Coventry First Time Buyers borrow £211.3m in the last 12 months

Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

 

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Coventry property market, not just from your point of view, but also from every player’s point of view. Over the last 12 months, 4,397 properties have sold (and completed) in Coventry, worth £817.3m. Interestingly the number of properties changing hands in Coventry has also dropped when compared to a decade ago.

 

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Coventry buy-to-let investors.

 

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Coventry property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.

 

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

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Q4 2015 – £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 – £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 – £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 – £827m buy-to-let mortgages vs £1.42bn for first time buyers

 

When looking at the figures for Coventry itself, first time buyers have borrowed more than £211.3m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Coventry economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

 

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at the Coventry market, at this moment in time there are an impressive 1,020 properties for sale (so lots of choice). All this will be welcome news amongst Coventry first-time buyers with a combination of a proportional reduction in new investors and landlords.

 

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.

‘Generation Rent (Forever)’ – 25,796 Coventry Tenants have no intention of ever buying a property to call home

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts … those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

 

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Coventry (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Coventry property ladder.

 

However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Coventry. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Coventry (and in fact the rest of the Country).

 

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

 

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Coventry population choose to be tenants as it better suits their plans and lifestyle. Local Government in Coventry (including the planners – especially the planners), land owners and landlords need an adaptable Coventry residential property sector that allows the diverse choices of these Coventry 20 and 30 year olds to be met.

 

This means, if we applied the same percentages to the current 67,176 Coventry tenants in their 26,992 private rental properties, 25,796 tenants have no plans to ever buy a property – good news for the landlords of those 10,365 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

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.. but does that mean the other third will be buying in Coventry in the next 12 months?

 

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Coventry, we will in fact need an additional 11,568 private rental properties over the next eight years (or 1,446 a year) … meaning the number of private rented properties in Coventry is projected to rise to an eye watering 38,560 households.

 

With 67,176 people in Private Rented Properties in Coventry – Should you still be investing in Coventry Buy To Let?

If I were a buy to let landlord in Coventry today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Coventry property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Coventry property prices do drop, the downside to that is that first time buyers could be attracted back into the Coventry property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Coventry landlord, almost a blessing in disguise.

 

Coventry has a population of 315,038, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

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Coventry – Accommodation Type and the Number of Occupiers
Owned outright – Coventry Owned with a mortgage – Coventry Shared ownership (part owned and part rented) – Coventry Social rented (aka Council Housing) –  Coventry Private rented – Coventry Living rent free – Coventry
76,812 119,220 1,649 47,112 67,176 3,069
24.4% 37.8% 0.5% 15.0% 21.3% 1.0%

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Yields will rise if Coventry property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Coventry landlords add to their portfolio. Rental demand in Coventry is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Coventry landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

 

I have just come back from a family get together. I got chatting with my cousin and his partner.  Both are in their mid/late twenties, both have decent jobs in Coventry and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 30 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

 

So, as 21.3% of Coventry people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Coventry – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch – there is nothing like bricks and mortar!

1,438 Coventry Households Occupied by OAP Renters

Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older, meaning 4.39% of OAP’s are living in private rented property.

It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant?  In retirement, selling up could make financial sense to the mature generation in Coventry, potentially allowing them to liquidate the equity of their main home to enhance their retirement income.  I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Coventry?

The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home.  Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.

Funding retirement is important as the life expectancy of someone from Coventry at age 65 (years) is 18.4 years for males and 20.8 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females).  The burdens of financing a long retirement are being felt by many mature people of Coventry.  The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.

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So, what of Coventry?  Of the 31,542 households in Coventry, whose head of the household is 65 or over, not surprisingly 24,610 of households were owned (78.02%) and 4,827 (15.30%) were in social housing.  However, the figure that fascinated me was the 1,438 (4.56%) households that were in privately rented properties.

Anecdotal evidence, by talking to both my team and other Coventry property professionals is that this figure is rising.  More and more Coventry OAP’s are selling their large Coventry homes and renting something more manageable, allowing them to release all of their equity from their old home.  This equity can be gifted to grandchildren (allowing them to get on the property ladder), invested in plans that produce a decent income and while living the life they want to live.

These Coventry OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent.  Many landlords will also include gardening in the rent! Renting is also more adaptable to the trials of being an OAP – the capability to move at short notice can be convenient for those moving into nursing homes, and it doesn’t leave family members panicking to sell the property to fund care-home fees.

Coventry landlords should seriously consider low maintenance semi-detached bungalows on decent bus routes and close to doctor’s surgeries as a potential investment strategy to broaden their portfolio.  Get it right and you will have a wonderful tenant, who if the property offers everything a mature tenant wants and needs, will pay top dollar in rent!

£23.31bn total; £96m a year black hole in the Coventry Property Market – Is Buy to Let Immoral? (Part 2)

An Englishman’s Home is His Castle as Maggie Thatcher lauded – everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of homeowners rose to 69% by 2001. Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.

 

But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Coventry buy to let properties as an investment. Coventry first time buyers were in competition with Coventry landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Coventry landlords fanning the flames of the Coventry housing crisis bonfire?

 

I believe that the landlords of the 26,992 Coventry rental properties are not exploitive and are in fact, making many positive contributions to Coventry and the people of Coventry. Like I have said before, Coventry (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

 

According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.

 

It doesn’t sound a lot of difference, so let us look at what this means for Coventry …

 

For Coventry to meet its obligation on the building of new homes, Coventry would need to build 1,146 households each year. Yet, we are missing that figure by around 478 households a year.

 

For the Government to buy the land and build those additional 478 households, it would need to spend £96,107,645 a year in Coventry alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year … the Country hasn’t got that sort of money!

 

With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes to either be rented privately to Coventry families or Coventry people who need council housing because the local authority hasn’t got enough properties to go around.

 

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

 

 

 

So only you, the reader, can decide if buy to let is immoral, but first let me ask this question – if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade .. where would these tenants be living now? ….. because the alternative doesn’t even bear thinking about!

Coventry’s private renting set to hit 38,059 households by 2021 – Is Buy to Let immoral? (Part 1)

Can we blame the 55 to 70-year-old Coventry citizens for the current housing crisis in the city?

 

Also known as the ‘Baby Boomer Generation’, these Coventry people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

 

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.

 

…Yet some have suggested these Coventry baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.

 

Between 2001 and today, average earnings rose by 65%, but average Coventry house prices rose by 146.1%

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The issue of housing is particularly acute with the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution, are finding as they enter early adult life, very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents … it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.

 

Like all things in life, we must look to the past, to appreciate where we are now.

 

The three biggest influencing factors on the Coventry (and UK) property market in the later half of the 20th Century were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell most of those Council Houses off in the 1980’s and finally 15% interest rates in the early 1990’s which resulted in many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Coventry.

 

To start with, in 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages.

 

So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays … no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

 

Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you … I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!

 

So, in Part Two, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).