2,080 Huddersfield Landlords Plan to Expand Their Buy To Let Portfolios

A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector. According to Aldermore, the specialist Buy To Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (Portfolio landlords are landlords that own more than one property).

So, I thought, “Are Huddersfield landlords feeling the same?” If so, if these numbers were applied to the Huddersfield private rental market, what sort effect would it have on the Huddersfield property market as whole?

Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Huddersfield rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those Huddersfield landlords who are looking to enlarge their portfolio are doing so because they still see the Huddersfield rental market as a decent investment opportunity.

With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Huddersfield far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Huddersfield landlords.

The art to buying a Huddersfield buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.

No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) ... the housing market has always bounced back stronger in the long term. That’s the point ... long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs.

So, what of the numbers involved in Huddersfield?

There are 2,330 landlords that own just one buy to let (BTL) property in Huddersfield and 5,072 Huddersfield landlords, who are portfolio landlords. Between those 5,072 Huddersfield portfolio BTL landlords, they own a total of 10,646 Huddersfield BTL properties and they can be split down into the size of landlord portfolio in the graph below….

If I apply the Aldermore figures that means 2,080 Huddersfield landlords have plans to expand their BTL portfolio in the coming year or so.

However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord.

I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Huddersfield buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the ‘buy to let seesaw’ of capital growth and yield.

If you want to buy right and assess your own portfolio on the yield/capital growth seesaw ... drop me a note. I don’t bite and the opinion I give, whether you are landlord of mine or not as the case may be, is given freely, without obligation or cost. The choice is yours. Thank you for reading this article. To read others, please visit my Huddersfield Property Blog.

Extra Funding Is Required for Affordable Homes in Huddersfield

Extra Funding Is Required for Affordable Homes in Huddersfield

In my blog about the Huddersfield Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it).

In previous articles, I have spoken at length about the crisis in supply of property in Huddersfield (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.

An efficient and effectual housing market is in everyone’s interests, including Huddersfield homeowners and Huddersfield landlords, so let me explain ..

An average of only 168 Affordable Homes per year have been built by Kirklees Metropolitan Borough Council in the last 9 years

The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Huddersfield devoid of the money to allow them a decent standard of housing.

Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Huddersfield tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Huddersfield landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.

Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 home built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year.  As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area.

The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010. 

So, what does this mean for Huddersfield homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Huddersfield landlords find their children are also priced out of the housing market. Also, whilst your Huddersfield home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.

Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Huddersfield housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!

Huddersfield Property Market – Asking Prices Up 1.5% in the Last 12 Months

The average asking price of property in Huddersfield increased by 1.5% or £2,383 compared to a year ago, with particularly good demand from landlords and home-movers in the first few months of the year. This takes the current average asking price to £166,616, compared with £164,233 this time last year.

The rise in asking prices is being aggravated by buyers jumping into action looking to benefit from potential stamp duty savings (especially first-time buyers) or beat impending mortgage interest rate rises later in 2018. Of the numerous Huddersfield buyers starting their property hunting in the usually active spring market this year, many face paying even more than ever for the property of their dreams, and as I mentioned a few weeks ago, there are less properties for sale in Huddersfield compared to 12 months ago.

Looking at the different sectors of the Huddersfield property market, splitting it down into property types, one can see what is happening to each sector of the market with regard to their average asking prices now compared to a year ago. Firstly, looking at the Pound note amounts …

Interestingly, when one looks at the percentages, the most upward average asking price pressure is in the semi-detached property type sectors.

Now, I must stress this growth in the asking prices of Huddersfield property doesn’t mean the value of Huddersfield property is going up by the same amount ... nothing could be further from the truth.  Only time will tell if the current levels of Huddersfield asking prices is a catch-up abnormality after a couple of months of restrained asking price rises in the first few months of 2018, or is it an initial sign that we are in for a better 2018 Huddersfield Property market than all of us were expecting at the start of the year? 

I believe these asking prices must be viewed with a pinch of salt, as it will be fascinating to see whether Huddersfield properties actually sell at these higher asking prices. Just because house sellers (be they owner-occupiers or landlords liquidating their assets) are asking for more money it doesn’t mean buyers will be enthusiastic to part with their hard earned cash. Like my Mum and Dad used to say to me all those years ago, “You can ask ... but you might not get”.

Also, Huddersfield homeowners and landlords wanting to sell their property need to be aware of progressively strained buyer mortgage affordability and the more those sellers increase asking prices, the more buyers will hit their maximum on the amount they are able borrow on a mortgage.

However, those Huddersfield buyers who need a mortgage (be they owner-occupier or landlord), will paradoxically benefit from lower mortgage payments before interest rates rise … maybe another reason for the uplift in the number first time buyers and landlords buying? Only time will tell!

£841 pcm – The Average Huddersfield Rent

The rents paid by Huddersfield tenants are now standing at £841 per calendar month (PCM), a rise of 1.40% year on year and 0.33% lower month on month.

However, this attention-grabbing monthly rent figure masks stark differences in the various different parts of the Huddersfield rental market.  Demand in Huddersfield for high quality family homes with two or three bedrooms in good catchment areas for schools remains really robust due to tenants wanting access to the schools.  Other influencing factors that make certain areas popular are the proximity to transport links. However, I have noticed a drop in demand (and thus rents achieved) for property where the landlord hasn’t kept the property fresh; in terms of decoration, carpets, replacement windows and poor heating.

So, what does all this mean for Huddersfield landlords and tenants?

With the new tax rules for landlords, many believed that the number of rental properties would narrow throughout 2017, as landlords sold up their Buy to let properties and looked to invest their money elsewhere, but evidently this hasn’t happened (yet).  Feasibly Huddersfield landlords are re-mortgaging their Huddersfield buy to let properties instead, as they still believe it’s a safer investment than looking, say at the stock market?
However, demand remained strong in 2017 for Huddersfield private rental properties, meaning the rents being achieved were at a decent level for landlords. Keeping your outgoings low is also an important consideration and so I looked on a well-known financial services comparison site this morning and found a High Street bank offering a 5-year fixed rate for Buy to let landlords with a 40% deposit/equity for 2.17% … I can remember (as I am sure many of my readers of this blog can) when mortgage rates were at 15% - this is cheap money!

Looking at property values in Huddersfield, over the last 12 months and specifically at the lower of the market where buy to let landlords tend to buy their rental properties.  Flats/apartments have risen in value by 4.37% whilst terraced properties have risen by 4.23%.

Some Huddersfield landlords have seen the yields they are achieving remain squeezed.

However, most landlords can start to feel assured that as capital growth in Huddersfield remains at a more realistic figure (good for long term stability in the property market) and long-term rents are on the rise, the overall corresponding annual return on investment (Annual ROI being annual capital + annual yield) has stabilised in all areas and is now starting to grow.

With additional people seeing renting as a long-term option, even with the challenges of the new tax regime, Huddersfield landlords, with the support of a good advice and opinion, should continue to see renting as a good investment vehicle.

Huddersfield Millennials Have Spent £117,556 On Rent By The Age of 35

The Millennials were born between the mid 1980’s and late 1990’s thus making them between the age of around 22 to late 30’s. They are the imaginative, artistic youngsters who grew up with the newest tech and computers and who are huge aficionados of music festivals, gourmet pizzas, emoji’s, selfies and old school nostalgia. Also known as Generation Rent, many Millennials have discovered that renting is a good choice for their shelter and accommodation needs without the hassle that comes from buying a home. Nonetheless, that is not the only reason they don’t buy property. When they should be concentrating on their profession, putting down roots and starting a family, Millennials are still going through the pressure and strain of student loan liabilities whilst, at the same time, finding it tough to pay rent.

The hot topic at the moment is the cost of renting, as both political parties have seen mileage in wooing these Millennial Generation Renters. The average rent in Huddersfield is currently £816 per month making this a big-ticket item on the monthly budget. I was inquisitive to find out exactly how much Huddersfield Millennials will spend on rent by the time they reach their mid 30’s. The average age people leave home in the UK is 22; so looking at a Huddersfield 22-year-old (or Millennial) who left home in 2005 then between 2005 and today that Huddersfield Millennial will have shelled out £117,556 in rent.

It’s no wonder local Millennials can’t afford to buy a Huddersfield home given their tremendous debt. This means younger Huddersfield Millennials will probably carry on renting for the foreseeable future, simply because the prospect of buying a home is not yet achievable.. that is until you look more deeply at the numbers…

Looking at the chart above, the average rent of a Huddersfield property in 2005 was £684 per month (pm)  … if it had risen by inflation, today, that would be £964 pm. As I have already mentioned in the article, today it only stands at £816 per month. Looking over the last 12 years, adding up all the differences between what the average actual rent was compared to what it should have been if rent had gone up by inflation, the average Huddersfield Millennial tenant would have paid £129,374.

This means that an average 35-year-old Huddersfield Millennial tenant, who has been renting since 2005, is better off by £11,818 when comparing the actual rent paid compared to what it would have been if it had risen by inflation. In a nutshell, tenants have done well due to the sub-inflation growth in rents.

In fact, if you recall I mentioned in an article a few weeks ago, the older Huddersfield Millennials are starting to use those savings and are gradually shifting towards home ownership. They are finally catching up with the British homeownership dream as Bank of Mum and Dad help with the deposit. Also, the scrapping of Stamp Duty from the Government starts to kick in together with the realisation that if the 5% mortgage deposit can be scrapped together (yes, 95% first time buyer mortgages have been available since 2009), it is still a lot cheaper to buy than rent, meaning this will unquestionably drive demand for Huddersfield homes for sale – good news for Huddersfield homeowners.

… and what does this mean for Huddersfield landlords?

Well the vast majority of younger Millennials are still renters and I foresee this to be the case for at least the next ten to fifteen years. Landlords will need to keep improving their properties to ensure they get the best tenants and they will see a much higher rent achieved. Millennials will pay top dollar for a top dollar property. It is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … because as I promised a few weeks ago, the first rule of Buy To Let Investment ….. “You are not going to live in the property yourself”

Huddersfield Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down ... the Press is full of column inches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.  

… And that made me think … is there just one Huddersfield Property Market or many?

I like to keep an eye on the property market in Huddersfield on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Huddersfield, be that a buy-to-let property for a Huddersfield landlord or an owner occupier house for a home owner.  So, I thought, how could I scientifically split the Huddersfield housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Huddersfield property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Huddersfield, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile.  Looking at the market, I have calculated that these are the price bands in Huddersfield are as follows:

·         Lowest Quartile (lowest 25% in terms of value) … Up to £110,000

·         Lower/Middle Quartile (25% to 50% Quartile in terms of value) ...  £110,000 to £160,000

·         Middle/Upper Quartile (50% to 75% Quartile in terms of value) ... £160,000 to £260,000

·         Upper Quartile (highest 25% in terms of value) ... £260,000 Upwards

So, having split the Huddersfield Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening -

Huddersfield	Available	Sold STC	% Sold
Up to £110,000	357	214	37.5%
£110,000 to £160,000	329	279	45.9%
£160,000 to £260,000	346	218	38.7%
£260,000 Upwards	380	165	30.3%

The best performing price range in Huddersfield is the middle market. As I would expect, the upper quartile (the top 25%) is finding things tough. Interestingly for Huddersfield landlords, the lower market is also selling well, meaning there are plenty of Huddersfield landlords buying properties to add to their buy to let portfolios. Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere).

It is a fact that British (and Huddersfield’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else ... unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Huddersfield landlord investors to bag a bargain?

Want to know where those Huddersfield buy to let bargains are?  Follow my Huddersfield Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Huddersfield, many local landlords ask me my thoughts, opinion and advice on what (and not) to buy locally … and I wouldn’t want you to miss out on those thoughts ... would you?

20% Less Huddersfield Home Owners Wanting to Move Than 12 Months Ago

As I have mentioned a number times in my local property market blog, with not enough new-build properties being built in Huddersfield and the surrounding area to keep up with demand for homes to live in (be that tenants or homebuyers), it’s worrying to note that less Huddersfield home sellers are putting their properties on to the market than a year ago… or is it a worry?

At the start of 2007, there were 868 properties for sale in Huddersfield, but by September 2008, when the credit crunch was really beginning to bite, that number had risen to 1,318 properties on the market at a time when demand was at an all-time low, thus creating an imbalance in the local property market.

Basic economics dictates that if there is too much supply of something and demand is poor (which it was in the Credit Crunch years of 2008/9) … prices will drop. In fact, house prices dropped between 15% and 20% depending on the type of Huddersfield property between the end of 2007 and Spring 2009.

However, over the last five years, we have seen a steady decrease in supply of properties coming onto the market for sale and steady demand, meaning Huddersfield property prices have remained robust.  A stable housing market is one of the foundations of a successful British economy, as it’s all about getting the healthy balance of buyer demand with a good supply of properties.

Around the UK, over 85% of towns in the UK have seen an increase in the number of properties for sale from a year ago, stunting their local property markets. However, there were 677 properties for sale 12 months ago, and today that stands at 540, meaning there are 20% less properties for sale in Huddersfield today than a year ago, meaning the property market is holding its own locally.

   

Even better news, since the Chancellor announced the stamp duty rule changes for first time buyers (FTB), my fellow agents in Huddersfield say that the number of FTB’s registering on the majority of agent’s books has increased year on year. That has still to follow through into more FTB’s buying their first home, however, with the heightened levels of confidence being demonstrated by both Huddersfield house buyers and those potential FTB house buyers, I do foresee the Huddersfield Property Market will show steady yet sustained improvement during the first half of 2018.

What does this mean for Huddersfield landlords or those considering dipping their toe into the buy to let market for the first time? Landlords will need to keep improving their properties to ensure they get the best tenants. It is true demand amongst FTB’s is increasing, albeit from a low base, so that will play a small factor in demand. Even with the new landlord tax rules, buy to let in Huddersfield still looks a good investment, providing Huddersfield landlords with a good income at a time of low interest rates and a roller coaster stock market.

If you are thinking of investing in bricks and mortar in Huddersfield, it is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a fewer number of properties on the market .. comes less choice. Don’t buy the first thing you see, buy with your head as well as your heart … and don’t forget the first rule of Buy To Let Investment …..

I will tell you that 1^st rule in a couple of weeks!