Tag: lymm

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Lymm Tenants Face Further Rent Hikes, as the Number of Available Rental Homes Drops by 43%

  • The number of properties available to rent in Lymm has dropped from 54 to 31 since February 2020.
  • The average rent a tenant has had to pay in Lymm has risen from £1,287 to £1,694 since February 2020.
  • Many Lymm landlords have cashed in on the post-lockdown property boom of the last two years and sold their properties to owner-occupiers – not fellow landlords.
  • The supply of Lymm rental property isn’t near what is needed, which is of benefit to Lymm landlords rather than Lymm renters.

The Lymm rental property shortage is currently very evident. In this article, I will investigate why there is such a significant lack of homes available for rent across Lymm and what it means for buy-to-let investors.

Anybody who enjoys surfing the property portals (Rightmove, Zoopla and On the Market) will have observed an emerging trend that the number of properties available to rent in Lymm has dropped considerably in the last couple of years.

This reduction has been seen all around the UK as well. For example, on 1st November 2020, there were 372,931 properties to rent on portals. By the 1st November 2021, that had dropped to 275,650; by the 1st November 2022, that had fallen to 171,224.

That doesn’t mean the number of privately rented homes in the country has dropped by over half. Fewer properties are coming onto the market to rent. I will explain why in this article. For tenants, especially over the last 12 months, it has become progressively more challenging to find a Lymm rental home, thus making the rent they must pay go up. This state of affairs in the property market isn’t showing an indication of getting any easier either, making for a hard time for Lymm renters.

So, what is the reason behind the Lymm rental property shortage, and what does this mean for existing Lymm landlords or those potential investors considering buying a Lymm buy-to-let property soon?

Several different components are making the perfect storm in the UK property market.

Firstly, the number of households in the UK.

The UK has not been building enough homes for the last 20 years. I appreciate that parts of Lymm seem like one huge building site, yet as a country, we are woefully undersupplied with property to live in. This has meant house prices continue to rise due to demand. 

The government have known about this issue for decades. The Barker Review of Housing Supply published in 2004 stated that the UK had experienced a long-term upward trend of 2.4% in real house prices since the mid-1970s because of a lack of house building. The report stated that 240,000 houses needed to be built each year to keep up with demand.

The average number of houses built since the mid-1970s has been around 165,000 per year, meaning the UK is short of 3,375,000 houses (i.e., 45 years multiplied by 75,000 missing homes per year).

Several years ago, the government set a target to build 300,000 new homes each year to address this issue.

However, in 2019/20, the actual number of homes delivered stood at just 243,770. In 2020/21, the number of properties built dropped to only 216,000 new homes. In a nutshell, there are fewer available homes to buy, meaning fewer available homes to rent. 

Secondly, Lymm tenants are staying in their rental homes longer.

A Lymm first-time buyer’s average house deposit is £33,983 (the UK average deposit is £53,935).

The average rent of a Lymm property in November 2022 is £1,694 per calendar month (up from £1,287 per calendar month in February 2020) – quite a rise!

These numbers translate into Lymm renters not being able to pay the rent and be able to save for a deposit, or if they are saving, it is taking a lot longer to save for a deposit due to the cost-of-living crisis and higher rent costs.

Also, many Lymm tenants have decided to stay in their existing rental homes because of the rent rises. Many landlords are less inclined to raise the rent on an existing property when they have a decent tenant who keeps the property in good condition and pays rent on time. Anecdotal evidence also suggests that rent arrears in those properties are dropping as tenants know if they don’t pay the rent, the chances are they will have trouble finding another property, and if they do, they will have to pay a lot for their next rental home.

For Lymm landlords, this is all positive news – tenants are staying for longer in their Lymm rental properties, arrears are lower, and void periods are less likely. When it comes to the market, there is less competition (because of the decrease in the availability of Lymm rental properties) so this makes the investment an even better bet.

Thirdly, landlords are selling up on the back of recently increased house prices.

It would be difficult for Lymm buy-to-let landlords to ignore the rising property prices in recent years.

The average property value in Lymm in the summer of 2022 was 17.5% higher than in the summer of 2021.

For some Lymm buy-to-let landlords, especially those who were classified as ‘accidental landlords’ (an accidental landlord is a landlord who never chose to become a landlord, it was just after the Credit Crunch of 2008/9, they found themselves unable to sell their property, so they temporarily let their own property out), they chose to ‘cash in’ on the higher house prices. This would have also contributed to the lack of available Lymm homes for rent.

Yet everything isn’t all sweetness and light for Lymm landlords.

Landlords have a few costs to consider before investing in buy-to-let, including everything from regular refurbishment costs, buildings insurance, letting agents’ fees, income tax, and, not forgetting, stamp duty.

Talking of costs, one issue some Lymm landlords are facing is their failure to plan financially for the recent mortgage interest rate rises. Some Lymm landlords may have become complacent to the ultra-low Bank of England base rates we have had since 2008 and, therefore, may need to sell their rental property, which, if bought by a first-time buyer, will remove another property from the Private Rented Sector.

Another hurdle to jump is the proposed new regulations requiring better energy efficiency for rental properties. It is proposed all new tenancies must have at least a minimum of a ‘C’ rating for their EPC (Energy Performance Certificate) from 2025 (and 2028 for all existing tenancies).

Therefore, as a buy-to-let Lymm landlord, it is wise to do your research to make sure the buy-to-let opportunity is correct for your rental portfolio, particularly when it comes to weathering any impending financial storms. 

Landlords need to consider the returns from their Lymm buy-to-let investments.

Landlords can earn money from their buy-to-let investments in two ways. One is the property’s capital growth, and the other is the rental return (often expressed as a yield). In 96% of buy-to-let investments, there is an inverse relationship between capital growth and yield (i.e., properties that tend to go up in value quicker will have lower yields 96% of the time – and vice versa).

Getting the best balance of yield and capital growth depends on your current and future needs from your Lymm buy-to-let investment.

If you would like me to review your portfolio and ascertain if your existing portfolio will match your current and future needs for the investment – whether you are a client or not, feel free to drop me a line, and we can have a no-obligation chat and possibly organise a review.

What does all this mean for the Lymm rental market?

The continued shortage of Lymm rental properties means it will be more difficult than ever to find a Lymm property to rent, and so rents will continue to grow.

Unlike in Scotland, England and Wales do not have rent controls, with Westminster ruling out the possibility of introducing rent control here to deal with the cost-of-living crisis.

You would think rent controls would be a no-brainer, yet economists from around the world have proved for the last 75 years that rent controls might help tenants in the short term, yet ultimately it drives landlords to sell their investments in the long term, thus reducing the stock of available properties to rent out (not great for future tenants).

Therefore, it is highly likely that Lymm rents will continue to rise for tenants.

Landlords who persevere with their Lymm buy-to-let properties or become a Lymm buy-to-let landlord are set to benefit because they have an asset in very high demand.

The housing shortage, not to mention the other issues discussed above that are affecting the supply of rental properties, is unlikely to be fixed anytime soon!

In conclusion, the Lymm rental market is a constantly changing picture. What is known is that the supply of rental properties is far from what is needed, which can only be to the benefit of buy-to-let investors rather than of tenants renting.

I see buy-to-let as a long-term investment. Everyone reading this knows that the real value in your buy-to-let investment is playing the long game, allowing your Lymm buy-to-let investment to grow over time. Like the crypto or stock market, getting sucked in by get-rich-quick schemes that are selling ‘apparent quick wins’ in property investment is very easy.

I regularly highlight the best buy-to-let deals for Lymm landlords with all the estate agents (not just my own). You don’t need to be a client of mine either to receive that information. Drop me a line or call (without any cost or obligation) if you are interested in making your first Lymm buy-to-let investment or considering adding to your existing Lymm portfolio.

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What will the stamp duty cuts and interest rate rises mean for homeowners and landlords?

The Bank of England increased interest rates to 2.25% and they are expected to be 3.25% by early next year. This increase will make the monthly mortgage payments more expensive for first-time buyers, an issue dubbed by some as the ‘property affordability crunch.’

It will also damage the household budgets of homeowners coming off their fixed-rate mortgages in the next 12 months.

So how many homeowners are coming off their fixed rates in the next year?

Of the 7.97 million homeowners with a mortgage in the UK, 6.1 million of them are on a fixed-rate mortgage at an average rate of 2.04%. Industry statistics show around 1.3 million homeowners are coming off their fixed rate in the next 12 months.

The current crop of fixed-rate mortgage deals available today have already had the recent increase in the base rate ‘priced-in’ for weeks.

The cheapest 5-year fixed-rate today for a 65% Loan to Value re-mortgage (i.e., you are borrowing 65% of the value of your home) is a mortgage rate of 3.8% with Royal Bank of Scotland (RBS).

So, what will be the difference in mortgage payments between a 2.04% mortgage and a 3.8% mortgage? Lets look at Lymm as an example…

Say an average Lymm first-time buyer bought their first home in November 2019 on a 25-year mortgage. They had a 3-year fixed-rate mortgage, and let’s assume they fixed it at 2.04% (as mentioned above), meaning their fixed-rate deal finishes next month. They have £260,000 outstanding on their mortgage, and their Lymm house is worth £400,000. They would have been paying £1,107 per month for the last three years (assuming they took out a 25-year repayment mortgage).

On the RBS deal above, they will have to start paying £1,548 per month from November when they come off their initial rate – a rise of £441 per month in mortgage payments. That’s quite a rise and potential blow to their household budgets.

Yet if they pushed back the repayment term from 22 years to, say, 35 years, that reduces the payment to £1,120 per month – something to consider if you are re-mortgaging in the coming 12 months.

What will the stamp duty changes mean for Lymm property owners?

Liz Truss and Chancellor Kwasi Kwarteng believed that cutting stamp duty will support economic growth by encouraging more people to move home or jump onto the property ladder.

Stamp duty also has other harmful side effects as it decreases labour market elasticity and curtails people from selling up and buying elsewhere, where the jobs are.

Also, stamp duty makes mature homeowners stay put in their large homes rather than downsizing. This reduction in stamp duty will encourage those mature homeowners to move, thus freeing up their large family homes for the younger families that need them.

The ex-Chancellor doubled the zero-rate stamp duty band from £125,000 to £250,000, passing a stamp duty tax saving of up to £2,500 for all English homebuyers.

Also, tax savings are even more significant for first-time buyers, particularly in areas with high house prices, such as London and the South East. They can save a maximum of £11,250 in stamp duty – with a new zero-rate band of £425,000, based on a higher £625,000 spend cap (i.e., the house they buy can’t be over £625,000 for them to qualify for the tax relief).

So, what effect will these stamp duty changes have on the Lymm property market? Looking at recent events in the local property market is the best place to start.

Of the 283 transactions in the Lymm area since June 2021, 67 were below £250,000. These would now be tax-free!

Unsurprisingly, most housing transactions in Lymm were above the £250,000 threshold, yet irrespective of that point, it’s a saving of up to £2,500 for all future Lymm homebuyers.

Anyone currently buying a house in Lymm and not yet completed on their purchase (completion is when you have paid the money for your home and collected the keys) will be in line to make this saving.

Lymm landlords purchasing buy-to-let properties will also save money with the stamp duty cut (but they will still be liable for their second home stamp duty levy of 3%).

Overall, this is a welcome move to help the Lymm property market.

Yet will the stamp duty threshold rise have the seismic effect that the Rishi Sunak stamp duty holiday did in 2021, where just under 40% more people moved home than the long-term 30-year average?

I am sure the stamp duty cut will somewhat offset the rising costs in mortgage rates mentioned in this article and cushion the blow to the property market.

A blow to what you might ask?

Well, many people judge the property market’s health by house prices.

The average value of a Lymm property stands at £464,146 and has risen 40.1% in the last five years. Not bad, eh?

But I believe there is a better way to judge the health of the local property market, and that is the number of people moving home (i.e., housing transactions).

You might be asking yourself why we should be more concerned about the number of property transactions and not the change in property values.

Many economists believe the number of property transactions is a far more accurate bellwether for the health and potency of the local housing market. A greater number of people moving home is better for the whole economy (i.e., what these changes are being made for) than a smaller number of transactions, whilst the same can’t be said for higher house prices. 

So, what is going to happen to Lymm house prices?

I believe the growth in Lymm house prices achieved in 2021/22 is not sustainable into 2023.

In conjunction with the price cap on energy bills, the stamp duty change, the reversal of the rise in National Insurance and the drop in Income Tax will mitigate house price drops. Yet, I foresee a ‘slight’ realignment in the house prices being achieved in 2023, compared to 2022.

The more significant impact these changes will have is the number of people moving home in the next 12 months.

I have been forecasting a 15% to 20% year-on-year drop in Lymm property transactions in 2023. Following this stamp duty cut and the measures mentioned above, I believe it will be lower, yet around 5% lower.

To conclude, I predict we will have slightly lower house prices and fewer people moving home in Lymm, but not any way a crash that many thought was on the horizon.

Before I go though, let me share some thoughts on whether stamp duty is a fair tax.

Now, this is almost a topic for a standalone article itself. Some economists believe that removing stamp duty (which raised £14.1bn in tax in 2021) and replacing that lost income to the Exchequer by increasing council tax on more expensive properties would do a lot more than other intended tax cuts to boost economic growth.

According to some commentators, the way UK Government taxes housing is flawed. They suggest instead of taxing an infrequent property transaction particularly harshly (the average stamp duty bill is £10,600), the Government should tax living in a house more, especially those who live in the higher priced properties.

So let us see how viable that could be…

Even if council tax was frozen for bands A to D (the lower priced properties), and the uplift between the more expensive council tax bands was doubled on each step between band D and H (so a typical band E property owner would see their council tax rise from £2,473 to £3,628 per year and a typical Band H see a rise of from £3,435 per year to £5,790 per year), such massive increases in council tax would be political suicide for the wealthy Tory voting homeowners and only raise £5.28bn – a long way from the £14.1bn currently raised.

Now, if the £14.1bn tax raise were spread evenly over all council tax bands, the average band D property would need to rise by £490 per year, and even a band A would increase by an extra £382 a year … something that again would be political suicide.

Yes, stamp duty is flawed. It’s just every other option has more significant flaws.

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Lymm’s ‘Generation Stuck’ and Their £934m Tied-up Equity

The predicament of the Lymm 20 to 30 year olds who rent and their inability to get onto the housing ladder is often discussed in the press.

There are 4.43m properties in the UK that are still in the private rented sector (compared to 2.13m in 2002).

This group of people in their 20s and 30’s, who rent from a private landlord, are often called ‘Generation Rent’.

Yet would it surprise you that since 2017, the number of UK households in the private rented sector has reduced by 260,000 whilst the number of homeowners has increased by 1.1m?

In this article I want to talk about another set of people, not ‘Generation Rent’, but ‘Generation Stuck’.

Generation Stuck are our middle-aged and mature homeowners of Lymm. They are the generation that could be described as late ‘Baby Boomers’ (born in late 1950s and early 1960s) and the early ‘Gen X’ (born in the mid 1960s to early 1970s).

These 50 to 64 year old people feel stuck in their Lymm homes, and therefore I have nicknamed them ‘Generation Stuck’. Their inability to move could be holding back those younger Lymm ‘Generation Renters’.

So, let me look at the numbers involved.

In Lymm, there are 904 households, whose owners are aged between 50 and 64 years old and about to pay their mortgage off on property that is worth £440.42m.

There are an additional 1,015 mortgage free Lymm households, owned by 50 to 64 year olds, worth £494.50m, meaning …

Lymm ‘Baby Boomers’ and Lymm ‘Gen X ‘are sitting on £934.9m worth of Lymm property.

According to the Census, 47.8% of homes occupied by 50 to 64 year olds have two or more spare bedrooms.

This is backed up by the annual English Housing Survey that states nationally, 49% of properties occupied by these ‘Generation Stuck’ are ‘under-occupied’.

Under-occupied is categorised as having at least two spare bedrooms.

Looking at the statistics closer to home

52.7% of Warrington 50 to 64 year olds have two or more spare bedrooms, making it the 124th highest local authority in the country (out of 348 local authorities).

The rising number of older Lymm homeowners who want to downsize their Lymm home are often held back by the lack of suitable housing options for older people and the difficulties of moving.

Lots of over 50 year old Lymm people cannot move home in the way that they would like, due to a lack of suitable housing options and so can find themselves ‘stuck’ in homes which are no longer suitable for them as they age.

Only 1 in 29 people over the age of 50 move home each year, compared to 1 in 15 for the rest of the population.

Helping mature Lymm homeowners (Generation Stuck) to downsize their homes at the right time will also allow younger Lymm people (Generation Rent) to find the Lymm family homes they need – meaning every generation wins, both young and old.

However, to ensure downsizing works, we need more choices for these “last-time-buyers”.

That means building more bungalows or more ground floor apartments suitable for the middle to older generation.

One way this could be done is by changing the planning rules to force builders to build these types of properties, whilst the other could be the changing of the stamp duty tax breaks for downsizers.

In this way, older Lymm people will be more able to move into homes which suit their specific needs, improve their quality of life whilst meeting their goals in life, all without them becoming detached from their friends and family locally in the Lymm area.

These are my thoughts, please let me know yours.

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Why Aren’t Liz and Rishi Courting Lymm’s Generation Rent?

With the cost-of-living crisis beginning to hit, the 20 and 30-somethings of Lymm urgently need the help and support of the Government to help them get on the property ladder.

For the last few weeks, we have listened to the debates and hustings of Liz and Rishi. Between them, they have told us how they are going to stop building on the green belt, slash taxes, outbid each other on the number of refugees they are going to deport and push back against WOKE culture wars, but what are they doing for the 20 to 30-somethings of Lymm?

Dubbed ‘Generation Rent’ by the press, desperate to get on the property ladder, this is an open goal for any candidate to obtain more votes to become the next Prime Minister.

Yet only 16% of the c.200,000 Tory membership is aged 18 to 34

whilst 47% of members are aged between 55 and 74.

Therefore, it’s not a surprise that neither Liz nor Rishi aren’t speaking daily about the cost of petrol for the daily commute, rising childcare fees or the lack of opportunities for first-time buyers to purchase their own properties.

(For balance, 16% of Labour’s members are 18 to 34, 20% for the Lib Dems and 16% for the SNP).

Everyone is feeling the effect on their household budgets with the rise in energy bills. Yet, it is the younger generation (i.e., Generation Rent) that are having to cope with the frenzy of rising energy costs the most.

Whilst increasing energy prices will affect all households across the country, younger (and less affluent) households are more prone to be disproportionately affected than those on the lowest incomes (i.e., Generation Rent).

In the financial year ending in 2020, the least well off 25% of households spent 5.59% on energy compared to 3.9% for the average UK household. With 2023 energy bills set to be triple those figures, energy bills for those in the lower quartile will rise to around 16.8% of their household budget.

And let’s look at the housing element of the ‘Generation Rent’ household budget.

The average rental of a Lymm property in the summer of 2020

was £1,147 PCM; by the summer of 2021, itwas £1,186 PCM,

and today, it is £1,296 PCM.

Overall, Lymm rents are 9.3% higher than a year ago and 13.1% higher than two years ago.

This is the fastest annual rate of rental growth since records began in 2006. This increase in rents isn’t standard. Before 2020, I would have expected to see this level of rent growth over a seven-to-ten-year period – not two years. Good news for Lymm landlords, yet not so for Lymm tenants.

Why have rents increased so much in Lymm?

It comes down to fewer rental properties and existing Lymm tenants not moving as much.

There are 41 fewer rental properties in Lymm than five years ago, leaving only 724 private rental properties in Lymm.

9 out of 10 rentals come onto the market because the existing tenant is moving. Yet, because there are fewer Lymm rental properties and the asking rents for those are much higher than their current home, many Lymm tenants are not moving, exasperating the issue even further.

Today, I looked on Rightmove, and there were only 11 properties available to rent. I would have expected that to be over double that pre-pandemic.

Neither candidate has been silent on the topic of homeownership for the young.

Rishi Sunak said he would stop building on the greenbelt. This, however, would not help Generation Rent massively.

Liz Truss has pledged to help more renters buy their first home by stating she will ensure tenant’s rental payments could be used as part of mortgage affordability assessments. This is important as the mortgage payments can be 10% to 20% lower than the rental payments.

 

Tied in with new relaxed mortgage affordability rules announced by the Bank of England in early August, this is undoubtedly a step in the right direction to help Generation Rent.

 

Truss also plans to scrap the red tape holding back housebuilding and give local populations more say on developments. However, when Boris Johnson suggested something similar a few years ago, the policy was quietly dropped after the Liberal Democrats used this against them resulting in the Tory’s resounding by-election defeat in 2021 in Chesham and Amersham. So, by the end of the first week of September, we will know who the Prime Minister will be. Whoever gets the job has a gigantic task on their hands. I wish them luck and ask them not to forget the younger generation and their aspiration to be homeowners.

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Lymm Starter Homes are 25.8% Cheaper Today Than in 1989

Even though the average value of a Lymm first-time buyer property has risen by 361.4% since 1989 to £355,430, the monthly payments Lymm first-time buyers must make on their mortgages as a proportion of their take-home pay is 25.8% less today compared to 1989.

Today, according to the Nationwide Building Society…

the average Lymm first-time buyer only needs to pay out 24.5% of their household take-home pay on their mortgage payments, compared to 33.0% in 1989 (i.e., just over a quarter less).

You might say 1989 was 33 years ago, a long time ago and not relevant to today. I would agree.

So next, I looked a little closer to home, and in 2007…

the average Lymm first-time buyer had to spend 37.9% of their household income on mortgage payments (i.e., 35.4% proportionally cheaper than today).

So why do I say all these things?

Last month, the Bank of England revealed that its Financial Policy Committee would be removing their mortgage market affordability test on people taking out mortgages in August.

The test was introduced in 2014 to ensure the UK didn’t have a repeat of the 2008 Credit Crunch and particularly hit first-time buyers with what they could afford to buy.

This rule change means Lymm property buyers could soon be able to borrow thousands of pounds more and purchase larger homes.

The decision to withdraw the affordability test certainly raised eyebrows in the press, primarily as the Bank of England has raised interest rates five times in the last six months to try and reduce rising inflation. Yet, as stated in the first part of this article, Lymm first-time buyers are comfortably paying their mortgages compared to previous years – therefore everything should be ok with this rule change.

The old rules tested home buyers on mortgage repayments if interest rates rose to 6%/7%, yet the Bank thought that rule was too harsh.

Not all rules have been changed, as the important Bank of England ‘loan to income ratio’ stays put.

The Bank were keen to stress that the mortgage market was not going to turn into a free-for-all, as it did in the mid-2000s when the likes of Northern Rock were offering 125% mortgages, and a sixth of all UK mortgages were given without proof of income.

I believe it will have a progressive effect on the Lymm property market.

Many Lymm tenants who have been paying rents far more than actual mortgage payments for the same Lymm home, but have failed affordability assessments regardless, will now be able to get on the property ladder.

The rule change should open the Lymm property market up a little more and allow house prices to grow in Lymm.

I advise anyone who has been refused a mortgage on affordability in the past to speak to a mortgage arranger. If you don’t know of one, drop a message to me, and I will give you details of mortgage arrangers you could talk to.

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13% of Lymm Property Sellers Reduce Their Asking Prices as the Property Market Equilibrium Starts to Return

  • 9 of the 69 properties on the market in the Lymm area have had a price reduction in the last 3 months.
  • The average reduction has been 3.6% of the original asking price.
  • This is great news for Lymm home buyers and Lymm buy-to-let landlords, strangely Lymm house sellers as well.

The last couple of years of the Lymm property market has seen some amazing prices being achieved with multiple offers and many properties selling for way over the asking price.

Yet, as I have been writing about the Lymm property market over the last few weeks, the tide is beginning to turn, and pendulum swing more towards a balanced Lymm property market as more homeowners in the Lymm area (WA13) have been reducing their asking prices.

Of the 69 properties for sale in the Lymm area, 9 have been reduced in price in the last 3 months.

Price Range of the Lymm PropertyNumber of Price Reductions in Last 3 Months
£100k-£150k1
£150k-£200k2
£200k-£250k0
£250k-£300k0
£300k-£350k0
£350k-£400k2
£400k-£500k2
£500k-£600k0
£600k-£750k2
£750k-£1m0
£1m-£2m1

So why is this important and why is this good news, even for Lymm house sellers?

Property industry statistics show that 5 out of 6 house sellers will buy another property and over 80% of those sellers will move up the property ladder.

When you move up the property ladder, that normally means you pay more for the one you want to move to (that’s why it’s called the property ladder).

So, whilst you won’t be getting as much for yours as you might have done earlier in the year, you won’t have to pay as much for the one you want to buy (and the price difference between the two properties will be smaller – meaning you will end up saving money because of these reductions).

Therefore, what is the level of reduction being seen in the Lymm property market?

The average percentage of the price reduction in the Lymm area has been 3.6%.

I must stress house prices/values in Lymm haven’t dropped 3.6%, just the asking prices of some of the properties on the market.

This is good news for Lymm first-time buyers and landlords, as they will be more likely to buy a property at a more reasonable price whilst. As I explained above, this is also good news for sellers as most of them will end up paying less for the higher priced property they end up buying after selling theirs.

So, what should Lymm homeowners be aware of if they are selling their home now or in the future?

For me it is important that I inform all Lymm property owners of the real story. This enables them to judge for themselves where they stand in the current Lymm property market, thus enabling them to make better informed decisions.

You see some Lymm estate agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a bigger chance to secure the property on that agent’s book, as opposed to a competitor.

This practice is called overvaluing.

Now of course, each Lymm homeowner wants to get the most for their home, yet some estate agents know this and prey on those Lymm house sellers.

You might ask, what is the problem with that?

Well, you only get one opportunity at hitting the Lymm property market as a new property. Everybody has access to the internet, social media and the four main property portals (Rightmove, Boomin, On The Market, Zoopla), and your potential buyers will know the property market like the back of their hand.

If you have a 2-bed Lymm semi that is on the market for a 3-bed Lymm semi-detached house price … those Lymm buyers will ignore you.

Your Lymm property will stick on the market as your potential buyers keep seeing your property on the portals each week.

These buyers will then start to believe there is something wrong with your property and dismiss it even further. That is until you, as the house seller, reduce your asking price. The issue is that sometimes these buyers will think something is wrong with your home and could bid you down even further, meaning you will get less even though you asked for more! (This was backed up by some research done by Which?).

Now according to research by Denton House, the average British house buyer only views around six properties before buying – so please don’t assume viewers will come round your optimistically priced (i.e., overvalued) Lymm home, thinking they will knock you down – quite the opposite – they just won’t view your home in the first place.

And you know that because I bet you have done the same yourself when searching for property.

So, all I suggest is this … be realistic with your asking price to start with.

Do that and you will sell your Lymm property at a decent price to a decent buyer … first time, every time – enabling you to move onto the next chapter of your life.

If you know of anyone currently selling their home in the Lymm area and finding things difficult, please share this article with them as it could be of interest.

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What Was the Average Lymm House Price in 1952?

Well, what a weekend the Jubilee was. Street parties, gatherings in the park, the purple bunting, egg and cress sandwiches, union jack flags, cheese and pineapple on cocktail sticks, and let’s not forget the trifle – the Platinum Jubilee Party. And no decent party is worth its salt without a game or a quiz.

So, if you have post-Jubilee blues, let me ask you, how much was the average Lymm house worth in 1952?

To start with, let me look at what a property is worth today in Lymm.

The average price paid for a property in the Lymm area in the last 12 months was £438,340.

Now, let’s go back to 1952. Sir Winston Churchill was the Prime Minister, Newcastle won the FA Cup, London was covered in the Great Smog, free prescriptions on the NHS ended (it cost 1 shilling or 5p in new money), and King George IV, at the age of 56 passed away on the 6th February, meaning Princess Elizabeth became the Queen – as for housing…

The average price of a Lymm home in 1952 was £3,579.

This means Lymm house prices are 121 times higher since 1952.

Yet over the last 70 years, the country has been subjected to 4.5% per annum inflation.

The 1952 Lymm home is equivalent to £68,829 today when adjusted for inflation.

This means Lymm house prices have increased by 504.8% in real terms since 1952.

So, does that mean house prices are more expensive today compared to 1952?

In 1952, the average annual male wage was £452, 8 shillings and 1 pence, meaning the average Lymm house was 7.91 times the average wage. Today the average home is 8.85 times the average wage.

Yet let us not forget the average mortgage payment in 1952 was £11 per month. The average Brit earned £34 per month, meaning 32.3% of the household income was going on mortgage payments, whilst nationally today, according to the Nationwide, it stands at 28%.

It’s cheaper, in real terms, to buy a property in 2022 than in 1952.

And that’s the point, some things in ‘real terms’ (real terms being true spending power of the money after taking into account wages, costs and inflation) were more expensive and some cheaper 70 years ago. For example, in 1952, petrol was equivalent (in today’s inflation-adjusted prices) to £1.02 per litre, a pint of beer £2, half a dozen eggs £2.20,

cheddar cheese £2.40 per 500g, a basic radio £430, a Hoover £530 and a 12-inch TV £1,600.

So back to property, the Queen’s reign has seen some amazing house price rises in the UK, yet that growth hasn’t always been in constant upwards direction as we have had a couple of dips along the way.

We had a house price crash in 1990, when the average value of a Lymm property dropped from £107,706 to £89,201 in 1996, only for them to start rising again.

Lymm saw another house price crash between 2008 and 2009, and the average house price dropped from £322,195 to £274,676 in a year.

So, what else has changed about property and housing since the Queen came onto the throne?

In 1952, only 32% of people owned their own home, whilst 50% of people rented from a private landlord and 18% rented a council house.

By the time of the Silver Jubilee in 1977, 56% of people owned their own home, with 12% of people privately renting and 32% rented from the council.

Come the Golden Jubilee in 2002, 70% of people owned their own home, with 11% of people privately renting and 19% rented from the council.

Today, 63% of people own their own home, 20% of people privately rent and 17% rent from the council.

So, to conclude, as we look forward into the 21st century, I am sure the property market will be totally different again in 70 years.

I hope you enjoyed reading this article and do share it with your friends if you find it interesting.

PS for all you Rightmove fans, the average Lymm terraced home in 1952 was worth £2,540, and the semi in Lymm could be bought for on average £3,404.

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Has the Property Market Peaked?

Should you buy now or wait for the bargains?

  • Many commentators believe we have seen the peak of the property market.
  • So, should savvy bargain hunters wait for house prices to fall?
  • Or could postponing your house buying for any anticipated house price drop be a costly mistake?

Over the last two years, the property market has been a rollercoaster ride of hyperactive demand together with the new sport of getting your offer accepted when you compete with 30 other bidders.

Yet there are clouds on the horizon that the property market could be at its peak.

Bank of England interest rates have increased four times in the last few months to try and combat inflation. Meanwhile many households are finding it tough to counter the most significant drop in real incomes in a single year since records began in the mid-1950s, all at the same time as gas, heating oil and electricity prices are predicted to rise again in the autumn.

Hence why some economists are predicting house price drops in the coming 18 to 24 months of 3% to 5%.

So, surely this is not the best time to buy a property – and surely savvy buyers should wait for house values to fall?

Is it realistic to see double-digit national house price growth? Certainly not.

The question is how far the property market will slow and whether the slowing will drop into modest falls.

Let me look at household income first.

At best, the outlook is gloomy as real household disposable income is set to drop by 2.4% in 2022/23, the largest drop since records began in 1956. This is despite the £17.6 billion of financial support for British households revealed in Rishi Sunak’s Spring 2022 Statement with the National Insurance thresholds, energy bill support package and duty cut on petrol. Without these changes announced by the Chancellor, real household disposable income would have fallen by an additional 1% in 2022/23.

Second, as interest rates increase, mortgage rates will increase in line, increasing mortgage costs, so surely that will curtail demand, meaning house prices will drop, and buyers should wait to catch a bargain?

Finally, with inflation on the rise, the real value of people’s savings will decrease quicker, and the value of their deposits will diminish, meaning prices will surely drop, and people should wait to buy?

Surely the property market has peaked and buyers should wait for the bargains?

Well, I don’t think so, and these are the reasons why I say that.

I believe, subject to no significant shocks in the world economy, house price growth will be very slow in the next 18/24 months and go into low single digits (even the odd month dipping ever so slightly into the red), but not the 16% to 19% annual drop we saw in 2008/9.

Let me look at real household income. Every economist predicts growth in real household income in 2023/24 by around 1%.

If the two years are combined, the predicted effect on real household income in the next two years (2022/23/24) is a net loss of 1.4%, whilst in the credit crunch years 2010/11/12, the net loss was 2.7%.

I was looking at the increase in mortgage rates. 79% of owner-occupiers have fixed their mortgage costs and had their affordability stress-tested to Bank of England interest rates of 3% to 4% under the Mortgage Market Review rule changes in 2014. I believe the most significant impact of increasing interest rates will be at the point of taking on a new mortgage by first-time buyers (as opposed to servicing or the porting of an existing mortgage from one house to the next house).

The four successive Bank of England base rate rises, inflation and the rising cost of living are likely to bring more cautiousness over summer and autumn when it comes to people buying a property. Yet, there is still a massive imbalance of demand for property over the number of properties for sale to quench that demand.

The potency of the job market and the ongoing mismatch between the supply of properties on the market and demand for those properties will support property values.

Finally, the by-product of increasing inflation is that it makes buy-to-let more attractive. If there is a reduction in first-time buyers, this will be counterweighted by more landlords buying again, supporting the current level of properties.

But what if house prices do drop significantly?

So let’s assume that house prices do fall, irrespective of the reasons above, it will not inevitably help buyers.

If we have a house price crash, people tend to find their careers are at risk, and their salaries don’t rise as much. The younger generation (i.e. first-time buyers age range) often gets hit the toughest by recessions.

If first-time buyers wait until 2024 to buy and property values drop by 10%, that will prove more expensive.

In the last 2008/09 crash, lenders weren’t offering 5% deposit mortgages. The lowest deposit mortgage that first-time buyers could get was with a 10% deposit and even then, they were hard to come by.

When writing this article, first-time buyers can obtain a 5% deposit mortgage for a fixed rate of 2.66% for five years.

If we look at Lymm as an example, the typical first-time buyer terraced house in LymM sells for £341,000.

So, if they were to buy now, on this mortgage deal, the first-time buyer would have to stump up a £17,050 deposit and their mortgage payments would be £1,186.07 per month.

Yet, let’s say property values in Lymm do drop by 10% in the next 18 months, the terraced house would now be worth £306,900, so a significant saving. Or is it?

Everyone believes interest rates will rise further, so let’s assume they go to 3% by the autumn of 2023. That means the mortgage rate for a 10% deposit mortgage will be in the early 5%’s, so let me assume 5.29% (because the banks tend to increase the gap between the base rate and the mortgage rate in recessions to allow for the extra risk).

The monthly mortgage payment on the 5.29% mortgage would be £1,445.50 per month, and you would need to double your deposit to £30,690.

So even if Lymm’s house prices did drop by 10%, the first-time buyer would be £3,110 worse off a year in mortgage payments and would have to find double the deposit.

…and then there is the other cost of waiting.

You have two years’ worth of rent to pay. The average rent for a Lymm property is £1,185 per month.

If you waited a couple of years for Lymm house prices to drop by 10%, you would spend £28,440 in rent.

Choosing to buy a Lymm property makes even more economic sense if it is a long-term choice, as homeowners can ride out any house price drops.

Homeowners who plan to stay in a property can generally rely on getting their money back within six to ten years whilst not paying any rent.

Will prices go up, or will they go down?

Remember, George Osbourne said house prices would drop by 18% in May 2016 if we voted to leave the EU, whilst many economists said they would drop by 5% to 10% when Covid hit in March 2020.

And we all know what happened.

If you think you will be better off owning your own home rather than renting one, don’t bother to wait for the suggested house price drop that may never happen.

These are my thoughts, what are yours? Let me know in the comments.

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Lymm Rental Homes Nightmare

  • Lymm needs 45 additional private rented properties per year to keep up with current and future demand from Lymm tenants.
  • Yet over the last 5 years, Lymm has lost 41 private rented homes.
  • What are the 5 reasons the supply of private rental properties in Lymm are falling? What does this mean for tenants and landlords in Lymm?

There has been a rise in demand for rental properties and an 8.9% fall in the number of Lymm private rented properties, which has caused Lymm rents to rise by 10.4% in the last year, a new all-time high. 

The National Residential Landlords Association asked the respected economics think tank Capital Economics, to carry out research on the UK rental market. It found that if the current trends in the property market in terms of growth of the population, Brits living longer, the lack of new homes building, the reduction in social housing (aka council housing), then demand for homes in the private rented sector needs to increase by 227,000 homes per year.

So, based on those numbers, Lymm needs to have an additional 45 private rented properties per year.

The problem is the number of private rented properties in Lymm has reduced from 765 in 2017 to 724 in 2021, a net loss of 41.

So, why has supply of private rented homes in Lymm reduced?

  1. Section 24 Income Tax

Section 24 was introduced in 2017 to level the playing field on the taxation of property between homeowners and landlords. Section 24 stops landlords from offsetting their buy-to-let mortgage costs against the profits from their rental property. Interestingly, no other kind of UK business is affected by the Section 24 taxation. In other words, whatever other form of business you might be in, be it butcher, baker or candlestick maker, every other business can offset their finance costs against their profits, except buy-to-let.

The issue caused by Section 24 Tax is that some landlords ended up paying more income tax than they really made in profit after paying their buy-to-let mortgages. Meaning on the back of rising Lymm house prices in the last five years, some Lymm landlords have sold their buy-to-let investments.

  • 3% More Stamp Duty for Landlords

When someone buys a property, they normally must pay a tax to the Government for the privilege. This tax is called Stamp Duty. Yet landlords must pay an additional 3% stamp duty supplement on top of that when they purchase a Lymm buy-to-let property. Evidence suggests some Lymm landlords have decided to hold off or scale back buying additional buy-to-let properties for their portfolio because of the thousands of extra pounds that landlords have to pay to buy the rental property.

  • Holiday and AirBnb Lets

Some Lymm landlords are converting their long-term rental properties into short-term furnished holiday and AirBnB properties. Whilst the hassle, stress and service levels are much higher, these types of properties do tend to make more money and aren’t as heavily taxed as normal lets. When properties convert to short-term lets, it removes another Lymm property out of the general supply chain of long-term rental properties.

  • Greater Legislation for Rental Properties

With more than 150 pieces of legalisation, and new laws being added each year, the burden on landlords is huge. On the horizon is the Renters Reform Bill which will remove the no fault evictions. Also, all rental properties with an Energy Performance Certificate (EPC) rating of below a ‘C’ will have to be improved (i.e., money spent on them) by the landlord. This could be more than £10,000 per property. Hence, why some Lymm landlords have been selling their rental properties with low EPC ratings in the last 18 months.

  • Accidental Landlords Selling Up

There are some Lymm landlords who are classed as ‘Accidental Landlords’. In 2008/9, with a slowing property market and house price values dropping in the order of 16% to 19% (depending on the type of property) some Lymm homeowners decided to let their home out as opposed to selling it at a loss. Yet, with the price booms of the last 18 months, many decided to cash in on the higher property prices and sell – again taking another private rental property out of the system.

So, why is demand of private rented homes in Lymm increasing, even though more people own their home in Lymm than 5 years ago?

Even with better provision of affordable social housing and higher rates of owner occupation in Lymm (rising from 75.15% of homes in Lymm being owner occupied in 2017 to 77.91% in 2021), demand for private rental property continues to outstrip supply.

There are many reasons behind this including:

  1. People are living longer, meaning not so many properties are coming back into the mix to be recycled for the younger generation.
  • Net migration to the UK has continued at just over a quarter of a million people a year since 2017, meaning we need an additional 115,000 households to house them alone.
  • For the last two years, one in six of the owners of properties that have been sold have moved into rented accommodation instead of buying on because of the lack of properties to buy.

So, what is the outcome of the imbalance between supply and demand on Lymm rental properties?

Quite simply – Lymm rents have rocketed. They are 10.4% higher today than the spring of 2020 … and that’s on the back of rents being 6.8% higher in spring 2020, compared to spring of 2019.

The severe shortage of housing in the private rented sector is pushing up rents in Lymm as demand continues to grow. Many Lymm people are finding it hard work to find appropriate accommodation at a reasonable rent, and with mounting numbers of tenants predicted to continue, this situation will only get worse unless more houses are built.

My heart goes out to those Lymm tenants struggling with the cost-of-living crisis, only to then be hit by higher rents.

Yet, these higher rents are now enticing new landlords back into the Lymm buy-to-let market because of the higher returns.

With higher inflation, property investment has been seen in the past a safe harbour to invest one’s money in. With the bonus of rising yields (because of the increase in rents) together with the nervousness of the Bank of England to increase interest rates too much because of the issues in Eastern Europe, this could be the start of a second renaissance in the Lymm buy-to-let market.

If you have concerns about the issues in legislation and taxation, then the advantage of employing a letting agent, with the choice of property, what you pay for it and how it’s managed, will go a long way to mitigate them.

If you are considering getting into the Lymm buy-to-let market for the first time or expanding your property portfolio (whether you are a client of mine or not) please do not hesitate to give me a call and we can discuss these matters further.

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Lymm Household Heating Bills Set to Rise to £7,705,561 in 2022

(Stats from Land Registry, NoMis, Office of National Stats and Denton House Research)

The energy bills of every Lymm resident will rise in April as the price cap increases to account for the global increase in the cost of gas. Those not on the gas mains will still be hit as the UK uses gas to make 45% of its electricity.

So, what can Lymm residents do to reduce their energy consumption and ultimately save money?

Firstly, let’s look at the scale of the costs.

Considering the increase in energy prices from April, the combined energy bills for the whole of Lymm come to …

  • £7,705,561 for central heating
  • £1,545,010 for hot water
  • £839,632 for lighting

There are extra energy costs for washing, fridges, etc., yet I wanted to focus just on the home as this is a property blog.

Everyone’s bills will be around 50% more expensive in 2022 than in 2021, but it’s not too late for Lymm people to take some quick steps to cut their energy bills and, at the same time, cut our carbon footprint.

Just over a quarter of the UK’s carbon comes from heating and lighting our 27.6 million homes, and each UK home produces 4.39 tonnes of carbon dioxide a year.

Upgrading the energy efficiency of UK homes is seen as a vital step to attempting to mitigate the issues of climate change, fuel poverty and our nation’s energy security.

So, what are some quick wins for Lymm residents to reduce the energy bills on their homes, and how will energy efficiency play a more significant part in the value of Lymm homes in the future?

  1. By turning down the thermostat by 1 degree, the average saving would be an average annual saving of £105.91 per home and each homes carbon dioxide would be reduced by an eighth of a tonne (it all adds up!).
  • Replacing your bulbs when you can with energy-efficient bulbs will, on average, reduce your lighting costs from £172 per year to £103 per year.
  • What time does your heating come on and off? Could it come on later and go off earlier?
  • Smart meters (which are installed for free) are estimated to help lower UK homes’ electricity use by nearly 3% and gas use by 2% … again it’s all margin gains.

These are just a handful of ideas. Check out the internet for others as it’s fascinating how much energy we use for overfull kettles, chargers left on and tech on standby etc.

Yet, these things will only scratch the surface … many of us will need to go further, especially Lymm landlords, to retrofit our properties to make them more energy-efficient.

This is particularly important as in June the Government announced they would make the country carbon neutral by 2050, meaning Britain’s homes need some enormous retro-fitting to meet these ambitious climate targets.

In 2018, the Government required private landlords to improve the energy rating of their rental properties by prohibiting the rental of any property with an Energy Performance Certificate (EPC) rating of F and G (the lowest ratings). Yet from 2025, that will be increased to C for all new tenancies and 2028 for all existing tenancies (more on these EPCs below).

I don’t believe there is an appetite to mandate private homeowners to do this work, though you never know in the future.

So, how do you find out about your Lymm home’s eco-credentials?

Since 2007, every new home that has been built, rented out or put on to the market in Lymm has had to have an EPC, giving it a rating between A and G (rather like those stickers you see on fridges and washing machines).

A is the highest rating (i.e. best energy efficient and greener), and G is the worst efficient rating.

45.3% of Lymm homes are in that eco-friendly A to C energy performance band rating, compared to the national average of 40.1%.

So, what next? Well, the Government will attempt to make the green revolution as painless as possible with technology.

In the future, we might have hydrogen central heating instead of mains gas; or have solar panels for electricity, all triple glazed windows and even ground source heating – sounds fanciful? Well, who would have thought some of the most wanted cars would be electric 20 years ago?

There is no doubt that the energy efficiency of our homes will rise in the coming years as the cost of fuel increases and people’s opinion on going green changes.

You don’t need to spend thousands of pounds to find out what you can do to make your property greener and cost less. Look at your EPC and it will tell you what small changes you can make to improve your Lymm home’s energy efficiency rating and ultimately save yourself money. If you want to find the EPC rating of your Lymm home, go to epcregister.com.