Video

Coventry’s housing affordability hits a ratio of 5.57 to 1

 

A Coventry homeowner emailed me last week, following my article posted in the Coventry Property Blog about the change in attitude to renting by the youngsters of Coventry and how they thought it was too expensive for first time buyers to buy in Coventry.  There can be no doubt that buy to let landlords have played their part in driving up property values in Coventry (and the UK) and from that made housing a lot less affordable for the 20 and 30 somethings of Coventry.

 

In the email, they said they thought the plight of the first-time buyers in Coventry was like a novice tennis player, playing tennis with Andy Murray. If you played him once you will unquestionably lose and if you were to play him 100 times you would lose 100 times. That is what they thought it was like for all the 20 something’s first time buyers of Coventry going against all the buy to let landlords.

 

They went on and asked if the Bank of England (BoE) should be tasked to control house price inflation in the same way as the BoE controls inflation.  The BoE has a target for the annual inflation rate of the Consumer Prices Index of 2%, whilst it is also required to support the Government’s economic policy, including its objectives for growth and employment.  So, should BoE be charged with containing buy to let housing market, by possibly changing the rules on the loan-to-value (LTV) ratio’s?

 

So, let’s look at how affordable Coventry is?  The best measure of the affordability of housing is the ratio of Coventry Property Prices to Coventry Average Wages, (the higher the ratio, the less affordable properties are).   (i.e. looking at the table below, for example in 2014, the average value of a Coventry property was 4.84 times higher than the average annual wage in Coventry).

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 (EST)
2.50 2.82 3.21 4.51 5.00 4.97 4.58 4.52 4.84 5.57

Graph

This deterioration in affordability of property in Coventry over the last couple of years has been one of the reasons why the younger generation is deciding more and more to rent instead of buy their own house.

… but it’s not the only reason.

A quick look on Money Supermarket today found 169 lenders prepared to offer 75% LTV Buy to let Mortgages and none at 85% LTV.  Lenders have self-imposed a high level of entry for buy to let landlords (i.e. putting down at least 25% of the purchase price in cash).  The BoE don’t need to meddle there!  Also, the Tories have certainly done lots to level the playing field in favour of first time buyers.  For nearly a year now, Landlords have had to pay an additional 3% in stamp duty on any buy to let purchase and over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket.  Neither, it doesn’t help that the local Authority sold off council houses in the Thatcher years and so for many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).

It’s easy to look at the headlines and blame landlords.  First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 2 bed apartment in Coventry for around £120,000 and only need to find £6,000 deposit.  Yes, a lot of money, but first time buyers need to decide what is important to them.  Either save up for a couple of years to save the deposit and go without two annual foreign holidays, the full Satellite or Cable TV package with Sports and Movies costing three figures a month, the latest mobile phone and out socialising … or not as the case maybe?

I think we as a Country have changed … renting is returning to be the norm.  So my opinion is, landlords have it tough.  Let’s not blame them for the ‘perceived’ woes of the nation … because to be frank … we haven’t always been a country of homeowners.  Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord – today – its only 15.3% nationally.

Graph 1.png

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or what not to buy in Coventry), one source of information is CoventryPropertyMarket.co.uk

For more information, hints & tips, please call me on 024 7650 0005.

 

Please subscribe to my new YouTube channel; Coventry Property TV found at https://www.youtube.com/channel/UCRxB2n1Kh-5XwOOpHC4yDTg

 

If you would like to save time and want me to source the whole market and all agents to bring you the best buy to let opportunities, please follow me on twitter: @CovBuy2Lets

 

For my comments on Coventry’s Property Market, please visit CoventryPropertyMarket.co.uk

 

For visual idea’s, please visit my boards on Pinterest: uk.pinterest.com/CovBuy2Lets/

 

My office is located at 2 Greyfriars Court, Greyfriars Road, Coventry, CV1 3RY

 

I am also contactable via email: heenay@newman.uk.com

 

REMEMBER We are also located in Southam, Leamington Spa and Rugby.

 

We are experienced in Lettings, Property Management, Block Management, Portfolio Management, Sales and Financial Services.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s