£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?

Huddersfield Landlords could be fined £861,000 per year

“Who would want to move to Huddersfield in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Halifax and this was the earliest he could do. 

It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.

For those Huddersfield landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.

Our landlord from Halifax wanted to know how much of a real issue was ‘Right to Rent’ in Huddersfield. I was able to tell him, the last available figures (from a couple of years ago) show that 287 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Kirklees Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £861,000 to the landlords of the town.

It doesn’t sound a lot when you think there are 162,949 residents in Huddersfield, and of those, 140,147 people (or 86.01%) were born in the UK. But Huddersfield is a cosmopolitan town as the country of birth of the residents in Huddersfield can be split down as follows:

·         UK                                                                          86.01%

·         Ireland                                                                     0.87%  

·         Europe                                                                     2.66%

·         Africa                                                                      1.62%

·         Middle East and Asia                                              7.32%

·         Americas and Caribbean                                         1.35%

·         Australia and Pacific region                                    0.13% 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 4,335 Europeans in the area necessarily have the right to live in the UK either.

In a nutshell, Huddersfield landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....

·         UK Passport

·         EEA Passport/Identity card

·         Travel document or Permanent Residence Card showing indefinite leave to remain

·         Paperwork from Home Office stating their Immigration status

·         Certificate of registration or naturalisation as a British citizen.

I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.

So what did our landlord do?

Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Huddersfield Property Blog for a while and because of the knowledge we impart to the landlords of Huddersfield, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £35 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.

Huddersfield Landlords count the cost of a Tory Election win

Can you remember 10.05pm on Thursday, 7^th May 2015 ... with the shock news that BBC Exit Polls suggested the Conservatives would be returned with majority? The middle classes in Fixby and Ainley Top exhaled a huge sigh of relief, as Huddersfield landlords, faced with rent controls from Red Ed and the Labour Party, now had something to cheer about as the Tory’s were always considered to be a political party that accepted the importance of the rental market, supported its development while properly targeting the lawbreaker landlords renting out below standard rental accommodation.

Since May though, George Osborne announced future rises in stamp duty for buy to let landlords and a change in the interest relief on buy to let mortgages, some people have started to question that loyalty. However, things could have been a lot worse for Huddersfield landlords as previous ideas of making landlord’s pay more tax was the idea (which was seriously considered) of increasing Capital 

Gains Tax rates to the landlord’s own income tax levels. If Landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non starter for almost everyone.

However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially. The new rules are likely to slow demand in the Huddersfield housing market, which is in fact good news for the other landlords, as there is less competition from 'amateur' landlords offering too much.

Just a thought, but making Huddersfield landlords think twice and

run their numbers more cautiously is not such a bad thing.

So looking at the numbers, the November figures have just been released and they show a growth of property values in Huddersfield of 0.7% over the month of November. That figure doesn’t surprise me due to the time of year. It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Huddersfield have risen by 3.4%, not bad when you consider inflation is running at -0.1%.

However, regular readers of the Huddersfield Property Blog know my passion for looking deeper into the stats. The really interesting information is the value growth, but what types of property are actually selling in Huddersfield?  Looking at all the properties sold, as recorded by the Land Registry, within 2 miles of the centre of Huddersfield in September 2015 (this data always runs a couple of months behind the house price data) compared to September 2007 (a couple of months before the credit crunch started to bite and the subsequent property crash).

	Sept 2007	Sept 2015	Difference
Detached in Huddersfield	26	14	-46%
Semis in Huddersfield	59	34	-42%
Terraced Houses in Huddersfield	98	57	-42%
Apartments / Flats in Huddersfield	15	6	-60%

Now I have mentioned in previous articles that the numbers of properties selling in the town has certainly dropped post 2008, but what amazed me were the greater drop in the number of apartments selling in Huddersfield compared to the drop of detached, semis and terraced properties.

Less properties are selling than last decade in Huddersfield

and the types of properties selling have changed ...

interesting times ahead for the Huddersfield Property market!

Therefore, all I can say to the landlords of Huddersfield is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and above all, for those of you planning to add to your portfolio, buy the right property at the right price. One place for such advice and opinion on the Huddersfield Property market is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Where will Huddersfield Property Prices be by 2021?

I was having lunch the other day at Three Acres Inn and Restaurant at the Three Acres Hotel in Huddersfield, with a local Huddersfield solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Huddersfield property market for the next five years.  Property prices are both a British national obsession and a key driver of the British consumer economy.  So what will happen next in the property market? So here is what I told him, and now wish, my blog reading friends, to share with you.

Before I can predict what will happen over the next five years to Huddersfield house prices, firstly I need to look at what has happen over the last five years.  One of the key drivers of the housing market and property values is unemployment (or lack of it), as that drives confidence and wage growth – key factors to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue purchasing buy to let property.

When the Tory’s came to power in May 2010, the total number of people who were unemployed in town stood at 3,410 (or 7.6% of the working age population in Huddersfield parliamentary constituency’s). Last month, this had dropped to 1,680 people (or 3.7% of the working age population).

As the Huddersfield job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 3.4% per year in the private sector (as recently reported by the ONS).  That is why, even with the colossal turbulence of the last few years, property values in the Huddersfield area are only 0.09% lower today than they were five years ago.

Many home occupiers have held back moving house over the past seven to eight years following the Credit Crunch but with the outlook more optimistic, I expect at least some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the town, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Huddersfield.

I forecast that the value of the average home

in Huddersfield will increase by 17.8% by 2021

17.8% might sound optimistic to some, but according to Land Registry, values are currently rising in Huddersfield at 2.6% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.

However, it wouldn’t be correct not to mention those potential negative issues as I do have some slight concerns about the future of Huddersfield housing market.  The number of properties for sale in Huddersfield is lower than it was five years ago, restricting choice for buyers (yet the other side of the coin is that that keeps prices higher). Interest rates were being predicted to rise around Easter 2016, but now I think it will be nearer Christmas 2016 and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 (although choosing the right sort of property / portfolio mix in Huddersfield will, I believe, mitigate those issues with the next taxation rules).

I am telling the landlords I speak to, that with interest rates at their current level 0.5%, the cash in your Building Society Passbook is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes, far outstripping bank accounts and inflation.

So my final thought ...  property is a long term investment, it has its’ up and downs, but it has always outperformed, in the long term, most investments. Those in their 40’s and 50’s in Huddersfield would be mad not to include property in their long term financial calculations. Just make sure you buy the right property, at the price in the right location. One source of information on such matters would be the Huddersfield Property Blog  http://huddersfieldproperty.blogspot.co.uk/