I was having an interesting chat the other day with a couple
of solicitors at a Bingham business networking event, when the subject of a
lack of property for first time buyers came into the conversation. I followed the chat up with an email of my
findings, findings that I would like to share with you today.
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 our 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 bogeymen they could easily be. Despite
all these benefits enjoyed by private landlords, let us not forget the good
they have done, especially in Bingham.
Property values today in Bingham are still 9.5% below 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 35.5% 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 £7,300 deposit to secure a lovely 2 bed semi in
the Wychwood Road area of Bingham 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 Bingham
will have risen from the 414 properties recorded in 2011 to 625 by 2021. Sounds
fanciful? Well in 2001, there were only 204 privately rented properties in Bingham.
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 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 would like to chat about buy to let possibilities in / around Bingham,
then please email me on katie.archer@belvoirlettings.com
or call me on 01949 714101.
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