Bourne Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down …

The Press is full of column niches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.

… And that made me think … is there just one Bourne Property Market or many?
I like to keep an eye on the property market in Bourne on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Bourne, be that a buy-to-let property for a Bourne landlord or an owner-occupier house for a homeowner. So, I thought, how could I scientifically split the Bourne housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Bourne property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Bourne, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile. Looking at the market, I have calculated that these are the price bands in Bourne are as follows:

• Lowest Quartile (lowest 25% in terms of value) … Up to £150,000
• Lower/Middle Quartile (25% to 50% Quartile in terms of value) … £150,000 to £190,000
• Middle/Upper Quartile (50% to 75% Quartile in terms of value) … £190,000 to £250,000
• Upper Quartile (highest 25% in terms of value) … £250,000 Upwards

So, having split the Bourne Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening –

Bourne Available Sold STC % Sold
Up to £150,000 33 36 52.2%
£150,000 to £190,000 34 32 48.5%
£190,000 to 250,000 40 28 41.2%
£250,000 Upwards 48 35 42.2%

The best performing price range in Bourne is the lower market. As I would expect, the upper half (the top 50%) is finding things toughest. Interestingly for Bourne landlords, the lower end of the middle market isn’t selling as well as other sectors, so maybe there could be some bargains out there for buy to let investment? Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere).

bourne212 graph

It is a fact that British (and Bourne’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else … unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Bourne landlord investors to bag a bargain?

Want to know where those Bourne buy to let bargains are? Follow my Bourne Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Bourne, many local landlords ask me my thoughts, opinion and advice on what (and not) to buy locally … and I wouldn’t want you to miss out on those thoughts … would you?

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

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128 First Timer Buyers in Bourne  Bought Their First Home in 2017

128 First Timer Buyers in Bourne Bought Their First Home in 2017

A little bit of good news this week on the Bourne Property Market as recently released data shows that the number of first time buyers taking out their first mortgage in 2017 increased more than in any other year since the global financial crisis in 2009.

The data shows there were 128 first time buyers in Bourne, the largest number since 2006.

I expect in 2018 that this increase of first time buyers will level out and maybe dip slightly as, nationally, figures demonstrate that first time buyer’s average household income was £40,691 and this represented 17.3% of their take home pay. Although, it might surprise readers that it is actually cheaper to buy than it is to rent at the ‘starter home’ end of the housing market. Many of you can remember mortgage rates at 12% … even 15%. Today, at the time of writing this article, I found on the open market, 189 first time buyer mortgages at 95% (meaning only a 5% deposit was required) with 3 year fixed rates from a reputable High Street bank at 2.49% … they even did a 3 year fixed rate 100% mortgage for 2.89%!

Interestingly, looking at the other end of the market, the buy-to-let investment in Bourne was subdued, with only 26 buy-to-let properties being purchased with a mortgage. However, I must stress, whilst there is no hard and fast data on the total numbers of landlords buying buy-to-let, as HM Treasury believes only 30% to 40% of buy-to-let property is bought with a mortgage. This means there would have been further cash only buy-to-let purchases in Bourne – it’s just that the data isn’t available at such a granular level.

In terms of the level of mortgage debt in Bourne, looking specifically at the PE10 postcode, there hasn’t been too much change in this over the last few years.

bourne207graph

This is pleasing to see, as new mortgage debt is created by first time buyers, buy-to-let landlords and home movers themselves, that is being roughly equalled by the amount being paid off with mature mortgaged homeowners in their 50’s and 60’s finally paying off their mortgage.

So, what does all this mean for the Bourne Property Market? Well, the stats paint a picture, but they don’t inform us of the whole story. The upper end of the Bourne property market has been weighed down by the indecision around the Brexit negotiations and rise in stamp duty in 2014, when made it considerably more expensive to buy a home costing more than £1m. The middle part of the Bourne property market has been affected by issues of mortgage affordability and lack of good properties to buy, as selling prices have reached the limit of what buyers can afford under existing mortgage regulations. The lower to middle Bourne property market was hit by tax changes for buy-to-let landlords, although this has been offset by the increase in first time buyers.

If you are in the market and selling now and want to ensure you get your Bourne property sold, the bottom line is you have to be 100% realistic with your pricing from day one and you might not get as much as you did say a year ago (but the one you want to buy will be less – swings and roundabouts?). I know it’s not comfortable hearing that your Bourne home isn’t worth as much as you thought, but Bourne buyers are now unbelievably discerning.

So, if you are thinking of selling your Bourne property in the coming months, don’t ask the agent out a few days before you want to put the property on the market, get them out now and ask them what you need to do to ensure you get maximum value in the shortest possible time. I, like most Bourne agents, will freely give that advice to you at no cost or commitment to you.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

120 Bourne Landlords Plan to Expand Their Buy To Let Portfolios

120 Bourne Landlords Plan to Expand Their Buy To Let Portfolios

A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector.

According to Aldermore, the specialist Buy To Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (i.e. Portfolio landlords are landlords that own more than one property).

So, I thought, “Are Bourne landlords feeling the same?” If so, if these numbers were applied to the Bourne private rental market, what sort effect would it have on the Bourne property market as whole?

Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Bourne rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those Bourne landlords who are looking to enlarge their portfolio are doing so because they still see the Bourne rental market as a decent investment opportunity.

With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Bourne far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Bourne landlords.
The art to buying a Bourne buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.

No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) … the housing market has always bounced back stronger in the long term. That’s the point … long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs.

So, what of the numbers involved in Bourne?

There are 134 landlords that own just one buy to let (BTL) property in Bourne and 292 Bourne landlords, who are portfolio landlords (i.e. they own one or more buy to let properties). Between those 292 Bourne portfolio BTL landlords, they own a total of 614 Bourne BTL properties and they can be split down into the size of landlord portfolio in the graph below….

bourne217 graph

If I apply the Aldermore figures that means 120 Bourne landlords have plans to expand their BTL portfolio in the coming year or so.

However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord.

I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Bourne buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the ‘buy to let seesaw’ of capital growth and yield.

If you want to buy right and assess your own portfolio on the yield/capital growth seesaw … drop me a note. I don’t bite and the opinion I give, whether you are landlord of mine or not as the case may be, is given freely, without obligation or cost. The choice is yours. Thank you for reading this article. To read others, please visit my Bourne Property Blog.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

How Affordable is Property for Bourne’s Average Working Families?

How Affordable is Property for Bourne’s Average Working Families?

The simple fact is we are not building enough properties.

If the supply of new properties is limited and demand continues to soar with heightened divorce rates, i.e. one household becoming two, people living longer and continued immigration, this means the values of those existing properties continues to remain high and out of reach for a lot of people, especially the blue collar working families of Bourne.
Looking at some recent statistics released by the Government, the ratio of the lower quartile house prices to lower quartile gross annual salaries in South Kesteven District Council has hit 8.73 to 1.

What does that mean exactly and why does it matter to Bourne landlords and homeowners?

If we ordered every property in the South Kesteven District Council area by the value of those properties, the average value of the lower quartile properties (i.e. lowest 25%) would be £148,000. If we then did the same, and ordered everyone’s salary in the same council area, the average of the lowest quartile (lowest 25%), the average salary of the lowest 25% is £16,958 pa, thus dividing one with the other, we get the ratio of 8.73 to 1.
Assuming there is one wage earner in the house, the chances of a Bourne working family being able to afford to buy their own home, when it’s over eight times their annual salary, is very slim indeed.

The existing affordability crisis of people wanting to buy their own home is the unavoidable outcome of the decade on decade failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. South Kesteven District Council needs to ensure more properties are not only built, but built in the right locations and of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.
Looking at the historic nature of the ratio, it can clearly be seen in the graph below that this has been an issue since the early to mid 2000’s.

bourne218 graph1
However, if one looks at the historic data, those on the bottom rung of the ladder (those in the lower quartile of wage earners) used to be housed by the local authority instead of buying. However, the vast majority of council houses were sold off in the 1980’s, meaning there are much fewer council houses today to house this generation.

Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s, with 100% mortgages, but the with the credit crunch in 2009, that rug (of 100% mortgages) was rudely pulled from under their feet. You see it is cheaper to buy than rent … it’s the finding of the 5% deposit that is the challenging issue for these Bourne working class families. So unless the Government allow 100% mortgages back, the fact is, demand for rental properties will outstrip supply.

In the long term, to alleviate that, I would suggest the Bourne community hold their local politicians at South Kesteven District Council to account for the actions they could take to ensure the affordability of housing and the extent to which they work with private developers and housing associations and aggressively use the planning tools at their disposal to safeguard the local community getting the new households we need. South Kesteven District Council could make certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which do not solve the current problem.
Yet in the short term, all this means is demand for rental properties will continue to grow, keeping Bourne house prices high and Bourne rents high.

If you’d like to know how we can help with no obligation, get in touch at the Boston branch today on the details below.
new lewis
Lewis Thorogood, Branch Manager, Bourne
Call: 01778 300 069
Email: bournesales@hillclark.co.uk

 

Bourne Council Tax Payers Stung by 51.5% above Inflation Rise

Bourne Council Tax Payers Stung by 51.5% above Inflation Rise

Buying and selling a home in Bourne isn’t the easiest or cheapest thing you will ever do.

Estate Agent fees, Solicitors fees, Survey fees, Mortgage fees, Removal Van … the costs just mount up throughout every step of the move. Last week, a Bourne landlord asked me whether the Council Tax Band made a difference to a property’s appeal, be it tenanted or to owner occupiers, when it comes to being sold on the open market and whether extensions or improvements made a difference to the tax banding?

Well, like I said, the first point you should always be aware of is what Council Tax Band your new house or apartment will fall under. Being aware of this before you buy/move will help when planning month by month for life in your home (or investment). But what exactly are Council Tax Bands, and how do they affect landlords/tenants/homebuyers?

How much Council Tax you pay depends on two variables. The first is which Council Tax Band your property is in. A property is placed into a specific band depending upon what the value of the property was in April 1991 – the date when the tax band system was applied. In a nutshell, what your property is worth today has no relevance whatsoever to your banding.

Council Tax Bands have a letter of the alphabet and range from bands A-H.

The Council Tax Band values are:
Band A – up to £40,000
Band B – £40,001 to £52,000
Band C – £52,001 to £68,000
Band D – £68,001 to £88,000
Band E – £88,001 to £120,000
Band F – £120,001 to £160,000
Band G – £160,001 to £320,000
Band H – more than £320,000

So, for example, if a property sold for £110,000 in April 1991 but is now worth £350,000 it will remain in Band E – NOT Band H), as this was the value when the bands were set in 1991. For new homes, the same thing applies: they are valued based on the 1991 market value. This safeguards that all homes and all buyers are treated equally and consistently. The second factor that determines how much Council Tax you pay is what each individual local authority decides each band will pay in Council Tax. (So for example, a householder/tenant in Leeds in a Band E property will pay a different amount in Council Tax each year to someone in Swindon or North London in Band E).

Interestingly, the average current level of Council tax paid by Bourne people stands at £1,161 per annum, up from £403 in 1993 (although if it had risen by inflation in those 25 years .. today that should only be £766) … meaning Council Tax has outstripped inflation by 51.5%. So unless the local authority changes its majority political party, the only way you can change the amount you pay in Council Tax is your banding i.e. you physically move to a higher or lower band.

bourne209graph

Contrary to what most people think, extensions and improvements do not change the Council Tax Band and existing householders/tenants only have to pay the same Council Tax as they would have without any extensions and improvements. However, the Valuation Office (The Government’s Property Valuers) do reserve the right to re-value the extended property if the property gets sold. If you are a potential buyer, you should be aware of this review as it could change the amount of Council Tax you pay after the purchase. If a higher band is necessary, the new band will be based on what the extended property would have been expected to sell for in 1991. However, this does not necessarily mean that the banding will jump one band, as this is contingent on the extent of the changes and whether the property falls towards the top or bottom of its existing band. More often than not – it isn’t an issue and the banding stays the same.

In terms of which band the property is in, this can be challenged. In my experience in the Bourne property market the only issue is one where there is an anomaly with the banding, when one property is in a different band to all the others in the street. This is much rarer than it used to be, as most such anomalies have been found and rectified. Anyone can check the banding of any property by going to Google and typing in “Check My Council Tax Banding”. I do need to mention a thoughtful warning though. Challenging your Council Tax Band is not something to do on a whim for one simple fact – you cannot request your band to be lowered, only ‘reassessed’, which means your band could be moved up as well as down. I have even heard of neighbouring properties band’s being increased by someone appealing, although this is the exception. If you have any questions don’t hesitate to drop me a line.

The Bourne property market and the Governments budget promise to build 300,000 more homes.

The Bourne property market and the Governments budget promise to build 300,000 more homes.

In what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 478 ‘net additional dwellings’ in the last 12 months in the South Kesteven District Council area, a meagre increase of just 0.87% on the 2010 figure.

The figures show that 94% of this additional housing was down to new build properties. In total, there were 450 new dwellings built over the last year in South Kesteven. In addition, there were 26 additional dwellings created from converting commercial or office buildings into residential property and a further two dwellings were added as a result of converting houses into flats.

Net additional dwellings in South Kesteven in the last 12 months
New build Conversions Change of use Demolitions Net Additions
450 2 26 0 478

I was encouraged to see some of the new households in the Bourne area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had re-utilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Bourne housing crisis.

Back in the autumn budget, Theresa May and Philip Hammond set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of home-ownership for all.

“However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.”

Moving from a 2 bed Bourne property to a 4 bed will cost you £478 pm

Moving from a 2 bed Bourne property to a 4 bed will cost you £478 pm

Moving to a bigger home is something Bourne people with growing young families aspire to.

Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three bed Bourne homes are much in demand and it can be a costly move.

If you live in Bourne in a two-bedroom property and wish to move to a four-bedroom house in Bourne, you would need to spend an additional £121,049 (or £478.14 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

Let us see what the average property price is for a Bourne property by the number of bedrooms it has.

Average Property Price in Bourne by Bedroom
1 bed 2 bed 3 bed 4 bed 5 bed
£138,327 £161,881 £197,058 £282,930 £447,984

Bourne Bedrooms

Now lets calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% – so the mortgage cost could be higher or lower depending on the mortgage taken).

Bourne
Price Difference to make the move Cost per month to move up market (Mortgage)
1 bed to 2 bed £23,554  £93.04
2 bed to 3 bed £35,177  £138.95
2 bed to 4 bed £121,049  £478.14
3 bed to 4 bed £85,872  £339.19
4 bed to 5 bed £165,054  £651.96

There are some interesting jumps in costs when moving upmarket as a Bourne buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Bourne is quite high (and hence why some four bed properties are taking slightly longer to sell nowadays). On an aside, a lesson here for all our landlord property blog readers, you can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let because the monthly finance costs and rents achieved don’t match up so well (i.e. A mortgage for a 4 bed home in Bourne would cost you 43.58% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that – although depending on your circumstances, 4 bed homes can offer other advantages to buy to let – pick up the phone if you want to know what they are in more detail).

So, coming back and looking at the stock of properties in Bourne, this also makes interesting reading …

Housing Stock in Bourne by Bedrooms
1 bed 2 bed 3 bed 4 bed 5 bed
2.90% 16.43% 14.98% 12.56% 53.14%

bourne housing stock

The most active purchasers are 20 something and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Bourne, they face stiff competition from these 20/30 something families, making the three bedroom Bourne home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Bourne property market.  Again, if you are a landlord, call the office and we will show you areas with decent returns where you aren’t in so much competition with young Bourne family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Bourne buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.

Nevertheless, that’s the place many homeowners find themselves in with the cost of the additional bedroom being too much to bear. To those buying their home for the first time, all we suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Bourne property ladder.

Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.

If you are thinking of moving yourself and would like to know the current market value of your home I’d love to meet with you over a coffee and I can show you ways how we can achieve you the best possible market price for your property. Give the office a call on 01778 300069.