Local property market information for the serious investor

Month: April 2017

Edgware rents rise by 33.3% since 2005

The Edgware Property Market is a very interesting animal and has been particularly fascinating over the last 12 years when we consider what has happened to Edgware rents and house prices.

 

There’s currently much talk of what will happen to the rental property market following Brexit. To judge that, I believe we must look what happened in the 2008/9 credit crunch (and what has happened since) to judge rationale and methodically, the possible ramifications for long-term investors in the Edgware property market. You see, an important, yet overlooked measure is the performance of rental income vs house prices (i.e. the resultant yields over time). In Edgware (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years. Today, they are 33.3% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 3.6% per annum. From a landlord’s point of view, increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

Turn the clock back to 2005, and we have a property being rented for say £900 a month and that is still being rented at £900 a month today, in Spring of 2017. While the landlord is not getting any less income, this £900 is no longer worth as much. Let me explain, in 2005, £900 may have bought a two-week 4* holiday in Italy. Yet, holidays have increased in line with inflation (which has been 38.5% since 2005), so our holiday would cost today £1,246 (£900 + 38.5% inflation = £1,246). Therefore, the landlord could no longer afford the same holiday, even though having the same amount in pound notes from their rental property.

This means when we compare rents in Edgware to inflation since 2005, Edgware landlords are worse off today, when they receive their monthly rental income, than they were in 2005 by 5.2% in real terms (rents increased by 33.3% since 2005, less the 38.5% inflation since 2005 – net affect 5.2% drop)

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Edgware landlords may be content to accept that for a colossal increase in capital value.

Property values in Edgware have risen by 89.7% since 2005

This equates to a reasonably salubrious 7.48% per annum increase over the last 12 years. Even more interesting that this includes the 2008/9 property crash, this will make those Edgware landlords and investors feel a little better about the information regarding rents after inflation.

Moving forward, the prospects of making easy money on buy to let in Edgware have diminished, when compared to 2005. Last decade, making money from buy to let was as easy as falling off a log – but not anymore.

 

It would be true to say, my rental income verses property prices study does lead to noteworthy thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Edgware property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords. The clear majority of agents in Edgware will be able to give a detailed analysis of past and anticipated investment opportunity (especially the awful effect of inflation) on your portfolio. However, if they can’t help – well, you know where I am, the kettle is on!

For more thoughts on the Edgware Property market – visit the Edgware Property Blog

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or not to buy in Edgware), one source of information is the Edgware Property Blog

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! Email me at Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT– the kettle is always on.

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

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog

Facebook – https://www.facebook.com/BenjaminStevensEstateAgents

Twitter – https://twitter.com/BenjamStevensEA

Website – http://www.benjaminstevens.co.uk

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Edgware’s housing affordability hits a ratio of 13.99 to 1


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

 

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

 

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

 

So, let’s look at how affordable Edgware is?  The best measure of the affordability of housing is the ratio of Edgware Property Prices to Edgware Average Wages, (the higher the ratio, the less affordable properties are).   (i.e. looking the table below, for example in 2014, the average value of an Edgware property was 11.67 times higher than the average annual wage in Edgware).

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 (EST)
5.87 7.91 9.94 10.60 9.39 9.37 9.82 9.76 11.67 13.99

 

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

… but it’s not the only reason.

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

It’s easy to look at the headlines and blame landlords.  First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 1 bed apartment in Edgware for around £290,000 and only need to find £14,500, deposit.  Yes, a lot of money, but first time buyers need to decide what is important to them.  Either save up for a couple of years to save the deposit and go without two annual foreign holidays, the full Satellite or Cable TV package with Sports and Movies costing three figures a month, the latest mobile phone and out socialising … or not as the case maybe?

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

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or not to buy in Edgware), one source of information is the Edgware Property Blog

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! Email me at Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT– the kettle is always on.

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

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog

Facebook – https://www.facebook.com/BenjaminStevensEstateAgents

Twitter – https://twitter.com/BenjamStevensEA

Website – http://www.benjaminstevens.co.uk

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Edgware Rents To Rise Quicker Than Edgware Property Prices In Next 5 Years

The next five years will see an interesting change in the Edgware property market. My recent research has concluded that the rent private tenants pay in Edgware will rise faster than Edgware property prices over the next five years, creating further issues to Edgware’s growing multitude of renters. In fact, my examination of statistics forecasts that ..

By 2022, Edgware rents will increase by 23%, whereas Edgware property values will only grow by 18%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Edgware have risen by 53.6%, whilst rents have only risen by 9.4%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Edgware tenants will have fewer properties to choose from, which will push rents higher. In fact, talking to fellow property professionals in Edgware, there appears to be privation and shortage of new rental properties coming on to the Edgware lettings market.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. They didn’t invest in buy to let as a charity or to satisfy any philanthropic urges. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the Council houses were sold off in the 1980’s!).

With the challenges ahead, with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Edgware. As I have discussed in previous articles, the number of properties on the market in Edgware remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why I believe property values in Edgware will only be 18% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Edgware people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands (because they have no money), with the average rent for an Edgware rental property currently standing at £1,524 per month …

Over the next five years, I predict the average rent

in Edgware will rise to £1,875 per month

These are interesting times. There is still money to be made in buy to let in Edgware – Edgware landlords will just need to be smarter and more savvy with their investments. If you are looking for such advice and opinion to help you meet those investment goals, one place you can find more information is the Edgware Property Blog.
If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! Email me at Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT– the kettle is always on.

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

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog

Facebook – https://www.facebook.com/BenjaminStevensEstateAgents

Twitter – https://twitter.com/BenjamStevensEA

Website – http://www.benjaminstevens.co.uk

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357 Properties For Sale in Edgware … is this a good time to sell?

2017 has started with some positive interest in the Edgware property market.  Taking a snap shot of the Edgware property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to 12 months ago:

 

Type of Edgware Property Number of Properties on the Market 12 months ago Number of Properties on the Market now % change
Detached 33 54 +64%
 
Semi 100 111 +11%
 
Terraced 16 25 +56%
 
Apartment 140 155 +11%

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 357 properties for sale today compared with 300 a year ago, a rise of 19%.

Next, Edgware asking prices, compared

to the same as a year ago, are 8% higher.

With that in mind, I wanted to look at what property was actually selling for in Edgware. Taking my information from the Land Registry, the last available six months property transactions for HA8 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

 

Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
Detached £910,000 (2) £1,035,500 (4) £783,333 (3) £730,000 (1) £650,000 (2) £987,500 (2)
Semi

Detached

£585,154 (13) £708,065 (13) £600,160 (13) £670,533 (9) £512,694 (9) £629,636 (11)
Terraced £368,350 (6) £451,250 (8) £418,653 (16) £393,955 (11) £381,333 (6) £411,857 (7)
Flat £372,388 (89) £336,825 (16) £345,571 (14) £356,400 (10) £290,500 (8) £334,195 (10)
All £407,087 (110) £545,025 (41) £471,489 (46) £472,977 (31) £421,049 (25) £504,198 (30)

So what does all this mean for the property owning folk of Edgware?

Well, with more property on the market than a year ago and asking prices 8% higher, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Edgware property ladder, have much more price information about the Edgware property market at their fingertips than ever before.

Those Edgware people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Edgware estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Edgware property-market has an unassailable demand for property – there is one saying that always rings true – as long as the property is being marketed at the right price it will sell.

If you want to know if your Edgware property is being marketed at the right price, send me a web link and I will give you my honest opinion.

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! Email me at Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT– the kettle is always on.

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

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog

Facebook – https://www.facebook.com/BenjaminStevensEstateAgents

Twitter – https://twitter.com/BenjamStevensEA

Website – http://www.benjaminstevens.co.uk

Continue Reading