Deciding Not to Move Home?

A recent report by Legal & General stated that, since the pandemic, many older homeowners had put their plans to move home ‘on ice’. It said that fewer OAP homeowners are planning to downsize from their large family homes after the pandemic made them realise the actual value of their local community and space. 

Historically, many OAPs move home to another part of the country to live near their grown-up children. Yet the pandemic has shown that OAPs can live quite well locally without moving to a strange new town to live near their children. The support networks of their friends in their existing community has emphasised the significance and importance of having friends close by. 

Yet this trend isn’t just for OAPs moving away. Many TS9 OAPs who aren’t moving away from TS9 (because their family is still local) are also deciding to stay put longer for the same reasons. Even though they are rattling around their large 3 and 4 bed detached family homes, they love the space their large TS9 homes offer.

And for those TS9 OAPs who are wanting to move, the issue is that the choice of properties they could buy to downsize is limited. This scarcity of properties for sale, called the ‘housing crunch’, can be seen by that lack of choice of properties for OAPs to move to.

Only 21 bungalows are for sale within half a mile radius of TS9

In a ‘normal’ TS9 property market, I would expect this to be double or even triple this number.

All these factors combined means these OAP “eternal homeowners” threaten to make the scarcity of properties coming on to the market even worse!

So, why is this an issue for everyone else?

Well, because TS9 OAPs aren’t moving from their large 3 and 4 bed detached homes to smaller bungalows or ground floor apartments, this is creating a blockage on the housing ladder. TS9 families, in their 30’s and 40’s, are desperate for larger 3 and 4 bed detached homes for their ever-expanding families. But if the OAP sellers of those family houses aren’t moving, they will remain overcrowded in their existing homes.

Let’s look at the numbers first.

• There are 4.42m UK over-65 property owners, and their properties are worth a combined £1.53 trillion (which covers just under three-quarters of the national debt).
• 71.3% of those aged 65 and over own their home (although 1 in 10 still has a mortgage).

• There are 2,253 TS9 homes occupied by OAPs, representing 39% of all the households in TS9 (notable compared to the UK average of 31%).

• 83.1% of those TS9 OAPs are retired, meaning the rest are still working! (The national average is 83.4%).

• The total value of the property in TS9 owned by OAPs is £577.7m.

• 71.9% of TS9 OAPs own their home outright (compared to the national average of 65.8%), and 4.5% of TS9 OAPs own their home, albeit with a mortgage (compared to the national average of 5.5%).

Many TS9 OAP homeowners simply love the house and neighbourhood they live in, often living in their homes for over 25+ years. I talk to many mature TS9 homeowners who say they are afraid to put their home on the market, because they believe (incorrectly) if they find a buyer for their home and can’t find another property to go to … they would be made homeless.

I can only share my opinions on the matter. The one thing I have seen in my years in the property market is that so many TS9 people leave it too late to move home. So, when they do move, they aren’t fit enough to do all the jobs in their new home. Indeed, is it better to move home in your late 60’s/early 70’s, meaning you can still do the little things to make your new house a home, rather than in your late 70’s/early 80’s and find the jobs are much harder to do?

Also, if you are worried about finding your next home, get yourself on the mailing lists of all the TS9 estate agents.  A recent study showed only 1 in 6 buyers were on an agent’s mailing list for the property they bought. Therefore, by being on the mailing list, you will get to know of any suitable properties coming on the market before most others. This is important in this housing market; a property is often sold STC before it hits Rightmove (to a buyer that put themselves on the agent’s mailing list).

By downsizing, you could use the additional funds to top up your pension, take the family on a holiday of a lifetime (once it’s safe to do so of course), or help your children get on the housing ladder themselves with a deposit for their own home.

I fully appreciate many of the 1,722 OAP homeowners in TS9 have many reasons to stay, be that sentimental, friendship, support networks etc. My advice to all of you is to do your homework, put yourselves on the mailing lists of agents (in case the property of your dreams comes up) and do what is best for you. By downsizing, you are giving yourself better options for your quality of life and massive opportunities to spend more time on the things you enjoy like your family, holidays, or even helping others.

The choice, as they say, is yours.

If you are a TS9 homeowner and want to ask me anything about what I have said, please drop me a line to discuss the matter further at no cost or obligation.

With Rightmove announcing a national drop of 0.3% in average asking prices in August, some are asking if the steam has been let out of the property market. Yet with the gains we have seen in the last 12 months, is this just a minor bump in the road? Alarm bells normally ring when new homeowners coming to the market for the first time are having to lower their initial asking price when compared to the market as a whole. 

So, what is actually happening in the national and local property market to asking prices and the number of properties for sale, and where does that leave TS15 homeowners and TS15 landlords?

1 in 7.4 homes already on the market today have reduced their asking price in the last two weeks

That means new sellers bringing their property to the market for the first time, are having to curtail their initial asking price to remain competitive. Normally, this should ring alarm bells, particularly when this is the first time this has happened in 2021. Therefore, it’s vital to ‘look under the bonnet’ of the figures and see what, exactly, is happening locally.

Average asking prices for TS15 homes are 3% higher compared to July

However, that figure hides some interesting anomalies – the average asking price of TS15 detached houses are 7% lower than in July (that doesn’t mean they have dropped in value by that much – just the headline asking prices) whilst semi-detached houses have seen the average asking price rise by 15% in the last month.

So, if this is what is happening to TS15 asking prices, what about the number of properties for sale. Looking nationally first …

there are currently just 285,970 properties for sale in the UK, which means 1 in 67 British homeowners are presently on the market – interesting when compared to 2005, it was 1 in 13.5 homeowners on the market.

With such little supply of properties for sale nationally, demand remains robust. Yet the property buyers in the market are being a little more reserved with the offers they are making compared to the Stamp Duty holiday frenzy times seen earlier in the year. They will pay handsomely, and yet top dollar won’t offer the ‘crazy price’ levels some TS15 buyers were offering in the spring – hence the recent reduction in asking prices to a more realistic level.

Looking at the movement in the available properties for sale and to rent in TS15 over the last few months, an interesting picture arises.

Number of TS15 Properties on the Market
	Apr-21	May-21	Jun-21	Jul-21	Aug-21
TS15 Properties for Sale	98	92	93	72	71
TS15 Rental Properties Available	12	11	9	7	3

The number of TS15 properties for sale (and rent) is still at record lows when compared to the 30-year long term average.

The choice for TS15 tenants is limited as well, as many tenants aren’t moving home. With the additional increase in demand from 1 in 10 TS15 homeowners choosing to go into rented accommodation (albeit temporarily) TS15 landlords with exceptional properties are getting decent rents, as discussed in a recent article I wrote about the level of rents in TS15.

With the current level of TS15 properties for sale being around 40% to 50% below the long-term average (depending on the type of TS15 property you own), it means when a TS15 property is properly priced, given the intense competition, often it comes down to the position of the buyer and not the price they are prepared to pay.

When I say, “position of the buyer”, I mean, do they have a chain, do they have to sell their own property to buy another property?

Many TS15 house sellers are selling their home before they buy. Selling before you buy can be a fruitful approach in a fast-moving property market. That does mean your own purchaser will have to demonstrate a certain amount of patience whilst you wait for the right home to come on to the housing market. 

However, because it is currently on average taking 19 weeks between sale agreed and exchange of contracts with mortgage providers and solicitors taking their time due to the backlog, this often allows you to potentially play catch-up if it takes a couple weeks to find the right property for you.

Many home sellers are going even further by selling their TS15 home first and then going into transitional rented accommodation. This subsequently puts them in pole position when their forever home comes up for sale as they have no chain. Although this takes a lot of determination and resilience, it does mean you will be in the very best position when the property of your dreams comes up.

The choice they say, as always, is yours!

If you would like a chat about the TS15 property market and the best thing for you and your personal circumstances, do drop me a line. In the meantime, what are your thoughts on the current TS15 property market? Do share in the comments. 

Should you sell or should you buy in this most interesting property market?

I have calculated that at least 16 house sellers have rented a home to break their house chain in the last 12 months in TS9 alone, although at a cost as they face paying many thousands of pounds in rent. 

There are a number of reasons behind this. One is because they cannot find another property to buy amidst a continuing shortage of new properties coming to the market. Although, there are others who have achieved such a high price for their home they have decided to cash in and are (hopefully for them) waiting for the property market drop?

Or will it drop? (More on that later).

Those selling their home have seen the …

average TS9 home rise in value in the last 12 months by £34,100.

Yet, if they have had to go into private renting, they have paid for that privilege in the rent they have had to pay.

The average cost of a six-month rental agreement in TS9 is £3,545, meaning accidental TS9 tenants have pumped £56,727 into the TS9 rental market in the last 12 months.

The unevenness between the number of properties for sale and demand for them is at its widest since the early 2000’s. Whilst we have seen a slight improvement in the number of properties for sale in TS9, there are still …

64% fewer homes up for sale today in TS9, compared to August last year.

This serious shortage of property for sale is discouraging some hesitant homeowners from putting their property on to the housing market, anxious they will not be able to find their next home and will be left renting.

Yet some savvy TS9 homeowners are moving into a rented property as a way to navigate the shortage of properties to buy. If you have someone offering you top dollar for your  home, whilst you will have the hassle of two moves, the increase in value of your home will more than offset the rent.  

Also, when you come to buy your next home, you will be chain free and in pole position to buy your ‘forever home’, rather than being overlooked for the home because you are sold stc and burdened with a chain.

Yet this trend has made life tougher for long-term tenants.

On average there were normally 15 to 20 properties available to rent in TS9 on Rightmove at any one time (pre-pandemic), today there are only 7 available.

To give you an idea of how this has affected the TS9 rental market, with heightened demand and lower supply, demand for rental properties has grown to such an extent …

the average rent in TS9 has grown from £591 per month a year ago to £650 per month today.

Tenants are suffering from less choice and higher rents in the TS9 property rental market, with few indications it’s going to significantly ease on the run up to Christmas.

So, what is going to happen to the TS9 property market? 

Well, those of you that follow me know I regularly write about the property market in our property blog.

If you would like some advice on the future of the local property, either drop me a line and I will send you some links to those posts, send me a DM or contact me by telephone.

For new instructions follow our social media channels for exclusive video updates of properties coming soon.

In the meantime, please do share your thoughts on the matter in the comments.

Whether you are a homeowner, first-time buyer or landlord; the last 15 months has been a roller coaster ride when it comes to the local property market.

With 213,120 UK house buyers and 58,580 UK tenants moving home in June, the summer has been manic for many people. Meaning some homeowners are asking if they should be staying put? Or should they wait for the best home to come onto the market before putting their home up for sale or find a buyer but be unable to find a property – it’s all rather confusing.

Then we have some landlords who are asking themselves if they should buy another property investment (and some even wondering if they should sell and cash in on the boom) and then finally, with 95% mortgages back, first-time buyers are asking if they should look to take the plunge and buy their first home or wait.

In this article, I hope I can help you with the decisions you might want to make and to navigate this unusual post lockdown housing market. Let me start with some stats to show you what is happening at the moment in the TS15 postcode.

The average time it takes to sell a property in the TS15 postcode

in this housing market is 50 days.

Interesting when compared with nearby Stockton-on-Tees at 31 days, Middlesbrough at 30 days and Great Ayton at 38 days.

Look back five years, it took 112 days on average to sell a TS15 home – the local property market is now certainly ‘cooking on gas’!

The property market has certainly solidified a little over the last few weeks. The Stamp Duty holiday rush has seen its run and the pent-up post-Brexit and more importantly post-lockdown demand has receded and although I am still observing competing offers on most TS15 properties, I certainly get a feeling of a small shift in the balance-of-power between the seller and buyer.

Many people have put their house hunting on hold as they go on their first holiday since 2019, be that glamping in Cornwall or having days out on a ‘staycation’. That means between now and mid-September, depending on what type of property you are looking for, many buyers could well discover that there are fewer competitors for their next home than there might be.

Also, July and August are notoriously barren months for estate agents putting new properties up for sale. Yet since the typical ‘seasonal property market’ is so out of kilter as a result of the pandemic, many agents are taking on a decent number of very good properties now, which is not something that characteristically would have happened in the summer months.

The important thing is not to wait for the property to hit the portals (i.e. Rightmove etc). Yet research shows, nearly 5 out of 6 people who bought their home were not on the agents mailing list before they viewed the home they eventually bought. That’s OK in a normal property market as you can wait until it hits Rightmove or Zoopla, yet these are unprecedented times and if you are not on an agent’s mailing list – you will miss out on properties.

If you don’t put yourself on the agent’s mailing lists, you could end up losing out on the property of your dreams.

So, the question is should you put your TS15 home on the market first or wait for the right property to come along?

Roll the clock back a few years and it was standard practice for people to wait for their dream home to come onto the market, then put theirs on and hope that it would sell in time. This housing market is different and only those who are in a position to proceed (cash buyers or those sold subject to contract) will be considered as serious buyers.

Yet, nobody wants to be homeless if they do sell.

Estate agents are returning back to their old skills from the 1980s and 1990s by chain building. By starting at the bottom of the chain of the smaller house and building up a chain, waiting for everybody to find their next homes, nobody need be made homeless.

This is not an issue because most house sales are taking on average between 20 and 25 weeks and as long as everybody communicates with each other and everyone knows where they are, then normally things go through, albeit slower. Can you believe it – estate agents really are earning their money with this!

So what TS15 homes are selling the fastest?

TS15 Terraced and Town Houses are selling in 93 days

TS15 Semi-Detached Houses are selling in 30 days

TS15 Detached Houses are selling in 68 days

TS15 Apartments are selling in 204 days

TS15 landlords, maybe there are some bargains to be had with some apartments with that length of time on the market? Again, do your homework or even consider picking up the phone to me for a chat.

So, there you have it. The lessons I hope you have now learnt from this are to put yourself on agent’s mailing lists, talk to agents about your requirements so you get a heads up first when a property is coming onto the market (don’t just do everything over a computer screen) and once you have found a property be a little bit more patient with how long it takes to build a chain and then get the property through to an exchange and completion so you get the keys to your forever home.

Whether you are a TS15 homeowner, TS15 landlord or first-time buyer and would like some advice and opinion on your circumstances in the current TS15 property market, please don’t hesitate to either pick up the phone or drop me a message.

To everyone else, what are your thoughts on the TS15 property market?

The bungalow is a building that has represented a more leisurely, gentler way of life since the early 1900’s. Bungalows have been sold as an aspiration for those about to retire, saving them the annoyance of having to climb stairs. With an ageing population, one would think they would be building more bungalows, yet nothing could be further from the truth. In fact, this could be one of the main issues that is holding back many mature homeowners moving home, thus creating a bottleneck in the TS9 postcode property market for the younger families who are being held back and unable to move into the larger homes they so need to grow their families.

So, before I answer that question, let me share this fascinating fact about bungalows. The word ‘bungalow’ originated in India, not the UK. The name is derived from the Hindi word ‘baṅglā’ or the Gujarati word ‘baṅglo’, both of which seem to refer to a home occupied by a Bengali person. The colonial English started to use it for themselves in the late 1600s to describe the same sort of basic lodgings that sailors and staff of the invading East India Company used.

Anyway, back to the here and now in TS9.

There are 364 Bungalows in TS9.

When you consider there are 5,780 properties in TS9, that means only 6.30% of property in TS9 are bungalows.

To give you an idea of the age demographic of TS9 homeowners, there are 2,753 TS9 homeowners aged 65 years old (and over) and 2,503 TS9 homeowners aged between 50 and 64 years of age.

You can see demand for bungalows is only expected to grow.  Yet new homes builders are having to deal with soaring land prices, meaning to get a profit from the site they are under pressure to build more vertically than horizontally as with bungalows (as bungalows take up so much more land).

The last available data is from 2018 and only 1.6% new builds in the UK were bungalows, interesting when it was just over 7% in the middle of the 1990s. As British people are living longer, those existing TS9 bungalow homeowners will be living in them longer, thus creating even more of a bottleneck in the TS9 property market.

So, what is the answer?

Well with building land in TS9 at a shortage, maybe new homes builders should be forced under planning rules to reserve ground floor apartments to be set aside for older people to encourage them to move out of larger houses. I would challenge the long-held point of view that building more bungalows in TS9 is the pre-eminent way to urge growing numbers of mature ‘last-time buyers’ to move out of their under-occupied TS9 homes and free up their large homes (where their children have flown the nest) for younger families to grow.

With the new Planning Regulations due to be in place in a couple of years, local authorities could require builders to set aside a share of homes for mature residents, as they are already obligated to subsidise local community facilities or low-cost social housing in return for obtaining their planning permission to build in the first place.

Another option would be to convert all those empty shops in our town and city centres up and down the country into residential use. There is no need for planning permission to change offices to residential property and the Government are considering the same for shops (although I have heard of some horror stories of those office to residential developments making rabbit hutches look spacious) – so again, it comes down to the planning laws and making them fit for purpose.

There are no doubt consequences of not designing our housing stock for the 21^st Century and beyond for older people.

The population of TS9 is set to grow by 2,420 to 15,155 by 2040.

As the UK population gets older in the coming decades, as life expectancy is set to grow from 81 years 2 months to 83 years 3 months by 2040, I fully appreciate the need for more TS9 homes to be built for families, yet one must ask if the planning authorities are focusing too much on new housing for the younger generation, when they in fact should be encouraging new homes builders to develop larger, ground floor two-bedroom homes and decent accessible transport links.

These are my thoughts, what are yours the good people of TS9?

The semi-detached house – the icon of middle-class aspiration, the pinnacle of liberalism yet at the same time compromised individuality, the ‘semi’ as it is colloquially termed is, for many homeowners, the highpoint of modern domestic bliss.

Britain’s gift to architecture is the humble ‘Semi-Detached House’. This type of property has been exported around the world with – the ‘Doppel Haus’ in Germany, the ‘Duplex’ in the USA, Canada and Australia.

For those young, hip and trendy people living in your converted warehouses with strobe lighting and exposed brickwork, it might surprise you the semi is the dream home of an immense number of people. In fact, it is the most common dwelling type in the British Isles, with 8,060,657 semi-detached homes occupied by Brits alone (representing 31.68% of all occupied property) compared to 23.81% detached, 25.49% terraced and 19.02% flats.

In TS15 alone, there are 1,071 semi-detached houses meaning … 19% of properties in TS15 alone are semi-detached.

So, when did the semi-detached house first come into play? Many people think the semi-detached boom started with mass swathes of the suburban mock Tudor bay-fronted semis being built between the first and second world wars. The fact is that it was actually that rich landowners in the post Great Plague (1665+) years wished to house their farm labourers as inexpensively as possible, yet making their grand estates look as imposing as possible.

And that’s the point of a semi-detached house. Only half the property is yours, yet you ‘feel’ like you own it all.

The next phase of the semi-detached story, and a phase that really pushed home the point, were many of the late Georgian houses built around the Kensington Gardens area in West London. Many upper-middle class Georgians were wanting something more than the classic Georgian terraced house yet couldn’t afford a large detached home. Therefore, architects took the humble semi-detached house to the next stage of its evolution by masquerading the building itself as one home by slipping its two front doors down opposite sides of the building, making it look like one home from the front, to complete the impression of total ownership.

By Victorian times, semi-detached houses fell out fashion as the railways were building many of them for their railway workers and they became associated with the lower working classes but speculative builders continued building semi-detached homes for the new lower middle class, that is the reason why ultimately the country is full of semi-detached homes today.

The semi-detached house was saved from the annals of history by the Bedford Park development in Ealing (London). Referred to as the world’s first ‘garden suburb’ and started in the 1870’s, the architect of Bedford Park used influences of the Aesthetic Movement, the precursor to the Arts and Craft Movement to make the buildings look more pleasing on the eye. The architect also took reference from the style of properties from British history such as Queen Ann to be seen in such features as a sweep of steps leading to a carved stone door, rows of painted sash windows in boxes set flush with the brickwork and bright coloured brickwork with limestone stone quoins emphasising the building’s corner.

As the car enabled people to commute to work from further away, people wanted to get out of the big cities, thus giving rise to the interwar semi, with its mock Tudor fronted, rosemary tiled roof, oak beamed, herringbone brickwork and the leaded and stained glass windowpanes that we all recognise. It was Bedford Park that gave the green light for architects up and down the country to use old styles of building design to make their semi-detached houses look the part.

And now, in more modern times, the semi-detached house has gone from strength to strength. 956 of TS15 semi-detached houses have changed hands since 1995, many upwards of 5 times (and a handful even more).

The semi continues to appeal, both to big national builders and smaller developers, and most importantly to home buyers. The advantage of semi-detached houses over town houses/terraced houses or apartments is they afford access to their (typically bigger) gardens without having to pass through the house, and they have natural sunlight on three sides of the property, are easily extendable and quite often have a driveway.

And that’s at the heart of what a semi-detached house is all about, the schism or divide of the semi reveals the tension at the heart of owning your home, which on one side of the coin is a commodity/way to make money and on the other side, a vision to have your own castle, a piece of ground to call your own. It articulates both the craving for personal freedom and the inevitability of socio-economic life. What do I mean by that?

We may dream of owning a castle in many acres, with a drawbridge and moat, yet in real life we can only afford half a building plot sliced out by a volume national builder next to the A67.

I just love a semi-detached house! Style and substance combined.

What are your thoughts? Share your stories and opinions on the humble semi-detached house.

as 101.4% more people sell in June compared to the TS9 area 10-year average

June 2021 was the busiest month ever for UK estate agents, home removal companies and conveyancers since monthly records began, as HMRC logged 213,120 residential transactions in June, a jump of more than 216% nationally on the same month last year (when the housing market had just reopened after the initial lockdown). 

The cause of this was all the homebuyers trying to complete their property purchases before the approaching Stamp Duty Holiday deadline finished at the end of June. This was important as house buyers had until 30th June to complete their sale to save up to £15,000 in Stamp Duty Tax.

Many property market commentators believed the property market would slump after the Stamp Duty Holiday finished. Yet, I haven’t observed many property sales falling through or renegotiations because the buyer had to pay the extra Stamp Duty, and talking to other property professionals around the UK, neither have they.

Let’s not forget that the Stamp Duty Holiday isn’t totally over as it is tapering off until 30^th September. This means homes and apartments sold under £250,000 will still profit from the Stamp Duty Holiday.

So, what sort of property transaction numbers are we talking about here in TS9?

An average of 11 properties a month in the TS9 area have sold in the last 12 months, compared to the 10-year rolling average of 14 properties sold per month.

The best month ever before this June was March 2016, when there was a rush by TS9 buy-to-let landlords to secure a property before the introduction of a 3% Stamp Duty surcharge for second homes. In March 2016, the number of properties that changed hands in TS9 was 22.

My calculations show 27 TS9 households sold in June 2021, 101.4% more than the long-term average.

So, what has driven this? The Stamp Duty changes caused some TS9 people to bring their home moves forward from 2022/3 to take advantage of the tax savings. Yet the most significant thing, talking to many TS9 homebuyers and sellers, is the pandemic has changed the way people live. Working from home and needing additional office space has meant many TS9 families (and others from out of the area) are seeking larger properties with more extensive gardens and better access to the countryside. I really can’t see this social trend changing for a long time. I believe this means TS9 property prices in the medium term will not be markedly different over the next couple of years yet …

don’t be alarmed to see volatile short-term changes on the run-up to Christmas (both up and down) with TS9 house prices.

I have always been a believer in the medium-term (i.e. over a couple of years) house price trends instead of the monthly trends, which can sometimes be like a yo-yo. I have always said the best bellwether to the health of the TS9 property market is the number of property transactions rather than the house prices.

Finally, I can only see this continuing as banks scrabble to give money away in the form of cheap mortgages. A few weeks ago HSBC and TSB launched a 0.94% two-year fixed rate deal for those wishing to borrow 60% or less. More recently, the Nationwide Building Society launched a 0.99% five-year fixed-rate mortgage deal (again on a maximum of 60% loan to value basis).

If you would like a chat about the TS9 property market, your options and where you stand in the TS9 property market – please do not hesitate to give me a call.

In the meantime, I would love your thoughts on this.

Has the pandemic made you move home earlier?

What do you think will happen in the coming years to property in TS9? share your views.

I know of many buy-to-let landlords who fell into property investing by accident. Many didn’t want to sell their family home when the housing market crashed in the Credit Crunch of 2009/10, yet still needed to move (often for work). They thought they would keep their family home in case they ever moved back. Yet by keeping it, it couldn’t remain empty (there was still a mortgage to pay on it), so they ended up renting their home out.

And that was the start of many buy-to-let landlord’s journeys!

Many of you landlords reading this have had your fair share of problems, from tenants doing a midnight flit, rent arrears and troublesome tenants, yet also had your rewards.

The average TS15 landlord in the last ten years has seen their investment rise by an average of £95,300 and has earned in rent (before costs) £102,256.

Many of you reading this have started to learn about investing and creating a property portfolio by buying additional Teesside homes to rent. The average Teesside buy-to-let landlord now owns 3.38 properties that generate an impressive passive monthly income with the bonus of growing their household net-worth through growth in the value of their buy-to-let portfolio.

With the average Tbuy-to-let landlord in the 56-to-58-year age range, one thing I learned about savvy buy-to-let investing, the shrewd landlords tend to want longer-term mortgages.

Taking longer-term mortgages reduces the risk to the landlord.

It sounds counterintuitive, yet it comes down to leverage. Let me explain that whilst leverage is formidable in buy-to-let, it is also quite risky.

Before I explain why some readers might not know what leverage is and how it relates to mortgages and buy-to-let, two-thirds of landlords are debt-free, yet those landlords who have come into the property investment games in the last 10 or 20 years have had to use borrowed money (mortgages) to finance their deals. Therefore, by putting down a small amount of say 20% and borrowing the other 80%, if you calculated your return on an investment base only the money that you put into the deal, then that is what is called leverage (i.e. using borrowed money as a funding source when investing in property and generate greater returns on borrowed money).

You would think, as, say a typical 55-year-old TS15 landlord, you would want to be only taking a mortgage out for however long you intend to work (say ten years at most) – meaning your portfolio would be all bought and paid for by the time you retire. Yet the

clever buy-to-let landlords I talk to don’t see their portfolio as having to be paid off (and mortgage-free) by the time they retire. They have understood how to utilise and administer their mortgage debt rationally to enhance their returns without taking on unwarranted risk.

By taking a short-term mortgage of say ten years, compared to a 25-year mortgage, during those ten years, your monthly mortgage payments will be particularly high (because the longer the mortgage term, the smaller the monthly payments will be).

Also, you can pay off a 25-year mortgage in 10 years, but you cannot pay off a 10-year mortgage in 25 years.

Longer mortgage terms mean lower monthly mortgage payments, which in turn means greater cash flow and more elasticity within your rental portfolio. Now to some landlords, possessing their rental properties debt-free is very important. Yet, I would still seriously consider taking the 25-year buy-to-let mortgage and make additional payments every month to help you to pay the mortgage off early …

Therefore, if for example, you have a bad couple of months without any rent coming in or unexpected bills, you can return to making the mandatory lower monthly mortgage payments without getting your property repossessed.

So, by taking on the longer-term mortgage, you decrease your risk because it has the lower required payments.

Let me give you an example – if our landlord wanted to buy a TS15 terraced house property for say £214,000 and put down a 25% deposit of £53,500, the best buy-to-let deal I found online on the day of writing this article was a 1.79% Santander 5-year fixed-rate buy-to-let mortgage.

Looking at the mortgage payments per month when comparing the mortgage terms; on the 10-year mortgage, the mortgage payment would be £1,474.66 per month. Therefore, our landlord would have to top up from personal savings to make up the monthly mortgage payments. Whilst if they choose the 25-year mortgage, the mortgage payment would be £677.94 per month. This would mean our landlord would be in profit from day one.

Some might say though the longer term means more interest payments, as it’s 25 years and not 10 years. Yet, at today’s low interest rates, that would only mean an additional £26,424 in interest payments spread over 15 years – not much in the grand scheme of things.

Therefore, by taking the longer-term mortgage, as a savvy TS15 landlord, you are ‘cash flow positive’, meaning you can build a reserve fund for every one of your rental properties to enable you to deal with any unforeseen voids and repairs.

The best way to deal with a buy-to-let property is to see it as a small mini-business, and as with all businesses, you need to grow your income and reduce your expenses whilst in the background provide a decent rate of return for your investment.

The greater the amount of mortgage debt you carry, the greater your monthly mortgage payments, and the simple fact is, the shorter the mortgage term, the higher the monthly mortgage payments. So, if you take on a sensible level of mortgage debt and be ‘cash flow positive’, you can profit from much better returns without taking on excessive risk.

These are my thoughts -please share yours.

P.S. Before I go, I have to say this to cover my proverbial. My comments are only a very brief commentary on the issues raised and should not be relied on as financial advice and that no liability is accepted for such reliance, and that anyone needing such advice should consult a qualified financial adviser or other authorised person.

For an appointment with one of our advisors please call 01642 711 111

… yet Bitcoin investors would have made £14,653,160 in profit. Is investing in ‘Bricks & Mortar’ dead?

Investing in property has historically been a sound investment, yet alternative investments (like Cryptocurrency) have been gaining traction over the last five years. So, should we all ditch buying our own home and buy Bitcoin?

Cryptocurrency with such names as Bitcoin and Ethereum are being bandied about as the new investment vehicle everyone should be investing in. But is Crypto a sound investment or just an ‘end of the seaside pier one arm bandit’ speculation?

Well to start, I need to discuss the difference between investing and speculation.

I have always seen investing as making a thorough detailed evaluation (and you are realistically sure your principal lump sum is relatively safe), you then have an opportunity to make a profit. Whilst speculating is all about putting your money into an asset that has ambiguous protection of your principal lump sum … and you have an opportunity to make a large profit but also the potential to make a huge loss.

In a nutshell, investment should be as interesting as watching paint dry and speculating should be as exciting as putting all your money on red on the roulette wheel.

So, let’s see what has happened to both Cryptocurrency and TS9 property in the last five years.

The average TS9 home five years ago was worth £294,240, today it’s worth £358,810.

We now ask, what would have been the return if you had invested the same amount in Bitcoin?

If you had invested £294,240 into Bitcoin in 2016, it would be worth £14,947,400 today.

What about the return if you had invested the same amount in Ethereum?

If you had invested £294,240 into Ethereum in 2016, it would be worth £48,587,900 today.

Yet only In June, when China placed stringent controls on how its population can use Cryptocurrency, Bitcoin dropped in value by 30% in one day. Also, this year, we saw another fall in Bitcoin when Elon Musk tweeted that Tesla were banning the acceptance of Bitcoins to buy its cars.

Can you imagine the value of your TS9 home dropping in value by £109,437 in just one day because of one tweet?

So, if Cryptocurrency is speculation and extremely high risk, surely buying your TS9 home is an excellent investment?

It is my opinion that purchasing a home to live in is a massive financial choice that can give you peace of mind and a lovely place to live, yet it is not an investment. I know this is going to sound strange coming from someone in the TS9 property industry, but whilst I know it’s common for people to think of their TS9 home as an investment, I believe nothing could be further from the truth.

I am not suggesting every 20 and 30 something should avoid homeownership, but if you are edging towards buying a TS9 home because you think you are making a savvy investing choice, think again.

The concept that the home you live in can be an investment comes from the statistic that, historically, property values increase. We all know someone, our Mum and Dad or Grandparents for example, who purchased their TS9 home in the 1950’s or 1970’s for the price of an Xbox and it’s now worth more than you make in ten years in salary.

Yet, I believe, it’s not an investment only because it goes up in value.

Between 1989 and today, TS9 property values, after removing inflation, have gone up by 50.37% … sounds great until you realise that is only 1.57% growth per annum (after inflation).

Sounds rubbish, doesn’t it?

But guess what? Does it really matter?

Even though your TS9 home’s value has outperformed inflation, there are other reasons your TS9 home is not an investment.

A real investment needs more than the outlook of an increase in value.

A home has a more important primary purpose.

Possibly the specific biggest reason why your TS9 home is not an investment is because its prime purpose is providing a roof over the heads of you and your family. One of the most rudimentary issues that makes an investment an investment, is your capability to decide the timing of your possession of the investment.

A true investment requires you to buy it and sell it at times (and under situations) that are probable to exploit your investment return, yet since your TS9 home is your family’s shelter, you will have hardly any power over the sale and purchase of your TS9 home from an investment perspective.

The absence of ‘real’ control over the timing of buying and selling our TS9 homes (and note I use the word home and not house) has had a significant harmful effect on property as an investment.

In all my years in the property profession, I have seen numerous TS9 people buy houses at the top of the market (1988 and 2008) because that was the time that they required a home for their family, but those same people became stuck, having to sell their homes a few years later because of personal circumstances, albeit for a loss.

Then I have seen other TS9 people buy at the bottom of the market (1993 and 2011) because that was the time that they also required a home for their family, and those same people had to sell their homes a few years later due to personal circumstances, albeit for a huge profit. Are the second set of people more savvy investors? No, it was just good or bad timing, and that is not uncommon when it comes to buying homes, and so has to, in my opinion, exclude a home as an investment.

A TS9 home cannot be an investment if you never plan to sell it … and not buy another home.

While it is fact that TS9 homes usually increase in value, there is only a partial opportunity to tap into that growth. The best way to sell your TS9 home is after it has experienced a massive amount of value increase, sell at the top of the market, move into rented accommodation, then buy at the bottom of the market. Nevertheless, how do you know when it is the top and bottom of the property market (and moving home is considered the third most stressful thing you can do after death and divorce)?

That doesn’t sound like an investment to me, does it to you?

Ok, most people sell and buy another home, so when you do sell your TS9 home, you will have to use the profit you have made from the sale of your original TS9 home to purchase the next home as you will be moving from one home to another. This means your profit (equity) is trapped profit.

The only time that doesn’t happen is when you either trade down to a less expensive home, or move into rented accommodation, yet both scenarios are quite rare occurrences.

Using your TS9 home as a bank account?

In the early 2000’s, many banks and building societies were encouraging homeowners to re-mortgage their homes as property values rose by 15%+ a year. By extending the term of the mortgage, you could easily borrow £20k, £30k+ for fancy holidays and new cars and the monthly mortgage payments would be lower – that was like free cash!

Known as equity-stripping, a lot of TS9 homeowners found out the hard way during the Credit Crunch that they had in fact bought themselves negative equity when property values crashed. That left them powerless to re-mortgage to lower the monthly payments when the interest rates dropped in 2009, yet unable to sell to move to a less expensive property because of the negative equity. Finally, to add insult to injury, as the mortgage term had constantly been pushed into the future, they had the prospect of having to pay their mortgages until their late 60’s/early 70’s.

Bitcoin doesn’t need a boiler replacing every ten years.

Every homeowner knows it costs money to maintain their home. Replacement windows, soffits, roof, carpets, kitchens, bathrooms, boilers, flat roofs – the list goes on. Over the 25 years of a mortgage, that can add up to many tens of thousands of pounds, yet one can justify those costs since your home is providing you shelter. But that gets back to the original principle – a home is a shelter, and not really an investment.

But isn’t renting out a property an investment?

The solid fact is that your TS9 home, the home that you live in, basically won’t provide any form of cashflow when you are a homeowner, unless you move out and rent the whole house to someone else. That is called a buy-to-let investment – of course that is an investment and I know many TS9 buy-to-let landlords who make a decent living at renting out their rental properties.

Yet, that wasn’t the point of the question I asked originally – “is buying a home, for you and your family to live in, a good investment?”

Of course, you could take in a lodger or rent rooms out as an Airbnb, and this will help you pay your mortgage, Council Tax and other costs associated with homeownership, so it can be worth it for many. However, an “Englishman’s home is his castle” is quite apt and most of us aren’t good with sharing it with strangers.

What do we buy homes for then?

To conclude, I believe the principal reason why so many TS9 people consider their home (not house) to be an investment is because we are all obsessed about how much our home is worth.

We are all guilty of checking out Rightmove when a property on our street comes up for sale. Yes, we are nosey by looking at the pictures, yet the most important thing is what price they’re asking and how it compares to our home. Our home is our biggest tax-free asset and especially when it goes up in value, which it certainly has done for the last nine or ten years, it certainly can feel like an investment then.

However, during the five property crashes that we’ve had since World War II, not only did property values not increase, but they fell. Some dropped dramatically. For homeowners in that position, not only was their home not an investment, but it had become a huge liability.

People often ask, “when is the best time to sell a property?” 

Our answer is there is no right time to sell properties. It all comes down to your circumstances, the type of property you have, and the local market conditions.  

Understanding the local property market conditions

It is important to discuss certain details with your agent such as current prices, is there are a wide range of properties within your area, and is there buyer ? They can share the latest market reports of properties recently sold in the last few months.

Consider your requirements – should you sell now?

There are a few factors in life that may urge you to sell your property. 

· You get a new job in another area

· Your family is growing so you need more space

· You are financially stable and you’re looking to upsize

· You want to unlock some capital 

· You want to realize the profit on an investment

· You want to reduce your debt

· You’re Looking to downsize and simplify your life

· The perfect property goes on the market, and you want to buy it.

Now you understand some of the decisions to sell, let’s further look at the different seasons and the advantages they offer.

Benefits of selling property in any season

There are key benefits to selling in any season. It all depends on your property, the location, and your preference.

Spring

The cold-snowy season has passed, flowers are starting to bloom, and people are feeling optimistic. If your property has a beautiful garden, this might be the right time to show off your ideal outside area. It is also a great time to sell a property that may struggle in the cold and heat or one, which can be a bit dark in winter.

Summer

A lot of buyers who missed out in Spring are keen to buy before the end of the year. If your property has a garden, or has a view , summer is the best time to show your asset off at its best. Additionally, properties that are cold and dark can attract more buyers on bright summer days.

Autumn

Autumn is proving to create excellent results for sellers. Buyers have well and truly settled back into work and school to focus but often shifts into serious decisions like buying a property. The weather is cooling, the leaves are turning, and the gardens are still looking good.  

Late Summer or Autumn represents is a good time for sellers as it enables them to miss the competitive spring selling season but still benefit from a relaxed buyer market and good weather conditions. 

Winter

While Winter has a reputation for not being a good time to sell, Winter does offer some benefits for sellers. The market is often quieter with less stock on the market because buyers are pushed to purchase during the winter times and are often motivated due to a lack of choices. Here comes January, they’ve already had time off from work, many buyers are keen to fulfill their new year’s resolution with a property change. So, placing your property on the market at the end of January and to February can mean your property will be more noticeable in an undersupplied market. 

Homes that present well in Winter, perhaps have a fireplace or a cozy and warm surrounding which does well in the colder month. Open houses should be visited when it is warm and well lit. 

Is it a good time to sell my house? Understanding property cycles. 

Working out whether it is a great time to sell your property or not comes down to several personal factors, as detailed above. But it also can be affected by what phase in the property cycle your local area is. 

The property market moves in a cycle – prices rise, stumble, steady and then rise once more. Knowing what stage of the property cycle your area or street can help you determine if it is ideal to sell your property. 

What is a property cycle? 

A property cycle usually circles between two factors; supply (the number of properties for sale) and demand (the number of people who are able to buy a property). If a demand exceeds supply, then property prices will increase. When new supplies arrive in the market from developments or property owners, demand often exceeds and prices drop.