1 in 4 Huddersfield Homeowners Unable to Sell

·         The average time to find a buyer for a Huddersfield property reduced from 73 days in 2020 to 43 days in 2021.

 

·         Yet still, just under 1 in 4 Huddersfield homeowners are on the market after 12 weeks.

 

·         Why are so many Huddersfield homes still on the market after all that time, and what does it mean for the Huddersfield property market?

 

You would have needed to have been living in a cave since the end of Lockdown No.1, not to realise the property market has been on fire in Huddersfield (and the UK as a whole) for the last 18/20 months.

 

It has been very much a seller’s market, especially in 2021. Yet as we enter the second quarter of 2022, I have noticed a slight rebalancing of the Huddersfield property market, more towards buyers, something that is good news for everyone (sellers and buyers) locally.

 

In 2020, it took on average 73 days from the average Huddersfield property appearing on the property portals (i.e. Rightmove, Zoopla etc.) to the property going sold (STC).

 

Interesting when compared to the national average of 72 days in 2020. Yet, last year, this was reduced to 43 days in Huddersfield (51 days nationally).

 

So, what's the issue with the Huddersfield property market being on fire?

 

Well, that was last year, and things have changed slightly since.

 

Of the properties for sale in Huddersfield, 24.7% of houses

have been on the market for more than 12 weeks.

 

That doesn't sound a lot, yet that is an eternity in this market!

 

So, why are there so many properties on the market in Huddersfield still for sale after all this time … it usually comes down to one thing … the practice of 'overvaluing'.

So before I explain what overvaluing is, let me give you some background.

 

Many agents (not just ourselves), in 2021, were achieving top prices for Huddersfield property with multiple offers becoming the standard. The property they were selling was only available to buy for days before the owner obtained multiple offers that were not only at a satisfactory level, yet more than they ever dreamed likely.

Although this was great news for Huddersfield homeowners, this caused fewer homes to come on to the market in the last six months in Huddersfield, as people were afraid to put their home on the market without having a property to buy.  

With fewer properties coming onto the market, some estate agents have become more and more desperate to get a larger slice of this smaller property market. It has seen an unwelcome side of the estate agency profession, the estate agency practice of ‘overvaluing’.

While ‘overvaluing’ is nothing new, the custom has been generally limited to a small number of estate agents. Yet now, it's become more prevalent and creates uncountable distress and pressure for some Huddersfield homeowners.

Many Huddersfield homeowners want to sell quickly to get the property of their dreams. Yet, in many cases, when they do put their property on to the market, they don’t sell quickly enough because of this ‘overvaluing’ (even with the fantastic current property market conditions).

To give you an idea of the issue …

72.5% of Huddersfield homes put on the market

in the last 30 days have not sold.

There are hundreds of Huddersfield families having their dreams dashed by 'overvaluing.'

Therefore, let me look at exactly what overvaluing is, why it’s on the rise and most importantly, the harm overvaluing causes to homeowners like yourself.

You would think the most important thing in estate agency is all about finding the best buyer for your home, at the best price, who can make the move with the least amount of hassle.

To us it is, and to many other Huddersfield estate agents, it is as well. Yet, to some agents, sales aren’t the essential objective. Instead, it is having a vigorous catalogue of properties to sell to generate more future leads.

Deprived of an endless number of new properties for sale, the enquiries estate agents receive will significantly drop, leaving them high and dry without any buyer (or seller) leads, the lifeblood of estate agents.

Therefore, some (not all), but some estate agents will feed on a homeowner’s appetite to get the highest possible price for their Huddersfield home by giving them an over-inflated suggested asking price to market their property at (i.e. ‘overvaluing’).

If one estate agent can get you an extra £30,000 for your

Huddersfield home, you will take it, won’t you?

 

The suggestion of pushing the asking price of your Huddersfield home for 10%, 15% even 20% could be seen by many as a temptation too good to miss. Yet once you are on the market, the agent is trained to slowly get you to reduce your asking price over a lengthy sole agency agreement.

The problem is that the home of your dreams might have sold by the time you reduced your price in 3 months. Also, Which reports in 2017 and 2019 proved you ended up getting less for your home when it did eventually sell (which means you lose money) and finally, the agents know homeowners perceive it’s a hassle to swap agents (which it isn’t).

But estate agents only get paid when they sell the house;

why do they overvalue?

Would it surprise you that some estate agency chains pay their staff a commission when they put the property on to the market, not when it sells? So, their team overinflate their suggested asking prices to get that commission.

Over the last 18 months, with the rising property market, there has undoubtedly been a valid reason for pushing the envelope on the asking price. Yet, if every house like yours is on the market or sold subject to contract at £300,000 to £320,000, yours isn’t going to achieve £355,000, let alone £375,000 – even in this market.

With 72.5% of Huddersfield homes still for sale after a month, the market is starting to level out and if you are keen to sell, then let me give you some advice.

Research has shown that if the asking price is initially set too high, it will be ignored by people surfing Rightmove and Zoopla.

 

(Come on, be honest – you have done that yourself haven’t you?)

 

When the property is eventually reduced because it has the stigma of being on the property market too long (begging the question from potential buyers that there may be a problem with the property itself hence no interest?), often when it does eventually sell, it will sell for less than what it would have done if it were priced correctly from day one (as per the two reports from Which in 2017 and 2019).

 

Of course, on the other hand, setting the asking price below its market value means potentially leaving money on the table needlessly – hence the need for a good agent.

 

Putting your Huddersfield home or buy-to-let investment up for sale at the right price from the beginning is the key to selling within the best time frame and for the best price to a serious and motivated buyer.

Ask a handful of estate agents to value your home, ask them to back up any valuation of your Huddersfield home with cold hard comparables of similar properties to yours.

 

Find your comparables by searching ALL the property portals (i.e. Rightmove, Zoopla, Boomin, OnTheMarket).

 

If you only take away one thing from this article, when you search the portals for comparables, make sure you include under offer/sold STC properties, as that will triple the comparable evidence. 

 

Thus, by doing your homework and then working with a dependable, trustworthy and experienced Huddersfield estate agent, who will help to ensure that your Huddersfield property is put on the market to get you, the homeowner, the best price from day one without over cooking it so you don’t lose out, you will be just fine.

 

These are my thoughts, let me know if you have any yourself.

 

How Will Rising Inflation Affect the Huddersfield Property Market in 2022?

 

The UK is currently experiencing its highest inflation rate since the early 1990s. This increase in prices has primally come about by the combination of an increase in demand for goods and services from consumers following lockdown last year together with global supply chain disruptions.

 

Most economists weren't too concerned about this increase in the inflation rate as the very same thing happened in the early 1990s following the Credit Crunch with a similar rise in demand and supply chain issues. Thankfully, back in the early 1990s, inflation returned to lower levels quite quickly. However, the situation in Eastern Europe now could change matters.

 

So, let me look at all the factors and what it means for the Huddersfield property market.

 

The crisis in Eastern Europe has sparked even further rises in crude oil (which diesel and petrol are made from), gas and grain prices as pressure on supply chains around the world increases.

 

In my previous articles, I suggested UK inflation would rise to around 7% in the spring and drop back to 5% in the autumn and as we entered 2023, be approximately 3% to 4%.

 

Yet, with these issues, inflation could rise to 8% to 9% by late spring and still be around 6% to 7% in autumn, well above the Bank of England's target of 2%.

 

With Huddersfield wages rising at only 3% to 4% and inflation at 7%+, Huddersfield household incomes, in real terms, will fall.

 

This is because ‘real’ UK household incomes characteristically have been the most consistent lead indicator of growth (or a drop) in house prices. This is because growing inflation erodes the value of money you earn, which reduces its buying power. When the cash in your pocket has a lower spending power, people tend to spend less when they buy (and rent) a home (and vice versa).

 

Next month, Income Tax thresholds will be frozen, and National Insurance contributions are increasing. Collectively, all these issues will create a drop of around 2% to 2.5% in the real disposable income of Britain's households in 2022 (real disposable income - somebody's take-home wages after tax and then the effects of inflation are considered).

 

Will Huddersfield people be more anxious to spend their money?

With less money in people's pockets, people's inclination to spend the money they do have could also be curtailed. People's savings are at an all-time high, yet many will decide to sit on the cash, instead of spending it, especially as consumer confidence has dropped to minus 26 on the GfK index (whatever that means – but in all seriousness though - more on that below).

 

All this can only mean there is going to be a house price crash.

 

It’s all doom and gloom! …Or is it?

 

My heart goes out to people caught up in the awful humanitarian crisis in Eastern Europe. Yet, I respectfully need to put that to one side for just a moment for the purpose of this article.

 

This blog is about the Huddersfield property market, and Huddersfield people want to know what will happen to the Huddersfield property market.

 

In the first half of the article, I looked at the impending fall in real disposable incomes of 2% to 2.5% in 2022. I appreciate it's going to be tough for many families in Huddersfield. Yet, it is always important to consider what has happened in previous times.

 

1982 – a drop of 2.3% in real disposable income

1992 – a drop of 3.7% in real disposable income

2008 – a drop of 5.8% in real disposable income

 

Yes, it's going to be tough, yet we got through 1982, 1992 and 2008 – and so we shall in 2022/23.

 

Next, the price of petrol is very high compared to a year ago.

 

The average price of unleaded petrol is £1.51/litre today, quite a jump from the £1.21/litre a year ago. But here is an interesting fact, petrol was a lot more expensive (in real terms) in 2011 than today. In TODAY's money, a litre of unleaded petrol in 2011 would be the equivalent of £1.79/litre. We have some way to go before we get to those levels – and again, the Huddersfield economy (and property market) kicked on quite nicely after 2011.

 

What are Huddersfield people spending

on their rent and mortgages?

 

Housing costs - owner occupiers were spending on average 17.3% of their household income on mortgages in 2015, yet in 2021 this had risen, albeit to 17.7% - not a huge increase.

 

Council house (social) tenants have seen a drop in their rent from 29.2% in 2015 to 26.7% in 2021, whilst private tenants from 36.4% in 2015 to 31.2% in 2021.

 

Interesting that private tenants are proportionally 14.29% better off in 2021 than in 2015.

 

How we spend our money - the average UK home spent 4.2% of their household income on energy in 2021, and that is due to rise to 6.3% after April (and probably 7% in October). Yet, as a country, we spend 9% of our income on restaurants and hotels and 8% on recreation and culture. As with all aspects of life, it will mean choices, and maybe we will have to forego some luxuries?

 

Just before I move on from this aspect of the article, again I appreciate I am talking in averages. Many people with low incomes suffer from fuel poverty and they will find the increases in energy prices hard - my thoughts go out to you.

 

Interest rates - higher inflation is generally brought under control using higher interest rates, meaning mortgage payments will

be higher.

 

First, 79% of homeowners with a mortgage are on a fixed rate, so any rise won't be instantaneous. Yet, there will be a bizarre side effect from the issues in Eastern Europe. Surprisingly, though the current situation in Eastern Europe, by its very nature, will bring greater UK inflation, it will also probably defer the Bank of England raising interest rates. This means mortgage rates won't increase as much as the bank won't want to exacerbate any pressures to the UK economy in 2023/24 caused by the conflict.

 

The stock market had priced an interest rate rise to 2% by the end of 2022. I suspect this will now be no more than 1% to 1.25% by Christmas, slowly going up in quarters of one per cent every few months. The crisis in Eastern Europe might even come to be seen as a defence for higher inflation throughout 2022, all meaning everyone's mortgage will be less.

 

Next, looking at Consumer Confidence Indexes - these indexes are fickle things. I prefer to look at the Organisation for Economic Co-operation and Development Consumer Confidence Index as it has a larger sample range and a longer time frame to compare against. Looking at the data from the mid 1970s, the drop in consumer confidence is big, yet nothing like the drops seen in the Oil Crisis of the mid 1970s, Recession of the early 1980s, ERM crisis of 1992 and the Global Financial Crisis of 2008/09. Also, when compared to the other main economies of the world (G7), the UK has always bounced back much more quickly from recessions when it comes to consumer confidence.

 

What about house prices in Huddersfield in 2022/23?

 

Increasing energy prices, rising inflation, an increase of sanctions, and a probable drop in consumer confidence and spending in the aftermath of the conflict will knock the post-pandemic recovery globally, which will lead to a recession around the world, including the UK.

 

A recession is when a country’s GDP drops in two consecutive quarters. For the last 300 years, there has been a direct link between British house prices and GDP - (i.e. when GDP drops, UK house prices fall). Yet in 2020, the British GDP dropped by nearly 12%, yet house prices went the other way. 

 

But let’s look at what would happen if Huddersfield house prices did drop by the same extent they did in the Global Financial Crisis of 2008/09.

 

House prices in Huddersfield dropped by 17.5% in the Global Financial Crisis, the biggest drop in house prices over 16 months ever recorded in the UK.

 

The average value of a property in Kirklees

today is £177,532.

 

Meaning if Huddersfield's house prices dropped by the same percentage in the next 16 months, an average home locally would only be worth £146,463.

 

On the face of it, not good - until you realise that it would only take us back to Huddersfield house prices being achieved in May 2020 - and nobody was complaining about those.

 

Yes, that will mean if they do drop in price, the 5.3% of Huddersfield homeowners who have moved home since May 2020 would lose out if they sold after that price crash. But how many people move home after only being in their home for a couple of years? Not many!

 

The simple fact is that 94.7% of Huddersfield homeowners will be better off when they move if house prices crash.

 

And all this assumes there will be a crash.

 

The simple fact is, the circumstances of 2009 that caused the property crash are entirely different to 2022 (no lending by the banks, higher interest rates and increasing unemployment compared to today’s increased lending, ultra-low interest rates and low unemployment environment).

 

I do believe with all that's happening in the world we might see a rebalancing of the Huddersfield property market later in 2022 and could see the odd month with little negative growth in house prices, yet it will be nothing like 2009.

 

The expected fall in household spending could be counterbalanced by UK businesses’ plans to invest more in their businesses (with last year’s tax breaks on investing), which will create even more jobs.

 

Who knows what the future holds? These are just my opinions - what are yours?

1 in 45 homes are sitting empty in the Huddersfield area

·         4,174 homes in the Kirklees area are empty, which represents 1 in 45 homes.

 

·         2,426 of those have been empty for more than six months and are worth £431million.

 

·         Why are those properties standing empty and deteriorating and why could that become an issue for the whole of Huddersfield?

 

A couple of weeks ago was National Empty Homes Week, so I thought I would find out how many homes are empty in the Huddersfield area – the numbers surprised me, so I wanted to share my thoughts about them with you.

The latest Government statistics show that 2,426 properties

in Kirklees have been empty for more than six months.

 

Homes that are left empty for an extended period can affect our locality and occasionally invite anti-social behaviour.

With a shortage of housing in the Huddersfield area, these empty homes must be brought back into use to generate much-needed housing for local people.

As you can see in the first bullet point, some homes are only empty for a short period of time. Yet, those local properties that stand empty for more than six months and then deteriorate become a problem for our local community.

I appreciate there can be many genuine explanations why a property may be left empty for a long time. However, with council house waiting lists at high levels and the shortage of both properties to buy and rent in Huddersfield, we must ask what is being done about this at Government level and how this could affect the Huddersfield property market?

The collective value of these 2,426 long-term (6 months or more)

empty houses in Kirklees are worth £431million.

This impacts the Huddersfield housing market with a lack of properties coming onto the market for sale and rent. This results in house prices being pushed up, making it less affordable for first-time buyers to get on the first step of the housing ladder.

It’s a real shame that many local properties are empty for over six months when there is an increasing demand for accommodation, at a time when there’s such a competitive housing market.

So, one might ask if this issue of long-term empty properties is a new problem? Well, not really.

There were 3,696 homes long-term empty in Kirklees in 2010.

 

I know our local authority likes to work with property owners of empty homes to bring them back into housing stock as it helps with the housing shortage, even with the help of grants if improvement work is needed for the empty home. Yet, they could use enforcement action where a homeowner is incapable or unwilling to bring their property back into use.

 

So, what is the Government doing nationally? Homeowners are charged a 50% premium on top of their Council Tax if their home has been empty for two years or more. This can rise to a 300% premium if the property has been empty for ten years or more.

 

However, the bigger question is, why are all these homes in the Huddersfield and Kirklees area being left empty?

 

The real answer is - they are not.

 

A handful of the properties belong to the local authority and are in poor condition because the tenant trashed the property. 

 

Probate (where the person's estate is put in order and passed onto the beneficiaries of the will) takes between six and twelve months. Most of these long-term properties are being modernised and renovated, whilst other Huddersfield properties are part of a deceased estate. In other circumstances, some Huddersfield homes have been left empty after the owner has been placed into a care home, yet there is no Power of Attorney to put the home onto the market. 

 

There is no 'one fix all' to the empty home syndrome in Huddersfield.

 

Empty properties in Huddersfield is not an issue that will sort the housing crisis we are suffering from.

 

The simple fact is the population is growing faster than the number of houses being built. We need to build more homes.

 

Whether that means council properties, housing association homes, private landlords or even owner-occupation housing the masses - that's a massive question we could all talk about, day in day out until the cows come home.

 

So, tell me, what are your thoughts on the matter?

 

 

Why Are There So Few Huddersfield Homes For Sale?

 

·           35% drop in the number of properties for sale in Huddersfield in the last 12 months.

 

·         355 Huddersfield homes have sold (stc) in the last three months alone, taking the time from the ‘for sale board’ going up to sale agreed to a median of 53 days.

 

·         The £100k to £200k price range in Huddersfield is the most active, where it only takes 33 days to sale agreed, but the £400k to £500k is taking 210 days.

 

·         Yet, what issues cause the people of Huddersfield to want to move home and what can Huddersfield people, who want to move in 2022, do to ensure they sell and find the home of their dreams?

 

There are 289 properties for sale today in Huddersfield; roll the clock back exactly a year, and the figure was 447 - there’s been a drop of 35%. This drop is being dubbed ‘for sale board crunch’.

 

The ‘for sale board crunch’ has left many prospective Huddersfield home buyers stressing to find the right Huddersfield property as the number of properties available to buy has dropped significantly.

 

I am sure you know people looking for their next Huddersfield home, but when they see it on the portals (Rightmove, Zoopla, Boomin, OnTheMarket etc.) the properties are gone within days.

 

With demand at an all-time high, many Huddersfield home buyers are in a state of misery as Huddersfield house prices have grown in the last few years, forcing many of them to review their plans.

 

They are victims of the ‘for sale board crunch’ in the Huddersfield property market, the likes of which have not been seen since 2007.

 

Normally when there has been excess demand in the residential sales market, that frothiness has been taken care of by people moving into rented accommodation. However, the number of Huddersfield properties available to rent is at a 15-year low.

 

So why is the Huddersfield property market this way?

 

Demand for Huddersfield homes has exceeded the number of properties for sale since the General Election in December 2019. After years of long drawn out Brexit negotiations, homeowners and buyers were more confident about their move. Many Huddersfield people who put their home move on hold in 2018/19 had more confidence to return to the market.

 

The first lockdown in the spring of 2020 did nothing to quell this pent-up urge, and since the late spring of 2020, the Huddersfield property market has been on fire! The lockdown changed what homeowners are looking for in their Huddersfield home. Proximity to public transport dropped down the wish list for buyers, and demand for apartments dropped. Whilst properties with larger gardens and rooms that could double up as home offices tended to be at the top of most Huddersfield buyers' wish lists.

 

Around 36% more Huddersfield properties have sold in the

last 18 months than the long-term 20-year average.

 

Looking at the supply side of the equation, in the last five years, an average of 204,410 new homes per year have been added to the number of properties available in the UK. Also, 239,600 properties came back into the market when they became available after their owners had sadly passed away. Yet still, that isn't enough. The country needs at least 300,000 new dwellings to keep pace with demand.

 

There is also another problem that has come to light with the cladding issue of apartments. Just over three-quarters of million apartments have issues with cladding. Whilst these are being sorted out (which will take many years), they are essentially unsaleable unless a fire safety expert on these buildings signs them as safe.

 

These cladding issues prevent these apartments from coming onto the market (thus reducing the supply of properties to buy). It also precludes their owners from moving up the property ladder from their apartment to a house. Also, many first-time buyers who can save a bigger deposit or be gifted cash from the Bank of Mum and Dad are skipping the apartment as their first home and going straight for a house, thus intensifying the lack of larger properties for sale.

 

So, how long does it take to sell a Huddersfield property now?

 

Huddersfield Apartments – 79 days

Huddersfield Terraced/Town House – 59 days

Huddersfield Semi-Detached – 33 days

Huddersfield Detached – 69 days

 

This means it is a seller’s market in Huddersfield, empowering them to push up their asking prices in high demand areas. However, most sellers are also buyers, which means the advantage they have on selling their property is turned on its head when they come to buy.

 

Many Huddersfield sellers prefer to find their future Huddersfield home before putting their current home on the market. That is making the lack of properties on the market seem even harsher than it may otherwise be.  

 

The ‘for sale board crunch’ would be somewhat eased if Huddersfield sellers put their property onto the market whilst they were hunting for their next ‘forever home’.

 

However, not all Huddersfield homeowners are doing so, partially because they (wrongly) believe they will be made homeless if they find a buyer and can’t find another property to buy (remember, you are not legally committed to moving until exchange of contracts).

 

A big issue will be finding a suitable Huddersfield home. We very much have a chicken and egg scenario. Some homeowners are waiting for the right property to come onto the market before they put their home on the market. This will probably mean that that Huddersfield property will sell even before the photographs have been taken of your home.  

 

Yet, many Huddersfield homeowners are worried if they put their house on the market and it sells, they won’t be able to find another suitable home and thus be homeless.

 

Classic chicken and egg – so what do you do first?

 

There is another way of doing this. It's a technique estate agents used to use before the internet, and it's called 'chain building'. Many Huddersfield homeowners are contacting me to move home yet don't want to be made homeless. What we do is slowly build a group of people in a chain over many months. It requires a lot of patience to build a chain downwards and upwards around you.  

 

There is no cost to this and no legal commitment to go through. It can take six, even twelve months to build a chain of people who are prepared to wait for the chain to form.

 

Yet, everyone normally gets their next 'forever home'

by playing this long game.

 

Because if you don’t play the long game, build relationships with Huddersfield estate agents (who can build these chains) and only rely on waiting for properties to appear on Rightmove, Boomin, OnTheMarket or Zoopla, you will be sorely disappointed.  

 

According to national research from Denton House Research, 7 out of 8 people who viewed a house through an estate agent in 2021 were not on the mailing list of that agent before they viewed it.

 

That means all these Huddersfield properties, built on a chain builder (as above), will sell yet won't appear on Rightmove or Zoopla, meaning you will miss out. 

 

You must get yourself on the mailing list of our estate agency (and other agents if they do this chain building) so you don’t miss out on your next forever home in Huddersfield. 

 

If you would like a chat about anything mentioned in this article, feel free to drop me a message or call me.

 

The Future of the Brighouse Buy-To-Let Market in 2022

 

The headlines …

 

·         Brighouse rents up by 8.2% in the last 12 months

·         Brighouse house prices up 11.1% in the last 12 months

·         Brighouse landlords helped by ultra-low mortgage rates and a stamp duty holiday 

·         Yet, some landlords in Brighouse anxious about a possible end to no fault evictions

·         New EPC rules could cost Brighouse landlords £10,000+ per property 

 

In this article, I will look at what happened in 2021 in the Brighouse buy-to-let property market and give you my opinion as to what lies ahead for Brighouse landlords in 2022 and beyond.

 

On a positive note, Brighouse house prices have rocketed, rents have risen faster than inflation, at the start of the year we had the benefit of a stamp duty holiday and finally, ultra-low mortgage rates, meaning Brighouse landlords had lots to be happy about in 2021.  

 

On a more cautious note, the laws regarding renting are currently being debated in Parliament which will see the end of no-fault tenant evictions and changes in regulations will require Brighouse landlords to make their buy-to-let rental properties more eco-friendly at a cost of up to £10,000+ each.

 

So, let’s have a look at these points …

 

Brighouse Rents will Continue to Rise in 2022

 

Brighouse buy-to-let landlords have seen the average rent of a Brighouse rental property rise by 8.2% in the last 12 months.  

 

The number of Brighouse properties available to rent on the property portals (e.g. Rightmove etc) at any one time is roughly 35% to 40% below the last decade’s average, meaning there is greater competition for each rental property.

 

Demand has increased for several reasons.

 

Firstly, some homeowners cashed in on the high prices, sold up and moved into rented property.

 

Secondly, some Brighouse buy-to-let landlords have also cashed in on the buoyant property market and sold their rental property when their existing tenant handed in their notice.

Finally, the rental sector has an inverse relationship to the state of the general British economy, meaning with the uncertainty in the British economy in the early part of 2021, this meant more people decided to rent rather than tie themselves into a mortgage.

 

Looking at the supply side of the Brighouse rental market, in the short term, rents will continue to grow as some Brighouse landlords are abandoning the rental market - some because of the impending regulation changes which I will talk about later and others with the natural flow of people cashing in their investments on retirement.

 

With increased demand and restricted supply, this will only lead to competition becoming more severe between renters, thus making Brighouse rents continue to rise.

 

Brighouse House Price Growth Will Slow

 

For those that own property, the way house prices grew in 2021 surprised most people.

 

Brighouse house prices, according to the Land Registry, grew by 11.1% in 2021, with the typical Brighouse home reaching £203,500.

 

Many local landlords have been helped by this increase in Brighouse house prices and will be in a place to cash in on those capital gains by either selling their buy-to-let property (as mentioned in the previous section) or releasing some equity by re-mortgaging.

 

Whether Brighouse house price rises carry on at such a rate in 2022 will mainly depend on whether the imbalance between the number of properties that come on to the market (supply) is by the number of buyers (demand).

 

Most commentators believe that nationally house prices will be between 3% and 5% higher by the end of 2022 and I can see no reason why Brighouse house prices won’t be in that range by the end of the year either.

 

Mortgage Rates Will Rise

 

The reduction in tax relief for Brighouse buy-to-let landlords with mortgages in the last five years hit some landlords hard, yet this has been tempered by the inexpensive ultra-low mortgages available to buy-to-let landlords.

 

Yet even with the Bank of England increase in base rates, Brighouse landlords with big deposits of 40% or more can benefit from low rates. For example, at the time of writing, you can get a BTL mortgage at 1.49% fixed for 5 years with a 40% deposit (meaning borrowing £180,000 on a £300,000 purchase would only cost you £719 per month on a 25-year mortgage - or £224 per month on repayment only).

 

However, those with only a 25% deposit must pay slightly more, but only at a mortgage rate of 1.64% - who can remember mortgage rates of 14% to 15% in 1992?

With inflation rising, the Bank of England has already indicated further interest rate rises are on the cards. I suspect they will be around the 1% mark by Christmas 2022. Therefore, if you are one of the one in five landlords on a variable rate mortgage, your margins will be squeezed as your variable rate mortgage will rise in line with the Bank of England interest rate rise.

 

Maybe it’s time to consider fixing your mortgage?

 

The End of No-fault Evictions?

 

The Renters' Reform Bill in England and The Renting Homes Act in Wales are both set to abolish Section 21 (no fault eviction). Section 21 laws allow landlords to take back possession of their rental properties without having to prove fault by the tenant.

 

Yet in 2022, Westminster will issue plans for a change of this law which will probably incorporate the eradication of Section 21, which would signify a major change in the balance of power between the landlord and tenant. 

 

Some doom mongers are worried that with the abolition of Section 21, Brighouse landlords may be unenthusiastic about renting and therefore sell up and leave the rental sector altogether. Yet these people said the same when tax relief for landlords was changed five years ago.

 

The Scottish equivalent of Section 21 was abolished at the end of 2017.

 

At the time, there was some anxiety about how this would affect the Scottish rental market, as anxious landlords and letting agents felt that they could lose control of their rental properties under this new law. Nonetheless, just over four years later, the rental sector has not collapsed in Scotland. The buy-to-let market remains upbeat, and there are signs that a Scottish landlords’ right to evict their tenant has been reinforced by these changes in the law.

 

The reason the Scottish changes worked was the new grounds for repossessing rental properties was clear and wide-ranging. The Scots sped up the slow and unwieldy eviction process where the landlord had a legal and genuine reason to re-claim their property.

 

All I hope is the same changes are made south of the border to the court procedure.

 

New EPC Rules Could Cost Brighouse Landlords £10,000+ per Property

 

The law currently stands that Brighouse landlords need an Energy Performance Certificate (EPC) with at least a rating of E.

 

Westminster is anticipated to increase the EPC requirement for private rental properties in England and Wales to an EPC rating of C for all new rental tenancies by 2025/6, and for all existing tenancies by 2028, whilst Scottish landlords are also expected to see energy efficiency measures in their new proposed Housing Bill.

The problem is 1,959,045 of the 2,965,455 registered rental properties on the EPC database have an energy rating of D or below. 

 

To take a property from an EPC D rating to a C rating might only cost a few hundred pounds, yet the average for all rental D and E rated properties has been calculated at just over £10,000 per property.

 

My advice to every Brighouse landlord is to look at the full EPC report of their rental property (and if you haven’t got it, contact me and I will send it to you -whether you are a client or not) as that will tell you whether this will be a big or small job.

 

Renovating the UK’s rental stock to meet the Government's carbon neutral targets will be a big trial for landlords. There is talk of exemptions, as there currently is for the existing minimum EPC E rating – yet only time will tell on that front.

 

Maybe those Brighouse landlords currently buying properties to add to their rental portfolio should reconsider their buying strategy? In the past, it has been normal for Brighouse buy-to-let investors to be attracted to the inexpensive older properties that need an overhaul. However, with the potential energy efficiency laws coming into the game, it's rational to suggest that buy-to-let landlords will be more predisposed to buying slightly newer properties rather than have the cost for the upgrades to meet the potential energy targets.

 

Conclusion

 

Roll the clock back 20 years and making money from buy-to-let in Brighouse was as easy as falling off a log. Yet with increased legislation and regulation, together with the changing dynamics of the British economy and the requirements tenants want in a rental property, making money won’t be as easy over the next 20 years.

 

It amazes me that 11 out of 20 landlords do not use a letting agent to help them with their rental portfolio, considering the cost can be offset against your tax.

 

Moving forward, the savvy Brighouse landlords will more and more utilise their letting agent not only to collect the rent and manage the property but also build up their portfolio to withstand the regulatory and demographic changes on the horizon, and to ensure that their investment is fit for purpose in the medium to long-term.

 

If your existing letting agent does not offer such advice, or you are a self-managing landlord, let’s have a chat about the future of the Brighouse rental market.

 

Whether you are a client of mine or not, if you would like me to look at your rental portfolio and see where you stand, then drop me a line and maybe we can meet for a coffee (or we can meet virtually over Zoom) to discuss the matter – all at no charge.