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An extension could add £30,025 to the value of your Doncaster home

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As our families grow bigger the need for more space, be that bedrooms or reception rooms, has grown with it. Also, as our older generation lives longer and nursing home bills continue to rise quicker than a rocket on the 5th of November  (the average nursing home bill in the area being £534.58 per week) many families are bringing two households into one larger one.

So, should you move somewhere larger, or extend your Doncaster property to make it large enough for you and your family? In some circumstances the choice has been made for you. If you live in an apartment with no garden, there isn’t much of an opportunity of making it larger. But if you have a house with a garden or an attic with sufficient headroom, extending your home becomes a real prospect.

Even if it makes more sense to extend or move, the choice hangs on a number of different dynamics – your future plans, money (both saved and access to finance), in what way you are emotionally attached to your home, the particular area of Doncaster you live in and finally, the type/style of house you prefer.

Interestingly, the average British home is 968 sq.ft, which as you can see from the table, is in the middle of developed nations when it comes to the size of a property. Of the 1.11m homes sold in 2016 in England and Wales, the average floor area of the houses was 1,119 sq.ft – that’s about an eighth the size of an Olympic sized swimming pool. Apartments averaged 530 sq.ft that’s just over ten times bigger than an average garden shed. Looking at apartments and houses together, the average size of properties sold in England and Wales 968 sq.ft  – are slightly smaller than the European average, and much smaller than households in the US.

So back to the question in hand.. extending does mean you will have a lot of inconvenience whilst the work is being carried out. The location of your Doncaster property, the quality of construction, what type of room(s) you want to add, your plot, neighbouring building lines, planning regulations and the overall demand for your type of Doncaster home, will make a vast difference to the financial repercussions of extending versus moving.

A medium-sized 270 sq.ft single storey extension (say around 17ft x 16ft) will add on average £30,025 to the value of a property in Doncaster

It’s important to note the end result of the extension needs to be a sensible and realistic home. A two bed semi-detached house extended to a four bedrooms with no lawn or driveway, or a home with outsized reception rooms downstairs and miniscule bedrooms upstairs, could be problematic if  and when you come to sell your home in the future. Irrespective of whether your strategy is to live in your extended home for a long time, you will want to side-step outlaying a lot of money on costly building work that will make it tougher to sell.

In terms of what it would cost to build an extension, you can expect to pay on average between £140 to £200 per sq.ft, depending whether the extension is a single or double storey extension and other factors including finish and type of extension (note – I have seen it cost a lot more than these figures – so please speak with a builder) … So taking a mid line figure, that same 270 sq.ft extension on your Doncaster home would cost on average £55,080.

However, moving means there are substantial costs incurred – Estate Agency fees, Removal Van, Survey Fees, Legal fees and Stamp Duty on the property you are buying. Neither option is the obvious choice and comparing the costs of extending your Doncaster home to that of moving is not a stress-free undertaking.

How realistic each option is will probably come down to one thing .. your mortgage provider. You will need a considerable sum of equity in your Doncaster home before you can think of increasing your mortgage more, because most lenders will require you to have at least 10% to 20% equity left in your property after the extension or move has been done.

The best advice I can give .. don’t assume anything …. get advice and opinion from builders, mortgage brokers, architects, mortgage people and of course… an agent. Look at your options and make an educated decision with all the superficial and objective facts in front of you.

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Buy to let deal of the day

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Our buy to let deal of the day is here. Natalie is in Old Rossington, outside a 2 bedroom flat for sale on the market with Portfield for £45,000. Rental income is £400 pcm which gives you a yield of 10.6%. This is a first floor flat and a excellent opportunity. The link to the property is below as is the video. Make sure you keep a eye on our YouTube to see our buy to let deals throughout the week.

http://www.rightmove.co.uk/property-for-sale/property-70878680.html

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Buy to let deal of the day

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Our buy to let deal of the day is here. Natalie is in Bessacarr, outside a 2 bedroom flat for sale on the market with Reeds Rains for £87,500. Rental income is £525 pcm which gives you a yield of 7.2%. The link to the property is below as is the video. Make sure you keep a eye on our YouTube to see our buy to let deals throughout the week.

http://www.rightmove.co.uk/property-for-sale/property-70430669.html

 

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Buy to let deal of the day

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Our second buy to let deal of 2018. Natalie is in Hexthorpe, Ellerker Avenue, outside a 2 bed terraced house on the market with Preston Baker for £50,000. Rental income is £400 pcm which gives you a yield of 9.6%. The link to the property is below as is the video. Make sure you keep a eye on our YouTube to see our buy to let deals throughout the week.

http://www.rightmove.co.uk/property-for-sale/property-48712428.html

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Our first buy to let deal of 2018

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The first of many buy to let deals of 2018. Natalie is in Balby, Sylvester Avenue, outside a 3 bed terrace with converted loft on the market with Hart for £50,000. Rental income is £450 pcm which gives you a yield of 10.8%. The link to the property is below as is the video. Make sure you keep a eye on our YouTube to see our buy to let deals throughout the week.

http://www.rightmove.co.uk/property-for-sale/property-42748953.html

 

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One in 33 rental properties in the Doncaster area will be illegal in 2018

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As the winter months draw in and the temperature starts to drop, keeping one’s home warm is vital. Yet, with the price of gas and electricity rising quicker than a Saturn V rocket and gas, oil and electricity taking on average 4.4% of a typical Brit’s pay packet (and for those Brit’s with the lowest 10% of incomes, that rockets to an eye watering 9.7%), whether you are a tenant or homeowner, keeping your energy costs as low as possible is vital for the household budget and the environment as a whole.

For the last 10 years, every private rental property must have an Energy-Performance-Certificate (EPC) rating.  The property is given an energy rating, very similar to those on washing machines and fridges with the rainbow coloured graph, of between A to G (A being the most efficient and G the worst). New legislation comes in to force next spring (2018) for English and Welsh private landlords making it illegal to let a property that does not meet a certain energy rating. After the 1st of April next year, any new tenant moving into a private rented property or an existing tenant renewing their tenancy must have property with an energy performance rating of E or above on the property’s EPC and the new law will apply for all prevailing tenancies in the spring of 2020. After April 2018, if a landlord lets a property in the ‘F’ and ‘G’ ratings (i.e. those properties with the worst energy ratings) Trading Standards could fine the landlord up to £4,000.

Personally, I have grave apprehensions that many Doncaster landlords may be totally unaware that their Doncaster rental properties could fall below these new legal minimum requirements for energy efficiency benchmarks. Whilst some households may require substantial works to get their Doncaster property from an F/G rating to an E rating or above, my experience is most properties may only need some minor work to lift them from illegal to legal. By planning and acting now, it will mitigate the need to find tradespeople in the spring when every other Doncaster landlord will be panicking and paying top dollar for work to comply.

Whilst there is money and effort involved in upgrading the energy efficiency of rental property, a property that is energy efficient will have greater appeal to tenants and other buy-to-let landlords/investors and this will enable you to obtain higher rents and sale price (when you come to sell your investment).

So, how many properties are there in the area that are F and G rated .. well quite a few in fact. Looking at the whole of the Doncaster Metropolitan Borough Council area, of the 18,774 privately rented properties, there are ..

443 rental properties in the F banding
124 rental properties in the G banding

That means just over one in 33 rental properties in the Doncaster and surrounding area has an Energy Performance Certificate (EPC) rating of F or G. From April next year it will be illegal to rent out those homes rated F and G homes with a new tenancy.

Talking with the Energy Assessors that carry out our EPC’s, they tell me most of a building’s heat is lost through draughty windows/doors or poor insulation in the roof and walls. So why not look at your EPC and see what the assessor suggested to improve the efficiency of your property? I can find the EPC of every rental property in Doncaster, so irrespective of whether you are a client of mine or not, don’t hesitate to contact me via email (or phone) if you need some guidance on finding out the EPC rating or need a trustworthy contractor that can help you out?

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33.6% Drop in Doncaster People Moving Home in the Last 10 Years

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I was having a lazy Saturday morning, reading through the newspapers at my favourite coffee shop in Doncaster.  I find the most interesting bits are their commentaries on the British Housing Market.  Some talk about property prices, whilst others discuss the younger generation grappling to get a foot-hold on the property ladder with difficulties of saving up for the deposit.  Others feature articles about the severe lack of new homes being built (which is especially true in Doncaster!).  A group of people that don’t often get any column inches however are those existing homeowners who can’t move!

 

Back in the early 2000’s, between 1m and 1.3m people moved each year in England and Wales, peaking at 1,349,306 home-moves (i.e. house sales) in 2002.  However, the ‘credit crunch’ hit in 2008 and the number of house sales fell to 624,994 in 2009.  Since then this has steadily recovered, albeit to a more ‘respectable’ 899,708 properties by 2016.  This means there are around 450,000 fewer house sales (house-moves) each year compared to the noughties.  The question is … why are there fewer house sales?

To answer that, we need to go back 50 years.  Inflation was high in the late 1960’s, 70’s and early 80’s.  To combat this, the Government raised interest rates to a high level in a bid to lower inflation.  Higher interest rates meant the householders monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner’s household budget. However, this wasn’t all bad news since inflation tends to erode mortgage debt in ‘real spending power terms’.  Consequently, as wages grew (to keep up with inflation), this allowed home owners to get even bigger mortgages.  At the same time their mortgage debt was decreasing, therefore allowing them to move up the property ladder quicker.

Roll the clock on to the late 1990’s and the early Noughties, and things had changed.  UK interest rates tumbled as UK inflation dropped.  Lower interest rates and low inflation, especially in the five years 2000 to 2005, meant we saw double digit growth in the value of UK property.  This inevitably meant all the home owner’s equity grew significantly, meaning people could continue to move up the property ladder (even without the effects of inflation).

This snowball effect of significant numbers moving house continued into the mid noughties (2004 to 2007), as Banks and Building Society’s slackened their lending criteria.  [You will probably remember the 125% loan to value Northern Rock Mortgages that could be obtained with just a note from your Mum!!].  This meant home movers could borrow even more to move up the property ladder.

So, now it’s 2017 and things have changed yet again!

You would think that with ultra-low interest rates at 0.25% (a 320-year low) the number of people moving would be booming – wouldn’t you?  However, this has not been the case.  Less people are moving because:

(1) low wage growth of 1.1% per annum
(2) the tougher mortgage rules since 2014
(3) sporadic property price growth in the last few years
(4) high property values comparative to salaries (I talked about this a couple of months ago)

What does thistranslate to in pure numbers locally?

In 2007, 6,384 properties sold in the Doncaster City Council area and last year, in 2016 only 4,235 properties sold – a drop of 33.66%.

Therefore, we have just over 2,150 less households moving in the Doncaster and surrounding Council area each year.  Now of that number, it is recognised throughout the property industry around fourth fifths of them are homeowners with a mortgage. That means there are around 1,762 mortgaged households a year (fourth fifths of the figure of 2,150) in the Doncaster and surrounding council area that would have moved 10 years ago, but won’t this year.

The reason they can’t/won’t move can be split down into different categories, explained in a recent report by the Council of Mortgage Lenders (CML). So, of those estimated 1,762 annual Doncaster (and surrounding area) non-movers, based on that CML report –

  1. There are around 634 households a year that aren’t moving due to a fall in the number of mortgaged owner occupiers (e. demographics).
  2. I then estimate another 247 households a year are of the older generation mortgaged owner occupiers. As they are increasingly getting older, older people don’t tend to move, regardless of what is happening to the property market (e. lifestyle).
  3. Then, I estimate 106 households of our Doncaster (and surrounding area) annual non-movers will mirror the rising number of high equity owner occupiers, who previously would have moved with a mortgage but now move as cash buyers (e. high house price growth).
  4. I believe there are 775 Doncaster (and surrounding area) mortgaged homeowners that are unable to move because of the financing of the new mortgage or keeping within the new rules of mortgage affordability that came into play in 2014 (e. mortgage).

The first three above are beyond the Government or Bank of England control.  However could there be some influence exerted to help the non-movers because of financing the new mortgage and keeping within the new rules of mortgage affordability? If Doncaster property values were lower, this would decrease the size of each step up the property ladder.  This would mean the opportunity cost of increasing their mortgage would reduce (i.e. opportunity cost = the step up in their mortgage payments between their existing and future new mortgage) and they would be able to move to more upmarket properties.

Then there is the mortgage rules, but before we all start demanding a relaxation in lending criteria for the banks, do we want to return to free and easy mortgages 125% Northern Rock footloose and fancy-free mortgage lending that seemed to be available in the mid 2000’s … available at a drop of hat and three tokens from a cereal packet?

We all know what happened with Northern Rock …. Your thoughts would be welcome on this topic.

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Moving from a 2 bed Doncaster Property to a 4 bed will cost you £602 pm

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Moving to a bigger home is something Doncaster people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Doncaster homes are much in demand and it can be a costly move.

If you live in Doncaster in a two-bedroom property and wish to move to a four-bedroom house in Doncaster, you would need to spend an additional £152,424 (or £602.08 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Doncaster by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for a Doncaster property by the number of bedrooms it has.

Average Property Price in Doncaster by Bedroom
1 bed 2 bed 3 bed 4 bed 5 bed
£69,168 £99,099 £125,848 £251,523 £315,359

I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% – so the mortgage cost could be higher or lower depending on the mortgage taken).

Doncaster
Price Difference to make the move Cost per month to move up market (Mortgage)
1 bed to 2 bed £29,931  £118.23
2 bed to 3 bed £26,749  £105.66
2 bed to 4 bed £152,424  £602.08
3 bed to 4 bed £125,675  £496.42
4 bed to 5 bed £63,836  £252.15

There are some interesting jumps in costs when moving upmarket as a Doncaster buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Doncaster is quite high (and hence why some four bed properties are taking slightly longer to sell nowadays). On an aside, a lesson here for all my landlord property blog readers, you can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let because the monthly finance costs and rents achieved don’t match up so well (i.e. A mortgage for a 4 bed home in Doncaster would cost you 99.86% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that – although depending on your circumstances, 4 bed homes can offer other advantages to buy to let – pick up the phone if you want to know what they are in more detail).

So, coming back and looking at the stock of properties in Doncaster, this also makes interesting reading …

Housing Stock in Doncaster by Bedrooms
1 bed 2 bed 3 bed 4 bed 5 bed
4.89% 25.60% 50.05% 15.72% 3.74%

 

The most active purchasers are 20 something and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Doncaster, they face stiff competition from these 20/30 something families, making the three bedroom Doncaster home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Doncaster property market.  Again, if you are a landlord, call me and I will show you areas with decent returns where you aren’t in so much competition with young Doncaster family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Doncaster buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.

Nevertheless, that’s the place many homeowners find themselves in with the cost of the additional bedroom being too much to bear. To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Doncaster property ladder. Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.

..and Doncaster landlords – well these changes in the way people live also mean there are opportunities to be had in the Doncaster rental market. Many Doncaster landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line.

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Should the 12,428 home owning OAP’s of Doncaster be forced to downsize?

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

So, should we force OAP Doncaster homeowners to downsize?

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

Well, one of the biggest reasons OAP’s move home is health (or lack of it)

Looking at the statistics for Doncaster, of the 12,428 Homeowners who are 65 years and older, whilst 6,192 of them described themselves in good or very good health, a sizeable 4,459 home owning OAPs described themselves as in fair health and 1,777 in bad or very bad health.

14.3% of Doncaster home owning OAP’s are in poor health
But if you look at the figures for the whole of Doncaster Metropolitan Borough Council, there are only 89 specialist retirement homes that one could buy (if they were in fact for sale) and 679 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Doncaster downsizers could certainly afford to move but are staying put in bigger family homes because they can’t find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Doncaster population and specialist retirement properties for the ones who aren’t in such good health … we need to build more appropriate houses in Doncaster.

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

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

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

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

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Doncaster Buy to Let Leasehold – 2017

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Happy new year to all of our subscribers!

Here is your first of many buy to let deals of 2017. This delightful ground floor apartment is advertised with Moss Properties at £90,000 on the very popular Wakelam Drive. This street and surrounding streets are indeed sought after due to its location and local amenities offered not to mention the close proximity of the M18 motorway.

This apartment is leasehold so you will need to take this in to account for accurate figures but with a rental income of £550pcm and purchase price of £90,000 that provides approximately 7.3% rental yield!

For further details on the property please see link http://www.rightmove.co.uk/property-for-sale/property-63809303.html

If you’re looking for your first investment for 2017 or to extend your portfolio and looking for advise on a property you’re interested in please email me direct on frances@mosspm.co.uk or contact me on 07896 988366. Remember you’re always welcome to pop in branch for a coffee and a chat.