Doncaster Property Blog » November 2019

Monthly Archives: November 2019

Doncaster Property News

Are the Tory’s Selling Off the Final Part of the Family Silver? 1,422 Doncaster Housing Association Households & the Right to Buy Their Homes

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In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their own their own council flats and houses, although it might interest you to know, that the council tenant right to buy idea was first proposed in the late 1950s and formed part of the manifesto of the Labour party. Yet Maggie’s version was based on massive discounts for tenants and 100% mortgages (i.e. no deposit). However, the real bugbear was that half the monies raised form the house sales went to central Government and the other half to the local authorities … but that money had to be used to reduce the local authorities debt rather than building new houses – so houses were being sold and not replaced.

19,782 council homes in the Doncaster area have been

bought in the last 40 years (an average 495 per year)

Interestingly, the Tories relaxed the rules in 2012 for right to buy and raised the highest discount on a property to £75,000 (it has subsequently increased further, to £100,000, in some parts of the UK) meaning 625 council houses have been sold locally since the rule change, raising £30,761,957 since 2012 alone.

The issue, stated by many existing council house tenants, is that those tenants turned homeowners subsequently sell on their ex-council homes at a huge a huge profit, meaning the demographics of those areas has become ever more transient, more specifically, properties that were once council homes are now owned by buy-to-let landlords who rent them out on a short-term basis.

Yet up to this point in time, nothing has been said about ‘other’ type of social housing – housing association properties. Whilst council houses are properties owned by the local authority providing low cost social housing, housing associations also provide lower-cost social housing for people in need of a home, yet they are private, non-profit making organisations.

The Tory’s state one of the biggest divides in our British society is between those who can and cannot afford their own home, so plan to establish a new national model for shared ownership which allows people in new housing association properties to buy a proportion of their home while paying a lower/subsidised rent on the remain part – helping thousands of lower income earners get a step onto the housing ladder.

So, what for the tenants of the existing 1,422 housing association households in Doncaster? The Conservatives have said they will work with housing associations on a voluntary basis to determine what right to buy offer could be made to those Doncaster tenants, although there are already existing rules which give most housing association tenants the right to buy their home, yet with only modest discounts of £9,000 to £16,000 depending on where you live. So, what does all this mean for the current homeowners and landlords of Doncaster properties?

The Tory’s sold off 13,102 council houses in Doncaster whilst in power between 1979 and 1997

This really created waves in the housing market in the 1980’s and was a contributary factor to the housing crash of 1987 when Dual-MIRAS tax relief was removed by Nigel Lawson. By the selling off of council housing in those years they were accused of selling off the family silver cheaply, thus created the foundation of the buy-to-let boom of the early to mid 2000’s, because of major shortage of affordable housing being sold in the previous two decades.

Yet this time round, note the Tory’s state it is just for new housing association properties, not existing. Also, that tenants will have the right to go into shared ownership – NOT OUTRIGHT OWNERSHIP. This means this policy will have hardly any effect … unlike the Thatcher policies of 1979.

Doncaster Property News

Doncaster Buy to Let – Past, Present and Future

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Investing in a Doncaster buy to let property has become a very different sport over the last few years.

In the glory days of the five years after the turn of the Millennium, where we had double-digit house price growth, mortgage companies (notably Northern Rock, HBOS and their ilk) desperate to get on the buy to let mortgage bandwagon with rates so low it would make the belly of a snake seem high and an open mildness to give loans away with not so much more than a note from your Mum and with hardly any regulatory intervention… anyone could make money from investing in property – in fact it was easier to make money than fall off a log! Then we had the unexpected flourish of the property market, with the post credit crunch jump in the property market after 2010,when everything seemed rosy in the garden.

Yet, over the past five years, the thumbscrews on the buy to let market for British (and de facto) Doncaster investors have slowly turned with new barriers and challenges for buy to let investors. With the change in taxation rules on mortgage relief starting to bite plus a swathe of new rules and regulations for landlords and mortgage companies, it cannot be denied some Doncaster landlords are leaving the buy to let sector, whilst others are putting a pause on their portfolio expansion.

With the London centric newspapers talking about a massive reduction in house prices (mainly in Mayfair and Prime London – not little old Doncaster) together with the red-tape that Westminster just keeps adding to the burden of landlords’ profit, it’s no wonder it appears to be dome and gloom for Doncaster landlords … or is it?

One shouldn’t always believe what one reads in the newspaper. It’s true, investing in the Doncaster buy to let property market has become a very different ballgame in the last five years thanks to all the changes and a few are panicking and selling up.

Doncaster landlords can no longer presume to buy a property, sit on it and automatically make a profit

Doncaster landlords need to see their buy to let investments in these tremulous times in a different light. Before landlords kill their fatted calves (i.e. sell up) because values are, and pardon the metaphor, not growing beyond expectation (i.e. fattening up), let’s not forget that properties produce income in the form of rent and yield. The focus on Doncaster buy to let property in these times should be on maximising your rents and not being preoccupied with just house price growth.

 

Rents in Doncaster’s private rental sector increased

by 2.02% in the past 12 months

 

Rents in Doncaster since 2008 have not kept up with inflation, it is cheaper today in REAL TERMS than it was 11 years ago and some landlords are beginning to realise that fact with our help.

Looking at the last few years, it can be seen that there is still a modest margin to increase rents to maximise your investment (and it can be seen some Doncaster landlords have already caught on), yet still protect your tenants by keeping the rents below those ‘real spending power terms’ of the 2008 levels.

Buy to let must be seen as a medium and long-term investment ….

Rents in Doncaster are 6.66% higher than they were 3 years ago and property values are 10.17% higher than Jan 2016

…and for the long term, even with the barriers and challenges that the Government is putting in your way – the future couldn’t be brighter if you know what you are doing.

Investment is the keyword here… In the old days, anything with a front door and roof made money – yet now it doesn’t. Tenants will pay top dollar for the right property but in the right condition. Do you know where the hot spots are in Doncaster, whether demand is greater for 2 beds in Doncaster or 3 beds? Whether town centre terraced houses offer better ROI than suburban semis? With all the regulations many Doncaster landlords are employing us to guide them by not only managing their properties, taking on the worries of property maintenance, the care of property and their tenants’ behaviour but also advising them on the future of their portfolio. We can give you specialist support (with ourselves or people we trust) on the future direction of the portfolio to meet your investment needs (by judging your circumstances and need between capital growth and yields), specialist finance and even put your property empire into a limited company.

If you are reading this and you know someone who is a Doncaster buy to let landlord, do them a favour and share this article with them – it could save them a lot of worry, heartache, money and time.

Doncaster Property News

Doncaster Property Values 2% Higher Year-on-Year

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It seems that quite a few Doncaster homeowners and Doncaster landlords have become acclimatised to living with the uncertainty of Brexit throughout most of 2019, as figures show many of them decided to get on with living life, started reinvesting their money into Doncaster property and buying and selling their Doncaster homes and BTL investments. Land Registry stats confirm that. Current data shows that…

Doncaster property values are 2% higher than 12 months ago

Whilst the newspapers were stating prime central London property values were now 17% below the levels being achieved a couple of years, that message seems not to have been heard by certain sectors of the Doncaster property market!

Speaking with other property professionals in Doncaster, many weren’t expecting the usual autumn rebound after the summer holidays. Many were anticipating a dormant Doncaster property market on the run up to Christmas believing many Doncaster home-movers would put off the their home moving activities until the new year, yet in many sectors of the local property market, I have seen (and the stats back this up) that those Doncaster property buyers who are able to hold their nerve (whereas others were hesitant) have found themselves in a better negotiating position to get a great property deal. Putting aside the fluff of newspaper headlines, the real foundations of Doncaster housing market remain sound with record low unemployment, ultra-low interest rates and low inflation.

Interestingly, there are 11% less homes for sale in Doncaster compared to two years ago

However, there are still parts of the Doncaster property market that remain stagnant, with some homeowners being slightly unrealistic with their marketing pricing. To them, the property market appears to be slow, as they stare at their ‘for sale’ board for months on end, yet nothing could be further from the truth.

The key to a balanced (and healthy) property market is realistic pricing by the homeowners when they place the property on the market, mortgage affordability for buyers (which was discussed a couple of weeks ago in the Doncaster Property Blog) and buy to let landlord activity which creates and maintains forward momentum. One measure of momentum is how long a property remains on the market, and interestingly…

The current average length of time a Doncaster property remains on the market is 90 days, down slightly from 98 days two years ago

Now the number of properties sold locally is slightly down year on year (even though we had a burst of property sales in the summer locally) and interestingly, Rightmove reported recently that nationally, the number of properties sold in the UK was only just over 3% less year on year, so a similar picture nationally.

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

We have always had issues that were game changers for the housing market; for the last few years it’s been Brexit, 10 years ago the credit crunch, 18 years ago the dot com crash, the ERM and 15% interest rates issue 27 years ago, dual MIRAS 32 years ago, hyper-inflation 40 years ago, the 3 day week 45 years ago – the list goes on. Everyone needs a home to live in, the local authority just has not got the money to build council houses, so buy to let will continue to grow for the foreseeable future which in turn creates a stable foundation for all homeowners. Maybe you should use this time, like many are in Doncaster to take advantage of the property deals to be had in Doncaster.