Are Hampstead landlords to blame for the lack of first time buyers?

I was having an interesting chat the other day with a couple of solicitors at a Hampstead business networking event, when the subject of a lack of property for first time buyers came into the conversation. I followed the chat up with an email with my findings, of which I would like to share with you today.

At the time of the last census in 2011, there are 3,401,675 properties in England that were privately rented, of which it is estimated, were owned by over 1.25 million private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing our younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords have claimed on their mortgage interest -tax relief not available to homeowners.

They may be asset rich thanks to recently rising property values, but let us not make the landlords the bogeymen they could easily be called. Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Hampstead.

Property values today in Hampstead are still 51.5% above the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are only 25.5% more expensive than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the city. Interest rates are at an all time low and first time buyers only need to save a £16,000 deposit to secure a lovely studio flat in Hampstead Heath with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?

The number of people choosing to rent, either for lifestyle or economic reasons, has grown since 2000. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Hampstead will have risen from the 20,276 properties recorded in 2011 to 25,300 by 2021. Sound fanciful? Well in 2001, there were only 14,724 privately rented properties in Hampstead.

It is a fact that we as a Country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they left school and got a job.

Tenants, in particular, will also feel the benefit from recent changes in the market. The current mix of existing economic conditions, combined with the uncertainty of the Brexit negotiations has resulted in low demand for people to buy yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner.

If you want a chat about what would make the best sort of property that would offer that in Hampstead, then please email me on chris@ashmoreresidential. com or visit the Hampstead Property Blog www.NW3propertyblog.com

Kerb appeal in Hampstead: You could add over £100,000 to the value of your home

When it comes to selling your home, presentation is crucial to the pre listing process; apart from location and size, presentation is the third factor in determining the value.

A well presented frontage with newly painted masonry, front door and well maintained garden will have the Brits digging deeper into their pockets to acquire the home with kerb appeal.

The average house price in Hampstead is around 5 times that of the London average. A well presented home in the area will add between 5-8 % compared with a similar one that has not been maintained over the years.

Whilst not everyone has the experience or the resources for extensive renovations before moving in, the majority of purchasers will want a turnkey investment that is in the least livable, in order to make improvements in stages. Interestingly, tenants’ expectations have exceeded that of buyers in recent years, especially as they are being asked to pay market rents to service someone else’s mortgage with the owner making a profit.

My top 5 tips

1. Fresh paint work to the front door and porch

2. Clean and well maintained windows and frames

3. Clean and tidy garden

4. Polished or new hardware for the front door

5. Exterior lighting- a well lit frontage is a sign of maintenance and good security

The majority of house hunters will attend a viewing for a well presented home and make their initial judgements on the first impression. Likewise, an equal number will reject a property and not even bother to venture inside if the exterior is unkempt with an overgrown garden.

British home owners on average don't carry out external maintenance that often. In fact, most leave it for more than 8 years and almost 25% of home owners haven’t done any external maintenance in over 15 years.

People are moving home less than they did a generation ago.In fact, in Hampstead , its once every 18.5 years. As Birts spend most of their time indoors, the exterior is often “forgotten” about

Why is kerb appeal so important?

We all know that we don’t get a second chance to make a first impression, when selling a home it’s vital to get that right. After all, it’s the first thing prospective purchasers will see when they visit for an inspection.

The rise of social media has seen the number of home exteriors photographed go up significantly in recent years.

The likes of Instagram and Pintrest have given inspiration to a number of British home owners and would be house hunters.

Whether you are selling or letting a “back to basics" approach in making sure your property is in good condition will help you to get your home sold or rented in the quickest possible time, whilst maximising the value. In today’s world of Internet savvy consumers, purchasers and tenants do plenty of research before booking that viewing.

Londoners, like other city dwellers are time poor, generally living fast paced lives and they want to see homes that they aspire to, so taking care of the exterior is as important as the interior. As a vendor or landlord in today’s competitive market, presentation is crucial, as your home is being offered in competition with- not in isolation to the rest of the local market.

Hampstead Property Values are 2.1 % higher than a year ago – My predictions for 2018

As you are all aware the London property market and has been subjected to its fair share of adverse press commentary in the past 12-18 months. In the financial news there was the usual yearly round up and as the UK economy and its housing market are inextricably liked there were generous air time and column inches devoted to the future of the British housing market. Following on from that, here is my forecast for Hampstead in 2018.

Mortgage interest rates are very low, despite the slight increase of 0.25% by the Bank of England. For example, the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014. From an area perspective. The Hampstead and Kilburn ward has low level unemployment of just 3.4 % making for a stable local economy. The recent figures show that only 519 properties were sold in 2017, this restriction of supply has put an upward pressure on prices meaning Hampstead property values are 2.1% higher than a year ago.

In 2018, the biggest concern is raising inflation that has reached 3.1%, the highest in 6 years. This is continuing the squeeze on household budgets with wages not having risen by as much in real terms. Looking through the data for the number of properties listed there were no less than 240 flats and houses with price reductions throughout 2017. Much of this could be down to optimistic expectations of house sellers at the time of listing.

The political and economic headwinds of the past 12-18 months will continue to dominate the headlines in 2018.How this will affect Hampstead house prices will depend on the outcome of the Brexit negotiations and the impact they will have on the UK economy as a whole. This and the Stamp Duty revisions have subdued activity in the local market. Throughout 2017, the weaker pound saw a high level of interest from overseas buyers in Central London, enabling them to acquire certain homes and investments at a discount. However, if the UK gets a poor Brexit deal, the finance and banking sectors will be affected and that will have a significant impact on the London market.  

My message to all Hampstead home owners and landlords is to keep a close eye on the Central London market because what happens there has an effect on the region as whole, but not to panic if prices suddenly fall. Since 2007 the Central London property market has seen house prices grow by 77% as where in Hampstead they have increased only by 51.1 %. A heavy correction in Central London will have a ripple effect to the suburbs, albeit more subdued.

Hindsight is better than foresight and economic predictions are all well and good when you know what’s round the corner. The Brexit negotiations currently underpin the political and economic landscape; the outcome shall determine which direction the economy and housing market take.  In truth, none of us know what Brexit will actually look like so it’s a case “wait and see”.  

So, what’s in store for Hampstead house prices over the next 12 months? I believe they will end up between 1% -1.5% and it will be a bumpy ride on the way.

If you want to know more about my thoughts on the Hampstead Property Market, visit the Hampstead property blog www.nw3propertyblog.com

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If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me 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 8366 9777. 

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