yes people can predict but I wouldn’t be afraid of this change .. because as a famous French proverb says, (I told you I was a reflective mood today), ‘the more things change, the more they stay the same’.  I mean, no one could have predicted how the property market has changed in Huddersfield over the last couple of decades? Looking specifically at the Huddersfield Parliamentary Constituency, twenty years ago, 21,800 households (meaning 58.94% of property) was owned and only 2,942 households were privately rented (meaning 7.95% of property was rented out by private landlords). Roll the clocks on twenty years and the change has been seismic …. Now 23,581 of properties in the Constituency are home-owners (a very slight drop to only 58.22% being owner occupied) and the jump in private renting has been out of this world, as 7,926 properties are now privately rented proportionally 19.56%). (NB Neighbouring Constituencies show similar changes as well).

Who would have predicted in 1995 the private rental sector in

Huddersfield would have grown by 158.66% in the proceeding 20 years?

Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Huddersfield have increased over the last 20 years (between 1995 and 2015), but by a more modest 102.52% (and most of that can be attributed to house price growth between 2000 and 2006.)

The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Huddersfield in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

The advice I give to my landlords, and you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Huddersfield buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more stable platform for knowledgeable and wise Huddersfield buy to let landlords to thrive in. If you want to learn more about the Huddersfield Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Huddersfield Property Blog, where you will find many more articles like this ..solely on the one topic of the Property Market in Huddersfield  INSERT URL

Huddersfield Buy to Let sees returns of 10.64% in 2015

Well, as a New Year begins I remembered that a few days before Christmas, I got chatting with one of my out of town landlords who was back in Huddersfield visiting his family.  Brought up in Huddersfield, he went to Nether Hall Learning Campus back in the 1970’s and is now a University Lecturer in central London.  To enhance his retirement, he has a small portfolio of four properties in the town and wanted my advice on where to buy the next property in Huddersfield (as he lives in a college owned flat and anyway, would never dream of buying where he lives in Kensington (where the average value of a flat is £1.62m and a town house £4.1m.  Eye-watering to say the least!!).

Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a Huddersfield property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth from rising house prices over time.  Going into 2016, Huddersfield landlords will be under more pressure to find the best permutation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.

However, (you knew there would be a however) before we look at yield and capital growth, one important consideration that often many landlords tend to overlook, is the propensity of how likely the rent will increase.  Interestingly, the average rent of a Huddersfield property currently stands at £810 per month, which is a rise of 3.1% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants).

Anyway, back to yield and capital growth, the average value of a Huddersfield property currently 

stands at £163,200, meaning the average yield stands at 5.96% per annum, which on the face of it, many landlords would find disappointing.  That is the problem with averages, so if I were to look at say 2 bed flats in Huddersfield which are the sort of properties a lot of landlords buy, in Huddersfield, the average value of a 2 bed flat is £103,700, whilst the average rent for a 2 bed flat is £626 per month, giving a yield of 7.24%.   However, if that wasn’t high enough, there are landlords in Huddersfield who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward (give me a tinkle if you wanted a chat about those sorts of properties – although they can be fun and games!).

Ultimately investors want to be making gains from both rent and house price growth.   When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our University friend from Kensington.   Return on investment is everything.   So, looking at property values in Huddersfield have risen in the last year by 3.4% …. which means the current annual return on investment in Huddersfield for a typical 2 bed flat is 10.64% a year .... not bad.

Whether you are a soon to be new landlord or existing seasoned landlord in Huddersfield, you might be interested in a blog about the Huddersfield Property market, where you will find similar articles to this one about what is happening in the Huddersfield Property market .... the web address is http://huddersfieldproperty.blogspot.co.uk/  and to answer the question on what he should buy, well on the same blog, once or twice a week, I post what I consider to be the best buy to let deals in Huddersfield, irrespective of which agent it is being marketed with.   Maybe you should visit the blog as well?