Baldock House Prices Outstrip Wage Growth by 21.13% since 2007

188 v1

 

I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Baldock. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for North Hertfordshire District Council, some interesting figures came out:

 

188 North Hertfordshire table

 

 

188 North Hertfordshire Graph

Salaries in North Hertfordshire have risen by 25.96% since 2007 (although it’s been a bit of a roller coaster ride to get there!) – interesting when you compare that with what has happened to salaries regionally (an increase of 18.65%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in North Hertfordshire are 47.09% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore…

Property values in the Baldock area have increased at a higher rate than wages to the tune of 21.13% … meaning, Baldock is in line with the regional trend

 

188 Baldock Grpah 2

 

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Baldock landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Baldock people are buying, then demand for Baldock rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Baldock property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of home ownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit simultaneously, meaning for many Baldock people, home ownership isn’t a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Baldock tenants and decent law-abiding Baldock landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Baldock in the last 10 (or 20) years … the demand for decent high-quality rental property keeps growing. If you want a chat about where the Baldock property market is going – please read my other blog posts on http://www.baldockpropertyblog.co.uk  or drop me note via email, like many Baldock landlords are doing.

 

Baldock Homeowners and their £260.9 million Debt

Baldock sign

 

Over the last 12 months, the UK has decided to leave the EU, have a General Election with a result that didn’t go to plan for Mrs May and to add insult to injury, our American cousins elected Donald Trump as the 45th President of the United States. It could be said this should have caused some unnecessary unpredictability into the UK property market.

The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the most thriving areas of the Country. Repossessions too are also at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have resulted in…

 

Property values in Baldock according to the

Land Registry are 3.3% higher than a year ago

 

So, what does all this mean for the homeowners and landlords of Baldock, especially in relation to property prices moving forward?

One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.

Roll the clock back to 2007, and nobody had heard of the term ‘credit crunch’, but now the expression has entered our everyday language.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Baldock property market, but in late 2007, and for the following year and half, Baldock property values dropped each month like the notorious heavy lead balloon, meaning …

 

The credit crunch caused Baldockscreen

property values to drop by 14.4%

 

 

 

Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy there were six successive interest rates drops between October 2008 and March 2009; this resulted in interest rates falling from 5% to 0.5%!

Thankfully, after a period of stagnation, the Baldock property market started to recover slowly in 2011 as certainty returned to the economy as a whole and Baldock property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Baldock from the post Credit Crunch 2009 dip and are now 64.7% higher than they were in 2009.

Now, as we enter the Autumn of 2017, with the Conservatives having been re-elected on their slender majority, the Baldock property market has recouped its composure and in fact, there has been some aggressive competition among mortgage lenders, which has driven mortgage rates down to record lows. This is good news for Baldock homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered. For example, last month, HSBC launched a 1.69% five-year fixed mortgage!

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to an all-time high in the UK.

 

In the Baldock postcode of SG7, if you added up everyone’s mortgage,

it would total £260,941,623!

Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?

In my modest opinion, especially if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level … and that is why I consider it important to highlight this to all the homeowners and landlords of Baldock. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Baldock.

If you are interested in the Baldock Property Market, you might learn something by visiting the blog. http://www.baldockpropertyblog.co.uk

 

Baldock’s New 3 Speed Property Market

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“What’s happening to the Baldock Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Baldock property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.

For ease, I have named them the …

  1. lower’ Baldock Property Market.
  2. lower to middle’ Baldock Property Market.
  3. ‘middle’ Baldock Property Market.

 

The ‘lower’ and ‘lower to middle’ sectors of the Baldock property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Baldock property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Baldock property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.

Some of you may be interested to know how I have classified the three sectors ..

  1. lower’ Baldock housing market – the bottom 10% (in terms of value) of properties sold
  2. lower to middle’ Baldock housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
  3. middle’ Baldock housing market – which is the median in terms of value

 

If one looks at the figures for North Hertfordshire District Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.

181 table

 

181 graph 1.png

You can quite clearly see that it is the ‘lower to middle’ market that has performed the best.

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower to middle’ market percentage uplift), to the ‘middle’ 1995 housing market figure, the 2017 figure of £361,822, would have been £400,229 instead – quite a difference you must agree?

 

181 graph 2

 

Now, I have specifically not mentioned the upper reaches of the Baldock housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Baldock’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Baldock property market – looking at the stats for the up-market Baldock property market from Land Registry, only 24 properties in Baldock (and a 5 mile radius around it) have sold for £1,500,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Baldock Property Market, but many Baldock “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my blog http://www.baldockpropertyblog.co.uk  it’s free to do so and I’m sure you wouldn’t want to miss out – would you?

I would love to know if you have spotted any micro-property markets in Baldock.

Baldock’s 439 Mortgage Time-Bombs?

 178 v1According to my research, of the 5,604 properties in Baldock, 2,034 of those properties have mortgages on them.  86.3% of those mortgaged properties are made up of owner-occupiers and the rest are buy to let landlords (with a mortgage).

However, this is the concerning part, 439 of those Baldock mortgages are interest only. My research also shows that, each year between 2017 and 2022, 12 of those households with interest only mortgages will mature, and of those, 3 households a year will either have a shortfall or no way of paying the mortgage off. Now that might not sound a lot – but it is still someone’s home that is potentially at risk.

Baldock 178 Graph 1

Theoretically this is an enormous problem for anyone in this situation as their home is at risk of repossession if they do not have some means to repay these mortgages at the end of the term (the typical term being 25 to 35 years). Banks and Building Societies are under no obligation to lengthen the term of the mortgage and, when deciding whether they are prepared to do so or not, will look at it in the same way as someone coming to them for a new mortgage.

Back in the 1970’s and 1980’s, when endowment mortgages were all the rage, having an endowment meant you were taking out an interest only mortgage and then paying into an endowment policy which would pay the mortgage off (plus hopefully leave some profit) at the end of the 25/35-year term. There were advantages to that type of mortgage as the monthly repayments were lower than with a traditional capital repayment and interest mortgage. Only the interest, rather than any capital, is paid to the mortgage company – but the full debt must be cleared at the end of the 25/35-year term.

Historically plenty of Baldock homeowners bought an endowment policy to run alongside their interest only mortgage. However, because the endowment policy was a stock market linked investment plan and the stock market poorly performed between 1999 and 2003 (when the FTSE dropped 49.72%), the endowments of many of these homeowners didn’t cover the shortfall. Indeed, it left them significantly in debt!

Nonetheless, in the mid 2000’s, when the word endowment had become a dirty word, the banks still sold ‘interest only’ mortgages, but this time with no savings plan, endowment or investment product to pay the mortgage off at the end of the term. It was a case of ‘we’ll sort that nearer the time’ as property prices were on the rampage in an upwards direction!

Thankfully, the proportion of interest only mortgages sold started to decline after the Credit Crunch, as you can see looking at the graph below, from a peak of 43.81% of all mortgages to the current 8.71%.

178 fixed graph - just cut and paste in

Increasing the length of the mortgage to obtain more time to raise the money has gradually become more difficult since the introduction of stricter lending criteria in 2014, with many mature borrowers considered too old for a mortgage extension.

Baldock people who took out interest only mortgages years ago and don’t have a strategy to pay back the mortgage face a ticking time bomb. It would either be a choice of hastily scraping the money together to pay off their mortgage, selling their property or the possibility of repossession (which to be frank is a disturbing prospect).

I want to stress to all existing and future homeowners who use mortgages to go in to them with your eyes open. You must understand, whilst the banks and building societies could do more to help, you too have personal responsibility in understanding what you are signing yourself up to. It’s not just the monthly repayments, but the whole picture in the short and long term. Many of you reading my blog ask why I say these things. I want to share my thoughts and opinions on the real issues affecting the Baldock property market, warts and all. If you want fluffy clouds and rose tinted glasses articles – then my articles are not for you. However, if you want someone to tell you the real story about the Baldock property market, be it good, bad or indifferent, then maybe you should start reading my blog regularly.

For more thoughts on the Baldock Property Market – visit the Baldock Property Blog on: http://www.baldockpropertyblog.co.uk

Baldock First Time Buyers Mortgages taking 33.9% of their Wages

Baldock 171 graphic v1I had an interesting chat the other day with a Baldock resident. He told he was a Baldock homeowner, retired and mortgage free.  He stated how unaffordable Baldock’s rising property prices were and that he worried how the younger generation of Baldock could ever afford to buy? He went on to ask if it was right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, Baldock landlords are denying the younger generation the ability to in fact buy their own home.

Whilst doing my research for my many blog posts on the Baldock Property Market, I know that a third of 25 to 30 year old’s still live at home. It is no wonder people are kicking out against buy to let landlords; as they are the greedy bad people who are cashing in on a social woe. In fact, most people believe the high increases in Baldock’s (and the rest of the UK’s) house prices are the very reason owning a home is outside the grasp of these younger would-be property owners.

However, the numbers tell a different story. Looking of the age of first time buyers since 1990, the statistics could be seen to pour cold water on the idea that younger people are being priced out of the housing market. In 1990, when data was first published, the average age of a first time buyer was 33, today it’s 31.

171 - fixed Graph showing Average Age of First time buyers

Nevertheless, the average age doesn’t tell the whole story. In the early 1990’s, 26.7% of first-time buyers were under 25, while in the last five years just 14.9% were. In the early 1990’s, four out of ten first time buyers were 25 to 34 years of age and now its six out of ten first time buyers.

171 - fixed graph Age Distribution of First Time Buyers in UK since 1990

Although, there are also indications of how in-affordable housing is, the house price-to-earnings ratio has almost doubled for first-time buyers in the past 30 years. In 1983, the average Baldock home cost a first-time buyer (or buyers in the case of joint mortgages) the equivalent of 2.8 times their total annual earnings, whilst today, that has escalated to 5.4 times their income.

Again, those figures don’t tell the whole story. Back in 1983, the mortgage payments as percentage of mean take home pay for a Baldock first time buyer was 29.4%. In 1989, that had risen to 75.9%. Today, it’s 33.9% … and no that’s not a typo .. 33.9% is the correct figure.

Baldock 171

So, to answer the gentleman’s questions about the younger generation of Baldock being able to afford to buy and if it was right for landlords to make money on the inability of others to buy property? It isn’t all to do with affordability as the numbers show.

What of the landlords? Some say the government should sort the housing problem out themselves, but according to my calculations, £18bn a year would need to be spent for the next 20 or so years to meet current demand for households. That would be the equivalent of raising income tax by 4p in the Pound. I don’t think UK tax payers would swallow that.

If the Government haven’t got the money, who else will house these people? Private sector landlords and thankfully they have taken up the slack over the last 15 years.

Some say there is a tendency to equate property ownership with national prosperity, but this isn’t necessarily the case. The youngsters of Baldock are buying houses, but buying later in life. Also, many Baldock youngsters are actively choosing to rent for the long term, as it gives them flexibility – something our 21st Century society craves more than ever.

Should the 1,677 home owning OAP’s of Baldock be forced to downsize?

164 pic v3

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

Should we force OAP Baldock homeowners to downsize?

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

One of the biggest reasons OAP’s move home is health (or lack of it).  Looking at the statistics for Baldock, of the 1,677 homeowners who are 65 years and older, whilst 1,062 of them described themselves in good or very good health, a sizeable 484 home owning OAPs described themselves as in fair health and 131 in bad or very bad health.

164 Graph Baldock

7.81% of Baldock home owning OAP’s are in poor health

If you look at the figures for the whole of North Hertfordshire District Council (not just Baldock), there are only 818 specialist retirement homes that one could buy (if they were in fact for sale) and 956 homes available to rent from the Council and other specialist providers (again, you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

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

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

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

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

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

 

658,208 People use Baldock Train Station a year……

train station sign.JPG

How does that affect the Baldock Property Market?

 

It might surprise you that it isn’t always the poshest villages around Baldock or the swankiest Baldock streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Baldock, I am frequently confronted with queries about the Baldock property market and most days, chiefly from newcomers, I am asked “What is the best part of Baldock and its villages to live in these days?”.  Now the answer is different for each person. A lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport of which the railways are very important.

Official figures recently released state that, in total, 902 people jump on a train each and every day from Baldock Train station. Of those, 336 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,432 a year.

If up to £1.82m is being spent on rail season tickets each year from Baldock, those commuters must have some impressive jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Baldock and the surrounding area and so, in turn, these are the type of people who are happy to invest in the Baldock buy to let market, providing homes for the tenants of Baldock.

The bottom line is that property values in Baldock would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it serves in the town

This isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.

Baldock 163 graph

Overall usage of the station at Baldock has increased over the last 20 years. In 1997, a total of 229,353 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 658,208 people using the station (that’s 1,803 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Baldock property. It is also significant for tenants – so if you are a Baldock buy to let investor looking for a property – the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website.

For more thoughts on the Baldock Property market and for any advice please pop into the office or give us a call on 01462 894565.

What will the General Election do to 5,604 Baldock Homeowners?

168 image.jpg

In Baldock, of the 5,604 households, 1,792 homes are owned without a mortgage and 2,034 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Baldock property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015,  in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections:

168 Graph One

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

I then wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line):

168 Graph Two

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

Finally, what does this mean for the landlords of the 767 private rented properties in Baldock? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Baldock will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Baldock, making it imperative that Baldock landlords are realistic with their market rents.  However, in the long term, as the younger generation still choose to rent rather than buy the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet.  If you want to find out more about the Baldock property market or for any advice, please either pop into the office, call us on 01462 894565 or e-mail: lettings@satchells.co.uk.

How The Rented Sector Has Transformed The Property Market In Baldock

Population image

The Baldock housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Baldock tenants and Baldock landlords.

The government recently released a white paper on housing which I have read and wish to offer my thoughts on the topic.  It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Baldock population.

In 1981, the population of North Hertfordshire stood at

108,600 and today it stands at 131,700

157 Graph

Currently, the private rented (B-T-L) sector accounts for 13.2% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for home ownership, a different story is told.

53.01% Baldock people owned their own home in 1981

38.08% Baldock people rented from the Council or Housing Association in 1981

 and 8.91% Baldock rented from a Private Landlord       

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of North Hertfordshire set to grow to 161,000 by 2037 it is imperative that North Hertfordshire District Council and central government all work actively together to ensure the residential property market does not hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new home builders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies but it is something Baldock landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, dating apps and TV with the likes of Netflix. Many Baldock youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Baldock and North Hertfordshire, be it B-T-L or B-T-R, has the prospective to play a very positive role.

 

Baldock’s ‘Generation Trapped’ and the £712.9m legacy

Generation Trapped Pic 2

Last week, I wrote an article on the plight of the Baldock 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Baldock homeowners and Baldock landlords alike, is our mature members of the population of Baldock.  Currently OAP’s (65+ yrs in age) in Baldock are sitting on £418.7m of residential property.  However, what about the ‘Baby Boomers’, the 50yr to 64yr old Baldock people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger generation renters.

In Baldock, there are 465 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off.  That property is worth, in today’s prices, £174.3m. There are an additional 320 mortgage free Baldock households, owned by 50yr to 64yr olds, worth £119.9m in today’s prices, meaning…

Baldock 156 Graph

Baldock Baby Boomers and Baldock OAP’s are sitting

on £712.9m worth of Baldock property

These Baldock Baby Boomers and OAP’s are sitting on 7,918 Baldock properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to de-clutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Baldock (and the Country) homeowners to downsize at the right time will also enable younger Baldock people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Baldock and the Planning Dept. should play their part, as should landlords and property investors to ensure Baldock’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.