I had the most interesting chat with a local Hampstead
landlord the other day about my thoughts on the Hampstead property market. The
subject of the affordability of renting in Hampstead came up in conversation
and how that would affect tenant demand. Everyone wants a roof over their head,
and since the Second World War,
owning one’s home has been an aspiration of many Brits. However, with rents at record highs, many are
struggling to save enough for a house deposit.
Let’s be honest, it’s
easy to get stuck in a cycle of paying the rent and bills and not saving, but
even saving just a small amount each month will sooner or later add up. The
former Chancellor, George Osborne, announced such schemes as the Help to Buy ISA , where the Government will top up a first time
buyers deposit.
Therefore, I thought I
would do some research into the Hampstead property market and share with you my
findings. Hampstead tenants spend on
average over half of their salary to have a roof over
their head. According to my latest
monthly research, the average cost of renting a home in Hampstead
is £3,455 per month or £41,460 per year. The average household income for
Hampstead currently stands at £77,500 per year that means the average Hampstead
tenant is paying 53.5 % of their salary in rent. (Now to have just over half your salaries go on
rent is unattainable, so you can see why people share.) I doubt there is much left to save for a deposit
towards a house after that and various household bills. That my Hampstead
Property Blog reading friends, is such a shame for the youngsters of the local
area.
You see one of the reasons for rents being so high is
property prices being high. As I have
mentioned before, there is a severe lack of new properties being built in
Hampstead. It’s the classic demand vs
supply scenario, where demand has increased, but the number of houses being
built hasn’t increased at the same level.
Also, Hampstead people aren’t moving home as often as they did in the
80’s and 90’s, meaning there are fewer properties on the market to buy.
If you recall, a few weeks ago I said back in Summer 2008,
there were over 1,000 properties for
sale in Hampstead and since then this has steadily declined year on year, so
now there are only 636 for sale in the whole of the NW3 area.
However, things might
not be all doom and gloom as originally thought, as a recent Halifax Survey (their Generation Rent 2016 Survey)
suggested more and more people may be long
term, if not lifelong tenants. In fact there is evidence in the report to
suggest that the perception of how difficult it is to get on the housing ladder
is vastly different between parents and people aged 20 to 45. It seems
from this survey that the state of the UK economy has shifted
priorities quite significantly in quite a short space of time. With
fewer people able to save up the deposit required by mortgage lenders, more and
more people are continuing to rent. This
delay in moving up the property ladder has driven rents across the UK up as
more people were seeking rental properties.
It is often said that more people in central Europe
rent for longer or never own their own property. The last two census in 2001
and 2011 show that proportionally the percentage of people who own their own
home in Britain is slowly reducing and, as a country, we are becoming more and
more like Germany. That isn’t a bad
thing as Germany is considered to have a more successful economy, one of the
main stays, often quoted, is because
they have a much more flexible and mobile workforce, (which renting certainly
gives) and from that, they have a higher personal income than in the
UK.
Therefore, if we are turning into a more European model
and the youngsters of Hampstead and the Country have changed their attitudes,
demand for rental properties will only and can only go from strength to
strength.
This news is a mixed bag for Hampstead tenants and
landlords alike; wages have risen in real terms to 1.9% adjusted for inflation,
since this time last year. For landlords property values in Hampstead are now 2.1%
higher than year ago, despite the fall out of Brexit, with rentals having shown
a steady rise of 3.2% year on year.
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.
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