Thursday, 7 December 2017

Increase in Interest Rates to cost Warrington Home Owners £204.71 a year



Warrington homeowners will be among those affected by the latest rise in the Bank of England interest rates. The first increase in 10 years; they have just been raised from 0.25 percent to 0.5 per cent. This uplift comes as inflation hits a 51-month high of 2.9 per cent whilst the national unemployment rate is at an all-time low of 4.3 per cent.
    
Interestingly, the Governor of the Bank of England has indicated that the interest rate is likely to increase again over the next couple of years, but Mr Carney said mortgages and savings would not be affected in the short term. However, look at all the big banks and just about all of them have increased their standard variable mortgage rate..  

The average Warrington mortgage is £81,883

I have to ask by how much Warrington homeowners (on variable rate or tracker mortgages) will see their repayments increase?

In the WA1-WA5 postcodes there are 35,958 homeowners with a mortgage, of which 15,448 have a variable rate mortgage (the remaining have fixed rate mortgages). The total amount owed by those WA1-WA5 homeowners with those variable rate mortgages is £1,264,898,595, meaning the average monthly mortgage payment for those home owners on variable rate mortgages before the interest rate rise was £638.46 per month and now its £655.52 per month … meaning

The interest rate rise will cost Warrington
homeowners on average an extra £204.71 per year

Whilst this is the first raise in interest rates in over 10 years, it must be noted it is at a significantly low level compared to figures in the 1970s and early 1990s. Many of my readers talk of interest rates at 17 per cent when Sir Geoffrey Howe increased them to try and combat the hyperinflation (from the fallout of the financial crisis that hit Britain in the 1970’s) and Norman Lamont in September 1992 with the infamous Black Wednesday crisis, when interest rates were raised from 10% to 15% in just one day.
So, what will this interest rate actually do to the Warrington housing market?
Well, if I’m being frank – not a great deal. The proportion of Warrington homeowners with variable rate mortgages (and thus directly affected by a Bank of England rate rise) will be smaller than in the past, in part because the vast majority of new mortgages in recent years were taken on fixed interest rates. The proportion of outstanding mortgages on variable rates has fallen to a record low of 42.3 per cent, down from a peak of 72.9 per cent in the autumn of 2011.
If more Warrington people are protected from interest rate rises, because they are on a fixed rate mortgage, then there is less chance of those Warrington people having to sell their Warrington properties because they can’t afford the monthly repayments or even worse case scenario, have them repossessed.
However, and this will be of interest to both Warrington homeowners and Warrington buy to let landlords …
.. for every 1% increase in the Bank of England interest rate, it will cost the average Warrington homeowner on a variable rate mortgage £68.24 per month

So, what next? Because UK inflation levels are at 2.9 per cent (the country’s highest rate since April 2012) and the Bank of England is tasked by HM Government to keep inflation at 2 per cent using various monetary tools (one of which is interest rates) – you can see why interest rate rises might be on the cards in the future as increasing interest rates tends to dampen inflation.


Now of course there is a certain amount of uncertainty with regard to Brexit and the negotiations thereof, but fundamentally the British economy is in decent shape. People will always need housing and as we aren’t building enough houses (as I have mentioned many times in the Warrington Property Blog), we might see a slight dip in prices in the short term, but in the medium to long term, the Warrington property market will always remain strong for both Warrington homeowners and Warrington landlords alike.

If you are a landlord who may have a void property over winter, then feel free to get in touch and let us at Hamlet Homes provide you with a fully reference checked and credit checked tenant in your property before the weather gets even colder, to ensure your property is protected.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

Thursday, 30 November 2017

Warrington Rents Set to Rise to £659 pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Warrington peaked at 1.9%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Warrington rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Warrington rents will regain their upward trend and continue to increase as demand for Warrington rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Warrington). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Warrington, that Warrington landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Warrington buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Warrington landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin). 

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth.  It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Warrington? In my considered opinion,

Rents in Warrington over the next 5 years will rise by 9.3%, taking the average rent for a Warrington property from £603 per month to £659 per month.

To put all that into perspective though, rents in Warrington over the last 12 years have risen by 15.2%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Warrington economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections 

  

In the past, making money from Warrington buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Warrington property market, as a Warrington landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Warrington, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Warrington Property Market blog - www.warringtonpropertyblog.co.uk

If you are a landlord who may have a void property over winter, then feel free to get in touch and let us at Hamlet Homes provide you with a fully reference checked and credit checked tenant in your property before the weather gets even colder, to ensure your property is protected.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

Thursday, 23 November 2017

Top Tips – Protecting Your Warrington Property Over Winter


Just how quick has this year gone by, did we even get a summer? Im not sure why i am even complaining, I really enjoy the Winter season, dark at 4pm the morning chore of de – icing your car and taking each step with caution in case you slip! Winter can be a tough time for everyone – but none more so than landlords.

These colder months present potential risks to your rental properties, which could lead to costly problems.However, taking some time now to check your properties can help with un-expected costs and help ease you through a disaster free winter.
The key to protecting your rental property over winter is making sure you have good tenants living inside them - if a house is being lived in, that means its warm, safe and providing the tenants are good it means your investment will be looked after. 


Void Periods

Void periods are a major threat during the cold months. If you know that your property is likely to be empty over the winter, you need to make extra plans to ensure its upkeep. Make sure that you visit regularly to open windows and check on the heating. If you can’t do this yourself, make sure that you arrange for someone else to visit.

If your property is likely to be unoccupied over the Christmas period, either while students are returning home or your tenants are taking a long holiday, ensure that you take the following precautions as expensive items on display are an easy target for thieves.

Invest in theft deterrents such as alarms (visible from the exterior of the property) and motion sensors. Ensure that the locking mechanisms meet the insurance policy requirements (usually 5 lever mortise locks but this may vary from policy to policy).

It’s also worth checking if there are any neighbourhood watch groups operating in the area and advise them of any void periods over the festive season.

Prevention

Even before you get to winter, get things checked out well in advance.If you are not covered by a guarantee or warranty it will probably cost more to get stuff fixed at Christmas time (and even if you do have a warranty it will take longer.) So, if the boiler is making a wheezing noise or the washing machine is clanking, have it checked out now. 

Keep Tenants Informed

Well-informed tenants are the best protection against winter property damage. Don’t assume that your tenants know how to deal with the cold weather; many won’t. Similarly, you should remember that it is your responsibility as a landlord to make sure they have the information they need.

Consider putting together an information pack, including things like the location of stopcocks, basic boiler operation, and so on. Remind tenants to periodically turn the heating on (using the timer system if one is available) if they go away over Christmas, in order to ensure that pipes don’t freeze. Another great way to warm up your property is to bleed the radiators. This releases any trapped air, allowing hot water to fill every part of your radiator and warm the property more efficiently. It may be worth dropping off some radiator keys to your properties and showing your tenants how to use them.

Make sure they know where the fuse box is and that they know how to turn off the gas. Tell them to keep a note of the number 0800 111 999 – they should call this if they smell gas.

Ask friends for names and phone numbers of good plumbers, heating engineers and other trades people. Have some portable electric fan heaters you can use to give your tenants to keep them warm if the heating conks out and no one can come out and fix it promptly.

Getting the Work Done

Only use properly qualified tradesmen who are member of a national body of association. Check what membership of the body gives you and check they really are members by asking for ID. For example, all gas engineers should be listed on
 http://www.gassaferegister.co.uk/(the new name for Corgi)

Decent plumbers and some heating engineers should be in
 http://www.ciphe.org.uk/(which also has a list of plumber and heating engineers who are available over the Christmas period) or the Association of Plumbing and Heating Engineers. Some white good suppliers are closed for only one day at Christmas.

If you are a landlord who may have a void property over winter, then feel free to get in touch and let us at Hamlet Homes provide you with a fully reference checked and credit checked tenant in your property before the weather gets even colder, to ensure your property is protected.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

Thursday, 9 November 2017

Ask Andy – My Warrington tenants may have sub let, what are my responsibilities?


Dear Andy,
I have been notified by the council that my tenants may be subletting, apparently 2 of the sub letters are trying to claim benefits. Where do I stand legally?
Thanks Amanda

Andy’s Answer:
Hello Amanda,
I hear your concerns, finding out a tenant may have sub let a room in your buy-to-let can be a worrying time. However there are landlords out there who will consider allowing tenants to take in lodgers. People who cannot afford a place to call home unless they rent a room may otherwise become homeless -ethical reasons why landlords may consider allowing subletting.
If your tenant looks after the property and pays the rent on time, is it in your best financial interest to evict the current tenant and start all over again?
Questions questions questions!

You may have fears that your buy-to-let will be open to abuse and will become a house for all and sundry. The new occupiers are an unknown quantity, are they suitable to be living in your property and what about the right to rent laws?
Well, If the tenant has taken in a lodger without telling you it is your tenants responsibility to complete the right to rent check as the tenant becomes the lodgers landlord.
Your tenancy agreement should have a clause which stipulates no sub-letting whatsoever or at the very least without prior written consent from the Landlord. You do not have to give permission, if you do, you are at liberty to attach conditions to the consent if necessary.
A landlord cannot evict a subtenant. Remember, the landlord has no contractual relationship with the subtenant, even though the subtenant is living in the landlord’s property.
My take on this – I would rather know what’s going on in the property and retain full control. I would complete full checks on the new person and create a new tenancy with the new tenant added. This makes the occupier a tenant instead of a lodger but that way their status is clear and if one of the tenants leave, leaving the other in the property, possession is usually simpler.
Until next week

If you are a Warrington landlord or tenant and would like to talk about your property, I am here to help. All you need to do is give me a call on 01925 235 338 or drop me an email on andy@hamletwarrington.co.uk

Thursday, 2 November 2017

Warrington Homeowners Are Only Moving Every 16 Years (part 2)


In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 30 years. The biggest reason being that confidence was low and many homeowners didn’t want to sell their home as Warrington property prices plunged after the onset of the financial crisis in 2008. However, since 2009, the rate of home moving has increased (see the table and graph below), meaning today:

The average period of time between home moves in
Warrington is now 16 years.

This is an increase of 66.04 per cent between the credit crunch fallout year of 2009 and today, but still it is a 28.59 per cent drop in moves by homeowners, compared to 15 years ago (The Noughties).

Average Length of Time (In Years) between Home Moves in the
Warrington Borough Council Area
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
20.74
16.53
14.99
15.79
16.49
15.80
14.78
12.93
12.75
13.64
16.96

2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
12.39
12.01
24.50
30.07
27.78
28.43
27.38
21.79
18.21
18.28
18.11





So why aren’t Warrington homeowners moving as much as they did in the Nineties?

The causes of the current state of play are numerous. In last weeks article I talked about how ‘real’ incomes and savings had been dropping. Another issue is the long-term failure in the number of properties being built. Only a few weeks ago in the blog, I was discussing the draconian planning rules meaning house builders struggle to locate building land to actually build on.

Back in the 1960’s and 1970’s, as a country, we were building on average 300,000 and 350,000 households a year. The Barker Review a few years ago said that for the UK to stand still and keep up with housing demand (through immigration, people living longer, a just under 50% increase in the number of households with a single person since the 1980’s and family makeup (i.e. divorce makes one household now two)) we needed to build 240,000 households a year. Over the last few years, we have only been building between 135,000 and 150,000 households a year.

Finally, as the UK Population gets older, there is no getting away from the fact that a maturing population is a less mobile one.


So, what does this mean for Warrington homeowners and landlords?

Well, if Warrington people are less inclined to move or find it hard to sell a property or acquire a new one, they are probably less likely to move to an improved job or a more prosperous part of the UK.

Many of the older generation in Warrington are stuck in property that is simply too big for their needs. The fact is that, in Warrington, nearly five out of every ten (or 49.5 per cent) owned houses has two or more spare bedrooms; or to be more exact ...

30,477 of the 61,552 owned households in the Warrington
area have two or more spare bedrooms.

So, as their children and grandchildren struggle to move up the housing ladder, with those young families bursting at the seams in homes too small for them i.e. overcrowding, we have a severe case of under-occupation with the older generation - grandparents staying put in their bigger homes, with a profusion of spare bedrooms.

Regrettably, I cannot see how the rate of properties being sold will rise any time soon. Many commentators have suggested the Government should give tax breaks to allow the older generation to downsize, yet in a recent White Paper on housing published just weeks before the General Election, there was no reference of any thoughtful and detailed policies to inspire or support them to do so.

This means that there could be an opportunity for Warrington buy to let landlords to secure larger properties to rent out, as the demand for them will surely grow over the coming years. As for homeowners; well those in the lower and middle Warrington market will find it a balanced sellers/buyers market, but will find it slightly more a buyers market in the upper price bands.


Interesting times ahead!
Our office address is based at 6, Bankside, Crosfield Street, WA1 1UP. Many of my blog readers also email me with RightMove , Zoopla or On The Market  links to look at and offer a second opinion so if that’s more convenient my email address is manoj@hamletwarrington.co.uk

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 26 October 2017

Warrington Home Owners Are Only Moving Every 16 Years (Part 1)


The average house price in Warrington is 6.24 times the average annual Warrington salary. This is higher than the last peak of 2008, when the ratio was 5.54. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Warrington) property prices might drop like a stone. The point is - they haven’t.

Now it’s true the market for Warrington’s swankiest and elegant properties looks a little fragile (although they are selling if they are realistically priced) and overall, Warrington property price growth has slowed, but the lower to middle Warrington property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Warrington people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Nineties. My statistics show…

The Total Number of Property Sales Per Annum in Warrington
Borough Council Area Since 1995
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2,937
3,685
4,065
3,858
3,898
3,855
4,121
4,711
4,776
4,467
3,591











2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
4,918
5,073
2,486
2,026
2,193
2,143
2,225
2,796
3,345
3,333
3,364

  

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Warrington housing market following the 2016 Brexit vote has seen the number of property sales in Warrington and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes - for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder. 

But coming back to today, looking at the property sales figures in the Warrington area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).


Next week I will be discussing how these (and other issues) has meant the level of Warrington people moving home has slumped to once every 16 years.
If you find yourself passing our office then pop in (the kettle is always boiling). We have plenty of free parking available and I’ll even get the ‘posh’ biscuits out.

Our office address is based at 6, Bankside, Crosfield Street, WA1 1UP. Many of my blog readers also email me with RightMove , Zoopla or On The Market  links to look at and offer a second opinion so if that’s more convenient my email address is manoj@hamletwarrington.co.uk

Don't forget to visit the links below to view back dated deals and Warrington Property News.