£359.10pm – The Profit made by every Huddersfield Property Owner over the last 20 years

As we go headlong into 2018, I believe UK interest rates will stay low, even with the additional 0.25% increase that is expected in May or June. That rise will add just over £20 to the typical £160,000 tracker mortgage, although with 57.1% of all borrowers on fixed rates, it will probably go undetected by most buy-to-let landlords and homeowners. I forecast that we won’t see any more interest rate rises due to the fragile nature of the British economy and the Brexit challenge. Even though mortgages will remain inexpensive, with retail price inflation outstripping salary rises, it will still very much feel like a heavy weight to some Huddersfield households.

Now it’s certain the Huddersfield housing market in 2017 was a little more subdued than 2016 and that will continue into 2018. Property ownership is a medium to long-term investment so looking at that long-term time frame; the average Huddersfield homeowner who bought their property 20 years ago has seen its value rise by more than 207%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historic gain in Huddersfield property values has come from property market growth, although some of that will have been added by homeowners modernising, extending or developing their Huddersfield home.

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

	Average Price Paid in 1998 in Huddersfield	Average Price Paid in 2018 in Huddersfield	Average Total Profit in last 20 years in Huddersfield	Average Profit per Month in Huddersfield over the last 20 years
Detached	£95,774	£230,660	£134,886	£562.03
Semi	£45,307	£138,849	£93,542	£389.76
Terraced	£27,901	£101,668	£73,767	£307.36
Apartments	£35,067	£83,751	£48,684	£202.85
Overall Huddersfield Average	£42,015	£128,199	£86,184	£359.10

However, I want to put aside all that historic growth and profit and looking forward to what will happen in the future. I want to look at the factors that could affect future Huddersfield (and the Country’s) house price growth/profit; one important factor has to be the building of new homes both locally and in the country as a whole. This has picked up in 2017 with 217,350 homes coming on to the UK housing ladder in the last year (a 15% increase on the previous year’s figures of 189,690. However, Philip Hammond has set a target of 300,000 a year, so still plenty to go!

Another factor that will affect property prices is my prediction that the balance of power between Huddersfield buy-to-let landlords and Huddersfield first-time buyers should tip more towards the local first-time buyers in 2018.

The Council of Mortgage Lenders expects the number of buy to let mortgages to drop by 34% from levels seen in 2015. This is because of taxes being increased recently on buy-to-let and harder lending criteria for buy to let mortgages, which means I foresee a gradual move in the balance of power in favour of first-time buyers rather than buy-to-let landlords. First time buyers will also be helped by The Chancellor eradicating Stamp Duty for all properties up to £300,000 bought by first-time buyers in the recent budget.

This means Huddersfield buy-to-let landlords will have to work smarter in the future to continue to make decent returns (profits) from their Huddersfield buy-to-let investment. Even with the tempering of house price inflation in Huddersfield in 2017, most Huddersfield buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

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

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

With Huddersfield Annual Property Values 3.8% Higher, This is My 2018 Forecast

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Huddersfield property market.

With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 5.3% in Huddersfield, which has contributed to maintain a decent level demand for property in Huddersfield in 2017 (interestingly – an impressive 2,294 Huddersfield properties were sold in last 12 months), whilst finally, the number of properties for sale in the town has remained limited, thus providing support for Huddersfield house prices, meaning …

Huddersfield Property Values are 3.8% higher than a year ago

However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.

In terms of what will happen to Huddersfield property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.

Nevertheless, the bottom line is Huddersfield homeowners and Huddersfield landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the last 8 years, the Central London property market has been in a world of its own (Central London house prices have grown by 89.6% in those last 8 years, whilst in Huddersfield, they have only risen by 14.2%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.  

Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact ... I am sure we can get through this together as well?

Oh, and house prices in Huddersfield over the next 12 months? I believe they will end up between 0.4% lower and 1.2% higher, although it will probably be a bumpy ride to get to those sorts of figures.

If you would like to read more articles on my thoughts on the Huddersfield property Market – please visit the Huddersfield Property Market Blog https://huddersfieldproperty.blogspot.co.uk/

My thoughts on the future of the Huddersfield Buy-To-Let Market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due to increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes; as Westminster wants to heighten standards in the Private Rented Sector. 

Interestingly I was chatting with a self-managed landlord from Farnley Tyas, when I was out socially over the festive period, who didn’t realise the other recent legislations that have hit the Private Rented sector, including the ‘Right to Rent’ regulations which came in to operation last year. Landlords have to certify their tenants have the legal right to live in the UK. This includes checking and taking copies of their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you (as they will with the redress scheme when that is implemented).

If you are a self-managed landlord though, the consequences are severe because if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000. That same Farnley Tyas landlord popped into my offices in the New Year, and I checked all his paperwork and ensured he was on the right side of the law going forward – and I offer the same to any landlord in the Huddersfield area if you want me to cast my eye over your buy to let matters (and at no cost – ok just bring in some chocolates for the girls in the office!)

But what of all these extra properties being dumped onto the market in Huddersfield? When I looked at the records the number of properties on the market in Huddersfield now, as opposed to a year ago, the numbers tell an interesting story …

	1st Jan 2017	1st Jan 2018
Detached	143	112	-22%
Semi	206	165	-20%
Terraced	242	216	-11%
Flat	112	113	1%
Plots + Other	20	32	60%
Total	723	638	-12%

Overall, Huddersfield doesn’t match the national trend, with the number of properties on the market actually dropping by 12% in the last year.  It was particularly interesting to see the number of flats increase by 1%, yet the number of detached on the market drop by 22%.

However, speaking with my team and other property professionals in the town, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords (a subject I will write about soon in my Huddersfield Property Market blog later this Spring?). You see, for the last ten years, each month there has always been a small number of Huddersfield landlords who have been releasing their monies from their Huddersfield buy to let properties - as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some Huddersfield landlords will want to release the equity held in their Huddersfield buy to let properties in 2018. All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!). This means you have an empty property, costing you money with no rent coming in.  However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Huddersfield area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids). 

Youngsters unable to buy their first home in Huddersfield – Are the Baby Boomers and Landlords to Blame?

Talk to many Huddersfield 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Huddersfield for say £15,000 in first quarter of 1977, today it would be worth £177,447, a windfall increase of 1082.9%.

But to blame the 60 and 70 year olds of Huddersfield for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don't believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Huddersfield area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Huddersfield society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago ... but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Huddersfield buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Huddersfield house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Huddersfield buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Huddersfield property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Huddersfield housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Huddersfield homes they provide for Huddersfield people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes ... homes that were provided to Huddersfield by these buy to let landlords.

One side of the argument is that 1,407 homes are being bought up by buy to let landlords each year in the Kirklees Metropolitan District Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 9,847 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life. 

Huddersfield Apartments are 18.6% more affordable than 10 years ago

My research shows that certain types of Huddersfield property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Huddersfield property values plummet like a lead balloon and the Huddersfield property market had reached a peak with the prices for Huddersfield property hitting the highest level they had ever reached.  Between 2008 and 2010, Huddersfield property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Huddersfield property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Huddersfield flat/apartment stood at £118,395 and today, it stands at £127,167, a rise of £8,772 or 7.4%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Huddersfield apartments are 18.6% more affordable than in 2007. Looking at it another way, if the average Huddersfield apartment (valued at £118,395 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £149,142 (instead of the current £127,167).

The point I’m trying to get across is that Huddersfield property is more affordable than many people think.  Huddersfield first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Huddersfield first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Huddersfield 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Huddersfield (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting - meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Huddersfield 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Huddersfield will continue to rise.

Therefore, everyone in Huddersfield has a responsibility to ensure that an adequate number of quality Huddersfield rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Huddersfield tenants on the finish and specification of their Huddersfield rental property.

I have perceived that in the past, what a tenant wanted from their Huddersfield rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Huddersfield tenants’ expectations are becoming more discerning as each year goes by.  I have also noticed the length of time a tenant remains in their Huddersfield property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Huddersfield landlords not to keep the rental payments at the going market rates  - maybe a topic for a future article for my blog?

The bottom line is this … Huddersfield landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Huddersfield rental properties over the next five, ten and twenty years -  e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Huddersfield private rental property market is important, and I frequently liaise with Huddersfield buy-to-let investors looking to spread their Huddersfield rental-portfolios. I also enjoy meeting and working alongside Huddersfield first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.

22.16% of Huddersfield and Kirklees is Built on ... Building Plot Dilemma or Not?

Well the fallout from the recent Budget is still continuing.  I was chatting to a couple of movers and shakers from the Huddersfield area the other day, when one said, “There isn’t enough land to build all these 300,000 houses Philip Hammond wants to build each year”.

...and if you read the Daily Mail, you would be forgiven for thinking the Country was at bursting point ... or is it?

It was 60 years ago the first satellite was launched (Sputnik). All the Superpowers have used them to take high definition pictures of each other for decades, but now satellites and their high-powered cameras are being used for more peaceful purposes. The European Environment Agency (EEA) have been taking high definition pictures of the UK from outer-space to give us a focused picture of what every corner of the Country really looks like … and the findings will come as a surprise.

As my blog readers know, I always like to ask the important questions relating to the Huddersfield property market. If you are a Huddersfield landlord or Huddersfield homeowner, this knowledge will enable you to make a more considered opinion on your direction and future in the Huddersfield property market. Like every aspect of all economic life, it’s all about supply and demand, because over the last twenty or so years, there has been an imbalance in the British (and Huddersfield) housing market, with demand outstripping supply, meaning the average value of a property in Kirklees has risen by 217.04%, taking an average value from £45,200 in 1995 to £143,300 today.

Using the information from the EEA and data crunched by Sheffield University with their Corine-Land Cover project, I posed them a few questions about the local area, interesting questions I would like to share with you …

1. What proportion of the whole of Kirklees is built on?

22.16%

That surprised you, didn’t it! In the study, land classified as ‘urban fabric’ defined has land which has between 50% and 100% of the land surface is built on, (meaning up to a half might be gardens or small parks, but the majority is built on).

2. How much land is intensively built on locally?

Of that amount mentioned above, how much of it is high-density urban fabric? (i.e. where 80% to 100% is built on – still leaving 20% for gardens)  0.19%  - again I bet that surprised you!

3. So how is the land used locally?

Sports Facilities                    1.73%

Industry                                 3.13%

Pastures                                 41.76%

...the rest being made up of various other minor types such as arable farmland and forests, etc.

Huddersfield and the surrounding areas are greener than you think! In fact, I read that property covers less of the UK than the land revealed when the tide goes out. The assumption that vast bands of our local area have been concreted over doesn't stand up to inspection. However, the effect of housing undoubtedly spreads beyond its actual footprint, in terms of noise, pollution and roads.

Now I am not suggesting for one second we concrete over every inch of the locality, but the bottom line is we, as a country, are growing at a quicker rate than the households we are building. I appreciate the emotional effect of housing is greater than other land use types because most of us spend the vast majority of our time surrounded by it. As Brits, we live our lives driving along roads, walking on footpaths and working and living in buildings meaning we tend, as a result, to considerably overemphasise how much of it there is.

The bottom line is Huddersfield people and the local authorities are going to have to put their weight into building more homes for people to live in. There is going to have to be some give and take on both sides, otherwise house prices will continue to rise exponentially in the future and Huddersfield youngster’s won’t be able to buy their own Huddersfield home, meaning Huddersfield rents and demand for private rented accommodation in Huddersfield can (and will) also grow exponentially. 

Huddersfield Property Market and Hammond’s Budget Promise to Build 300,000 more homes

I miss the good old days of George Osborne as Chancellor, with his hardhat and hi-vis jacket. He must have visited every new home building site in the UK with his trademark attire! For the last few years, the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party. However, with what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 983 ‘net additional dwellings’ in the last 12 months in the Kirklees Metropolitan Borough Council area, a decrease of 9% on the 2010 figure.

The figures show that 84% of this additional housing was down to new build properties. In total, there were 830 new dwellings built over the last year in Kirklees. In addition, there were 147 additional dwellings created from converting commercial or office buildings into residential property and a further 15 dwellings were added as a result of converting houses into flats.

While these all added to the total housing stock in the Kirklees area, there were 9 demolitions to take into account.

Net additional dwellings in Kirklees in the last 12 months
New build	Conversions	Change of use	Demolitions	Net Additions
830	15	147	-9	983

I was encouraged to see some of the new households in the Huddersfield area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had reutilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Huddersfield housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.