Huddersfield’s ‘Generation Trapped’ and the £6.51bn legacy

Last week, I wrote an article on the plight of the Huddersfield 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Huddersfield homeowners and Huddersfield landlords alike, as I discussed a couple of months ago, is our mature members of the population of Huddersfield. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Huddersfield were sitting on £2.78bn of residential property ... however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Huddersfield people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.

In Huddersfield, there are 10,077 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £1.67bn. There are an additional 12,306 mortgage free Huddersfield households, owned by 50yr to 64yr olds, worth £2.05bn in today’s prices, meaning...

Huddersfield Baby Boomers and Huddersfield OAP’s are sitting

on £6.51bn worth of Huddersfield Property

These Huddersfield Baby Boomers and OAP’s are sitting on 39,093 Huddersfield properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to declutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Huddersfield (and the Country) homeowners to downsize at the right time will also enable younger Huddersfield people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Huddersfield and the Planning Dept. should play their part, as should landlords and property investors to ensure Huddersfield’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities. 

‘Generation Rent (Forever)’ – 10,892 Huddersfield Tenants have no intention of ever buying a property to call home

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts ... those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Huddersfield (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Huddersfield property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Huddersfield. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Huddersfield (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Huddersfield population choose to be tenants as it better suits their plans and lifestyle. Local Government in Huddersfield (including the planners – especially the planners), land owners and landlords need an adaptable Huddersfield residential property sector that allows the diverse choices of these Huddersfield 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 28,364 Huddersfield tenants in their 12,973 private rental properties, 10,892 tenants have no plans to ever buy a property – good news for the landlords of those 4,982 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Huddersfield in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Huddersfield, we will in fact need an additional 5,560 private rental properties over the next eight years (or 695 a year) … meaning the number of private rented properties in Huddersfield is projected to rise to an eye watering 18,533 households.

For more insight and thoughts like this on the Huddersfield Property Market – please visit the Huddersfield Property Blog at https://huddersfieldproperty.blogspot.co.uk/

Huddersfield First Time Buyers borrow £112m in the last 12 months

Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Huddersfield property market, not just from your point of view, but also from every player’s point of view. Over the last 12 months, 2,332 properties have sold (and completed) in Huddersfield, worth £379.1m. Interestingly the number of properties changing hands in Huddersfield has also dropped when compared to a decade ago.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Huddersfield buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Huddersfield property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.  

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

Q4 2015 - £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 - £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 - £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 - £827m buy-to-let mortgages vs £1.42bn for first time buyers

When looking at the figures for Huddersfield itself, first time buyers have borrowed more than £112.09m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Huddersfield economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at the Huddersfield market, at this moment in time there are an impressive 709 properties for sale (so lots of choice). All this will be welcome news amongst Huddersfield first-time buyers with a combination of a proportional reduction in new investors and landlords.

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.  For more thoughts on the Huddersfield property market like this, you might want to visit the Huddersfield Property Market Property Blog https://huddersfieldproperty.blogspot.co.uk/

With 28,364 people in Private Rented Properties in Huddersfield - Should you still be investing in Huddersfield Buy To Let?

If I were a buy to let landlord in Huddersfield today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Huddersfield property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Huddersfield property prices do drop, the downside to that is that first time buyers could be attracted back into the Huddersfield property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Huddersfield landlord, almost a blessing in disguise.

Huddersfield has a population of 160,399 , so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Huddersfield - Accommodation Type and the Number of Occupiers
Owned outright - Huddersfield	Owned with a mortgage - Huddersfield	Shared ownership (part owned and part rented) - Huddersfield	Social rented (aka Council Housing) -  Huddersfield	Private rented - Huddersfield	Living rent free - Huddersfield
42,825	64,832	546	21,633	28,364	2,199
26.7%	40.4%	0.3%	13.5%	17.7%	1.4%

Yields will rise if Huddersfield property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Huddersfield landlords add to their portfolio. Rental demand in Huddersfield is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Huddersfield landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I have just come back from a visit to my wife’s relations after a family get together. I got chatting with my wife’s nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Huddersfield and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

So, as 17.7% of Huddersfield people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Huddersfield – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch - there is nothing like bricks and mortar!

For more views and opinions on the Huddersfield Property Market – visit the Huddersfield Property Market Blog https://huddersfieldproperty.blogspot.co.uk/