In 2019, the private rented sector accounted
for just over four and a half million households or 19.9% of UK households, no
change from the year before. Interesting, when compared to the proportion of
private rented households in the 1980’s and 1990’s, when the proportion of
private rented households was stable at around 9.5% to 10.8%.
Most of that growth in the private rented
sector came in three main spurts. The first growth spurt was between 1999 and
2003 and that was caused when property values were increasing at 20% per annum,
the second came from the migration of 1.69m people from the EU8 countries after
2004 and the final growth spurt came about because of the property crash of
2008/9. When I look at the local stats…
8% of Huddersfield properties in 1991 were
privately rented,
whilst the most recent stats stand at 18.8%
Apart from social housing, the other pillar of
home tenure is owner occupation. Owner occupation is made up of two separate
groups: outright owners and those who own their home yet are buying the
property with a mortgage.
In 1991, 26.8% of Huddersfield households
owned their property outright and 43.7% of Huddersfield households were buying
with a mortgage, whilst current stats show 30.3% of Huddersfield households are
outright owners and only 33% are buying their Huddersfield home with a mortgage
Looking at these numbers, two things are clear-
1.
The increase in the proportion and
number of Huddersfield outright owners is at least somewhat caused by Huddersfield’s
baby-boomer population retiring, being able to pay off their mortgages and thus
going into outright homeownership.
2.
Overall homeownership is down. These
figures will be of no surprise to many readers with heightened barriers to home
ownership, as saving for the deposit became the prevailing hurdle to getting on
the housing ladder together with a substantial increase in the amount of
private rented accommodation, provided by an ostensibly ever-growing cohort of buy
to let investors.
So, on the face of it, everything looks rosy for Huddersfield buy
to let landlords with the private rented sector growing ever upwards.This is not the case though, because these stats on private rented and homeownership on Huddersfield are from the last census. However, the Government have a number of in-depth annual surveys on the property market and since 2016, the proportion of privately rented properties has remained stagnant at between 19% and 20%. Also, over the same time frame, the proportion of homebuyers with a mortgage has increased quite considerably from 30.7% of all households nationally to 35.5% last year. This increase is mainly attributed to an increase in first time buyers.
So, why have we seen an increase in the number
of first time buyers?
Firstly, the government introduced their Help
to Buy Scheme in 2013 helping first time buyers get on the property ladder with
interest free loans and mortgage guarantees. Secondly, the wide availability of
95% mortgages since the mid 2010’s (meaning first time buyers only need to
find a 5% deposit), and finally the continued increasing reliance of
deposits from the ‘Bank of Mum and Dad’ have helped to support this growth.
Interestingly, age is an important factor in
these stats, as it’s the 25 to 35-year olds that have seen the biggest increase
in home ownership, yet it’s decreased for those in the 35 to 45-year old
bracket.
So, what does all this mean for Huddersfield
landlords and Huddersfield homeowners?
In the next six months, I believe the growth
in first time buyer numbers will ease slightly. The pent-up demand of the Boris
Bounce in January and February has now been released, and whilst the early
signs are very good, we are still to see the effects of the curtailing of the
furlough scheme on the people’s ability to move home.
Many doom-mongers were predicting the banks
would remove 95% mortgages after Covid-19, yet looking on a well-known
comparison website, at the time of writing, there were 183 ‘95% mortgages’
available to first time buyers, with eye watering low rates of 1.53% with the
Halifax on a 2 year fixed rate and 5 year fixed rate with the Skipton at 1.83%.
The Bank of Mum and Dad might be a tougher nut to crack for first time buyers’
deposits - the fall in the FTSE and the repercussions this will certainly have
on older households’ pensions income may restrict its availability.
This means even though the Huddersfield
property market is doing reasonably well, Huddersfield homeowners wanting to
sell shouldn’t get carried away and ‘over-egg’ their asking prices. The
information available today at all buyers’ fingertips means your property can
so easily be overlooked as being overpriced, and thus become ignored.
My advice to Huddersfield landlords is, even
though the proportion of private rented properties isn’t growing, in real
numbers it is, as we created 230,000 residential homes in the country last year
alone, so we aren’t seeing a mass exodus out of private renting.
Yet, now might be the time to consider
spending money on upgrading what you already own instead of buying another
property. Depending on the type and location of your Huddersfield rental
property, the return on investment of certain upgrades can be in the order of
20% to 30% per annum. Don’t fall for the trap many Huddersfield landlords fall
into and upgrade without speaking to a property professional. Whether you are a
client or not, I am always here at the end of the phone to give you my advice
and opinion.
Please do let me have your thoughts on the
matter – thank you in advance.
