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
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