“The way it works in Gloucester is this, you have to rent where you want to live, or buy where you don’t want to live”

I had this really interesting chat with some my tenants the other day, on renewal of their tenancy agreement. They are a great couple in their early thirties and I know they have decent jobs in Gloucester. They have been tenants of ours for quite a while, so I know them quite well. We got talking and I enquired if they ever thought of buying a property for themselves, to which they replied back with the title of this article. It made me think and so I did some more research into the subject which I want to share with you.

After the end of the Second World War, just over a quarter of the UK population owned their own home, the rest rented from private landlords or the local Council. If someone told you in the 1970’s and 1980’s that they rented, they were considered a second class citizen. Everyone wanted to own their own home .. it was the done thing. We think that home ownership will inevitably happen, but it won't.

It all changed in the 1970’s, when two things happened. Firstly, the number of people who owned their own home broke through the 50% barrier in 1971 and by 1981 it was at 57%. Tied in with that, the average house prices in Gloucester were doubling at one point every four years in the 1970’s so property and profit started to feed off each other.

To put that growth in context, if we were to look at the last 85 years in Gloucester, in 1930, the average Gloucester property was worth £397. It took 16 years for Gloucester property values to double, rising to £982 by 1946. Another 15 years and the average Gloucester property doubled again to £1,864 in 1961. The next doubling only took 10 years, as by 1971 the average Gloucester property had reached £3,789 in value.

It was (as mentioned above) the 1970’s when things really took off, as by 1975 (ie only four years) they had doubled to £7,930 and they doubled again to £15,875 by 1980. It took another eight years for values to double again, as an average Gloucester property reached £33,206 in 1988. Twelve years had to pass until the doubled again in 2000 (£68,323) and just six years to double again by 2006, when they reached £137,799. Where are we today? The average property value in Gloucester currently stands at £203,600.

We could blame Maggie Thatcher for making home ownership the ultimate goal, but what we now need to consider is that the country is turning on its head and we need to, as a country, love renting again. Some blame the banks, but obtaining a 95% mortgage is hard work, but nowhere near impossible. A typical Gloucester first time buyer would only need to save £7,500 for a deposit and fees and they could buy a decent property. For example, you could buy a property in Innsworth near Gloucester, and it would be cheaper each month in mortgage payments than renting.

People might say on surveys that they want to buy. If you have been living in a top of the range large property in Churchdown , but the bank will only lend you enough to buy a smaller property in Innsworth, what would you do? Don’t get me wrong, Innsworth has really pulled its socks up over the last ten years, but it isn’t Churchdown, is it? Again, if you were a twenty something, what would you do? Look again at the title of the post ... “The way it works is, you have to rent where you want to live, or buy where you don’t want to live,” - With tenant demand only going in one direction, that is probably why more and more people are getting into buy to let in Gloucester. With the new rules on pensions and the ability to use them to buy residential rental properties this could be the time for you to buy a rental property. You must take advice on your pension from a Independent Financial Advisor (there are plenty in Gloucester) and you must take advice from people who know what to buy (and not to buy) in Gloucester to ensure you get the best from your investment. One place for such advice is me and you can contact me neil.west@belvoir.co.uk

2 Bed flat 6.6% Yield !

This lovely, modern 2 bed apartment is on the market for £99,999 and lets for £550.00 PCM, giving a 6.6% yield. It is actually rented out through us and on the market for sale with us.

          http://www.belvoir.co.uk/flat-2-41-tolsey-gardens-tuffley-gloucester/91932

We have great tenants in there who are looking after the property as you will see from the pictures. This would make a great low maintenance investment. Please contact me if you would like more details on neil.west@belvoir.co.uk

Cheltenham Property Market : Number of Rental properties set to jump to 15,000 by 2021

At the time of the last census in 2011, 3,401,675 properties in England were privately rented, of which it is estimated, over 1.25 million were owned by private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing the younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief which is not available to homeowners.

They may be asset rich thanks to recently rising property values, but let us not make the landlords the bogiemen .Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Cheltenham.

Property values today in Cheltenham are now back to around the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 26% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the town. Interest rates are at an all time low and first time buyers only need to save a £8,000 deposit to secure a 2 bed semi in Wymans Brook with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?

The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Cheltenham will have risen from the 10,260 properties recorded in 2011 to 15,000 by 2021. Sounds fanciful? Well in 2001, there were only 5,811 privately rented properties in Cheltenham.

It is a fact that we as a country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they got a job.

Tenants, in particular, will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner. If you want a chat about what would make the best sort a property that would offer that in Cheltenham, then please email me on neil.west@belvoir.co.uk.

7.3% Yield ! Dont Hang Around

This 3 bedroom terrace is on the market with The Property Centre. They say that it needs some updating. It is on the market for offers over £90k. Say you got it for £95K , spent £20k , thats a total investment of £115K. Not bad for a 3 bed house! 

                            http://www.zoopla.co.uk/for-sale/details/36438851

I agree with the Property Centre that you could let this for £700 PCM , which on an investment of £115K is a yield of 7.3 % . Thats pretty good in anybodys book. Get on to the agent now and check it out as this will not be around long. If you would like advice in this or any other property please do ask me. 

Gloucester Landlords invest £822 million in the Gloucester Property market

South West property asking prices jumped by more than £950 to £268,500 in February according to Rightmove, an increase of 0.4% from January and 5.6% higher than a year ago. After the traditionally quiet months of January and February, the property market has started to warm up, but talking to some Gloucester Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (ie their REAL value). Is the issue a lack of supply?

Putting aside Gloucester’s continual housing supply shortage, (we only built 4,598 properties in the last decade but the population of Gloucester grew by 11,803), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can't find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Gloucester landlords only last week, I said that I believe this is the new norm in the Gloucester property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Gloucester.

When one looks at the historic data, in June 2008, there were 1,758 properties on the market in Gloucester compared to today’s 728. Should we be worried? Well in February 2010 there were only 803 properties for sale in Gloucester but seven months later in September 2010, this had jumped to 1352 properties, for it to drop to 602 properties in December 2013. The number of properties on the market is a cyclical thing in Gloucester, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase .

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep .. and the youngsters of Gloucester still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Gloucester landlords have stepped in and bought property to rent out to them. Gloucester landlords have bought 4,041 properties over the last decade (investing approximately £822million buying those Gloucester rental properties), meaning there were at the last count, 8,012 Gloucester properties being privately rented out to tenants. Gloucester tenants are in fact getting a good deal as well, as average rents in Gloucester are only 4.6% above where they were seven years ago. That sounds like a win-win situation for everyone to me. Stop blaming landlords and start building more properties in Gloucester .. that is the only answer.

In the meantime, the demand from Gloucester tenants for Gloucester property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please email me on neil.west@belvoir.co.uk or call me on 01452 387334

Massive drop in Homeownership in Gloucester

An Englishman’s home is his castle and when it comes to the UK we are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It is interesting to note that up until the mid to late 1960’s, more people rented their home than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied.

It was only after the Second World War, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme.

In 2001, 74.6% of households were owner occupied in Gloucester, but ten years later, that percentage dropped massively to 67.2%. But here is the interesting part, when you look at the actual numbers of households, 34,177 households in Gloucester were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had actually only decreased to 33,858 households.

So why big drop in percentages but not in actual properties? An additional 4,598 properties were built in Gloucester between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Gloucester. In fact, the number of properties in Gloucester, which were privately rented, jumped from 3,971 in 2001 to 8,012 in 2011!

With the council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location and with no more council houses being built and an increasing number of people looking for a roof over their head, private renting is the only option.

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Gloucester, then it is still a good time to consider buying a property for buy to let investment in Gloucester. I am always happy to give you my considered opinion on which property to buy (or not as the case may be).. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Gloucester Property Blog where you will find the best buy to let deals on a day by day basis from all the agents in Gloucester .