Huddersfield Home Buyers £11,323,188 Windfall as Stamp Duty Holiday Stretched to September… ...and new 5% deposit mortgages for Huddersfield first-time buyers

The Chancellor Rishi Sunak announced two initiatives to keep the Huddersfield property market firing on all cylinders into 2021.

 

Firstly, the £500,000 zero-rate Stamp Duty band has been extended to the 30^th June 2021. After then it will phase down to £250,000 for an additional three months, returning to the pre-pandemic levels on the 1^st October 2021. Secondly, Mr Sunak announced a scheme that will allow Huddersfield first-time buyers to buy their Huddersfield home with a 5% deposit from this April. Let me look at what each initiative means to the Huddersfield property market.

 

1.     Stamp Duty Holiday extension for Huddersfield home buyers

 

Coming out of the first lockdown in the early summer of 2020, there was a lot of apprehension that the British property market would flounder. Therefore, when the Stamp Duty Holiday was announced back in July 2020 to boost the property market, the deadline was set at the 31^st March 2021.  Little did anyone know of the snowball effect of people wanting to move because of the initial lockdown in the spring of 2020, the pent-up demand following the conclusion of the EU negotiations with the subsequent ‘Boris Bounce’ and then the Stamp Duty Holiday which made the perfect storm for what has been the busiest property market in Huddersfield since 2001/2.

 

The average stamp duty paid by a

Huddersfield homebuyer is £1,129

 

The reason the Stamp Duty extension is important is that many estate agents and solicitors have been warning for the last couple of months that home buyers would pull out of property deals or renegotiate if they could not complete their sale in time before the Stamp Duty Holiday ended.

 

So, by phasing down the Stamp Duty Holiday, this will allow some breathing space for burdened solicitors and mortgage lenders, thus decreasing the number of buyers pulling out of their property purchase because they unexpectedly have to find up to an extra £15,000 in Stamp Duty when property sales do not complete on time.

 

There are currently 1,172 properties that are sold STC in Huddersfield alone and the vast majority of those will save money on their stamp duty because of this extension

 

So, what does the Stamp Duty extension mean for Huddersfield house prices?

 

The extension has heightened confidence in the Huddersfield property market. The Government watchdog ‘The Office for Budget Responsibility’, has predicted that house prices in 4 years’ time will be just over 13% higher, compared to their pre-Christmas predicted figure of 11% growth (over the same time frame).

 

2.     5% deposit mortgages for Huddersfield first-time buyers

 

From next month, Huddersfield first-time buyers will be able to buy Huddersfield homes worth up to £600,000 with a 5% deposit and a Government-backed mortgage with a fixed rate of up to 5 years.

 

Rishi Sunak wants to turn the millennial ‘Generation Renters’ into ‘Generation Buyers’ and believes this initiative should be able to help two million people get on the property ladder. When we look at what that would mean for Huddersfield, I estimate …

 

5,247 Huddersfield people could be helped onto the

Huddersfield property ladder with these 5% deposit mortgages

 

The Government backed scheme will be open to Huddersfield first-time buyers for 21 months (until the end of 2022) and available from lenders including NatWest, Lloyds and HSBC (plus others to be announced soon). It will be available on all Huddersfield homes new or second hand (previous schemes applied to new homes only).

 

5% deposit mortgages were all but withdrawn from the market at the start of the pandemic in spring 2020 with an almost default minimum deposit of 10% (even as high as 15% in the autumn just gone) putting homeownership out of reach for all but the wealthiest Huddersfield first time buyers.

 

I must admit I found it a scandal that homeownership among the 25 to 34 year olds plummeted from 69% in 1981 to 36% by 2014, although with certain Government incentives and low interest rates since then, that had risen to 41% by last year, but it’s not enough

 

With so many young families paying huge sums in rent, who could effortlessly afford to make mortgage repayments on the same property, they haven’t been able to save enough for a 10% initial mortgage deposit, let alone 15%.

 

Yet now with these new 5% deposit mortgages, many Huddersfield first-time buyers will be able to afford to buy their first home in Huddersfield. Banks will typically lend between four and a half and five times the gross annual income – this means with a modest 5% deposit; many Huddersfield 20 and 30 somethings will now be able to buy their first home. Just before I finish this topic, the 5% deposit mortgages will also be available to current Huddersfield homeowners who don’t have the equity built up in their existing home – thus helping second or third (or more) time Huddersfield buyers as well.

 

How do both of these changes affect Huddersfield buy-to-let landlords?

 

I know many of you Huddersfield landlords are adding to your Huddersfield rental portfolio because of the Stamp Duty Holiday and with the extension, you too will save some money from it. The issue of first-time buyer mortgages does mean the demand for private rented accommodation in Huddersfield might not be as strong in the coming decade.

 

Don’t get me wrong, tenant demand will continue to outstrip supply of Huddersfield rental properties for the foreseeable future, yet the tenant/landlord balance could alter slightly in the medium term. Huddersfield landlords need to take a long hard look at their properties and ascertain if they are fit for purpose both now and into the 2030’s. Tenants are becoming a lot more demanding of what their rental property offers. Wood chip wallpaper, avocado green bathroom suites and kitchens fitted in the 1990’s (or before) simply won’t cut the mustard in the next decade.

 

The demand from Huddersfield tenants for properties with larger gardens, or the ability to keep pets or an extra reception room/garden office to allow them to enjoy their rented home more and also being able to work from home will ensure greater demand for your rental property … and the best bit, they will pay handsomely for that in higher rent.

 

If you are a Huddersfield homeowner, buyer, tenant or landlord and you want to discuss your options on selling, buying or renting a property in Huddersfield and the surrounding area, do not hesitate to contact me personally.

Half of Huddersfield Homeowners Move Again Within 6 Years and 27 Weeks – Why?

 In Britain, there are 27,071,500 households, of which 17,044,450 are owned, which are worth a total of £3,925,865,212,950 (£3.92 trillion). Over the last 5 years, an average of 86,096 properties sell each month, meaning just over a million UK households move home per year. Therefore, the average British homeowner moves every 16 years 5 months.

 

These statistics refute a common hypothesis that British neighbourhoods are becoming more fleeting and transitory. On the face of it, they appear to show that, once you have succeeded to buy a property you can call home, there isn’t much motivation to move again.

 

So, aren’t people moving home so much?

 

Could it be put down to a certain sense of complacency or apathy to moving home? Whereas we might love our home in Huddersfield, most of you (including myself) still want to ‘better our lives’ with a bigger house, better area etc, which typically requires us to climb up the Huddersfield property ladder.

 

Yet with Huddersfield house prices having risen by 195.1% in the last 20 years, the cost of going up the next rung on the Huddersfield property ladder is prohibitive.

Everyone harks back to the 1980’s, when we had an upbeat booming property market as a backcloth, Brits moved home every eight years; so now with the average at just over 16 years this equates to each British homeowner moving around three to four times in their adult lifetime. Maybe we should all call our homes ‘Dunroamin’ and be done with it!

 

Or does it? 

 

We have all heard the phrase ‘lies, damn lies and statistics’ … well the stats mentioned above hide some amazing features of the British property market. When homeowners get into their 50’s and 60’s, their tendency to move home drops like a stone. The average length of time a homeowner without a mortgage moves home is 24 years and 7 months (and just under 7 out of ten outright homeowners i.e. without a mortgage are 65 years old or older). 

 

Yet, homeowners with a mortgage move on average every 10 years and 11 weeks.

 

So, whilst I cannot determine who has a mortgage and who doesn’t, I can look at how quickly people move home in Huddersfield.  I have looked at the last 50 property sales in Huddersfield, and I have found some interesting findings.

 

On average Huddersfield homeowner only move every 14 years

and 9 weeks.

 

Nothing interesting about that you might say, when compared to the national average ... yet the devil is in the detail.

 

There appears to be a two-speed Huddersfield property market … look at the top 25% of Huddersfield home movers, and then the next slice … these Huddersfield people are moving home really quickly, yet the gap for the next two slices widens tremendously.

 

·         Top 25% quickest Huddersfield home movers move every 2 years & 39 weeks

·         The next 25% quickest Huddersfield home movers move every 10 years

·         The next 25% quickest Huddersfield home movers move every 18 years & 21 weeks

·         Whilst top 25% slowest Huddersfield home movers only move every 25 years

 

When looking at the properties that fall into the later bands (i.e. the ones that don’t move/sell so often), they tend to be the larger properties where the homeowners have lived for 25/30 years plus.

 

The lesson we all should learn is that once people get into their 50’s and 60’s, their propensity to move home drops considerably. This means the properties on the lower rungs of the Huddersfield property ladder do appear to sell quickly (as they are occupied by younger homeowners) yet once Huddersfield people get older, their tendency to move diminishes. This puts a roadblock on the younger generation wanting to buy the larger Huddersfield properties these mature homeowners live in.

 

What is holding the older generation back from selling and downsizing to free up homes for families that desperately need them? Some of it will be apathy, some of it will be holding on to the home that they brought their family up in, yet the bottom line is…

 

46.5% of the homes owned in Britain have

two or more spare bedrooms.

 

As a nation, we need to rethink how we can encourage older homeowners to sell their large homes to release them to the younger families that desperately need them. Some suggest tax breaks, yet the Government won’t be in the mood to give huge tax breaks as the measures to protect the economy over the last 12 months will ultimately need to be paid back.

 

One thing I do know, we as a Country have seen (and will continue to see) a lot of demographic change together with an increasing elderly population, so it’s not just about how many homes we build, but whether we are building the right kind of homes the older generation will want to move into.

 

Interesting times ahead for the Huddersfield property market!

 

If you have a Huddersfield property to sell or let in the coming weeks, months or years and would like to know how this and other factors will affect you and your property ... without obligation, don’t hesitate to give me a call or drop me line.

 

The Busiest December for the Huddersfield Housing Market Since 2006

 

Over the last six months, the Huddersfield Property Market has been flourishing. As soon as an estate agents ‘For Sale’ flag went up, neighbours would be checking out Rightmove to see the internal pictures and compare the asking price to their own home (go on .. admit you do that too – every Huddersfield homeowner does). Flabbergasted by optimistic asking price tags, those same Huddersfield homeowners stand open-mouthed to see a sold slip added to the board a few weeks later.

 

Property values in Huddersfield are 7.6 per cent higher than

a year ago.

 

The newspapers are full of stories of this mini property market boom, which has been fuelled by the Stamp Duty Tax cut, which ends on the 31^st March 2021. Not only has it pushed up values in Huddersfield, but it has also theoretically brought forward house moves from 2021 into 2020.

 

The most up-to-date transaction figures (i.e. the number of people moving home) endorse it too. In the UK, 137,200 property sales/transactions took place in December, the highest number of sales/transactions in December since 2006 (when it topped 149,200 transactions, only for it to fall to 32,700 transactions in December 2008 at the height of the Credit Crunch).

 

 

The exact figures from the Land Registry for Huddersfield won’t be available for another six weeks or so, yet in December 2019, 292 properties changed hands in Huddersfield. Looking at anecdotal evidence of for sale board changes, my database and the portals, I believe we will end up around 394 to 409 Huddersfield property sales/transactions for December 2020.

 

So, how does all this compare to other years?

 

The number of UK transactions continued to be relatively stable between November 2019 and March 2020. That decreased by around half in April/May 2020 compared to April/May 2019, triggered by economic impacts relating to the public health restrictions introduced. Since the first lockdown was lifted in the late spring, sales/transactions have increased steadily upwards each month, mirroring the relaxing public health restrictions for the property market during the summer and autumn of 2020 and introducing Stamp Duty Tax Holidays.

 

Before we all get the Champagne corks flowing, what the December national figures (and the corresponding provisional Huddersfield stats) don’t tell us, is that April to December 2020 transactions ended the year 13.7 per cent down compared to April to December 2019 transactions — the lowest since 2012. Don’t get me wrong, 13.7 per cent is impressive given that we are in the middle of a recession and even more remarkable considering there was a 48.7 per cent fall in transactions in 2008 (compared to 2007) when the Credit Crunch hit.

The biggest question though, is, how much of the urgency since the summer to buy property can be credited to the …

 

·         existing pent-up demand that built up in 2018/9 and was starting to be released in the ‘Boris Bounce’ in January/February 2020

·         new demand from home workers looking for bigger properties

·         people moving out of the big city centres

·         the Stamp Duty Tax cut

 

— or a mixture of all four?

 

Nobody can categorically know whether the UK property market would have ricocheted as quickly without the Stamp Duty Tax cut.

 

Talking to many buyers, sellers, agents and solicitors in the Huddersfield property market over the last three or four months, the anecdotal evidence I have collated from those people seems to imply that the outbreak of activity in the Huddersfield property market has mainly been put down to the lifestyle factors (bigger house with office space etc) and pent-up demand, meaning the Stamp Duty Tax Holiday is seen as the icing on the cake for most people. Yet, there will be some buyers, whose motivation has been purely to save money on the tax duty. Overall though, in the vast majority of house purchases, this allows us to be reasonably hopeful about what will happen once the Stamp Duty Tax Holiday is withdrawn on the 31^st March.

 

However, some newspapers are preaching a story that the property market will collapse without a Stamp Duty Tax Holiday extension. Nobody can argue that a phased withdrawal from the Stamp Duty Tax Holiday would be better than some homebuyer’s sales falling through, when the tax holiday finishes in late March. Even if your motivation isn’t to save money on the tax holiday, it could be the motivation of a buyer in your chain – meaning it becomes your issue. Nobody knew in July, when the tax holiday was announced, that we would get another two national lockdowns with the inevitable delays from remote working by solicitors, mortgage providers and local authority search departments. My advice to all people currently sold subject to contract is to ask the question, “What if we don’t complete the sale by the end of March?”. Better to sort it now than have a nasty surprise in the last week of March.

 

All property taxation is long overdue for reform, from Stamp Duty to Council Tax. When Margaret Thatcher tried to change local Rates to Poll Tax in the late 1980’s, those who are old enough can remember the Poll Tax Riots, hence the nervousness of any party since to make any changes. There is no way the Government will abolish Stamp Duty when it raises between £11bn to £13bn a year, yet with all the upheaval we have experienced in the last year, there could be an appetite to change the way property is taxed.

 

The Government has already spent £271bn on interventions due to the pandemic and needs every penny so that it can start to repay those debts over the coming decades.

 

I have a feeling most Huddersfield property buyers and sellers would compromise on the price they pay for their next home to cover the cost of the Stamp Duty Tax after April, rather than lose the chance of owning the forever home they longed for during the first lockdown.

 

Therefore, don't be alarmed when we see property values ease slightly in Q3 2021 when the price paid for property reflects the lower price to account for the Stamp Duty that will need to be paid from the 1^st April.

 

If you are a Huddersfield homeowner or Huddersfield buy to let landlord and you would like a chat about where you and your Huddersfield property stands in the current Huddersfield property market, don’t hesitate to give me a call or drop me a line.

 

 

 

Huddersfield Property Market: Is it Time to Stamp Out Stamp Duty?

 

Most people pay Stamp Duty Tax when they buy a property, house, apartment or other land and buildings over a particular price in the UK. The Chancellor, Rishi Sunak (quickly followed suit by the Welsh and Scottish Governments), announced last July that Stamp Duty was partially being suspended on all English property transactions up to £500,000 (£250,000 in Wales and Scotland) - a Stamp Duty Holiday.

 

That meant only 1 in 8 English buyers would pay any Stamp Duty Tax on their home purchase (if it was over £500,000), saving any buyer up to £15,000 in tax on the purchase. The problem is the property needs to have been purchased and bought by the 31^st March 2021. Complete the transaction a day later, and those buyers will have to pay Stamp Duty.

 

The issue is local authorities are snowed under with local search requests, mortgage companies and conveyancing staff are working from home, so property transactions are taking much, much longer. This means many Huddersfield (and UK) buyers who have currently sold (subject to contract) will miss out on the stamp duty saving.

 

Most (not all) estate agents have been warning the buyers and sellers in their property chains that some deals might not make the 31^st March 2021 deadline and pleasingly, most people aren’t moving because of the Stamp Duty Holiday (they are moving because they need extra space because of the pandemic). However, it only takes one person in the chain not to be ‘singing off the same hymn sheet’ for the whole chain to collapse … so keep in touch with your estate agent.

 

A campaign by one of the national newspapers and an online petition to extend the stamp duty holiday has meant the topic could be debated in Parliament in the next few weeks, after 100,000 home buyers and sellers signed that petition, asking for an additional six-month Stamp Duty Holiday. The home buyers and sellers are worried the property market will collapse after March 31st when the Stamp Duty Holiday is removed.

The last time British home buyers were conscious of upcoming Stamp Duty changes, it distorted the number of properties sold. The bigger question though is, did it change the overall number of people moving home?

In November 2015, the then Chancellor, George Osborne, announced in his Autumn Statement that buy to let landlords would have to pay an additional 3% in Stamp Duty (over and above owner occupiers) for all property bought after the 1^st April 2016. As shown in the graph below, this caused a surge in property buying (which we have seen since this summer with the Stamp Duty Holiday), with many Huddersfield buy to let landlords completing their property purchase in March 2016, as they dashed to complete their property purchase before the tax increase.

In the 3 years of 2015/6/7, the average number of Huddersfield and Kirklees properties sold (transactions) per month was 509 per month, yet in the month before stamp duty was changed in March 2016, transactions rose to 744, an uplift of 46.1% from the average or an extra 234 transactions in that month alone. Yet, look at the months of April and May, the property transactions numbers slumped, meaning in those two months combined, there were 172 less transactions.

So, if the Stamp Duty Holiday isn’t extended, what will that mean for the UK and Huddersfield property market?

London and the South East seem to be particularly exposed to the removal of the Stamp Duty Tax break because it has such a high proportion of property priced between £300,000 and £500,000. These areas benefit from the highest tax savings relative to house price.

Yet, with the average value of a Huddersfield home at £182,100, the stamp duty cost if the sale is delayed after the 31^st March 2021 is £1,142 – a figure that shouldn’t break the bank

So, if the Stamp Duty Holiday isn’t extended – it might not be such the nightmare scenario as some people believe.

 

My advice to all buyers and sellers is to be constantly talking to your estate agent, your solicitor and your mortgage broker. With your estate agent to ascertain if they have asked every person (or asked the other agents in the chain to ask the question), “What if we don’t meet the stamp duty deadline?” With your mortgage broker and solicitor to give them all the information they need to ensure there are no delays with any information they request from you.

 

One final thought, some mortgage providers allow insurance policies to be purchased by your solicitor in case your searches (from the local authority aren’t back in time) … the cost of those will be much lower than the cost of the stamp duty ... again, speak with your solicitor.  Irrespective of whether you are a client of mine or not, if you would like a chat about anything mentioned in this article, don’t hesitate to contact me.

 

18,566 Huddersfield Homeowners to be ‘Unchained’ From Toxic Leasehold Agreements in Biggest Shake-up of Property Law in Decades

When William the Conqueror invaded our fair shores in 1066, like all good kings, he needed to buy loyalty and raise cash to build his castles and armies. He did this by feudal law system and granted all the faithful nobles and aristocrats with land. In return, the nobles and aristocrats would give the King money and the promise of men for his army (this payment of money and men was called a ‘Fief’ in Latin, which when translated into English it becomes the word ‘Fee’… as in ‘to pay’).

These nobles and aristocrats would then rent the land to peasants in return for more money (making sure they made a profit of course) and the promise to enlist themselves and their peasants into the Kings Army (when requested during times of war). The more entrepreneurial peasants would then ‘sublet’ some of their land to poorer peasants to farm and so on and so forth.

The nobles and aristocrats owned the land, which could be passed on to their family (free from a fee i.e. freehold), while the peasants had the leasehold because, whilst they paid to use the land (i.e. they ‘leased it’ which is French for ‘paid for it’), they could never own it. Thus, Freehold and Leasehold were born (you will be pleased to know that in 1660 the Tenures Abolition Act removed the need of Freeholders to provide Armies for the Crown!).

4.3 million properties in the UK are leasehold

… and 18,566 properties in Huddersfield are leasehold. By definition, even when you have the leasehold, you don’t own the property (the freeholder does). Leasehold simply grants the leaseholder the right to live in a property for 99 to 999 years. Apart from a handful of properties in the USA and Australia, England and Wales are the only countries of the world adhering to this feudal system style tenure. In Europe you own your apartment/flat by using a different type of tenure called Commonhold.

The average price paid for leasehold properties in

Huddersfield over the last year is £145,120.

 

The two biggest issues with leasehold are firstly, as each year goes by and the length of lease dwindles, so does the value of the property (particularly when it gets below 80 years). The second is the payment of ‘ground rent’ – an annual payment to the freeholder.

Looking at the first point on the length of lease, the Government brought in the Leasehold Reform Act 1967, which allowed tenants of such leasehold property to extend their lease by upwards of 50 years. However, this was very expensive and as such only kicked the can down the road for half a century (when the owner would have to negotiate again to extend another 50 years – costing them more money, time and effort).

Ground rents on most older apartments are quite minimal and unobtrusive. The reason it has become an issue recently was the fact some (not all) new homes builders in the last decade started selling houses as leasehold with ground rents. The issue wasn’t the fact the property was sold as leasehold nor that it had a ground rent, it was that the ground rent increased at astronomical rates.

 

Many Huddersfield homeowners of leasehold houses are presently subject to ground rents that double every 10 years.

 

That’s okay if the ground rent is £200 a year today, yet by 2121, that would be £204,800 a year in ground rent, meaning the value of their property would almost be worthless in 100 years’ time.  One might say it allows for inflation, yet to give you an example to compare this against, if a Huddersfield leasehold property in 1921 had a ground rent of £200 per annum, and it increased in line with inflation over the last 100 years, today that ground rent would be £9,864 a year.

 

This is important because the majority of leasehold properties sold in Huddersfield during the last 12 months were terraced houses, selling for an average price of £107,332.

 

So, without reforms, the value of these Huddersfield homes will slowly dwindle over the coming decades. That is why the Government reforms announced recently will tackle the problem in two parts.

Firstly, ground rents for new property will effectively stop under new plans to overhaul British Property Law. Under the new regulations, it will be made easier (and cheaper) for leaseholders to buy the freehold of their property and take control by allowing them the right to extend the lease of their property to a maximum term of 990 years with no ground rent.

 

Secondly, in the summer, the Government will create a working group to prepare the property market for the transition to a different type of tenure. Last summer the Law Commission urged Westminster to adopt and adapt a better system of leasehold ownership – Commonhold. Commonhold rules allow residents in a block of apartments to own their own apartment, whilst jointly owning the land the block is sitting on plus the communal areas with the other apartment owners.

 

These potential leasehold rule changes will make no difference to those buying and selling second-hand Huddersfield leasehold property.

 

Yet, if you are buying a brand-new leasehold property, most builders are not selling them with ground rent (although do check with your solicitor). The only people that need to take any action on this now are people who are extending their lease. If you are thinking of extending the lease of your Huddersfield property before you sell to protect its value, your purchaser may prefer to buy on the existing terms and extend under the new (and better) ones later (meaning you lose out).

 

Like all things – it’s all about talking to your agent and negotiating the best deal for all parties. Should you have any questions or concerns, feel free to pick up the phone, message me or email me and let’s chat things through.

 

How Will the Brexit Deal Affect Brighouse House Prices and Your Mortgage Payments?

 

Christmas Eve brought the news that Boris Johnson had conclusively agreed on a Brexit deal for the UK with the European Union. This gave optimism that the economic turmoil of leaving the EU would be radically reduced, yet what will this ‘trade deal’ do to the value of your Brighouse home and the mortgage payments you will have to make?

 

Since the summer, the Brighouse property market has been booming, yet many commentators have cautioned that the momentum cannot last. With unemployment and the end of Stamp Duty Holiday  on 31^st March, the Halifax reported last week that they believed UK house prices would drop by at least 2% (and in some areas 5%) in 2021.

 

I find it fascinating the Brighouse property market has defied the doom and gloom swamping the wider British economy in the last seven months. The Brighouse property market has profited from the large swell in demand from better-off existing Brighouse households trying to buy larger Brighouse houses (as they are required to work from home) together with the added benefit of saving money from the Stamp Duty Holiday.

 

Brighouse house prices are 2% higher than a year ago, making our local authority area the 312th best performing (of the 396 local authorities)

in the UK.

 

With the Brexit deal being voted through in the Commons on the 30th December, many say this will boost the property market just as the Government-backed measures supporting the property market come to an end. Yet, in the face of rising unemployment due to the pandemic, the Brexit deal may do little more than avoid uncertainty for the Brighouse housing market.

 

What will happen to Brighouse house prices?

 

The Brighouse property market in 2019 was held back because of the uncertainty of the Brexit deal. In January 2020, we saw the demand released in the fabled ‘Boris Bounce’, only for buyer and seller activity to fall off a cliff in March during the first lockdown. It then took off like a rocket once lockdown was lifted. UK house prices are 4.19% higher today, year on year (although some areas are breaking the mould, like Aberdeen whose house prices have dropped by 5.1% and at the other end of the scale, Worcester’s house prices have increased by 11.9% year on year). A lot of that growth in UK property prices has been fuelled by buyers spending their stamp duty savings on the purchase price of their new home. Yet, it cannot be ignored.

 

Of the 91,200 workers in Calderdale, 6,600 are still on furlough

(although roughly 40% of those people are still only

on part-time furlough).

 

When the furlough scheme ends in April 2021, unemployment is likely to rise to in excess of 11%, whilst the protection for the homeowners utilising mortgage holidays will finish. 

Piloting the rocky shoreline of the recession is more important than any Brexit deal for Brighouse homeowners, buy-to-let landlords, buyers and sellers.

 

In April, the market will also be dealing with the end of the Stamp Duty Holiday, which is due to come to an abrupt halt on the 1^st April 2021. Consequently, we will continue to see the house price index's show growth in the first half of 2021. They will then recede as the  prices of Brighouse homes purchased after the 1^st April 2021 reflect the lower price paid (because buyers would have had to pay for their stamp duty again). Therefore, probably by the end of 2021, the Halifax may be correct, and Brighouse house prices will be 2% to 5% lower than they are today, simply because of the stamp duty.

 

What will happen to mortgage rates?

 

The real benefit from the Brexit deal is that there will be no tariffs on most goods coming into the UK. 52% of all goods imported into the UK are from the EU (totalling £374bn per annum). The UK Government were planning to add between 2% and 10% tariffs under World Trade Organisation rules on the vast majority of those goods. Price increases because of those tariffs would have fuelled inflation, meaning the Bank of England would have to increase interest rates. Although 77.2% of British mortgages are on fixed rates (paying an average of 2.16%), eventually those increased Bank of England rates would have fed through into higher mortgage payments. To show you how vital low interest rates are …

 

the average Brighouse homeowners’ mortgage is £277.64 pm,

 owing an average of £113,196.

 

Yet if interest rates rose only 1.5%, Brighouse homeowners’ monthly mortgage payments would rise to £419.14 pm, and if interest rates were at their 50-year average, then the mortgages payments would be an eye-watering £816.27 pm (note all mortgage payment figures mentioned above are only for the interest element of the mortgage- the capital repayment element would be additional and variable depending on the length of mortgage).

 

As I have mentioned many times in the articles I have written about the Brighouse property market, low interest rates are vital to ensure we don't have a property market crash. That's not to say just because they are at an all-time low of 0.1% to aid the economy that there won’t be some form of realignment of property prices later in the year (as mentioned above). Yet low interest rates mean people can still pay their mortgages, so there won't be panic selling. That would mean there won't be a flood of property come to the market (like there was in the 1988 and 2008 property crashes when interest rates were much higher), suggesting property prices should remain a lot more stable.

As Unemployment Hits 6.7% in Huddersfield, What Effect Will This Have on the Huddersfield Property Market in 2021?

 12 months ago, the unemployment rate in Huddersfield stood at 3.5% of the working population, yet with Coronavirus hitting the UK, what impact will this rise in unemployment have on the Huddersfield property market?

 

As I have discussed a number of times in my articles on the Huddersfield property market, this summer saw the Huddersfield property market do exactly the opposite of what was expected when Covid hit.

 

The Stamp Duty holiday added fuel to pent up demand for people to move to property with extra rooms (to work from home) and gardens. This prompted a brief hiatus in the number of people selling and buying their home in Huddersfield over the last summer and autumn.

 

Yet, insecurity around rising unemployment, led to many mortgage companies becoming more cautious in the later months of summer, predominantly when lending to the self-employed or first-time buyers borrowing more than 85% of the value of the home (as they wouldn’t want to lend money to someone that could not afford a mortgage due to an insecure income or not having a job).

 

Back in the late spring, economists were predicting that UK unemployment would rise to a peak of 6.5% in Q3 2020, returning back to the 2019 levels (3.4%) by 2022.

 

As we speak (Christmas 2020), nationally the unemployment rate stands at 6.3%. The toll Covid has had on people’s livelihoods has been massive, with an additional 1,434,515 people out of work, although it is important to note this unemployment rate is still lower than the five years following the Credit Crunch years - 2008 to 2013.

 

So, with such a growth in unemployment and the spectre of a ‘No Deal Brexit’, this may hold back the enthusiasm of many companies to take on more staff, reducing any rebound in employment. If unemployment remains high, this will influence perceptions of employment and personal/household financial security, which are the ultimate drivers for both house prices and whether people buy and sell.

 

9,695 Kirklees people were unemployed a year ago and today that stands at 18,335.

 

Looking at all the study papers on the topic, there is a link between unemployment and house prices, yet it’s not as strong as you would think. The larger factors are the demand and supply of property on the market and interest rates. Interestingly, in the past two recessions, the comparatively richer regions of London and South East house prices have been more sensitive to unemployment and house price changes than the rest of the UK, yet London and the South East also bounced back quicker and higher after the two recessions. 

The concept behind this is that more expensive house prices in the South drop more than lower priced houses in the rest of the UK. Why? Because those more expensive regions have, by definition, more expensive house prices meaning the homeowners have higher mortgages, so if they become unemployed, their homes are more likely to be repossessed (because of the high mortgages), and consequently that reduces house prices in that area quicker because repossessed houses tend to sell much more cheaply compared to normal house sales.

 

The health of the Huddersfield property market in 2021 and beyond really depends on what happens to the economy as a whole and more specifically what is happening in the Huddersfield economy.

 

When we drill down though, unemployment has hit different sectors of the economy to a lesser or greater extent. For example, for office workers, people who work in tech & sciences and the professional services, the impact on jobs has been comparatively mild, with many personnel able to work from home. Yet for others, such as those who work in the hospitality, leisure, retail, entertainment and catering industry, remote working is simply not an option and these have been hit the hardest.

 

Unfortunately, the industries mentioned above are the ones that tend to employ the younger generation, who invariably live in private rented accommodation, rather than own their own home. Being made redundant puts their dream of buying their first home back even further as they try and get themselves back on their feet by initially finding a job (let alone save for a deposit).

 

Housing markets will recover quickest in towns and cities, where jobs are in more resilient employment sectors.

 

For example, in London, unemployment jumped really quickly (and high) in 2009 with the Credit Crunch, yet came down just as quick in 2011, just as the property market in London started to take off, whilst in Huddersfield, it took a lot longer for unemployment to drop and the Huddersfield property market didn’t really start to get going until 2013/2014.

 

If we have a determined economic contraction, with a lengthier and leisurely economic recovery, impeded by financial stress, that will lead to much higher unemployment in the 10% to 12% range in the summer of 2021. However, before I get to the initial question, I need to highlight another interesting fact, because…

 

 

 

What is particularly interesting is the increase in unemployment in Huddersfield amongst men has been higher than women, with a growth of 3.8 percentage points for men compared to 2.5 percentage points with women.

 

So, what is the prediction for the Huddersfield property market under the cloud of this growth in unemployment?

 

One massive redeeming factor that could just save the Huddersfield property market is low interest rates. This will keep mortgage payments low, meaning repossessions should be kept to a minimum (therefore, there shouldn’t be a flood of cheaply priced Huddersfield properties coming onto the market all at the same time and dragging Huddersfield house prices down with it, as it did in the previous two recessions of 2009 and 1989).  

 

Yet, irrespective of the ultra-low interest rates, I still consider property prices in Huddersfield at Christmas 2021 won’t be much different from today, and in fact could be slightly lower.

 

This is because people have been paying top dollar in the last six months to secure their dream Huddersfield home, quite often spending the money they saved on Stamp Duty on the purchase price. When Stamp Duty Tax returns in April 2021, there will be less money to pay for the property ... thus Huddersfield property values will be, by implication, lower in a year’s time.

 

What about Huddersfield landlords and the rents?

 

Nationally, rents fell just over 2.3% between 2008 and 2010, following the Credit Crunch, while national house prices fell 15.9%. I anticipate Huddersfield rents will also remain comparatively robust in the coming months and years.

 

Rents are very much tied to the rise and fall of wage growth and I can’t see why this relationship shouldn’t continue. Rents will rise in Huddersfield by between 13% and 15% in the next five years, yet if property prices do rise in 2023/24, that means future rental yields will be marginally lower in 2023/4 comparative to today, especially as ultra-low interest rate expectations (according to the money markets) seem to be here to stay for a long time.

 

Therefore, something tells me there could be some interesting Huddersfield buy-to-let investment opportunities for Huddersfield investors willing to play the Huddersfield buy-to-Let market for the long term.

 

To conclude, these are just my personal opinions. If you are a Huddersfield landlord looking for advice and an opinion on what to buy to maximise your returns, please don’t hesitate to contact me. If you are a Huddersfield homeowner, looking to buy or sell and need any advice or an opinion on where the market is and where your Huddersfield home sits in the bigger Huddersfield property market picture – again feel free to drop me a line.