20,007 Spare ‘Spare’ Bedrooms in Huddersfield

 That isn’t a typo, of the 69,144 households in Huddersfield, 20,007 of those properties don’t only have one spare bedroom, but two spare bedrooms! … and it is this topic I want to talk about this week, my Huddersfield Property Market Blog readers – because this could be the cure for Huddersfield’s housing crisis.  The fundamental problem of the Huddersfield housing ‘crisis’, is the fact that the supply of homes to live in has not historically met demand, increasing property values (and in turn rents), thus ensuring home ownership becomes an unattainable ambition for the twenty something’s of Huddersfield.

Call me a realist, but it’s obvious that either demand needs to drop or supply needs to rise to stop this trend getting worse for the generations to come.  Don’t get me wrong, I admire Downing Street’s plans to build 200,000 starter homes which will be offered to first time buyers under 40 with a minimum 20% discount price.  However, the building of starter homes on current building sites, where new homes builders already have to build a certain number of affordable ‘starter’ homes at the moment under a different scheme, does not increase the stock of new ‘starter’ homes, it simply replaces one affordable scheme with another.

One option that could resolve the housing crisis is if the Government literally looked closer to home, concentrating on matching households with the appropriate sized home.

In Huddersfield, 45,019 households have one spare bedroom and of these, 20,007 have two or more spare bedrooms.

This compares to 3,389 households in Huddersfield that are overcrowded (i.e. there are more people than bedrooms in the property).

Looking specifically at the homeowners of Huddersfield, 17,411 owner occupied Huddersfield houses have one spare bedroom.  Now having a spare bedroom is not considered a luxury.  However, in addition to those 17,411 households with one spare bedroom, there are on top, a further 17,471 owner occupied Huddersfield households with two or more spare bedrooms.  

Therefore, I am beginning to see there is the spare capacity in the Huddersfield housing market.  Principally, I will concentrate on the group that makes up the bulk of this category, the owner occupiers of large properties, in their 60’s and 70’s, where the kids flew the nest back in the 80’s and 90’s.  They call it ‘downsizing’, when you sell a big property, where the extra bedrooms are no longer required, to move into a smaller and, usually, less expensive property.

However, there are many explanations why these individuals do not downsize.   These people have lived in the same house for 30, 40 even 50 years, and as one matures in life, many people do not want to depart from what they see as the family home.  Much time has been invested in making friends in the area and it’s nice to have all those rooms in case every grandchild decided to visit, at the same time, and they brought their friends!  But on a more serious note, more and more people are beginning to downsize earlier, but in my opinion, not at a fast enough rate.  As the years go one, we will have a situation where younger families will be living in smaller and smaller houses, whilst all the large houses with a couple of 70 something empty-nesters rattling around them!  I believe the Government should put more weight behind downsizing, because with the right incentives, many could be encouraged to think again and make the spare rooms available.

.. and it would have to be incentives, as the using the stick (instead of the carrot) would be political suicide for any party, especially the Tory’s.  One option is to allow retired downsizers not to pay stamp duty on the new property, saving them thousands of pounds and another for the planners to work with builders to build not only starter homes for under 40’s, but also have housing built just for retired downsizers ... or is this one step too far in ‘social engineering’?

The fact is not enough properties are being built in Huddersfield, and with population rising at a faster rate, something needs to be done.  However, I believe the Huddersfield population (and in fact the whole of the UK) is slowly turning into a more European model of house ownership.  In Europe, most people rent in their 20’s and 30’s, only buying in their 40’s and 50’s, when they inherit money from the sale of their late parent’s property.   That works particularly well in Germany and I can’t see why it can’t work here.  In the meantime, there is an opportunity in the coming 20 years for people to supplement their pension by buying smaller properties to rent out, as that is where the demand will be in the next few decades in Huddersfield.  For even more thoughts on the Huddersfield Property Market – visit the Huddersfield Property Blog  http://huddersfieldproperty.blogspot.co.uk/

Only 20,886 Council Houses in the Huddersfield and Kirklees area left – opportunity or problem?

The ‘Right to Buy’ scheme was a policy introduced by Maggie Thatcher in 1980 which gave secure council tenants the legal right to buy the Council home they were living in with huge discounts. The heyday of Council ‘Right To Buys’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. However, in 1997, Tony Blair reduced the discount available to tenants of council houses and the numbers of properties being bought under the Right to Buy declined.

So what does this mean for Huddersfield homeowners and landlords? Well quite a lot in fact!

Looking at the figures for our local authority, whilst the number of ‘Right to Buys’ have dwindled over the last few years to an average of only 77 ‘Right to Buy’ sales per year, one must look further back in time. Looking at the overall figures, 9,062 Council properties were bought by council tenants in the Kirklees District Council area between 1980 and 1998. Big numbers by any measure and even more important to the whole Huddersfield property market (i.e. every Huddersfield homeowner, Huddersfield landlord and even Huddersfield aspiring first time buyers) when you consider these 9,062 properties make up a colossal 7.7% of all the privately owned properties in our area (because in local authority area, there are only 116,361 privately owned properties).

Huddersfield first time buyers and landlords can now buy these ex-council properties second hand (or the PC brigade like to call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received (council discount was repayable if the first owner sold within a stipulated time period - usually 5 years).

Now let us all be honest, some (not all), but some ex-council properties lack the vital KSA that some landlords crave. The new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up the exteriors of their new homes to make them more appealing to buyers ... and if you don’t believe me ... why do Show homes exist? Going on the exterior looks of a modern property might be a theoretically good way of choosing a Huddersfield buy-to-let property, but in a challenging market, some Huddersfield investors are finding a more no-nonsense down to earth approach brings the largest returns.

Yes, the modern stuff being built in Huddersfield is lovely, but too many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live ... because remember the first rule of buy to let property … you aren’t going to live the property yourself. What an ex-council property lack in terms of KSA, they more than make up for in other ways.  Tenants more worried about how close the property is to a particular school or family members for child care matter to them far more than the look of a property.

Whilst ex-council properties tend to increase in value at a slower rate than more modern properties, that is more than made up in the much higher yields – and those built between the wars or just after are really well built. Tenant demand for such properties is good since Huddersfield property values are so expensive, a lot of people can’t get mortgages to buy, so they will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Huddersfield properties in the 80’s and 90’s, means that today’s younger generation who would have normally got a council house to live in themselves, now can’t as many were sold ten or twenty years ago.

So to Huddersfield landlords I say this … don’t dismiss ex-council houses and apartments – but remember the 1^st rule of buy to let (see above). However, those very same Huddersfield landlords should go in with their eyes open and take lots of advice. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property. One source of advice is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/ that just leaves the 20,886 council houses still owned by the local authority to be sold to their tenants in the coming years!

Has owning a home become an unattainable dream for the 2,599 Huddersfield 28 year olds

My parents bought their first house in the 1960’s, they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1960’s the average age people bought their first house was 23. By the early 1970s, it had reached 27, rising to 28 in the early 1980’s.

This year alone, 2,599 people in Huddersfield will turn 28 and 2,693 in 2017 .. and dare I say 2,810 in 2018 .. year in year out the conveyor belt carries on .. where are the Huddersfield youngsters going to live?

Ask a Huddersfield ‘twenty something’ and they will say they do not expect to buy until they are in their mid thirties - seven years later than the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Huddersfield people is the large deposit needed to get a mortgage .. or is it?

The average price paid for an apartment in Huddersfield over the last 12 months has been £100,800 meaning our first time buyer would need to save £5,040 as a deposit (as 95% mortgages have been available to first time buyers since 2010) plus a couple of thousand for solicitors and survey costs. A lot of money, but people don’t think anything today of spending a couple of thousand pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD television. That amount could soon be saved if these ‘luxuries’ were withheld over a couple of years but attitudes have changed.

Official figures, from the Office for National Statistics, show the average male in Kirklees with a full-time job earns £516.40 per week whilst the average female salary is £426.00 a week, meaning, even if one of them worked part time, they would still comfortably be able to get a mortgage for an apartment.

I was reading a report/survey commissioned by Paragon Mortgages from the autumn of last year. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants intend to remain within the rental sector and 24% intended to buy a house in the future, with the proportion of respondents citing the “unaffordability” of housing as the reason for renting privately increasing from 69% to 74%.

However, time and time again, in the starter home category of property (ie apartments), nine times out of ten the mortgage payments to buy a Huddersfield property are cheaper than having to rent in Huddersfield. It is the tenant’s perception that they believe they can’t buy, so choose not to. Renting is now a choice. Tenants can upgrade to bigger and better properties and move up the property ladder quicker than their parents or grand parents (albeit they don’t own the property). Over the last decade, culturally in the UK, there has been a change in the attitude to renting so, unless that attitude changes, I expect that the private rental sector in Huddersfield (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Huddersfield rental property unlikely to slow and newly formed households continuing to choose the rental market instead of purchasing a property. I also forecast that renting will continue to offer good value for money for tenants and recommend landlords pursue professional advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are curtailed. One such place for advice, comment and opinion is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/