60.3% of Staines Voters voted to leave the EU - What now for the 9563 Staines Landlords and Homeowners?

It’s 5.50am and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MPs from the Remain camp are using words like “challenging times ahead”. 34,135 voted to Leave, 22, 747 voted to Remain,  77.9% turnout - great turnout, Well done,  Spelthorne! .. And now the votes have been cast.. What next for the 7905 Staines homeowners,  especially the 4023 of those Staines homeowners with a mortgage? During the campaign, the Chancellor suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best; it focused on the abrupt and hasty increase in UK interest rates, which  would raise the cost of mortgages, and therefore potentially lower demand for property, causing a drop in property prices. … and I would say, yes .. that is likely, it will probably happen. Staines Property Values Staines property values may well  drop in the coming 12 to 18 months – but by 18%? - I am sorry I find that  overly pessimistic and believe that figure was overblown rhetoric to try to persuade homeowners and landlords to vote in a particular way. Since the last In / Out EU Referendum in June 1975, property values in Staines have risen by 2183.6% That isn’t a typo - and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14%. Another Credit Crunch? Notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train. Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because we Brits love our Bricks and Mortar.. and of course we will always need a roof over our head. However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. But  whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier... it will make British exports cheaper! And of course, that is great for the economy. Interest Rates … And what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise... end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, in the 1990s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50s and older will remember interest rates at 15%. But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing? .. Because whilst property values might drop in the country, they will bounce back. It’s only a paper loss... because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10%... and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling. The Staines landlords of the 4,701 Staines buy to let properties have nothing to fear, nor do the 11,612 tenants living in their properties. Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic. Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but, according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year just to stand still. As the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact. So, what will happen next? Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived! And the value of your Staines property? It might have a short term wobble… but in the long term -it’s safe as houses regardless. Written 23rd June 2016

The Staines Property Market and Euro 2016

Just in case you're not lucky enough to be jetting off to France for the UEFA Euro 2016 football tournament, I thought we’d have a bit of fun looking at the different nationalities that have made their home in Staines. I was hoping it would give me a good idea of who best to soak up the atmosphere with. On a more serious note, I thought it would also be interesting to see how EU migration has affected our property market. During my research some interesting numbers appeared. Going into Euro 2016, France were 3/1 favourites, then Germany at 7/2, third Spain at 11/2, then England at 9/1, Italy 16/1, Poland 50/1, Romania and Wales at 100/1, Ireland at 150/1 and Northern Ireland 500/1. Don’t forget Leicester were 5000/1 at the start of last season! Of the 95,598 residents in Spelthorne, the Home Nations will of course find the biggest bodies of support: 79,435 of the residents are from England, 972 from Wales, 359 from Northern Ireland and 1,087 from Ireland; I can’t help feeling sorry for the 1,343 Scots who didn’t get into the finals! Mainland Europeans make up 3.6% of the population in Spelthorne. Of that 3.6%, 1.68% are from Western Europe and EU residents from Eastern Europe - i.e. the Accession Countries to the EU between 2003 to 2007 (Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Bulgaria and Roumania) make up 1.92% of the population of the Spelthorne Constituency. Broken down into the relevant football teams, Spelthorne has … 217 French 404 Germans 269 Italians 163 Spanish 972 Poles 155 Romanians But what does this have to do with the Staines property market? Quite a lot in fact. Many of the Europeans were economic migrants, especially those from Eastern Europe. And this EU migration has served to fill gaps in skills and labour supply during the growth periods of the mid 2000’s. Subsequently over the last five years in Staines, EU migrants have done little to displace native workers but consistently take the jobs us Brits often turn our noses up at. And of course as there is no preferential treatment for council housing for EU migrants, so they have in fact increased demand for private rented accommodation in Staines. This has meant, as demand for housing in Staines has remained strong, Staines landlords have continued to buy properties to rent out. Therefore, the value of every homeowner’s property in Staines has been kept high because of the demand from these Staines landlords buying starter homes to rent out, allowing existing homeowners to move up the property ladder – benefiting everyone in the chain. Despite strong demand, rents have remained reasonable for tenants: in Staines, rents are only 20.1% higher than they were in 2005, not bad when you consider we have had 38.52% inflation in the UK economy as a whole over the same 11 year period. So EU migration has meant existing homeowners, landlords and the economy as a whole in Staines (and the rest of the UK) have benefited from better economic conditions and property prices have remained buoyant. No bad thing for Staines’ landlords. Now, I wonder who will win the footy?  Back to the TV! Written in June 2016

Landlords Set their Sights on Cheaper Buy-To-Let Properties

The latest research shows landlords are looking to invest in cheaper properties to reduce the impact of the recent stamp duty rate rises on second homes. The impact of the 3 percent stamp duty hike on second homes is starting to be felt as investors set their sights on cheaper properties. According to the latest data from Countryside, landlords are changing their investment habits in an attempt to offset  the increasing purchase costs. The research found the average price paid by a buy-to-let investor fell 8.3 percent month-on-month in April. The average price paid by a landlord was just £178,000, down from £194,000 in March. There was also a fall year-on-year on, with the average investment property costing £188,000 in April 2015. The biggest price reduction was seen in London, where the average price paid by an investor in April fell to £365,000, down from £436,000 in March. Although house prices in London have risen by 13.9 percent over the last year, it is clear landlords now feel lower priced properties represent a better investment. Cheaper areas steal London’s thunder In their search for lower priced properties, landlords are turning their attentions away from the buy-to-let market in the capital and towards more up-and-coming regions.  The number of enquiries is mirrored by eMoov’s national property index, which records the change in supply and demand for the most populated locations across the UK. The index monitors the total number of properties sold in comparison to the number on sale. It found that prime Central London and the North East had the least demand for property over the past three months. The top spots in the index were dominated by London’s outer boroughs and commuter belt areas. However, areas where house prices are lower, like Ipswich, Durham and Aberdeen, also experienced a significant increase in demand. Fewer landlords purchase homes Following a spike in activity in the first three months of the year, there was an expected lull in April as landlords reassessed their investment strategies. From January to March this year there was a 61 percent rise in the number of landlords buying properties when compared to the same period last year.  Many of the sales that would have normally completed in April were rushed through in March to avoid the 3 percent rise in purchasing costs. This resulted in around half the number of landlords buying a property in April 2016 than in April 2015. However, there was good news for first-time buyers and the first indications that the changes made to the buy-to-let sector could be having an effect. The number of sales to first time buyers rose by 19 percent in April 2016 when compared to figures for the same month last year. Rental prices have increased The good news for landlords who are still looking to invest in buy-to-let property is that rents are continuing to rise. Average rents increased by 2 percent over the last year, leaving the average monthly UK rent at £932.  Although the growth of rental prices has slowed since 2015 due to affordability constraints and the number of rental properties that are available, the rental market continues to grow. This is particularly the case in high demand areas like the London commuter belt. How can we help? Stamp duty rates on second homes might have increased but demand and rental prices of properties in the London commuter belt remains high, making Staines one of the UK’s buy-to-let hotspots.  Written in May 2016

£330,000 - Is Staines the best place for my windfall?

Dancing Fountains with Five Swimmers Sculpture, Staines -upon-Thames © Copyright Sean Davis and licensed for reuse under this Creative Commons Licence I had an interesting email from someone in Staines a few weeks ago that I want to share with you (don’t worry, I asked his permission). In a nutshell, the gentleman lives in Egham, is in his mid 60s and still working. He has a decent pension, so already comfortably off when he retires in a couple of years’ time. He has recently inherited £330,000 from an elderly aunt. One option was to put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%: meaning he would get £6,270 in interest a year. One of his other options was to buy a property in Staines to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords. Notwithstanding the war on Staines landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the cut to mortgage interest tax relief that could diminish, the profits of many Staines landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could potentially be mitigated. I told him that buying a Staines buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £6,270 a year OR, as he rightly suggested, invest in property in Staines. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Staines is 3.82% per annum, meaning our potential F.T.L (First Time Landlord) should be able to earn, depending on what he bought, £12,606 a year (before costs). However, I told him, there are plenty of landlords in Staines earning half as much again if not more. The bottom line is that the success of investing in Staines buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property, the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Staines have risen in the last twelve months by 8%, meaning, that if our chap had bought a year ago, not only would he have received the £12,606 in rent, but also seen an uplift of £26,400 …meaning his overall return for the year would have been £39,006 (not bad when compared to the Post Office!). But you might say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in the area currently stand 25.27% above the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Staines, we are well above these sorts of levels.  No guesses as to where I would put my money! And looking at what has come onto the market in Staines in the last two weeks, £330,000 would buy you a very spacious two bed flat, a two bed mid-terrace or a charming two bed cottage, all within a stone's throw of the station, so Staines could very definitely be your Buy To Let Oyster! Written April 2016

Staines' Generation Rent set to grow by 340 households by 2021

Some commentators are saying buy to let is about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated going forward. Some say 500,000 rental properties will flood the sales market nationally in the next 12 months as landlords leave the rental market. ‘Bad news sells newspapers’ – never a truer word in this case as far as I can see. Let me explain why I think buy to let in Staines is only going in one direction – and not the direction the papers are predicting. According to Sheffield University, buy to let landlords will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% (today it is 72.6% in Staines) by 2032, while the rate of private sector renting will increase to 35% (interestingly, in Staines, it stands at 15% today). Demand for rental accommodation in Staines will grow by 340 households in the next five years Over the last six years, Staines’ property values have risen significantly more than average wages/salaries, so given that homeownership and mortgage availability is dependent on your ability to pay, home ownership has been pushed further out of reach for many, at a time when the stock of council houses has actually withered. Nationally, the number of council houses in the last ten years has dropped from 3.16m to 2.18m households - a drop of 31.1%. The Tory’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, from their Help to Buy, their much vaunted Help to Buy Isa, and their Starter Homes Scheme, an initiative offering a 20% discount for first time buyers … but if you are unable to save for the deposit ... none of this means anything to you – which is where the bulk of the ‘20 somethings of Staines find themselves ... yet they still need a roof over their heads! Currently, 3,783 people live in private rented accommodation in Staines These are big numbers and a sizeable chunk of the electorate. So whilst it appears Staines “Generation Rent” youngsters will continue to rent, Staines buy-to-let landlords will be encouraged by the projections of greater rental demand. Staines and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a desirable place to live within good commuting distance of London. So, by 2021, the number of rental properties in Staines will rise to 2,338 Written April 2016 I

8% Rise in Staines Property Values adds weight to the town’s Housing Shortage

Staines’s continuing housing shortage is putting the town’s (and the country’s) reputation as a nation of homeowners under threat, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the town.   

Back in the Autumn, 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 (split down 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 ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960s.

How George Osborne is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there are not enough apples in the first place doesn't really help.

Looking at the Staines house building figures, in the local authority area as a whole, only 280 properties were built in the last 12 months, split down into 270 privately built properties and 10 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Staines property values have continued to rise, meaning they are 8.0% higher than 12 months ago, with a rise of 0.9% in the last month.

I was taught at school (all those years ago!), that it’s all about supply and demand, this economics game.   The demand for Staines 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 (both Staines homebuyers and Staines landlords alike). You see Staines’s economy is quite varied, meaning activity is expected to remain relatively strong into the early Summer of 2016, especially as some Staines buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

.. and of supply, well we have spoken about the lack of new building in the town holding things back, but there is another issue relating to supply.   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 Staines was 73, whilst 6 months ago, that figure was 109 whilst three and a half years ago it stood at 180… a massive drop!

With demand for Staines 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 Staines.   

Written March 2016

Staines Population set to rise to 116,200 by 2036

Staines faces a predicament. The population is growing and the provision of new housing isn’t keeping up. And indeed, the population of Staines is growing at a fairly alarming rate. This is due to a combination of longer life expectancy, a high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices. On the longer life expectancy, did you know that the average age of a Staines’ite (is there such a word?) is 40.4 years? This compares to the South East average of 40.0 years old and the national average of 39.4 years of age. Durham University, known as the UK’s leading authority for population statistics have produced statistics looking specifically at each Borough Council area. Their population projections make startling reading… For the Spelthorne Borough Council area ... these are the statistics and future forecasts: 2016 population           99,747 2021 population           104,207 2026 population           108,490 2031 population           112,464 2036 population           116,252 or seen graphically: The normal ratio of people to property is 2 to 1 in the UK, which therefore means...  We need just over 8,000 additional new properties to be built in the Spelthorne Borough Council area over the next 20 years. Whilst focusing on population growth does not tackle the housing crisis in the short term in Staines, it has a fundamental role to play in long-term housing development and strategy of the town and the surrounding areas. The rise of Staines property values over the last six years since the credit crunch is primarily the result of a lack of properties coming onto the market, a lack of new properties being built and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Staines but can’t buy or rent from the Council). Although many people are talking about the need to improve supply (i.e. the building of new properties), the issue of cumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer. It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing. So whilst one could propose expanding supply to meet the expanding population by building on green belt, most politicians haven’t got the stomach to tackle the problem in that way, especially in the Tory strongholds of the South of England, where demand is greatest. People mention brownfield sites, but recent research suggests there aren’t that many brownfield sites to build on;  certainly there aren’t enough in Staines to accommodate 8,000 properties in the next 20 years. In the short to medium term, demand for a roof over of one’s head will continue to grow in Staines (and the country as a whole). In the short term, that demand can only be met from the private rental sector, which of course is good news for homeowners and landlords alike as it will maintain rising house prices. In the long term though, local and national Government and the UK population as a whole need to realise that these additional tens of thousands of people (millions nationally, of course) need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a prosperous and comfortable future for everyone.