Monthly Archives: June 2017

Doncaster Property News

Council House Waiting List in Doncaster Drops by 47.8% in last 10 years

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

In Doncaster, there are 8,123 social housing households, which represent 17.56% of all the households in Doncaster. There are a further 8,737 families in the Doncaster Metropolitan Borough Council area on their waiting list, which is similar to the figures in the late 1990’s. The numbers peaked in 2006, when it stood at 16,760 families, so today’s numbers represent a drop of 47.8%.

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 Doncaster Metropolitan Borough Council area, the average rent in 1998 for a council house/housing association property was £136.80 a month, whilst today its £309.05, a rise of 126% in 19 years.

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%.

So, what does this all mean for the homeowners, landlords and tenants of Doncaster?

Rents in the private rental sector in Doncaster 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 70 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 – making 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 Doncaster Property Market!

Doncaster Market Research Property News

Are Doncaster First Time Buyers Being Squeezed Out Of The Housing Market?

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Doncaster First Time Buyers Mortgages taking 23% of their Wages

I received a very interesting letter the other day from a Doncaster resident. He declared he was a Doncaster homeowner, retired and mortgage free. He stated how unaffordable Doncaster’s rising property prices were and that he worried how the younger generation of Doncaster could ever afford to buy? He went on to ask if it was right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, Doncaster 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 Doncaster 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 Doncaster’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 of 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.

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.

Although, there are also indications of how un-affordable housing is, the house price-to-earnings ratio has almost doubled for first-time buyers in the past 30 years. In 1983, the average Doncaster home cost a first-time buyer (or buyers in the case of joint mortgages) the equivalent of 2.6 times their total annual earnings, whilst today, that has escalated to 3.7 times their income (although let’s not forget, it was at 4.6 times their income for Doncaster first time buyers in 2007).

Again, those figures don’t tell the whole story. Back in 1983, the mortgage payments as percentage of mean take home pay for a Doncaster first time buyer was 27.6%. In 1989, that had risen to 57.6%. Today, it’s 23.0% … and no that’s not a typo .. 23.0% is the correct figure.

So, to answer the gentleman’s questions about the younger generation of Doncaster 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.

And 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. I don’t think UK tax payers would swallow that.

So, if the Government haven’t got the money… who else will house these people? Private Sector Landlords 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 Doncaster are buying houses, but buying later in life. Also, many Doncaster youngsters are actively choosing to rent for the long term, as it gives them flexibility – something our 21st Century society craves more than ever.

Doncaster Property News

28.7 miles – The average distance people go to escape living in Doncaster

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“How far do Doncaster 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 Doncaster 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’s 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. What came back was fascinating!

Using statistics for the 12 months up to the middle of Autumn 2016, 201 households moved out of Doncaster (DN3), moving an average distance of 28.69 miles – the equivalent of moving from Doncaster to Lincoln (as the crow flies).  The greatest distance travelled was 370 miles – that’s more than 14 marathons (when someone moved to the Isle of Lewis and Harris in the Outer Hebrides).

Considering there were 361 property sales in DN3 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 neighbour-hood, or for better transport links or, to be closer to the school you want to get your children into, but the likelihood is you won’t travel far.

I then turned my attention to people moving into Doncaster. Using the same statistics for the 12 months up to the middle of Autumn 2016, 257 households moved into Doncaster (DN3), moving an average distance of 28.2 miles – the equivalent of moving from Leeds to Doncaster (again as the crow flies). The greatest distance travelled was 258 miles – that’s almost 10 marathons (when someone moved from Echt in Scotland to Doncaster).

I have looked at the data of every person moving into Doncaster 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 Doncaster. As you can see, there are a high proportion of people moving from London and from the West.

 

 

So, what does all this mean for the landlords and homeowners of Doncaster?

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 etc., 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 Doncaster property market, I also use the information to help my clients buy, let and sell well. So for example, the information gained for this article, will enable my team and I to be more efficient in where to direct our marketing resources to ensure we maximise our clients’ properties sale-ability or rent-ability.

For more information on the Doncaster property market, visit the Doncaster Property Market Blog

Doncaster Property News

1 in 56 Doncaster Properties are Leasehold

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There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold – usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for Doncaster, at the last count in DN1 there were 5,949 properties. Since 1995, 2,949 properties in DN1 have changed hands and have been sold. Looking further at those 2,949 transactions in DN1 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 1.77% have been leasehold (lower than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats – houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.

The issue comes when builders sell the freehold separately to an investment company without informing the lease holder  – which they are legally allowed to do without telling the leaseholder. In England and Wales, the “right of first refusal” to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.

.. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.

Doncaster Property News

What will the General Election do to 28,766 Doncaster Homeowners?

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In Doncaster, of the 46,238 households, 13,515 homes are owned without a mortgage and 15,251 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Doncaster 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

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).

Next, I 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).

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 8,419 private rented properties in Doncaster? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Doncaster 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 Doncaster, making it imperative that Doncaster landlords are realistic with their market rents. But, 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 read more about the Doncaster property market – then why not visit the Doncaster Property Market Blog for more information?