Month: April 2019

Live in Bourne? About to Retire and Privately Rent? You Could be £3,700 a Year Worse Off!

Live in Bourne? About to Retire and Privately Rent? You Could be £3,700 a Year Worse Off!

You read the personal finance pages of the newspapers and it all seems to be the impending pensions crisis … where people aren’t saving enough for their retirement. But it’s not the lack of Bourne peoples’ future pension incomes that are my immediate concern. The fact is that so many of the future retirees in Bourne over the coming decade, who never bought their home in the Millennial years of the 1990’s and 2000’s, will have to make some tough decisions regarding what house they live in when they retire anytime between now and 2038.
In Bourne, there are 133 privately rented households, where the head of the household is between 50 years and 64 years of age (meaning they will be retiring anytime between now and 2038). They are working now and easily paying the rent, yet what happens when they retire?
A Bourne retired couple, who currently privately rent and who have paid their fully qualifying NI stamp over the last few decades are likely to retire with the couples State Pension of £1,091 per month plus a tiny bit of private pension if they are lucky. Given that the average rent in Bourne is £712 a month – a lot of that pension will be lost in rent. This means taxpayers will have no alternative but to step in and top up the rent payments with Housing Benefit, yet…
The maximum housing benefit for a couple in Bourne is currently £398.88 per month … leaving a significant gap when you consider the average rent in Bourne is £712 per month.
It is most people’s opinion that retirees are either council tenants or own their home outright. Looking at these figures though, it looks like both these ‘mature’ private renters could be having to make some decisions on their lifestyle and where they live, possibly looking at downsizing the home they rent to make things more affordable in their old age. Also, the government will be in for a horrible surprise as more of Bourne people retire and continue to rent from a private landlord. Numerous Bourne private renters, with little or no savings, will have to rely on Housing Benefit, which will put greater pressure on the public purse.
The average Bourne retiree will need to find £3,757 pa to stay in their privately rented home after retirement
A recent report from Scottish Widows suggested that 1 in 8 OAP’s will be privately renting by 2032, up from the current one in 15.47 OAP’s whom currently private rent (or 6.47%). In fact, in that report they said the equivalent of more than one-third of the whole annual NHS budget would be spent on Housing Benefit for OAP’s in retirement living in private rented property.
What does this mean for mature Bourne homeowners? I see many using equity release schemes to stay in their homes to pay for a better retirement and others more open to downsizing, selling their large home to a family that needs it and moving into a smaller apartment or bungalow … yet lets be frank – they aren’t building bungalows in large numbers in Bourne anymore.
And for the Bourne landlords? Well with the younger Millennials showing no appetite in jumping onto the homeownership bandwagon anytime soon, it can only result in the demands on the buy to let market from Bourne tenants rising substantially. Of course, many Millennials will inherit money from their home owning parents in the coming few decades, yet a lot won’t as it will be spent on nursing home care and any leftovers (if any) split between siblings.
For those retiring in post 2050/2060, there is better news as official reports suggest those retirees will enjoy a State Pension approximately similar to today’s pensioners with auto-enrolment into top-up private pensions through their employer.
The solution to all this is to build more homes, of course. Last year we created/built just over 217,000 households in the UK, up from a post Millennial average of just under 150,000 households a year. We need to get back to the building booms of the late 1960’s and early 1970’s when on average 300,000 households were built … but back to reality … that won’t happen so it looks like we are turning into a nation of renters, which is of course good news for Bourne’s buy to let landlords!

Advertisements
As 26.5% of Holbeach Property  on the Market is Sold  Are there any bargains because of Brexit?

As 26.5% of Holbeach Property on the Market is Sold Are there any bargains because of Brexit?

Bargains – well yes and no – and let me explain why. To find a bargain you need to know the ‘market’, yet there is not one ‘property market’ in the UK. In fact, the British property market is like a fly’s eye, it looks one whole but in fact it is split into lots of fragmented pieces and the same goes for the Holbeach property market as that too is split into different patches… in fact it can even come down to two streets adjacent to each other, one street selling like hot cakes for top dollar whilst the next street can stick and at comparatively lower prices (i.e. if there is a school catchment boundary or differing postcode).

According to Coutts, property values in ‘Prime London’ have dropped by 14.7% in the last 5 years … yet look closely at those stats and Prime London is considered anything within a 1,500m radius of Kensington High Street above £4.6m – a totally different world to the average property in Holbeach, which is worth just under £190,000 and has risen in value over those same 5 years by 30.7% .. a different world!

I have noticed that the top end of the market above £400,000 in Holbeach and the surrounding areas is proving a little tougher to shift than a few years ago, yet this can’t all be blamed on Brexit, as buyers have long been flinching at overestimated asking prices and excessive stamp duty rates.

In Holbeach, 22.6% of properties for sale have
reduced their asking price in the last 3 months by
an average of 4.3%

A lot less than the reductions that are being seen in central London. In fact, the property market in Holbeach is looking reasonably good with

26.5% of properties on the market in Holbeach being
shown as under offer and Sold subject to contract

…Interesting when compared with the aforementioned London Prime market where only 5.86% of the properties for sale are sold .. some bargains to be had there!

So, where are the bargains in Holbeach? Well, to start with, it’s all about knowing the local Holbeach market. It’s all about comparing and contrasting property, so to start with, check out the property web-portals such as Zoopla and Rightmove to see what’s for sale. The art here is to click on the ‘include Sold stc’ in the filters .. then arrange them in price order. Then you will get a feel for what properties are roughly selling for. Also look at recent sales, so in Rightmove click on ‘House Prices’ on the main menu, on the proceeding drop down menu click on ‘Find Sold House prices’ and now you can type in a street, or even a street plus 0.25miles/0.5miles .. click on ‘List View’ and they are in date order. There is a similar function in Zoopla (feel free to contact me if you need a hand with that).

Then once you have found what you think is a bargain .. view it. Ask the agent why the sellers are moving. By doing your research on the seller, seeing how long it has been on the market, whether they have reduced the asking price (if you ask an agent they have to tell you and by how much) — you could cut a better deal if they are compelled to sell. Push home your advantage i.e. if you are a first-time buyer, don’t have a property to sell, chain free or cash purchaser it can all make a difference.

Looking at the numbers above, some savvy Holbeach landlords and home buyers are taking advantage of the doom and gloom newspaper headlines as property owners’ expectations are probably at the lowest they have ever been since the Credit Crunch, especially if they are in the ‘got to sell’ category instead of the ‘would like to sell’ category.

Like anything in life .. buying a property bargain comes down to putting the hard-work in, doing your homework and jumping at opportunities.