How the UK General Election will impact the Falkirk property market?

Well, it all came as a bit of a surprise – Theresa May calling a snap UK General Election on 8 June 2017.

When I first heard the news, my immediate reaction was that calling the UK General Election was, on balance, a smart move for Theresa May as if she wins (as the opinion polls are strongly suggesting) she will gain more power in both the EU Brexit negotiations and with the hard-liners in her own party. 

However, how the UK General Election will impact the property market in Falkirk is another matter; one that may become (slightly) clearer over the weeks of the UK General Election campaigning as Party Manifesto’s become clearer (or should I say slightly less opaque/unfocussed!).  I am looking forward to posting on this subject over the next few weeks.

As a starter to this, regulation wise, the UK General Election is not going to directly affect the Falkirk property market as housing is a devolved matter so it is the Scottish Government that sets the regulations on housing.  In fact, the Scottish Government is more advanced in it’s regulation of housing than the rest of the UK, so if anything some of the Scottish regulation may be exported to the rest of the UK.

Historic experience would suggest that UK General Elections does not have a significant impact on the housing market.  The graph below shows the number of housing transactions per month since 1995 and the dates of the 5 UK General Elections since then.  This shows that there have not been significant movements in the number of housing transactions around the times of these Elections.

So am I saying that UK General Elections are not important to the Falkirk property market?  Well, no and, actually, strongly no particularly in this case.

The Falkirk property market is likely to be influenced by three key things coming out of the UK General Election – the future direction of the UK Economy, the stance on Brexit negotiations following the UK General Election and whether the UK General Election makes IndyRef2 more or less likely.

Keep reading The Falkirk Property Blog over the next few weeks for further analysis of how the UK General Election will impact the Falkirk property market.

However, take heart from my mantra – we are not building enough new properties to satisfy the growing demand for property resulting from the growing population, people living longer, people wanting/needing to live on their own more etc.  Given this, whatever comes out of the UK General Elections, the fundamentals of supply and demand is likely to mean good things for the Falkirk property market.

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Buying to let in Falkirk – is it immoral? (Part 2)

Virtually from the day we were born, we have been told that everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of home owners rose to 69% by 2001.  Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.

But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Falkirk buy to let properties as an investment. Falkirk first time buyers were in competition with Falkirk landlords to buy these smaller starter homes… pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Falkirk landlords fanning the flames of the Falkirk housing crisis bonfire?

I believe that the landlords of the 4,124 Falkirk rental properties are not exploitive and are in fact, making many positive contributions to Falkirk and the people of Falkirk. Like I have said before, Falkirk (and the rest of Scotland and the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

For Scotland to standstill and meet current demand, the country needs to be building 30,000 new households each and every year. Nationally, we are currently running at 16,270 and in the early part of this decade were running at around 14,000.

So let us look at what this means for Falkirk…

For Falkirk to meet its obligation on the building of new homes, Falkirk would need to build 717 households each year. Yet, we are missing that figure by around 393 households a year.

For the Government to buy the land and build those additional 393 households, it would need to spend £53,023,791 a year in Falkirk alone. Add up all the additional households required over the whole of Scotland as well the UK and the Government would need to spend £1.89bn and £23.31bn respectively each year… the Country hasn’t got that sort of money!

With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes to either be rented privately to Falkirk families or Falkirk people who need council housing because the local authority hasn’t got enough properties to go around.

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. The regulation that the Scottish Government is introducing into the Private Rented Sector in Scotland should put rogue landlords out of business and give tenants the more regulated rental market they should be able to expect, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

So only you, the reader, can decide if buy to let is immoral, but first let me ask this question – if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade… where would these tenants be living now? because the alternative doesn’t even bear thinking about!

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Buying to let in Falkirk – is it immoral? (Part 1)

Who is to blame for the current housing crisis in Falkirk – can we blame the 55 to 70-year olds citizens?

Also known as the ‘Baby Boomer Generation’, these Falkirk people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.

…Yet some have suggested these Falkirk baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.

Between 2001 and today, average earnings rose by 55% but average Falkirk house prices rose by 168%

The issue of housing is particularly acute with the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution, are finding as they enter early adult life, very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents… it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The three biggest influencing factors on the Falkirk (and the Scottish as well as the UK) property market in the later half of the 20thCentury were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell most of those Council Houses off in the 1980’s and finally 15% interest rates in the early 1990’s which resulted many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Falkirk.

To start with, in 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages.

So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays… no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you… I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!

So, in Part Two next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

What type of property in Falkirk sells the best?

Knowing how saleable a property is half the battle when deciding what (or not) to buy for your next property investment. Why?  Well because one day, you may need to sell that property. If you go into the purchase with open eyes, you know most of the risks and can barter the price accordingly if you have to.

Bearing this in mind, last week, a couple from Polmont popped into our offices to ask about investing in property. Their concern was if we have another property slump (and we will because that is what has happened to the British property market ever since the 1950’s), if they did need to sell, what type of property would be easier to sell. Now everything sells, even during a slump, but I did some research and followed up their query – I was actually quite surprised with the results.

A good guide to judge the saleability of property is the number of properties for sale, compared to the numbers that are sold, subject to contract. Now I carried out this comparison last week, so the numbers will be marginally different today, but of the 16,819 households in Falkirk there are 370 properties on the market for sale. Of those 370 properties, 178 properties are fully available on the open market waiting for a buyer and 192 have buyers and are sold subject to contract. That means 52% of property on the market has a buyer in Falkirk (interestingly in Linlithgow 45% of properties on the market have a buyer and in Edinburgh 54%).

Analysis by type of property

However, delve deeper, and in Falkirk today, 58% of detached houses on the market have a buyer and great news for terrace house owners as 63% of them have buyers.  Semi-detached houses fair even better, with 2 of the 3 on the market now having buyers (making a wapping 66%). The properties that appear to be sticking though are flats at a comparatively lower 37%.

Analysis by number of bedrooms

Doing a similar analysis but this time by number of bedroom is even more interesting.  45% and 46% of studio and 4 + bed properties respectively on the market already have a buyer and this rises to 49% for two bed properties.  Fascinating though are the three bed properties where 72% of these sort of properties that are on the market have a buyer!  However, life is not so good for 1 bed properties as only 29% of these properties have a buyer.

Taking the above together suggests that, at the moment, 3 bed semi-detached houses look like the way to go.

We are always giving advice to our existing and new landlords in Falkirk on what to buy (or not as the case may be).  Having this detail of information at our finger tips, allows us to spot trends in the local market, which then enables us to give the very best advice to our clients. We don't charge for that advice as we have plenty of opportunity to earn money by finding the best tenants for our landlords in the years to come on the investments we have advised on.  If you want some advice, call me on 01324 469840, come and see me in my offices (6 Vicar Street, Falkirk) or email me (news@thekeyplace.co.uk).

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

The one about the new £1 coin and the Falkirk property market

I was in Tesco's today buying my guilty pleasure (Irn Bru if you are interested, the diet stuff not the full fat nonsense!) when I was handed a new £1 coin in my change.  Anything that reduces the risk of me having fake money in my pocket is a good thing in my book so I am all for the new £1’s but, personally, I also think that they look quite nice.

This new £1 got me thinking about the value of money over time.  The time value of money is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.  This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

So back to my thinkings. 

The old £1 coins first appeared in 1983. 

If you had put £1 in your piggy bank back in 1983 it would be worth only 32p in real terms today as the effects of inflation etc would have greatly corroded its worth. 

However, if you put £1 into property in 1983 the capital value would be worth, on average, £2.42 in real terms today which is more than 7.5 times what it would have been worth in your piggy bank .... but that is only part of the ‘good news’ story. 

Capital growth on rental properties has a good chance of being greater than the average given that:

• Most rental properties are 1 or 2 bed properties whose capital value has grown faster than the average.
• As a professional buyer of properties, your expertise can help you pick properties whose capital value may well grow faster than the average.

And then of course there is my old favourite – capital growth is only part of the good news story of owning a rental property with income being the other key part of this story!  I would estimate that income would add a further £1.70 to the capital growth returns.

As my Father used to say to me – piggy banks are for loose change that you do not invest!

I’m happy to give free impartial advice to would-be investors to help find a property that suits your requirements so, if you are interested in spending your new £1 coins on property, get in touch.

www.thekeyplace.co.uk

# falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning