Yearly Archives: 2020

Uncategorised

The Doncaster Post Lockdown Property Market

Published by:

What have we learned in the first month?

From talking to most of the Doncaster estate and letting agents and our own findings, it might surprise many of you that new enquiries from homebuyers, tenants, landlords and home sellers have been at record levels since lockdown was lifted from the property market in mid-May.

There are a number of reasons for this. Firstly, we had the pent-up demand for Doncaster property from the Boris Bounce in January and February. Next, many Doncaster people were planning to move this spring yet were prevented doing so because of lockdown, and finally, surprisingly, an advance wave of home movers seeking to bring their Doncaster moving plans forward because of a fear of a second Covid-19 wave later in the year.

So, what does all that look like and how does it compare to the last 12/18 months?

Data from Yomdel, the live chat and telephone answering service for a quarter of UK estate and letting agents, is able to track objective and more current information from across the UK on what is really happening. Each week, they are dealing with thousands of enquiries including:

  • Seller enquiries (e. house sellers looking to put their property on the market)
  • Buyer enquiries (e. people looking to view a property on the market with the intention of buying it)
  • Landlords enquiries (e. landlords looking for tenants for their rental property)
  • Tenant enquiries (e. people looking to view a property on the market with the intention of renting it)

 They have created a rolling weekly average of those enquiries for the whole of the UK for the 62 weeks before the country went into lockdown. Then they compared that 62 week average with specific time frames, namely the 10 weeks of the run up to the General Election, the 8 weeks of Post Boris Bounce in January and February 2020, the weeks of lockdown in March, April and early May and then finally, from mid-May, the post lockdown.

You might ask why tracking estate and letting agency enquiries is so important?

Enquiries in letting and estate agencies are the beating heart of the property market – they are the ECG machine of the estate and letting agency. Of course, house price data has its place and is lauded by the national press as the bellwether of the property market, yet it takes 6 to 9 months for the effects of what is happening today to show in those house price indexes, whilst these enquiries are what is happening now.

Have a look at the data in the graph and table, it can be seen in the 8 weeks up to the General Election, every metric was down. Next, the post Boris Bounce saw house seller and house buyer leads increase yet note how low tenant enquiries were (hardly any change from the run up to the election), everything dipped during lockdown as expected, yet look at all the metrics post lockdown … amazing! (e.g. if a number in the graph/table below is say -25%, that means its 25% below the rolling 62 week average, yet if it were +20%, then that would mean it would be 20% more than the rolling 62 week average.

The numbers speak for themselves!

So, what is happening in the Doncaster property market? Well, there is plenty of activity in the Doncaster property market, yet that doesn’t mean everything is back to normal. Enquiries are an important metric, yet another way to judge the health of the property market is to look at the number of property transactions (i.e. people moving).

Now the Land Registry data isn’t quite as exhilarating, yet it is less volatile. Nationally, it shows that property transactions were at their lowest level since its records began in April 2005. The seasonally adjusted estimate of UK residential property transactions in April and May 2020 was 90,210, 53.4% lower than the 193,500 transactions of April and May 2019. Again though, this was because of the restrictions on moving during Covid-19. The stats for Doncaster are still to be released, yet rest assured I will share them in due course.

Looking again at what is happening now, when I look at the number of properties for sale…

411 Doncaster properties have come onto the property market in the last 14 days alone, and of those, 39 are already sold subject to contract

So, what of the future of the post-lockdown Doncaster housing market? While a stern recession seems almost guaranteed, a housing market crash is not. Many newspapers are predicting property values to fall in 2020, then rise reticently from the ashes in 2021. The fact is, nobody knows. The property market is driven a lot by sentiment. Buying a home is not like buying stocks and shares – it’s a home to live in … and those Doncaster landlords who are looking for an investment opportunity, often let their heart rule the head (again sentiment) when investing in property.

Property always has, and always will be, a long-term investment. Many of you Doncaster people reading this, especially potential Doncaster first time buyers, have been putting off buying your first home because of Brexit, now its Covid-19, and in a few years, it will be something else. There will always be ‘something else’… and you could get to your 50’s and 60’s, still renting, waiting for the ‘next thing’ to pass before you buy … and end up buying nothing.

Nobody knows what the months or years ahead will bring … yet what I do know is, people will always need a place to live. Please let me know your thoughts in the comments. Tell us what your experiences are as a Doncaster landlord or homeowner, tenant or buyer so we can all learn from each other.

Doncaster Property News

Are Buy to Let Landlords to Blame for Doncaster’s Housing Crisis?

Published by:

Isn’t it funny that nobody boasts they are a buy to let landlord anymore? Roll the clock back to the early millennium and you couldn’t go to the local golf club or shop at a Waitrose without someone dropping buy to let into the conversation as easily and as often as the weather.

Yet now, Doncaster buy to let landlords have almost pariah status, as they place a brown paper bag over their head when they enter a letting agency, lest they be recognised as such. They can easily be recognised though, as the average age of a UK tenant in a property is 32 years old, whilst the average age of a UK landlord is between 40 and 61 years old.

Joking aside, if it wasn’t for buy to let landlords – Doncaster and the UK would be in a rather difficult position when it comes to housing our local people. Many people believe that if you take buy to let landlords out of the loop of the UK property network, then it would be the land of milk and honey for first-time buyers priced out of the market. Those Doncaster landlords provide those Doncaster tenants with a mixture of homes to live in and using market forces, ensure the right number of Doncaster homes are available. In fact, the stats show that…

Doncaster buy to let landlords provide 8,419 Doncaster homes for 20,060 Doncaster tenants

Yet the retort from many tenant organisations would be that Doncaster landlords are wealthy middle-class people, voraciously exploiting the failing Doncaster property market for their profit and greed. Of course, the demographic of an average Doncaster landlord is they tend to come from more fortunate backgrounds, with 3 in 4 of Doncaster landlords aged between their late 40’s to late 60’s and 4 in 10 having a degree level qualification.

It also wouldn’t surprise anyone to learn that those who invest in a buy to let Doncaster property are likely to be better off than those who have not yet been able to buy a home. Yet, that is the nature of the country we live in and it’s a consequence of a competitive free market economy (the alternative didn’t go to well in the Soviet bloc). Indeed, asserting that the buy to let landlords represent a transfer of wealth and money from tenants to landlords is like saying that the pub represents a transfer of wealth from drinkers to the pub landlord.

Don’t get me wrong, the tax loopholes for landlords up until 3 or 4 years ago were a little ‘too’ generous, still these were closed by the Tory’s themselves. However, should the Government try to place even more burden on landlords like some are suggesting, forcing them to sell, I am certain some Doncaster first time buyers would find it cheaper to buy their first Doncaster home. This is because they wouldn’t be in competition with Doncaster landlords to buy the starter homes both types of buyers crave, meaning house prices would drop (simple economics would dictate that).

Yet, if the supply of Doncaster privately rented homes contracted at a greater rate (because landlords were selling up) than demand, this would make renting more expensive (again simple economics) for the vast majority of Doncaster tenants who were still renting a Doncaster home. Irrespective of whether property values dropped, it might take years for a tenant to save for a deposit, whilst the rental properties the landlords want to sell, the tenants only need to be given two months’ notice to leave so the property can be put on the market.

One might ask why don’t the local authorities build more council houses?

Well, Government funding has been tight because of the credit crunch deficit since 2009 and going forward because of the current situation with Covid-19, it will get even worse. In fact, of the 617,230 new homes built in the country over the last 4 years, only 8,270 or 1.33% were built by local authorities, meaning only just over 1 in 100 of all new properties built in the last 4 years were built by the local authorities.

This is important as the number of people in rented property has been growing over the last 20 years. In fact, when you look at all the tenants in council and private rented accommodation locally…

34.2% of Doncaster people live in a rented property

Interestingly, the demographic of a council house tenant is totally different to that of a tenant in a private rented home. The average age of a council house tenant is 52 years old (compared to 32 years for a private rented tenant), so it appears the older generation have the upper hand on council houses. So again, who exactly is going to house the people of Doncaster, especially the younger generation that can’t afford to buy?

Local authorities haven’t got the money, Housing associations get their money from central Government, so the only other source of housing is private landlords. The problem existed before private landlords filled the gap. No doubt many Doncaster landlords have certainly gained from the problem, especially between 2000 and 2007, yet at the same time, they have helped home millions of people.

Consequently, are Doncaster landlords greedy and selfish?  For most law abiding Doncaster landlords, who look after their tenants and their properties really well, nothing could be further from the truth… and yes they have made some money – yet if you take into account property maintenance, mortgage finance, taxation, agent fees, surveys and inspections – it’s really not the gold mine many think it is.

Not until all the political parties stop using the housing issue as a political football will this issue be sorted. For example, it makes sense to allow mass building in the South East, again driving up supply and making property more affordable, yet that would wind up the Tory voting home county heartlands. It’s a shame because we do have the room to build more homes, in fact…

Only 1.2% of the country has houses built on it

The country needs a massive root and branch change to sort things out, yet I have grave misgivings that any politician has the stomach or the political resolve to do anything about it.

If Covid-19 does affect the confidence in the property market, that will be in fact good news for Doncaster landlords, as long as the Government doesn’t put its big ‘size 9’s into the rental market by taking even more money out landlord’s pockets.

Historically, ambiguity in the property market typically results in an expansion in activity in the private rental market. Prospective home movers will rent in between selling their home and buying the next one, while budding first time buyers typically postpone their purchase and stay in the private rental market for marginally longer … which all increases demand for rental property.

 

Uncategorised

Is This a Good Time to Buy Your First Home in Doncaster?

Published by:

Should you wait to buy your first home in Doncaster or buy now? What sort of mortgages are available? What sort of deposit is required? These are questions all Doncaster buyers are asking at the moment, yet this week I would like to focus on Doncaster first time buyers and what it means directly and indirectly to Doncaster homeowners looking to move up the Doncaster property ladder and Doncaster buy to let landlords.

Well quite frankly, to answer that question it’s contingent on what Doncaster property you are looking to move into and even more significantly, how long you are hoping to live in that property.

We have many armchair economists and even professional economists predicting Armageddon when it comes to the property market, yet the Doncaster (and UK) property market is essentially very sound. Don’t forget the Chancellor himself, George Osborne warned that if we voted to leave the EU two things would happen. Firstly, the UK property market would crash and property values would drop by 18% in the two years after the vote. Secondly, there would be an ‘economic shock’ to the country’s economy that would increase the cost of mortgages (through increased interest rates as there would be a run on the Pound). UK GDP rose by £132bn in the two years after the referendum and interest rates actually dropped and locally with regard to property values…

Doncaster house prices rose by 2.5% in the 2 years

following the Brexit vote

Lloyds have predicted an enormous 30% fall in property prices over the next 36 months whilst Savills have suggested a short dip of 5% during the summer, based on very low transaction numbers, with property prices bouncing back to be just over 15% higher in 5 years’ time. This assumes that the UK plc economic downturn is short & sharp, and that no substantial gap opens up between supply and demand in the property market (i.e. everyone doesn’t dump their property market all at the same time).

Doncaster Property Values after the 2008 Credit Crunch crisis plummeted 10.8% between 2008 and the end of 2009

Yet, the circumstances of the 2008/9 property crash were fundamentally different from today. Many ‘armchair economists’ assume there will be a re-run of the 2008/9 and 1988 property crashes in the coming 12 months in terms of house value falls. Yet, dissimilar to the last recession, this dip has not been led by previous years of strong property price growth like the other two crashes. House prices in many parts of the UK have been down in the last 12 months.

You would think Doncaster first time buyers who have already saved their deposit could grab a bargain in the coming months, you would believe they would have less competition in the market because of landlords holding back buying additional rental properties. This is because of the press speculation that rent arrears are sky-high from tenants who are unable to pay their rent. Yet evidence from many professional bodies in the private rental sector state rent arrears across the whole of the Country are appearing to be very low indeed, despite Covid-19.

Interestingly, the firm Yomdel who handles ‘web live chat’ and ‘phone support’ for thousands of estate and letting agents have reported national activity is higher than the two months of the Boris Bounce (in January and February 2020). The number of new buyer enquiries for the last two weeks is double (108.9% higher to be precise) than the 2019 yearly rolling average. New landlord enquiries are 32.1% higher than the 2019 average and tenants are 150.1% higher than the 2019 average  .. these are all great signs and go against the doom monger economists.

My best advice to all Doncaster property buyers is, be they second-time buyers, first time buyers, landlords.. whatever number buyers, they should buy with a medium-term view of future Doncaster property values, instead of an expectation of always looking to making a quick few pounds flipping a property (i.e. selling it quickly).

Let’s not forget that mortgage interest rates are another important factor: they are at a 325-year low, so borrowing money has never been so inexpensive. If you know you are going to be living in your first (or second) Doncaster home for five years and you want the peace of mind of knowing precisely what your mortgage payments will be, then it’s very attractive. At the time of writing, Barclays is offering any first-time buyer a 95% mortgage on a 5-year fixed rate of 2.75%. The average value of an average terraced house in Doncaster is £97,900 and so with the 5% deposit of £5,000 on a 35-year term the…

Mortgage payments on a typical Doncaster terraced house would only be £345 per month (i.e. much cheaper than renting)

Many lenders are lending money even if you are on furlough, yet you may find you won’t be able to borrow as much pre Covid-19. Interestingly, some mortgage companies will even take into account total income, where your employer is topping up the Government’s furloughed amount, whilst other lenders will consider mortgage applications on a case-by-case basis. The best advice I can give is, don’t assume what you can or can’t borrow. Speak to a whole of market mortgage broker, to see what is possible – not what your friend on Facebook tells you what you can or can’t borrow.

You only need to put down a 5% deposit

for the property you would like to buy

If you think about it, it’s inconsequential if Doncaster property values drop or not, or if they do drop whether they bounce back quickly (or not as the case maybe) because it’s impossible to know the bottom of the property market. I would say if you find the right Doncaster property for you, at the price that feels right, that will be your home together and you are going live in that Doncaster property for the next five to ten years, it’s not a bad time to be buying.  It’s like waiting for the next piece of tech – there will always be a better model or an assumed better time. We are talking about your home here – a home for you and your partner and family, be that your kids, dog, cat, pet or favourite pot plant because…

Spending money on rent is all wasted money – at least when you buy your own home, you start to pay your mortgage off from day 1

So many first-time buyers use the Bank of Mum and Dad to help with their deposit, yet I have spoken to many parents who wouldn’t want to interfere in their mature children’s life and subsidise day to day expenditure, yet are embarrassed to offer help with the deposit. If you don’t ask …you don’t get!

Doncaster Property News

1,077 Doncaster Families in Limbo Due to Coronavirus

Published by:

An immediate fallout of the Coronavirus pandemic is that it has placed many Doncaster families house moves on hold. Government guidelines state all house buyers and house sellers who are in the process of selling their Doncaster house and moving to a new house must adapt to these temporary arrangements, adjusting their usual practices, agreeing different dates to the house move after the removal of the stay at home actions we are all adopting. In essence, putting the house move ‘on ice’ during lockdown.

However, where the house being moved into is vacant, Government guidance states that you can continue with this transaction although you must observe the Governments guidance on house removals. There are also exceptions allowed where existing accommodation becomes un-fit to live in (e.g. flood or fire) or occurrences of domestic violence. Thankfully, the Government have asked mortgage companies to extend the expiry date of any mortgage offer and the Law Society have implemented a standard legal process for delaying completion dates.

So, what does all this mean for the people of Doncaster?

This means the house moves of 1,077 Doncaster families have been put on hold since the coronavirus restrictions brought the UK housing market mainly to a halt in late March.

These are Doncaster properties where a sale was agreed between October 2019 and February 2020. During the time between sale agreed and completion, the properties are classified as sold subject to contract.  Interestingly, it has been taking upwards of 14 to 19 weeks from agreeing a sale to the move-in over the last few years. This means typically, these 1,077 property transactions mentioned above would have completed between April and June/July 2020 yet have now been placed on hold after the Government asked buyers and sellers to delay house moves where possible.

The value of Doncaster property sold

subject to contract amounts to £177,597,000

The pandemic hit just as the Doncaster market had been experiencing the Boris Bounce following his General Election landslide in December. It appears talking to my team and other agents in Doncaster, just about every buyer and seller is happy to wait until the restrictions are lifted because they had been holding back their house move because of Brexit. Interestingly, many of the Doncaster homeowners in limbo mentioned above are moving up the property ladder, and whilst being ‘in limbo’, it has made them realise more than ever that the homes they are moving from are too small for their needs and they are keen to crack-on with the sale once restrictions are lifted.

Finally, we cannot forget the tenants of Doncaster. Currently there are 59 families looking to make that move, yet unable to as tenants are under the same restrictions as house buyers. This means they too cannot do a physical viewing nor can they move house during lockdown unless where existing accommodation becomes un-fit to live in, e.g. flood or fire or occurrences of domestic violence or the person moving is an essential worker. That doesn’t mean tenants cannot view the property and prepare the paperwork in advance. In fact, many agents think the first Friday after lockdown will be the busiest ever moving day in the history of the UK as there will be a huge pent up demand to move on that date.

For more information on the Doncaster Property Market – please follow me on social media for more up to date articles on the local property market.

Doncaster Property News

7.5% of Doncaster Workers Worked From Home Before Covid-19 – Wonder How Many More Do Now?

Published by:

Before the Covid-19 pandemic hit, 3,728 Doncaster people worked mainly from home, or about 7.5% of Doncaster’s 49,541 workforce (compared to the national average of 14.9%). Yet over the last few weeks, many hundreds, even thousands more Doncaster workers have joined them in their spare rooms or at their kitchen or dining room tables.

Amongst warnings from the Government that some lockdown constraints could stay in place into 2021, businesses are dealing with an unexpected cultural shift in how many of us do our work. Talking to many Doncaster people who have been asked to work from home, for many it has been a pleasant success.

Working from home does have some negatives though. I have found myself still working at 8pm/9pm and beyond as I have forgotten to clock out and whilst many people might think working from home means doing less work, more often than not, the reverse is true for industrious and hardworking employees. When you don’t have that break of the commute the office, the workday can blend into the home life. Talking of commuting, the average British worker has a daily commute of 11.9 miles, whilst locally…

The average daily commute for a Doncaster worker is 9.3 miles

A least working from home, the commute is only to the dining room table or spare bedroom. Speaking to some friends of mine that are new to working from home, they said to me that they can feel out of the office-loop as they miss the ‘water-cooler’ moments or spur-of-the-moment brainstorming session over a brew, it’s tough to reproduce that from home.

Don’t forget to get into your garden (if you have one), stretch those legs. Ensure you are taking advantage of the daily exercise allowance. I see so many people walking around our neighbourhood daily who I haven’t seen before. Let’s hope they keep up the habit once lockdown is removed. You have to admit, it’s quite nice especially as there are far less cars on the road.

Doncaster workers commute 387,497 miles a day to work

That’s all the way to the moon and over half of the way home

 again – every day!

Some feel guilty if they don’t reply to co-worker’s emails or phone calls straight away. My friends stated that they didn’t want their team-mates to wonder if they were taking it easy rather than pulling their weight. The best advice I can give from working with my team is to overcommunicate, and I suggested (as I do to you) to tell their bosses and colleagues what you are doing and share their accomplishments using those video conferencing software packages.

The really hard part is having a dedicated space in your home. Attempt to set up a workspace and make it out of bounds to the rest of your household while you are working (although that is very difficult when you have children, or your partner is having to work from home as well). Is there anything worse than being on an important call to your boss or a client, only to have a delivery driver knocking on the door or having your kids and dogs yelling and barking in the background? It’s a balancing act!

Interestingly, looking at the stats and this internment in Doncaster people’s homes could be a catalyst for people wanting to move home later in the year be it for rent or for sale, thus giving a vital boost to the Doncaster property market. Would it surprise you that…

9,782 Doncaster households are either at full capacity

or officially overcrowded?

The definition of full capacity is when the household has enough bedrooms for the occupants. The definition is set out in ‘The Allocations Code of Guidance’, which recommends that the ‘bedroom standard‘ is adopted as a minimum measure of overcrowding.

This means one bedroom should be provided for

  • each adult couple.
  • any other adult aged 21 or over.
  • two adolescents of the same sex aged 10 to 20.
  • two children regardless of sex under the age of 10

That means 21.16% of Doncaster households do not have

a spare bedroom for their occupants to work from

(compared to the national average of 16.64% of household)

Even worse, I suspect there are many Doncaster families with two teenage boys or two teenage girls, and guidance is suggesting they can share a bedroom – do they live in the real world? This means there are probably even more Doncaster households that are at full capacity or even more overcrowded than the stats suggest, meaning plenty of people will be working from dining room tables (if they have a dining room that is) and quite probably the kitchen table … a recipe for even more people wanting to move home later in the year.

So, I don’t know how many Doncaster people are working from home, yet looking at the newspapers the consensus is that it has at least doubled. For all the reasons mentioned in this article, this looks like we could have a pressure cooker scenario of demand for Doncaster property once the restrictions have been fully lifted.

Meanwhile, a message to all you new homeworkers in Doncaster. Working from home is a tough one. The best advice I can give is to change your way of thinking. I know many friends who are missing their offices right now, yet is office-working really so great? Consider the relentless risk of disturbance when you are trying to finish that important project, the recirculated air conditioning with its germs, the shortage of quiet meeting rooms and as I have already mentioned before, the drawn-out and expensive commute.

Try breaking the cycle that being at work – time is productive and not being at work – time is only leisure. The new way of thinking that accepts the concessions of home-working and discards the traditional 20th Century conventions of office working. Yes, the downside is that as humans we are very sociable creatures and we acutely feel the need to be in face to face contact with each other often, meaning lockdown is quite tough for many of us. Yet, if we are able to connect the positive prospects for the future working and the situation that Covid-19 offers us, then together as a society we should be able to find the right balance between working from home and coming together. In the meantime, be considerate of each other and keep safe we are all in this together and we will all overcome this together.

Doncaster Property News

New Electrical Safety Regulations could cost each Doncaster Landlord £350+ in the next 13 months

Published by:

Doncaster Electricians are going to very busy in the next 13 months as they will have to test the electrics of every private rented property in Doncaster and potentially may have to install new fuse boards and wiring in some circumstances.

New regulations set out in the Housing and Planning Act 2016 gave the Secretary of State of Ministry of Housing, Communities and Local Government the authority to compel private landlords to test their fixed electrical systems.  Currently, these responsibilities only apply to licensable Houses of Multiple Occupancy (where a house is split into individual rooms) yet these new rules will come into force for any new tenancy or renewal of any private rented home from the 1st July this year (2020).

All new tenancies from the 1st July 2020 will need

to have had their electrics tested

The new IET electrical regulations enforce a duty on all private landlords to ensure that their electrical installation complies with the 18th edition (from 2018) of the IET wiring regulations.  Therefore, any property built before the middle of 2018 will have electrics to 17th edition regulations (or a previous edition).  It might not sound a lot, but the 18th edition regulations were a substantial update over the 17th edition which were published in 2008.  Now, just because a rental property was built with its electrics up to the prevailing 15th, 16th or 17th regulations at the time of building, it doesn’t necessarily mean it will automatically fail this test.

A qualified electrician will need to test your rental property against the new 18th Regulations (as that is standard practice in the industry), which will cost in the region of £150 plus VAT for a small one bed flat through to £250/£350 plus VAT for a large 4 or 5 bed house (again these are ballpark figures).  The Electrician won’t fail a property who complies with a previous regulation (e.g. 16th or 17th) unless there is a good reason to do so.  No doubt there will be further clarification notes issued before the implementation date to sort this out – and I will keep you informed in this blog.

Electricians are telling me any property built after 16th Regulations came into force in 1991 (and they deem it to have failed the test) will probably require a new fuse board and other minor works at an average cost of around £355 per property, although it could be as low as £300 and up to £500 per property to upgrade, meaning…

The potential cost of upgrading every Doncaster buy to let

Home to 18th edition regulations (if they all failed) could total £2,988,745

Some Doncaster landlords might think they can circumnavigate the regulations by renewing the fixed term every 6 months, yet the Government have  protected against that by stating,  irrespective of what tenancy is in place, all rental properties by the 1st April 2021 must have been tested against  the 18th Regulations standard.

My concern is all 8,419 rental properties in Doncaster will need

their electrics testing before the Spring of 2021 and that there are only 60 qualified electrician firms within a 3-mile radius of Doncaster to do all these tests and work

Doncaster landlords must give any new Doncaster tenant a copy of the inspection report before they start the tenancy.  Also, Doncaster landlords must give a copy of the report to any prospective tenant who asks for it in writing within 28 days of a request during the tenancy itself.  In practicable terms, from the 1st April 2020, this means that the Electrical Report will need to be ready and work done when the property is placed onto the market for rent.

The local authorities are tasked with policing this – and they too have the right to request to see copies of any Electrical Report and works done.  They can force a landlord to comply with the legislation and also may issue a civil penalty up to a maximum of £30,000.

Remarkably, if the letting/managing agent doesn’t organise the Electrical reports, there is nothing in the legislation which allows a landlord to pass the blame onto their letting/managing agent.  That means Doncaster landlords could be at significant risk from dishonest or badly organised letting agents who won’t/don’t sort the electrics out, so my advice to all Doncaster landlords is to speak to your letting/managing agent right now and plan ahead.  Rest assured, we have had plans well in hand for our Doncaster landlords since last year, because I knew this legislation was on its way.

The regulations are obviously important for the safety of tenants and, in essence, these new laws and regulations will mean new accountabilities for the private rented landlords with not much time in which to get prepared and be compliant.  If you are worried about these new rules or don’t have ultimate confidence in your current agent, then please do pick up the phone and let’s have an informal chat about how we can help you with this issue, you don’t want to fall the wrong side of the law do you?

Doncaster Property News

What Will Be the Effect of Covid-19 on the Doncaster Property Market?

Published by:

So now we are only a matter of a couple of weeks into lockdown, yet can you believe it I am still speaking with agents from all over the UK, and I do not jest, properties are still being sold and let even in these unprecedented times. Yet I would like to address the question I have been asked many times recently “What will be the effect of Covid-19 on the Doncaster property market in the short, medium and long term?”

These are obviously unchartered times, yet we can look back in history to give us clues and more recently, the bounce back that is happening in China (and their property market). The Covid-19 situation will touch all parts of the Doncaster and UK property market, and so in this article, I will be considering its impact on Doncaster property prices, transaction numbers (i.e. the number of people that move home), Doncaster buy-to-let landlords and finally tenants and the rents they pay.

The Three Issues with the Virus and the Property Market

The first issue has to be the lockdown itself. Limitations on society’s capability to go about their normal working life will hinder the house buying/selling process. The practical difficulties of moving home and expediting the property sale; from the viewing itself, the Energy Performance Certificate being carried out, the surveyor checking the property for the lender etc., are all issues. Yet the estate agency and legal industries are coming up with some innovative solutions, from virtual viewings to legally watertight delayed completions, where the old owners stay in the house under licence during the lockdown, and the move will take place after the lockdown period.

Secondly, the UK housing market has never liked ambiguity or uncertainty and this virus will play a part on people’s feelings and sentiment towards moving home (or not).

Thirdly and finally, there is the issue with the money people have, be that wages, whether they have a job (or not) and their overall affluence, on the back of the of 29.4% stock market decrease in the last two months (correct at the time of writing this article).

The Background Economics

The economy drives everything including the housing market – and the overall measure of the economy is the Gross Domestic Product figure or the GDP (the GDP is basically the total value of all the goods and services created by the whole UK economy in one year and it currently stands at £2.15 trillion).

Looking at what has happened in China, most economists believe the UK will experience a short, yet sharp economic shrinkage in Q2 2020 with GDP set drop by 4% to 7% in the one quarter depending on the extent of the lockdown. Then GDP is expected to level out in Q3 2020, and then a significant ricochet (how significant depends who you listen to) in Q4 2020/Q1 2021.

Now putting politics aside, I have been impressed with Boris Johnson’s response with wide-ranging support for the UK economy and businesses, and whilst it’s far from perfect, help has been in the guise of the Bank of England reactivating its Contingent Term Repo Facility increasing liquidity and keeping the money markets going (important as that was what the issue was with the Credit Crunch), business grants and Government backed loans, together with telling lenders to take a compassionate line to those unable to make mortgage holidays and finally the furloughing of staff, thus allowing a quicker recovery in the economy.

What Will Happen to Doncaster Property Values?

There are a few doom-monger economists predicting Armageddon, yet I feel a lot of that is to get column inches in the newspapers. The Doncaster property market is less exposed than it was in the previous four historical property crashes in 1972, 1979, 1988 and 2008. This is because of the following reasons…

  1. Before each of the four crashes, there had been a significant upward spike in property values prior to the crash. We have not experienced that over the last 12 months.
  2. Mortgage interest as a percentage of household income (nationally) was a massive 32% in 1988, 18% in 2008 – yet now it stands at just under 8% (because interest rates are so low).

This is all assuming we don’t have high unemployment. Yet historically, it has been proved house price falls are not caused by high unemployment. It is in fact, that it happens the other way around, that a housing downturn can (not always) create unemployment – yet with the Government furloughing people – this shouldn’t be such so much of an issue.

The value of an average Doncaster home currently stands at £164,900

As I will explain in the next section, the biggest effect will be on transaction numbers, not on property values. I suspect in the summer there will be some Doncaster homeowners who will want to sell at all costs, and not care what price they achieve. Savvy property buyers will swoop on those properties and drive a hard bargain, meaning there will be some short-term localised reductions in what properties sell in the summer for those that want to sell at any cost.

Yet, these reductions will artificially amplify the property value indexes in a downward direction in the autumn (the ones the newspapers mention when they talk about property value changes) because they will be based on the very low levels of property transactions that will take place in the summer (because there is always a lag). Interestingly we have seen this many times over the years because just about every spring for the last 20 years, we have often seen negative or very subdued figures in the House Price Indexes in the months of January/February. This is because of the lack of property sales on the run up to Christmas a few months before. To give this all some context, property values in Doncaster are 26.9% higher than 10 years ago – and nobody was complaining about those. To give you an idea what that is in pound notes…

The average Doncaster home has risen in value by £35,000 in the last 10 years

The swiftness of recovery in the autumn/winter from that point will depend on the state of the wider economy. With the measures (mentioned above) implemented by the Government, household incomes should continue to remain steady, and whilst holidays and luxuries may be shelved for a year, those Doncaster people who have been locked up in their Doncaster homes for weeks on end, might just consider making that move later in 2020, taking advantage of the ultra-low interest rates. This in turn ought to encourage a return to sturdier levels of house-price growth in the medium term (2021/2 onwards).

The Number of People Moving Home in Doncaster Will Significantly Drop in 2020

I foresee the number of people moving home (i.e. the number of household transactions) in Doncaster will significantly drop in 2020. This will only really affect the pockets of Estate Agents (as they charge their fee when people move – so if less people are moving, they will earn less) and the people associated with house moving.

Even with virtual viewings and creative legal work, the number of property transactions will be considerably obstructed over the next couple of months. Interestingly, in the Chinese cities that removed the lockdown first (in the middle of March) I have read in the press the number of property transactions has already bounced back to around the half of the medium-term average after only three weeks!

Interestingly, there was already a good level of pent-up demand in the property market before we went into lockdown. This was caused by people delaying their move because of the ‘B’ word (Brexit) over the last 12/18 months, which interestingly saw a massive upsurge with the Boris Bounce in December/January and February.

Worse case scenarios suggested by economists state transactions will drop to 20% of the normal 10 year average number of transactions until the end of Q3 2020, return to 65% by Q1 2021, increase to 100% by the end of Q2 2021 and then 120% in 2022, yet most sensible economists (and often those that stay out of the limelight and don’t go chasing headlines), believe transactions will reduce to 45% to 50% of the 10 year average until the end of Q3 2020, improve to 80% in Q4 2020 and 100% by Q2 2021 with potential for higher transactions numbers in the order of 110% to 130% in 2022.

It all sounds rather grim doesn’t it, until you dig deeper…

Remarkably, it must be stated the number of property transactions over the last 12 months in Doncaster are only at 80.1% of the 10-year Doncaster average … and this was before Covid-19

In the last 12 months, there have been 2,990 property transactions in Doncaster, compared to a 10-year average of 3,730 per year

Yet, let’s not forget, these predictions are from the 10-year long term average, and as it can quite clearly be seen, transaction levels are already at a low, even without Covid-19 and nobody was complaining about that apart from estate agents and removal vans!

With the number of Doncaster people moving being held back, I would anticipate seeing a build-up of supressed demand for Doncaster property from Covid-19, on top of the pent-up demand from Brexit, especially with many Doncaster families realising their Doncaster homes aren’t large enough to contain them as the lockdown experience will push many Doncaster households to move in late 2020 or possibly 2021 … and as every economics student knows, when demand outstrips supply (because we can’t all of a sudden build more houses), prices go up.

How Will This Affect Doncaster First Time Buyers, Those Trading up, Downsizers and Landlords & Tenants?

FIRST TIME BUYERS – I believe the banks will be a little more wary when lending money to first buyers with their need for large percentage mortgages. The demand for the Help-to-Buy Scheme has been increasing year-on-year, yet its pace of growth has been declining in the last couple years – I foresee demand accelerating in the later parts of 2020. There could be some good deals to be had from new homes builders looking to release cash in Q3 and Q4 later in the year? Maybe the Bank of Mum and Dad might be able to help, yet they too will be stretched, although they might be able to release equity down the generations to their children and grandchildren (see the downsizers section).

TRADING UP – Many Doncaster homeowners in their starter homes will be going stir-crazy in their smaller homes, and with interest rates at ultralow levels, some Doncaster homeowners might forgo holidays and entertaining, and consider putting their weight and finances into moving up market in Doncaster. That might also be easier, if the Doncaster downsizers start to move as well.

DOWNSIZERS – There are many Doncaster retired people, rattling around their large Doncaster home, with their children having flown the nest and possibly moved away years ago. These Doncaster people don’t need to move, and so are considered ‘optional home-movers’ – yet the Covid-19 crisis could be the catalyst to make them finally move to be nearer their family around the UK – releasing good sized Doncaster family homes onto the property market for the ‘Trading Uppers’ to buy.

LANDLORDS & TENANTS – I suspect there won’t be many Doncaster tenants moving in the next three to four months. Tenants have the peace of mind with a cessation on evictions until the summer and buy-to-let mortgage payment holidays for buy-to-let landlords whose tenants are in financial difficulty (note the tenants have to give proof to their landlord that they are unable to pay with their applications to Universal Credit etc., etc.,). There might be small reductions in average rents, as some Doncaster landlords undertake to help their tenants in these chastened financial times, yet for most people, rents will continue to be paid, making no major impression on rental prices in 2020.

Let’s not forget, the level of average rents is directly related to tenants wages and I can’t see why this relationship between rents and tenants wages should break after Covid-19, so as wages are held back in the latter parts of 2020 the growth rents over the next year will be subdued. Finally, those Doncaster buy-to-let landlords sitting on cash might be able to bag a bargain in the summer from a desperate seller, before normality returns in Q3 and Q4 2020.

Conclusion

We are in unchartered territory, yet for the reasons explained in this article and, assuming there are no other seismic shocks in the coming weeks and months – in a few years’ time – this will be seen as a bump (albeit a rather big bump) – another part of the roller coaster ride of the UK and Doncaster property market.

Doncaster Property News

The Rights, Obligations & Responsibilities of the 3,409 Doncaster Landlords & 8,419 Tenants During the Virus Outbreak

Published by:

The last three or four weeks, unquestionably, have been one of the most life-changing times we have seen since WW2. The imminent threat of the Coronavirus has taken over the world, the UK and Doncaster and will challenge you, our families, our relationships and test us all.

The drive of this worldwide action of social distancing is not just to stop you from getting ill with the virus; the bigger drive is to slow down the development of this virus so the NHS will not become overwhelmed with those who are most likely to need hospital care. Yet the issue of social distancing has certainly raised many questions around the landlord/tenant/agent relationship, so in this article I wanted to share with all the 3,409 Doncaster landlords their rights, obligations and responsibilities to their Doncaster tenants. I also wanted to highlight the rights, obligations and responsibilities of the 8,419 Doncaster tenants in return.

These will be trying times for Doncaster landlords and Doncaster tenants alike, so let’s start…

A landlord has the responsibility to ensure the property is fit for habitation, so what if the Doncaster landlord/agent is incapable of undertaking an emergency repair (or say the annual gas safety check) because the tenant is self-isolating or actually has the virus? The answer is the landlord should use their best efforts to fix the problem if it’s an urgent repair, yet if the landlord/agent are unable to do so they should record this fact and that it is related to the Coronavirus epidemic. One should then re-try as soon as is possible and appropriate, having full respect for information on self-isolation, personal-safety and social-distancing and ensure that you make a written note for future issue. My advice is that you or your agent (as we are with our Doncaster tenants) need to uphold good lines of communication with the tenants touched by these current circumstances, so they are clear on what action you are taking and the timescales for this.

Yet at the same time, there will be very few situations in the coming weeks when the contractors who the landlord/agent use will also be in self-isolation, meaning a handful of the 8,419 Doncaster tenants might have to wait for repairs to be sorted. We have some excellent Doncaster contractors with their own backup plans and so together we will use our best endeavours to find an alternative contractor to fix any issues. If your agent has issues, then maybe we can help – do call me. Yet whatever you do, if this occurs, document everything and that it is related to the Coronavirus epidemic.

The total rent paid by Doncaster tenants

each month is £4,041,100

It’s true the UK government has demanded that building societies and banks give a three-month mortgage holiday to those landlords that are unable to make mortgage payments. This is not free cash, the mortgage payments are basically postponed with interest to be collected at the end of this crisis, meaning your obligation as a Doncaster tenant to pay the rent still exists. HM Government is offering employers an 80% wage support with the furloughing to avoid having to make people redundant and the rent for your Doncaster rental home will be treated in the same way as the landlord’s mortgage.

The average Doncaster rental payment currently

stands at £480 per month

Therefore, if you are incapable of being able to pay your rent, it will still build up and accumulate during this virus predicament and you will need to start a payment plan to pay it back on top of your normal monthly rent.  So if your rent is £480pm and you have already been living there for 2 months into a 12 month tenancy, there is still £4,800 to be paid over the next 10 months, so should you not pay anything for 3 months your rent would increase by 43% a month for the last seven months or you face eviction due to arrears (remember arrears have been put on hold – not removed during the virus outbreak). One option, subject to status and agreement by all parties, could be to renegotiate a new longer lease to pay off the arrears over a longer period. Again, the point here is communication from all sides – making sure there are no nasty surprises.

So, if you are in this predicament, there is a lot of help accessible from the HM Government including Universal Credit or Employment Support as soon as possible to escape any interruptions to your payments. Remember, your Doncaster landlord will need proof of your Universal Credit or Employment Support claims to give to their mortgage company to be able to start the mortgage holiday, so my advice to all the 8,419 Doncaster tenants is keep in contact with your agent to ensure your Doncaster landlord doesn’t suffer any avoidable hardship (which ultimately may end up with your home being repossessed because the mortgage payments were missed because you were unable to furnish the landlord with your own claim documents).

Communication is the #1 priority here. Whilst most agent’s premises are closed including our own, all are open for telephone and email enquiries, with staff working from home. This is a fast-changing time for everybody, for the 3,409 Doncaster landlords and 8,419 Doncaster tenants correspondingly and we will be ever vigilant to oversee the financial and monetary backdrop in the coming months.

These are going to be tough times for the people of Doncaster (and the world), financially and mentally; yet together we will come out of this stronger. By working together, working in partnership, again keeping lines of communication open with regards to your finances and your housing, by keeping safe and protecting our families and most of all by being kind to each other … we will get through this, a little battered and bruised – yet hopefully better human beings for it?

Doncaster Property News

Doncaster Property Market

Published by:

What is going to happen to Stamp Duty on 11th March?

If you are buying a home in England costing more than £125,000, you will have to pay Stamp Duty Land Tax on the purchase of your new home. In the provinces, it’s called something slightly different, so if you are buying a property in Scotland over £145,000 you will pay Land and Buildings Transaction Tax (LBTT) and for any property over £180,000 in Wales you will pay Land Transaction Tax (LTT). Whatever the tax is called, it is an important factor when moving, when you consider that

Last year the average UK house buyer paid

£10,150 in Stamp Duty Tax alone

Now as soon as the date for Rishi Sunak’s budget was set for 11th March 2020, conjecture in the Press began about what stamp duty changes he may disclose on budget day. The Chancellor only sets the budget for England and Northern Ireland, yet this is just as relevant for Wales and Scotland. Even though Derek Mackay, the Scottish Finance Secretary said on 6th February he has no plans to change Scotland’s version of Stamp Duty (LBTT), more often than not, Stamp Duty rule changes in England are often adopted in Wales and Scotland at a future date.

Some are asking if Sunak will impose what was promised in the Conservative manifesto with the 3% additional Stamp Duty surcharge on non-UK resident buyers? I have certainly heard in the Estate Agent community that foreign buyers are trying to rush through their sales in central prime London (Park Lane/Mayfair etc etc) before 11th March to ensure they don’t get hit with a new tax. Or will he go even further, and will we see a reappearance of Boris Johnson’s hitherto specified aim of eliminating Stamp Duty below £500k, consequently theoretically saving homebuyers many thousands of pounds?

However, opinions are divided on what, if anything, will be included in the budget.

Most believe that the extra 3% for foreign nationals is an almost certainty, and if it isn’t implemented straight away, it will be in the Autumn Statement. Many believe the Chancellor could also decide to repay the favour to those in the North who turned the Election map ‘blue’ on the evening of 12th December with actions to enhance the housing market north of the M62 with stamp duty changes. The best way he could do that is to raise the threshold from the current £125k.

When Boris ran for Tory leadership back in May 2019, he said that he wanted to expand the threshold at which you begin paying stamp duty from £125k to £500k, which when you consider 7 out of 8 residential sales in 2019 were for homes below £500k, that would have a considerable effect. If the Stamp Duty threshold had been raised to £500k in 2019, then 700,400 homebuyers in England would not have paid any Stamp Duty Tax.

98.5% of Doncaster properties sold last year were below £500k

Of the 5,896 properties sold in the last 12 months in Doncaster, only 88 of those properties sold were over £500,000 (interesting when compared with Greater London where 44.9% of properties were below the £500k level).

Yet the cost to the HM Treasury would be significant. If all properties below £500k were exempt, the government would lose £2.22bn in tax receipts according to Savills. Of course, this could be made up with extra tax on empty properties or increasing the second homes Stamp Duty levy from the current 3% to say 5%, which would raise an additional £1.12bn on top of the current £1.68bn it raises for the Treasury, yet it would have a negative effect on buy-to-let landlords buying additional homes.

What almost unquestionably won’t happen is the earlier idea of switching the Stamp Duty liability from homebuyer to home seller

this would stall the property market, would probably cause political fallout among 688,300 homebuyers who paid Stamp Duty last year alone, make homes ‘appear’ more expensive as house sellers would inflate the asking price to try and recoup some of the tax, yet ultimately could be seen as ‘re-arranging the deckchairs on the Titanic’.

The 3% additional levy for foreign buyers is almost certain (of which we don’t get many in Doncaster – as they tend to buy in prime London areas which is of course the City of Westminster and the Royal Borough of Kensington & Chelsea, and parts of the boroughs of Hammersmith and Fulham, and Camden), yet I have a feeling that ultimately the Government doesn’t want to rock the boat on the wave that is being rode by the property market on the ‘Boris Bounce’ since December. I also doubt any changes will be made to first time buyer Stamp Duty relief, as 22% of all property transactions in 2019 were to first-time buyers, and whilst it cost the Treasury (or saved the first-timer buyers) a total of £539m in Stamp Duty relief (an average of £2,411 each), the Government are keen for first time buyers to get onto the housing ladder.

Ultimately, we can only wait until Mr Sunak opens his red leather box on 11th March to find out what will happen. I will of course report back after 11th of March on what (if any) changes to the tax regime will affect the Doncaster property market going forward.

Doncaster Property News

Doncaster Property Market

Published by:

… the Rollercoaster of the last Decade

Ah the 2010’s, the tens, the teens – I am not sure what we are supposed to call the decade that has just gone. No matter what it was called, the last decade was a tough one, so does it really matter that we never really got around to giving it a name? Some might say, whatever one calls it, coming to an end is the most fundamental job any teen (and I refer to all humans) could possibly do!

The last two decades have certainly been tumultuous. At least for this decade we have just started we can say, in a few decades time, things like “That style is so ’20s” and fellow humans will essentially know what you are talking about. If you come of age in this decade, you will be a ’20s child and we will discuss ’20s politics and ’20s style and all the things that hadn’t been created on the 31st December 2019; the time that two nameless decades ended and how finally there was something everyone in the UK could agree on: the name of the decade. Hey – it’s a start!

So, what has happened to the local Doncaster property market in the last nameless decade?

The average Doncaster property has risen in

value from £137,000 to £160,400 in the last 10 years

… meaning each Doncaster homeowner has seen a profit of £45.00 per week for those last ten years. Rolling the clock back to the start of the last decade January 2010, and the economy (and housing market) were recovering from the Credit Crunch and the worldwide financial crisis. A decade on and things feel a little different. If you bought a Doncaster home over the past 10 years, things have certainly changed.

Doncaster property values rose 17.1% on

average over the last decade

yet taking inflation into account, they fell in real terms by 15.9 per cent.

Compare that to a 42.5% rise in the ‘80s, a 13.2% drop in the ‘90s and rise of 62.8% in the 2000s in real terms. So, in real terms after inflation, there has been a decrease in house prices in Doncaster in the past decade making homes today more affordable than a decade ago.

On average, 1.12 million homes were sold each year last decade, although that was 26.4% less than the decade before (the noughties) when an average of 1.52 million properties were sold annually.

So, what are the underlying issues in the Doncaster (and wider UK) property market when, in real terms, property is essentially cheaper than a decade ago?  Whilst the newspapers tell us first time buyers can’t get on the housing ladder and the housing market is in gridlock – what is the problem? Well I am a firm believer in the adage ‘bad news sells newspapers’ because the truth is something completely different as 32.7% of homes last year were bought by first time buyers compared with only 22.8% in 2009.

Yet, there are still issues; mainly a persistent lack of not building enough new homes which curtails the supply and choice of property; but stagnated wages, stiffer mortgage rules and homeowners not moving as much as previous generations are all contributing to the problem. In the UK, the number of homeowners who moved in 2019 was around 14% higher than in 2009, yet this was still just under 50% lower than the average for the noughties. It’s all up and down like a rollercoaster!

My thoughts for the future are based primarily on what will happen to interest rates. Throughout the last decade, the Bank of England base rate was 0.5% at the start and was cut to 0.25% in the Summer of 2016. Even with the increase to its current level of 0.75% in the Summer of 2019, it has made borrowing money on a mortgage very cheap indeed. Nonetheless, bank/mortgage rates will rise again and I am concerned about the effect upon the housing market. Now it won’t be as bad as previous times when mortgage rates went up in the 1970’s and 1980’s (with mass repossession) because the tougher mortgage rules introduced in April 2014 will have ensured borrowers were stress tested on their affordability if interest rates shot up.  Most borrowers have been stress tested on their affordability to mortgage rates of up to 6% – 6.5%, which would obviously squeeze household disposable incomes yet stop people losing their homes due to repossession. Whilst I am not giving advice, just personal opinion, if you are one of the 29.3% of homeowners who isn’t on a fixed rate – maybe you should seriously consider doing so?

The 2020’s will be an interesting decade – and if you want to be kept up to date with what is happening in the Doncaster (and wider UK) housing market – follow me and this blog to read similar articles to this one.