Huddersfield Homeowners Have Made an Annual Profit Of £5,118 Since the Millennium

As we go full steam ahead into 2019, it’s certain that the Huddersfield housing market in 2018 was a little more restrained than 2016 and 2017 and I believe this will continue into 2019. Property ownership is a medium to long term investment so, looking at the long-term, the average Huddersfield homeowner, having owned their property since the Millennium, has seen its value rise by more than 204%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The preponderance of that historical gain in Huddersfield property values has come from the growth in Huddersfield property values, while some of it will have been enhanced by extending, modernising or developing their Huddersfield home.

Taking a look at the different property types in Huddersfield, and the profit made by each type, makes interesting reading..

	Average Price Paid in 2000 in Huddersfield	Average Price Paid in 2018 in Huddersfield	Average Total Profit in last 20 years in Huddersfield	Average Householder Profit per Year in Huddersfield	Average Annual % Increase in Huddersfield
Detached	£91,582	£249,629	£158,047	£8,780	9.6%
Semi	£51,557	£158,963	£107,406	£5,967	11.7%
Terraced	£30,423	£102,961	£72,538	£4,030	13.3%
Apartments	£35,032	£118,686	£83,654	£4,647	13.5%
Overall Average	£46,962	£139,094	£92,132	£5,118	11.3%

However, we can’t forget there has been just over 60% inflation over those 18 years, which eats into the ‘real’ value (or true spending power of that profit) … so if we take into account inflation since 2000, the true spending power of that profit has been lower.

	Total 'REAL' Profit After Inflation in Huddersfield	‘Real' Annual Profit in Huddersfield
Detached	£96,488	£5,360
Semi	£65,571	£3,643
Terraced	£44,284	£2,460
Apartments	£51,071	£2,837
Overall Average	£56,247	£3,125

 So the ‘real’ value of the profit, after inflation, in Huddersfield has been £3,125 per year.. still nothing to sniff at.

I wanted to show you that even though we had the 2008/09 Credit Crunch property market crash where, depending on the type of Huddersfield property, property values dropped between 15% and 20% in 18 months … Huddersfield homeowners over the long term are still better off than those renting.

Moving forward, the question I get asked time and again is what will happen in the future to the Huddersfield Property market? Irrespective of what is happening in the World, Europe or even Central London, the biggest factor over the medium to long term to ensure that this level of house price growth is maintained in Huddersfield is the building of new homes both locally and in the country as a whole. Whilst we haven’t had the 2018 stats yet, Government sources suggest this will be nearer 180,000 to 190,000, a decrease from the 2017 figure of 217,350 new households being created. When you consider that we need to build 240,000 households to equal demand (immigration, people living longer, higher divorce rates and people co-habiting later in life etc) … demand will outstrip supply and unless the Government start to spend billions building council houses .. this trend will continue for years (and decades to come).

Another factor is that whilst Huddersfield landlords have been hit with higher taxes to enable them to actually be a landlord most, in every national survey, still intends to increase their portfolio in the medium to long term. The youngsters of Huddersfield see renting as a choice, giving them flexibility and options that being tied to a home cannot give… thus meaning demand will continue to grow and landlords will be able to enjoy increased rents and capital growth, although those very same Huddersfield buy to let landlords will have to work smarter in the future to continue to make decent returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Huddersfield in 2018, most Huddersfield buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Huddersfield buy to let landlord, ensure that continues?

Since the 1990’s, making money from investing in buy to let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be so easy. Over the last ten years, I have seen the role of the forward thinking agents evolve from a person collecting the rent to a more all-inclusive role; I call it, ‘strategic portfolio leadership’. Thankfully, along with myself, there are a handful of agents in Huddersfield whom I would consider exemplary at this landlord portfolio strategy where they can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, speak with your current agent – whether you are a landlord of ours or not – without any cost or commitment, feel free to drop me a line.

Live in Huddersfield? About to Retire and Privately Rent? You Could be £3,800 a Year Worse Off!

You read the personal finance pages of the newspapers and it all seems to be the impending pensions crisis ... where people aren’t saving enough for their retirement. But it’s not the lack of Huddersfield peoples’ future pension incomes that are my immediate concern. The fact is that so many of the future retirees in Huddersfield over the coming decade, who never bought their home in the Millennial years of the 1990’s and 2000’s, will have to make some tough decisions regarding what house they live in when they retire anytime between now and 2038.
In Huddersfield, there are 1,672 privately rented households, where the head of the household is between 50 years and 64 years of age (meaning they will be retiring anytime between now and 2038). They are working now and easily paying the rent, yet what happens when they retire?
A Huddersfield retired couple, who currently privately rent and who have paid their fully qualifying NI stamp over the last few decades are likely to retire with the couples State Pension of £1,091 per month plus a tiny bit of private pension if they are lucky. Given that the average rent in Huddersfield is £668 a month - a lot of that pension will be lost in rent. This means taxpayers will have no alternative but to step in and top up the rent payments with Housing Benefit, yet...

The maximum housing benefit for a couple in Huddersfield is currently £349.05 per month … leaving a significant gap when you consider the average rent in Huddersfield is £668 per month

It is most people’s opinion that retirees are either council tenants or own their home outright. Looking at these figures though, it looks like both these ‘mature’ private renters could be having to make some decisions on their lifestyle and where they live, possibly looking at downsizing the home they rent to make things more affordable in their old age. Also, the government will be in for a horrible surprise as more of Huddersfield people retire and continue to rent from a private landlord. Numerous Huddersfield private renters, with little or no savings, will have to rely on Housing Benefit, which will put greater pressure on the public purse.

The average Huddersfield retiree will need to find £3,827 pa to stay in their privately rented home after retirement

A recent report from Scottish Widows suggested that 1 in 8 OAP’s will be privately renting by 2032, up from the current one in 15.47 OAP’s whom currently private rent (or 6.47%). In fact, in that report they said the equivalent of more than one-third of the whole annual NHS budget would be spent on Housing Benefit for OAP’s in retirement living in private rented property.

What does this mean for mature Huddersfield homeowners? I see many using equity release schemes to stay in their homes to pay for a better retirement and others more open to downsizing, selling their large home to a family that needs it and moving into a smaller apartment or bungalow ... yet lets be frank - they aren’t building bungalows in large numbers in Huddersfield anymore.
And for the Huddersfield landlords? Well with the younger Millennials showing no appetite in jumping onto the homeownership bandwagon anytime soon, it can only result in the demands on the buy to let market from Huddersfield tenants rising substantially. Of course, many Millennials will inherit money from their home owning parents in the coming few decades, yet a lot won’t as it will be spent on nursing home care and any leftovers (if any) split between siblings.

For those retiring in post 2050/2060, there is better news as official reports suggest those retirees will enjoy a State Pension approximately similar to today’s pensioners with auto-enrolment into top-up private pensions through their employer.
The solution to all this is to build more homes, of course. Last year we created/built just over 217,000 households in the UK, up from a post Millennial average of just under 150,000 households a year. We need to get back to the building booms of the late 1960’s and early 1970’s when on average 300,000 households were built ... but back to reality ... that won’t happen so it looks like we are turning into a nation of renters, which is of course good news for Huddersfield’s buy to let landlords!

As OAP’s set to rise to nearly 1 in 4 of Huddersfield’s population by 2037 – Where are they all going to live?

With constant advances in technology, medicine and lifestyles, people in the Huddersfield area are, on average, living longer than they might have a few decades ago. As Huddersfield's population ages, the problem of how the older generation are accommodated is starting to emerge. We, as a town, have to consider how we supply decent and appropriate accommodation for Huddersfield’s growing older generation’s accommodation needs while still offering a lifestyle that is both modern and desirable.

In 1997 in Huddersfield, over one in every six people (15%) were aged 65 years and over (and the local authority area as a whole), increasing to just under one in every six people (17%) in 2017 and it is projected to reach nearly one in every four people (23%) by 2037, meaning..

Over the next 19 years, the growth of the over 65 population in Huddersfield will grow by 35.3% - a lot more than the overall growth population of Huddersfield of 7.0% over the same time frame.

In fact, the number of those over 90 is expected to more than double in our local authority from 3,207 (0.7%) in 2017 to 6,943 (1.5%) by 2037.

looking at the proportional percentage changes over those years..

Age group percentage of the Kirklees Metropolitan   Borough Council - 1997 to 2017 and 2017 to 2037
	Percentage Change from 1997 to 2017	Percentage Change from 2017 to 2037
Under 16	-9.09%	-5.00%
16 to 64	-1.59%	-6.45%
65 and Over	13.33%	35.29%

Looking at Huddersfield and the local authority as a whole, there is a distinct under supply of bungalows and retirement living (i.e. sheltered) accommodation. The majority of sheltered accommodation fit for retirement is in the ex-local authority sector whilst the majority of private sector bungalows were built in the 1960s/70s/80s and are beginning to show their age (although that means there is often an opportunity for Huddersfield investors and Huddersfield buy to let landlords to buy a tired bungalow, do it up and flip it/rent it out).

In the medium to longer term, we need to build more bungalows and sheltered accommodation and, if we do that, that won’t only be of benefit to the elderly population of Huddersfield – it will have a direct knock-on effect to the younger and middle-aged population by unlocking those family homes the older generation homeowners live in.  

There have been 17 Housing Ministers since 1997. No one ever seems to stay in the job long enough to create a consensus and direction in Government Policy on the vital issue of the country’s housing shortage, yet the sound bites and White Papers seem only to focus exclusively on first-time buyers when there is an even more severe and disregarded shortage in suitable housing for the older generation.

This scantiness affects both mature homeowners trapped in unsuitably big family properties, unable to find smaller bungalows or suitable retirement apartments, whilst the waiting list for Council sheltered accommodation is putting a strain on other aspects of social care. In both circumstances, policy coming (or not coming) out of Government is repressing the supply and type of accommodation mature people desire, need and want, whilst at the same time, increasing the cost (and taxes) for social and NHS care.

Maybe we need tax breaks for people to downsize or planning permissions that stipulate bungalows only. Whichever way you look .. there are challenging times ahead for us all.

Huddersfield ‘Home Owning’ Movers and Shakers in 2018

It’s now commonly agreed amongst economists and the general public that the dramatic rise in Huddersfield property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down - yet in the last 12 months, people have still been moving, buying and selling in Huddersfield at levels similar to the last six years - something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Huddersfield property market, and more specifically, who is moving and why in Huddersfield. Most of the sales in Huddersfield over the past twelve months were terraced properties, which on average sold for £120,800. Semi-detached properties had an average sold price of £163,200 and detached properties averaged at £290,400.

In Huddersfield, in the homeowner sector in 2018 (i.e. owner occupation), 1,009 households moved within the tenure (i.e. sold the home they owned and bought another one) and 196 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).

Huddersfield Home Movers in 2018
Moved from Owner Occupation to Private Rented	370
Moved from Private Rented to Owner Occupation	469
Owner Occupation to Social Housing	50
Straight to Owner Occupation	196
Left Owner Occupation (i.e. Household Ended)	243
Owner Occupation to Owner Occupation	1009

What does this mean for Huddersfield buy to let landlords? Well looking at the graph, it appears bad news for landlords. There were 469 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 370 Huddersfield households moved to the private rented sector from owner occupation … which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 489 new households in the Huddersfield private rental sector were created

...and it will continue to grow at those levels for the foreseeable future.

I have one final thought and opportunity for you Huddersfield property investors. 243 owner occupied households in Huddersfield sold in last year where the homeowners had passed away. These properties can be a potential goldmine and offer great returns. The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top dollar). These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market … the Huddersfield housing market is in decent shape for the medium to long term. If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned ... and returned with vengeance. Like I say to anyone buying a property, be they a first time buyer, landlord or homeowner ... property is a long game ... and if you play the long game, you will always win (although isn’t that true in most aspects of life?).

  

Huddersfield Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Huddersfield property market appeared to be doing the reverse and was already starting to cool down.

7.00% less people moved home in the Kirklees area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 441 homes a month.. yet in the same time frame in 2018, 410 (on average) sold and moved.

  

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Huddersfield property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Huddersfield property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Huddersfield homeowners that have been selling their Huddersfield homes, renting and wagering that, in the next few years, the Huddersfield property market will tumble by more than what they spend on their short-term rental home, before they buy another Huddersfield home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Huddersfield property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Huddersfield homeowners and Huddersfield Buy To Let landlords?

Well, in the short term, demand for middle to upper market Huddersfield rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Huddersfield landlords buying in this sector of the Huddersfield property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Huddersfield properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Huddersfield properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

  

Huddersfield House Prices vs Huddersfield Rents since 2006

The Huddersfield housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Huddersfield, the market has certainly changed for both buyers and sellers alike (be they Huddersfield buy to let landlords, Huddersfield first time buyers or Huddersfield owner occupiers looking to make the move up the Huddersfield property ladder).

Huddersfield house values are 4.07% higher than a year ago, and the rents Huddersfield tenants have to pay are 1.4% higher than a year ago

When we compare little old Huddersfield to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back...

Since 2006, Huddersfield house values are 17.07% higher, yet the rents Huddersfield tenants have had to pay for their Huddersfield rental property are 18.7% higher

...which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Huddersfield tenants are 23.3% better off in ‘real spending power terms’.

The rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Huddersfield house values in the years of 2008 and 2009 ... yet as Huddersfield property values started to rise after the summer of 2009, see how Huddersfield rents dipped 6/12 months later…. Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Huddersfield property.

However, maybe an even more interesting point is for the long-term Huddersfield buy to let landlords. The performance of Huddersfield rental income vs Huddersfield house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Huddersfield landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Huddersfield buy to let portfolio 

More and more I am sitting down with both Huddersfield landlords of mine and landlords of other agents who might not be trained in these skills - to carry out an MOT style check on their Huddersfield portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time against peace of mind - the choice is yours.

1, 2, 3 or 4 bed homes – Which Sell the Best in Huddersfield?

 I wrote an article on the Huddersfield Property Blog about the length of time it took to sell a property in Huddersfield and the saleability of the different price bands (i.e. whether the lower/middle or upper local property markets were moving slower or quicker than the others). For reference, it was taking on average 49 days from the property coming on the market for it to be sold subject to contract (and that was based on every Estate Agent in Huddersfield) … and today … 115 days  .. does that surprise you with what is happening in the UK economy?

Well, a number of Huddersfield landlords and homeowners, who are looking to sell in the coming months, contacted me following that article to enquire what difference the type of property (i.e. Detached/Semi/Terraced/Apartment) made to saleability and also the saleability of property by the number of bedrooms) As I have said before, whether you are a Huddersfield landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home; finding a buyer and selling your property can take an annoyingly long time… but anything you can do to mitigate that is helpful to everyone.

So, I did some research on the whole of the Huddersfield property market .. and these were my findings …  to start with by type (i.e. Detached/Semi/Terraced/Apartment)….

The star players are the detached and semi-detached variants of Huddersfield property, whilst apartments seem to be sticking in Huddersfield.

Next I looked at what the number of bedrooms does to the saleability of Huddersfield property..… and the five bed properties seem to be taking the longest time to sell ..and to answer the question in the title .. it’s four bed properties!

So, what does this mean for Huddersfield buy-to-let landlords and homeowners?  

There is no doubt that there is a profusion of properties on the market in Huddersfield compared to 18 months ago … it’s not because more houses are coming on to the market, it’s because they are also taking a little longer to sell. This makes it slightly more a buyer’s market than the seller’s market we had back in 2014/5/6. Therefore, in some sectors of the Huddersfield property market, it is much tougher to sell, especially if you want to sell your Huddersfield home fast.

Therefore, to conclude, on the run up to the New Year, if you are looking to buy and plan to stay in the buy to let market a long time, perhaps take a look at the Huddersfield properties that are sticking as there could be some bargains to be had there? Want to know where they are .. drop me a line and I will tell you a nifty little trick to find all the properties that are sticking.