Biggleswade Buy-To-Let Predictions up to 2037

174 graphic 3

On several occasions over the last few months, in my Biggleswade Property Blog, I predicted that the rate of rental inflation (i.e. how much rents are rising by) had eased over the last year. At the same time I felt that in some parts of the UK rents had actually dropped for the first time in over eight years. Recent research backs up this prediction.

Rents in Biggleswade for new tenancies only grew by 0.7% in the last 12 months (i.e. not existing tenants experiencing rental increases from their existing landlord). When we compare that current rate with the historical rental inflation in Biggleswade, an interesting pattern emerges ..

  • 2016 – Rental Inflation in Biggleswade was 4.3%
  • 2015 – Rental Inflation in Biggleswade was 6.4%
  • 2014 – Rental Inflation in Biggleswade was 0.7%

The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).

On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of Biggleswade property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth.

The lead up to the General Election in May didn’t help: after all people don’t like doubt and uncertainty. So now that we have a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home.

Whether it be ‘hard’ or ‘soft’ Brexit negotiations (and with the Election result the Tory’s might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in Biggleswade, the East and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics.

174 Table - Bedfordshire

174 graph Bedfordshire

Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in Biggleswade, and wider afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up!

The fact is that I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.

sunglasses-2523803_1920

I’m off now on annual leave for a couple of weeks – hoping for some UK sunshine!  Will be back to blogging again in mid-August.

In the meantime, please give us a call or pop in to the Letchworth office to discuss any aspect of the Biggleswade property market and lettings in general.  We don’t bite and happy to provide any advice we can.

 

 

Biggleswade First Time Buyers Mortgages taking 33.9% of their Wages

171 graphic v2

I have heard from a number of older mortgage free Biggleswade homeowners worried about how unaffordable Biggleswade’s rising property prices are and they are concerned about how the younger generation of Biggleswade could ever afford to buy.  They often ask if it is right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, Biggleswade landlords are denying the younger generation the ability to in fact buy their own home.

Whilst doing my research for my many blog posts on the Biggleswade property market, I know that a third of 25 to 30 year olds still live at home. It’s no wonder people are kicking out against buy to let landlords as they are the greedy bad people who are cashing in on a social woe.  In fact, most people believe the high increases in Biggleswade’s (and the rest of the UK’s) house prices are the very reason owning a home is outside the grasp of these younger would be property owners.

However, the numbers tell a different story.  Looking at the age of first time buyers since 1990, the statistics could be seen to pour cold water on the idea that younger people are being priced out of the housing market.  In 1990, when data was first published, the average age of a first time buyer was 33, today it’s 31.

171 - fixed Graph showing Average Age of First time buyers

Nevertheless, the average age doesn’t tell the whole story.  In the early 1990’s, 26.7% of first time buyers were under 25, while in the last five years just 14.9% were.  In the early 1990’s, four out of ten first time buyers were 25 to 34 years of age and now its six out of ten first time buyers.

171 - fixed graph Age Distribution of First Time Buyers in UK since 1990 .png

Although, there are also indications of how unaffordable housing is, the house price to earnings ratio has almost doubled for first time buyers in the past 30 years.  In 1983, the average Biggleswade home cost a first-time buyer (or buyers in the case of joint mortgages), the equivalent of 2.8 times their total annual earnings, whilst today, that has escalated to 5.4 times their income.

Again, those figures don’t tell the whole story.  Back in 1983, the mortgage payments as percentage of take home pay for a Biggleswade first time buyer was 29.4%.  In 1989, that had risen to a staggering 75.9%.  Today, it’s 33.9%, and no that’s not a typo, 33.9% is the correct figure.

Biggleswade 171

To answer the questions about the younger generation of Biggleswade being able to afford to buy and if it was right for landlords to make money on the inability of others to buy property, it isn’t all to do with affordability as the numbers show.

What of the landlords?  Some say the government should sort the housing problem out themselves, but according to my calculations, £18bn a year would need to be spent for the next 20 or so years to meet current demand for households.  That would be the equivalent of raising income tax by 4p in the pound and I don’t think UK tax payers would swallow that.

If the Government haven’t got the money, who else will house these people?  Private sector landlords will and thankfully they have taken up the slack over the last 15 years.

Some say there is a tendency to equate property ownership with national prosperity but this isn’t necessarily the case.  The youngsters of Biggleswade are buying houses, but buying later in life. Also, many Biggleswade youngsters are actively choosing to rent for the long term, as it gives them flexibility, something our 21st Century society craves more than ever.

41.9 miles – The average distance people go when they move from Biggleswade

Stotfold 170 v2

“How far do Biggleswade people go to move to a new house?”  This was an intriguing question asked by one of my clients the other week.  Readers of my property blog will know I love a challenge, especially when it comes to talking about the Biggleswade property market.

 For the majority, the response is not very far.  It is much more common for homeowners and tenants in Great Britain to move across town than to the next town or county.  Until now, it has been hard to say how many homeowners and tenants moved from and to relatively far away to buy or rent their new home.  However, I carried out some research and requested some statistics from the Royal Mail and what came back was fascinating.

Using statistics for the twelve months up to the middle of Autumn 2019, 304 households moved out of Biggleswade and the average distance was 41.90 miles, the equivalent of moving from Biggleswade to Lakenheath as the crow flies.  The greatest distance travelled was 372 miles, that’s almost 14 marathons, when someone moved to Bridge of Allan in Scotland.

Biggleswade out map

Considering there were 583 property sales in SG18 in the year and countless tenant moves, the numbers seems consistent.  Once you find a town you like, you tend to want to settle down and if you do move, you might only move to a different neighbourhood, a better transport links or to be closer to the school you want to get your children into.  The likelihood is however is that you won’t travel far.

I then turned my attention to people moving into Biggleswade.  Using the same statistics for the 12 months up to the middle of Autumn 2019, 386 households moved into Biggleswade and the average distance was 29.44 miles, the equivalent of moving from Kettering to Biggleswade, again as the crow flies.  The greatest distance travelled again was 487 miles, that’s the same as 19 marathons when someone moved from Old Aberdeen in Scotland to Biggleswade.

Biggleswade in

I have looked at the data of every person moving into Biggleswade and these have been plotted on a map of the UK. Looking at the map below, it shows exactly where most people come from, when moving into Biggleswade.  As you can see, there are a high proportion of people moving from London and from the South West.

What does all this mean for the landlords and homeowners of Biggleswade?

When an agent markets a property for rent or let, it is vital to know the tenant or property buyer well, that the properties they are letting / selling fit those tenants / buyers, so they almost sell themselves.  These days that means not only knowing how many bedrooms, reception rooms a property offers but the budget buyers and tenants want to spend on a property in that area as well as where they come from.

The estate and lettings industry loves the mantra “location, location, location”.  I say it might be helpful to factor in where and how far people are moving from, so the property can be sold or let more easily.  Many say knowledge is power and whilst I do enjoy writing my blog on the Biggleswade property market, I also use the information to help my clients buy, let and sell well.  So for example, the information gained from this article will enable my team and I to be more efficient in where to direct our marketing resources to ensure we maximise our client’s properties sale-ability or rent-ability.

For more information on the Biggleswade property market and for any advice, please give us a call on 01462 894565 or pop into the office for a chat……we don’t bite!

Council House Waiting List in Biggleswade Drops by 78% in last 3 years

172 image1.png

Should you buy or rent a house?  Buying your own home can be expensive but could save you money over the years.  Renting a property through a letting agent or private landlord offers less autonomy to live by your own rules, with more flexibility if you need to move.

Yet, there is a third way that many people seem to forget, but it plays an important role in the housing of Biggleswade people.  Collectively known as social housing, it is affordable housing, which is let by either Central Bedfordshire District Council or a housing association to those considered to be in specific need, at rents below those characteristic in the private rental market.

In Biggleswade, there are 1,072 social housing households, which represent 15.50% of all the households in Biggleswade.  There are a further 741 families in the Central Bedfordshire District Council area on their waiting list, which is similar to the figures in the late 1990’s. The numbers peaked in 2013, when it stood at 3,371 families, so today’s numbers represent a drop of 78%.

Biggleswade 172 Graph

Nevertheless, this doesn’t necessarily mean that more families are being supplied with their own council house or housing association property.  Six years ago, Westminster gave local authorities the authority to limit entitlement for social housing, quite conspicuously dismissing those that did not have an association or link to the locality.

Interestingly, the rents in the social rented segment have also been growing at a faster rate than they have for private tenants.  In the South Bedfordshire District Council area, the average rent in 1998 for a council house / housing association property was £200.94 a month.  Whilst we have no up to date figures, because of the ‘Large Scale Voluntary Transfer’ of all or most of the local authority’s stock was transferred to a Private Registered Provider sector, so the average rent is no longer applicable.  Therefore, using the average rent increase for England of 108% (England’s average rent being £183.08 a month in 1998 and £381.03 a month today) we can guesstimate an average of approximately £415.

When comparing social housing rents against private rents, the stats don’t go back to the late 1990’s for private renting, so to ensure we compare like for like, we can only go back to 2005.  Over the last 12 years, private rents have increased nationally by a net figure of 19.7%, whilst rents for social housing have increased by 59.1%.

172 fixed graph.png

 

What does this all mean for the homeowners, landlords and tenants of Biggleswade?

Rents in the private rental sector in Biggleswade will increase sharply during the next five years.  Even though the council house waiting list has decreased, the number of new council and housing association properties being built is at a seventy year low.  The government crusade against buy-to-let landlords together with the increased taxation and the banning of tenant fees to agents will restrict the supply of private rental property, which in turn using simple supply and demand economics, will mean private rents will rise.  This makes buy to let investment a good choice of investment again (irrespective of the increased fees and taxation laid at the door of landlords).  It will also mean property values will remain strong and stable as the number of people moving to a new house (and selling their old property) will continue to remain restricted and hence, due to lack of choice and supply, buyers will have to pay decent money for any property they wish to buy.

Interesting times ahead for the Biggleswade property market!

Looking to invest in Biggleswade?

Take a look at this video of a property that has just come to the market with our sales team in Biggleswade.  In a prominent high street position and with an asking price of £190,000 this property would provide a return of 5%.  The size of the property means you could also rent rooms individually and command a yield of around 10%.   Click here to see the rightmove advert and call Satchells in Biggleswade ASAP on 01767 313256 to view!

Should the 3,023 home owning OAP’s of Biggleswade be forced to downsize?

164 pic v1

This was a question posed to me on social media a few weeks ago, after my article about our mature members of Biggleswade society and the fact many retirees feel trapped in their homes.  After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house.  Many feel trapped in their big homes (hence I dubbed these Biggleswade home owning mature members of our society, ‘Generation Trapped’). Should we force OAP Biggleswade homeowners to downsize?

In the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. However, should the Government force OAP’s?

One of the biggest reasons OAP’s move home is health (or lack of it).  Looking at the statistics for Biggleswade, of the 3,023 homeowners who are 65 years and older, whilst 1,778 of them described themselves in good or very good health, a sizeable 963 home owning OAPs described themselves as in fair health and 282 in bad or very bad health.

164 Graph Biggleswade

9.33% of Biggleswade home owning OAP’s
are in poor health

If you look at the figures for the whole of  Central Bedfordshire Council (not just Biggleswade), there are only 818 specialist retirement homes that one could buy (if they were in fact for sale).

There are 956 homes available to rent from the Council and other specialist providers (again, you would be waiting for dead man’s shoes to get your foot in the door).  Many older homeowners would not feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.  My intuition tells me the majority ‘would be’ Biggleswade down-sizers could certainly afford to move but are staying put in bigger family homes because they cannot find a suitable smaller property.  The fact is there simply aren’t enough bungalows for the healthy older members of the Biggleswade population and specialist retirement properties for the ones who aren’t in such good health …

We need to build more appropriate houses in Biggleswade

The government’s   Housing White Paper, published recently, could have solved so many problems with the UK housing market, including the issue of homing our ageing population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do.  Instead of the stick, maybe the Government could use the carrot tactics and offered tax breaks for down-sizers.  Who knows, but something has to happen?

Come to think about it,  the word ‘downsize’  is such an awful word.    I prefer to use the word ‘decent-size’ instead of ‘down-size’ as the other phrase feels like they are lowering themselves as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration.  What I would say to all the homeowners and property owning public of Biggleswade   is more houses and apartments need to be built in the Biggleswade area, especially more specialist retirement properties and bungalows.  The government had a golden opportunity with the White Paper and were sadly found lacking.

A message to my Biggleswade   property investor readers, whilst this issue gets sorted in the coming decade(s), maybe seriously consider doing up older bungalows as people will pay handsomely for them be that for sale or even rent?  Just a thought!

 

6.82 Babies born for each new home built in the Biggleswade area

166 - Biggleswade

As more babies are being born to Biggleswade and Central Bedfordshire mothers, I believe this increase will continue to add pressure to the over stretched Biggleswade property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 6.82 babies were born for every new home that was built in the Central Bedfordshire Council area in 2016.  I believe this has and will continue to exacerbate the Biggleswade housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Biggleswade rents and Biggleswade property prices have remained resilient, even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Central Bedfordshire Council area had an average of 66.7 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 67.6 births per 1,000 women aged 15 to 44.

166 - National Graph JPEG (fixed graph) - to be used to add weight to your local graph

The number of births from Biggleswade and Central Bedfordshire women between the ages of 20 to 29 are close to the national average, but those between 35 and 44 were much higher.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Biggleswade area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles), and the higher predominance of single person households … this can only mean one thing … a huge increase in the need for housing in Biggleswade.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Biggleswade people.

The planners and politicians of our local authority, central government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) … demand for property is simply outstripping supply.

The simple fact is more Biggleswade properties need to be built, be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of Old Warden Park or Stod Fold Water Mill, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Biggleswade, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

 

Want to be a landlord in Biggleswade…?

Looking to invest in Biggleswade?

Take a look at this video…….Our sales office in Biggleswade are marketing this modern one bedroom apartment for £175,000.  This property is on a popular new build development and is ready for a tenant to just move in.   An ideal purchase for an investor with a potential yield of between 4.6 and 5%.  Call 01767 313256 to view ASAP.   Click here to see the rightmove advert

992,082 People use Biggleswade Train Station a year…..

Biggleswade station

How does that affect the Biggleswade Property Market?

It might surprise you that it isn’t always the poshest villages around Biggleswade or the swankiest Biggleswade streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Biggleswade, I am frequently confronted with queries about the Biggleswade property market, and most days I am asked, “What is the best part of Biggleswade and its villages to live in these days?”, chiefly from new-comers.  Now the answer is different for each person – a lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released state that, in total, 1,359 people jump on a train each and every day from Biggleswade Train station. Of those, 598 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,656 a year.

So, if up to £3.38m is being spent on rail season tickets each year from Biggleswade, those commuters must have some impressive jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Biggleswade and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Biggleswade buy to let market – providing homes for the tenants of Biggleswade…

The bottom line is that property values in Biggleswade would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it serves in the town

This isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.

Biggleswade 163 graph

Overall usage of the station at Biggleswade has increased over the last 20 years. In 1997, a total of 408,877 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 992,082 people using the station (that’s 2,718 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Biggleswade property. It is also significant for tenants – so if you are a Biggleswade buy to let investor looking for a property – the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website.

For more thoughts on the Biggleswade Property market or for any advice please pop into our office for a cup of tea, or give us a call on 01462 894565.

 

What will the General Election do to 7,034 Biggleswade Homeowners?

168 image

In Biggleswade, of the 10,005 households, 3,131 homes are owned without a mortgage and 3,903 homes are owned by a mortgage.  Many homeowners have made contact me with asking what the General Election will do the Biggleswade property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 … in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections:

168 Graph One

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

I then wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line):

168 Graph Two

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

So finally, what does this mean for the landlords of the 1,330 private rented properties in Biggleswade? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Biggleswade will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Biggleswade, making it imperative that Biggleswade landlords are realistic with their market rents. However, in the long term, as the younger generation still choose to rent rather than buy the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. If you want to find out more about the Biggleswade property market or need some advice please pop into the office, call us on 01767 313488 or e-mail us at: lettings@satchells.co.uk.