What would Brexit mean to the 41,000 Solihull Property owners?

If you read all the newspapers, the Brexit debate seems to be focused on central London. Many commentators have said leaving Europe will mean central London would have a lower standing in the world, meaning fewer people will be employed in Central London with the implication of lower wages and not so many jobs for those in the city. We are in Solihull however, not Marylebone, Mayfair or any part of Zone 1 London.

Solihull is home to Land Rover’s main production plant, Alcott Wood and are the birthplace of Richard Hammond. Whilst the central London property market exploded after 2009, that explosion honestly didn’t affect the Solihull property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 41,000 property owners of Solihull?

Initially, over the coming months on the run up to referendum, I believe it will be similar to the run up of last year’s General Election, with short-term uncertainty big decisions will be put on ice and people are less likely to make big money purchases for example buying a property. However, in the four months up to last year’s election, property values in Solihull increased by 1.42%, not bad for a country that thought it would get a hung parliament!

Post vote, should the UK opt to leave Brussels there would be a much more noteworthy impact. I believe that a vote to stay in the EU will see the Solihull property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Solihull (and UK) housing market could be variation (in an upwards direction) in interest, which could theoretically see the cost of mortgages grow swiftly. This will price many out of the market however two thirds of landlords buy without a mortgage, so this won’t affect them.  According to the Bank of England 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% do not so if you aren’t on a fixed rate ... my advice is to talk to your mortgage broker now, as interest rates can only go in one direction!

I suspect whatever decision the electorate of Solihull and the country as a whole make, over the long term it won’t have a major effect on the Solihull property market. We have seen off ‘the end of the world’ credit crunch of 2008/9, subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash and many more!

Today, property prices are 163.21% higher than 21 years ago in Solihull and are 6.4% higher than 12 months ago. So, make your own decision on 23 June 2016 safe in the knowledge that whatever the result, there might be some short term volatility in the Solihull property market.  In the long term, the Solihull property market will be just fine, even if it has a little blip in the summer and property investment is a long term strategy.

For more advice and opinion on the Solihull property market, please pop into our Solihull property lounge for a drink and chat. 

               

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For further details on this development or the Solihull property market pop into our property lounge or email me on jane.morcom@centrickproperty.co.uk

Only 2,859 Council Houses remaining in Solihull…

The ‘Right to Buy’ scheme a policy introduced by Margaret Thatcher in 1980 gave secure council tenants the legal right to buy the council home they live in at a discounted sale price.  The heyday of the Council ‘Right to Buy’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. In 1997 however, Tony Blair reduced the discount available to tenants of council houses and as a result the numbers of properties being bought under the ‘Right to Buy’ scheme began to decline.  Local housing associations have picked up the mantra and demand continues to be high.

So what does this mean for Solihull homeowners and landlords?

Looking at the overall figures, 5,895 Council properties were bought by council tenants in the Solihull Metropolitan Borough Council area between 1980 and 1998. These are large numbers by any measure and even more important to the whole Solihull property market (i.e. every Solihull homeowner, Solihull landlord and even Solihull aspiring first time buyers) when you consider these 5,895 properties make up a colossal 14.3% of all the privately owned properties in our area (because in the local authority area, there are only 41,098 privately owned properties).

Solihull first time buyers and landlords are now able to buy these ex-council properties second hand as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received (council discount was repayable if the first owner sold within a stipulated time period - usually 5 years).

Now let us all be honest, some of the available ex-council properties lack the vital curb side appeal that a handful of landlords crave. Developers of new builds know all about curb side appeal as they dress up the exteriors of their new homes to make them more appealing to buyers.

We find that many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live. Remember the first rule of buy to let property is that you aren’t going to live the property yourself. What an ex-council property lack in terms of curb side appeal, they more than make up for in other ways such as location. Tenants will be more concerned about how close the property is to a particular school or family members for child care rather than the look of a property.

Ex-council properties tend to increase in value at a slower rate than the more modern properties, however this is more than made up for with the higher yields plus those built between the wars or just after are really well built. Demand for such properties is good due to the current value of Solihull properties and the tough lending criteria, people will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Solihull properties in the 80’s and 90’s, means that today’s younger generation who would have normally been able to get a council house are now unable to as many were sold ten or twenty years ago.

So to Solihull landlords my recommendation is: don’t dismiss ex-council houses and apartments but remember the first rule of buy to let.  Solihull landlords should go in with an open mind and take as much advice as possible. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property. For tips and advance on the Solihull property market please email me on jane.morcom@centrickproperty.co.uk

15% of Solihull people Rent - Is that Healthy?

Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter (that buzzed in the night) or you lived in a council house. In the latter part of the 20^th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting in today’s market and as the rate of homeownership is starting to drop substantially, it appears there is no stigma at all to renting… everyone is doing it. In fact, of the 122,056 residents of Solihull, 19,113 of you rent your house from either the local authority/social provider (i.e. council house or housing association) or private landlords – meaning 15.65% of Solihull people are tenants.

The idea of homeownership is deeply embedded in the British soul, in fact 101,762 Solihull people live in an owner occupied property (or 83.37%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year, so that first time buyers can purchase their first home. To get votes, Thatcher (and for that fact, everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate homeownership to achieving the pinnacle of British life.

So, as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, homeownership could be affecting your health! The UK, according to Bloomberg, is only the 21^st healthiest country in the world. Germany is at No.10 and Switzerland is at No.4 and homeownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).

In the Solihull Metropolitan Borough Council area, 72.16% of homeowners, who own their house outright, said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 7.05% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types – 68.23% of Solihull local authority/social tenants said they were in ‘very good’ or ‘good’ health and 11.97% were in ‘bad’ or ‘very bad’ health …

… whilst ‘private rented tenants’ in Solihull, were the healthiest, as 87.39% described themselves as in ‘very good’ or ‘good’ health and a mere 3.56% were in ‘bad’ or ‘very bad’ health

I am not suggesting, of course, that low homeownership rates in Switzerland and Germany are directly linked to health, nor, do I expect Brits to all go to Berlin, Interlaken or Düsseldorf and realise how happy people are when they don't need to worry about all the stresses which accompany home ownership. However, the numbers for Solihull do go some way to correlating the argument (and they are similar across the whole of the UK). Nonetheless I do think that, substantially, all of the upside to homeownership in recent years has been a function of monumental rising house prices. Now that's come to an end, it's hard to see why anybody would want to buy?

 Renting is here to stay in Solihull and it’s growing incrementally each year. Even with the new tax rules for landlords, buy to let is still an incredibly viable investment option for most people in the town. 2016 is a great time to purchase a buy to let property in Solihull, but I advise you to buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion and do your research. One place to do this, is the Solihull Property Blog  http://solihullpropertyblog.blogspot.co.uk where you can read more articles like this and glean even more knowledge relating to the Solihull Property Market…

5.6% rise in Solihull Property Values adds weight to the town’s Housing Cris

The UK’s reputation as a nation of homeowners is under threat, as the number of houses being built continues to be woefully inadequate in meeting the ever-demanding needs of our growing population. Solihull is no different in this matter and is currently feeling the effects of this issue. As I was talking to my parents the other day at a family get together; the subject of the Solihull Property market came up in the conversation (after the usual weather and politics…). My parents said it used to be that if you went out to work and did the right thing, you would expect that would be buying a house relatively quickly over the course of your career. You would go on holiday every year and you would save for a pension. That was the way of things. Now however, things seem to have changed.

Back in the autumn of 2015, George Osborne used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses). If you look at the graph (courtesy of the ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1970’s.

How George is going to accomplish the feat of almost doubling house building overnight, I am not entirely sure. Using the analogy of a greengrocer; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving the customers more money (i.e. with the Help to Buy scheme), when there is not enough apples for purchase in the first place, does not really help the situation.

Looking at the Solihull house building figures, in the local authority area as a whole, only 430 properties were built in the last 12 months, split between 260 privately built properties, 140 housing association properties and only 30 council houses. This amount is simply not enough and the shortage of supply has meant Solihull property values have continued to rise, meaning they are 5.6% higher than 12 months ago, rising 1.2% in the last month alone.

I was taught at school that the economics game is all about supply and demand. The demand for Solihull property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers. You see, Solihull’s economy is quite varied. This means activity is expected to remain relatively strong into the early summer of 2016, especially as some Solihull buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April. With regards to supply, we have spoken about the lack of new properties in the town holding things back, but there is another issue. Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Solihull was 291, whilst 12 months ago, that figure was 353, whilst three years ago it stood at 601… a massive drop!

With demand for Solihull property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Solihull.