Behaviour changes in the rental market
Many of our customers at Homesite are investors in the buy-to-let sector, so we thought it might be useful to bring you the latest insight from two studies by Rightmove and Zoopla into how tenants’ relationships with rental properties are changing.
The latest stats show average rents have gone from 2% annual growth in 2021 to 12.3% growth in 2022 and a massive 17.8% in London. At the same time, supply levels have plummeted, with the availability of rental stock as much as 46% below the five-year average. If you then add in the cost of heating a home - the energy price cap has risen from £1,137 in January 2019 to £2,500 in September 2022 - and double-digit inflation, it should be no surprise tenant behaviour is changing.
Both studies show tenants are now choosing to stay longer in their existing homes. Especially since their choices have become more limited and rises for existing tenancies (+3.7%) are far lower than they are for new ones (12.3%). Rightmove found that the average tenancy is now over 2 years (the choice of 63% of renters) with only 21% choosing to stay for 12 months or less.
The types of homes tenants are choosing are also changing – demand has increased markedly for 1 and 2-bed flats but has fallen for 2 and 3-bed houses. Smaller properties are not only cheaper to rent, they are also cheaper to heat, too. The amount of gas required to heat a purpose-built flat is 40% less than the amount required for a terraced house and 25% lower for a converted flat. Energy efficiency is another increasingly important consideration - EPC D-rated homes require 25% more gas than C-rated ones and E-rated ones require 48% more. You can see from the list (RHS) that this is driving an increased desire to have all bills included (up 36%):
Top ten features with the biggest increase in tenant demand – Zoopla
All bills included +36%
Balcony +22%
Communal garden +22%
Pets allowed +22%
Zero deposit +22%
Transport links +21%
Flexible tenancies +20%
Well connected +18%
Professional management +17%
Parking +17%
So, are these long-term trends or short-term ones?
There’s no doubt, the current high demand is likely to eventually modify, as it has been driven, to an extent, by the reversal of our flight to the countryside during the pandemic. But as you can see from the above list, Covid’s effects are still lingering in our desire for more space (balconies and gardens) and it will all take some time to fully unravel. Supply, on the other hand, is only likely to improve if the government reverses its punitive tax and legislative approach to landlords. With a new Government and Housing Minister – Simon Clarke – it is not yet clear what kind of approach they will take, but they do seem to be making more pro-business noises than Boris.
Affordability, though, is less stretched than you might think. According to Zoopla, affordability is broadly in line with the long-term average. Zoopla also reported that 75% of tenants found rental payments very or fairly easy, while only 25% found them fairly or very difficult to pay. The figures were a little worse for those with lower incomes, but not by much, with 68% finding it fairly easy and 32% difficult to pay. It suggests there could be room for further rent rises.
If you are considering making a buy-to-let investment, why not take a look at our current properties for sale HERE
What is a Property Deed?
When you buy a piece of property, you will usually have to sign some sort of document. This is because real estate is one of the few types of assets that comes with its unique set of laws and regulations. In general, these documents are referred to as deeds. Property deeds are legal documents that prove that someone owns a particular land or property. They also outline the terms and conditions for transferring ownership if the owner ever decides to sell it or give it away for another reason. So even if you’re not considering selling your property anytime soon, it’s still important to understand what deeds are and how they can help protect your land.
What is a Property Deed?
A property deed is a legal document showing real property ownership. The deeds of property usually indicate the owners’ names, the legal description of the property, and the date when the owners bought their pieces of land. A deed also states when and how the owners can sell the property if they choose to. Once they sell the property, a new deed must be created to give to the new owner. Property deeds also act as proof that someone owns a particular piece of land or property.
Why Do You Need A Property Deed?
There are a few reasons you should be careful to hold on to your property deed(s). First, if you ever need to make a claim on the property, then having a deed that proves you own it is crucial. If you don’t have the deed, then you might have to jump through some hoops to prove that you should be allowed to stay on the land. You may have to leave if someone else owns the land and you don’t have a deed. Second, if you ever want to sell the land. If you don’t have the deed and someone else does, then you’ll miss out on the chance to sell your property. So, if you want to sell your land, keep the deed in a safe place. If you have a deed, then you can use it in the future when you want to sell the land.
Types of Property Deeds
There are several different types of property deeds, and each one serves a different purpose. For example, quit claim deeds are used to transfer ownership of a piece of land, while warranty deeds are designed to protect the seller from any future claims against the land. There are also grant deeds and special warranty deeds, which are rarer variations of these two options.
How to Safely Store Your Property Deed
You can do a few things to keep your property deed safe and secure. First, make sure that all of your important documents, including your deed, are stored in a safe place. This can be a safety deposit box or a fireproof box in your home. Second, make sure you record your property deed in a central database. This will help protect you if someone else claims to own your land. Third, consider making a digital copy of your deed. This can be helpful if you need to share the details of your deed and you don’t have a physical copy.
What is Ground Rent?
You probably have a vague idea of what ground rent is. You know it is something that you need to pay to own property, but you’re not sure how much it costs or even what it means. Many people find the idea of ground rent bewildering and confusing. In this article, we explore the meaning behind ground rent and explain different aspects of this regular payment. Whether you are looking to buy a house, apartment, condo or any other property, there is almost always an additional cost involved called ground rent. Read on to find out what ground rent is, as well as how much you can expect to pay if you are considering buying a property that has it included in the purchase price.
What is Ground Rent?
Ground rent is a regular payment made to the owner of the land that you are renting. The fee is in exchange for the use of the land and is a form of leasehold tenure or a long-term lease. Many people are confused because the lease is between two parties, the landowner and the tenant. Ground rent is a periodic payment made by a homeowner or tenant to the owner of the land on which the home or building sits. Ground rent is charged based on the number of years that the lease has left. For example, if you have a 50-year ground rent lease, you will pay 50 annual instalments. Ground rent is paid to the landowner by the homeowner or tenant who has leased the land. The ground rent is usually fixed, and the payment amount stays the same over the years.
How Much Does Ground Rent Cost?
The cost of ground rent is usually incorporated into the price of the property and paid by the buyer as part of the purchase. This is generally done as an upfront cost and a down payment for the lease agreement. The amount of money you will have to pay for ground rent will depend on the location and value of the property. Ground rent is usually charged quarterly, monthly or yearly, and the amount will depend on the length of the lease. Ground rent is often charged as a percentage of the property’s value or market rent.
What's Included in Ground Rent?
Ground rent is usually paid to cover maintenance costs and necessary repairs for the building itself. The lease usually outlines what precisely the ground rent payment covers.
Fixed and Escalating Ground Rent
The length of the lease will also have an impact on the ground rent. If you have a fixed-rate lease, the amount you pay each year remains the same for the entire length of the lease. However, with an escalating lease, the amount you pay each year will increase over time. Therefore, property owners, especially large corporations and real estate companies, often opt to include escalating ground rent clauses in their lease agreements.
Conclusion
Ground rent is a nominal amount paid by the homeowner to the property’s owner (usually a real estate company or developer). It is usually a yearly payment, either on a fixed amount or as a percentage of the property’s value. When you buy a property with ground rent, you have to pay the cost of the rent for the rest of your life. Always read the contract carefully to find out how much ground rent you will be paying and how it will fluctuate. You can also ask the seller for information about the current owner and their right to increase the rent.
Stamp Duty for Non-UK Residents
For those of you who are not UK residents, it is important to be aware of the stamp duty rates and how they may apply to you when purchasing property in England or Wales. In this article, we will provide a comprehensive overview of stamp duty for non-UK residents, including what constitutes a taxable transaction and how much tax you can expect to pay. We will also discuss some common exemptions from stamp duty and ways to reduce your bill. So whether you are thinking of buying a property in the near future or are just curious about this tax, read on for more information.
What is Stamp Duty?
Stamp duty is a tax that is levied on certain legal documents in the United Kingdom. The most common type of stamp duty is charged on property transactions, such as when you buy a house or land. This tax is usually paid by the buyer, but there are some circumstances in which the seller may be liable.
Calculation of Stamp Duty
The amount of stamp duty you will pay depends on several factors, including the value of the property, whether it is your main residence and whether you are a first-time buyer. In England and Wales, rates are currently as follows:
- Properties worth up to £125,000: 0%
- Properties worth between £125,001 and £250,000: 0% on the first £125,000 and then 0% on the remaining amount
- Properties worth between £250,001 and £925,000: 0% on the first £250,000 and then 20% on the remaining amount
- Properties worth between £925,001 and £150,500: 0% on the first £250,000; 20% on the next portion up to£925,000; 40% on anything above that
- Properties worth more than £150,500: 45%.
Less Than Market Value or Inherited Property
If you are buying a property for less than market value or inheriting a property from a family member who has died, you may be eligible for reduced rates of stamp duty. There are also certain types of properties that are exempt from stamp duty altogether, such as caravans and mobile homes.
Joint Bought Property
If you are buying a property jointly with another person, each of you will need to pay the relevant amount of stamp duty based on your respective share of ownership. So, for example, if you are buying a property worth £300,000 with someone else and you will own 60% of it, you will need to pay £120,000 in stamp duty (0% on the first £250,000 plus 40% on the remaining £50,000).
Stamp Duty Applies to Other Legal Documents
As well as being charged on property transactions, stamp duty can also apply to other legal documents such as shares and life insurance policies. The rates for these vary depending on the type of document and its value.
Scotland
If you are buying a property in Scotland, the rules for stamp duty are different. The tax is called Land and Buildings Transaction Tax (LBTT) and is calculated using a different system to the one used in England and Wales.
Who Pays Stamp Duty?
As we mentioned earlier, stamp duty is usually paid by the buyer when they purchase a property. However, there are some circumstances in which the seller may be liable for the tax instead. This includes cases where:
- The buyer fails to pay the stamp duty within the required time period
- The property is sold for less than its market value
- The property is inherited by the buyer
When is Stamp Duty Payable?
Stamp duty must be paid within 14 days of completion if you are buying a property in England or Wales. If you are buying a property jointly with another person, each of you will need to pay your share of the stamp duty within this time period.
Interest and Penalties
If you fail to pay stamp duty on time, you will be liable for interest and penalties. The amount of interest you will owe depends on how much stamp duty you owe and when it is paid. For example, if you owe £500 in stamp duty and pay it one month late, you will owe an additional £50 in interest. Penalties for late payment of stamp duty can be either civil or criminal. Civil penalties are issued by HM Revenue and Customs (HMRC) and are usually a percentage of the tax owed, with a minimum penalty of £100. Criminal penalties can only be issued by the courts and may result in a fine or even a prison sentence. However, it should be noted that criminal prosecutions for failure to pay stamp duty are very rare and usually only occur in cases of serious tax evasion.
Notting Hill Blue Plaque Tour
Notting Hill is one of the most vibrant and colourful neighbourhoods in London. It's also home to many famous historical landmarks, including the Notting Hill Blue Plaque Tour. This tour is a must-see for anyone visiting the neighbourhood. The plaques commemorate some of the most important and influential people who have lived in Notting Hill over the years.
22 Portobello Road
The first stop on the tour is at number 22 Portobello Road, which is the former home of writer and social activist George Orwell. The plaque commemorates Orwell's time spent living in the neighbourhood and his important work in exposing poverty and inequality in British society. Orwell lived in Notting Hill for two years, from 1927 to 1929. He was attracted to the area because of its diverse population and vibrant atmosphere. In his book "Down and Out in Paris and London", Orwell chronicled his experiences living among the poor and working-class residents of both cities. His time spent in Notting Hill helped to shape his political views, and he would go on to become one of the most important authors of the 20th century. The plaque at 22 Portobello Road is located on the side of the building where Orwell lived. It's a small, unassuming plaque, but it's definitely worth taking a photo of!
Orwell is just one of many notable figures who have called Notting Hill home over the years. The area has long been a haven for artists, writers, and musicians. Many famous people have lived in the neighbourhood, including playwright Oscar Wilde, singer Amy Winehouse, and actor Hugh Grant.
25 Kensington Park Road
The second stop on the tour is at number 25 Kensington Park Road, which is the former home of British Prime Minister Winston Churchill. Churchill lived in Notting Hill for over 20 years, from 1900 to 1922. He was first elected to Parliament in 1900 and served as Prime Minister from 1940 to 1945. Churchill is one of the most important figures in British history, and his time spent living in Notting Hill was crucial to his development as a politician. The plaque at 25 Kensington Park Road commemorates Churchill's time living in the neighbourhood and highlights his importance to British history.
33 Pembridge Road
The third stop on the tour is at number 33 Pembridge Road, which is the former home of writer Virginia Woolf. Woolf lived in Notting Hill for two years, from 1912 to 1914. She was attracted to the area because of its bohemian atmosphere and diverse population. Woolf is best known for her novels "Mrs Dalloway" and "To the Lighthouse". Both novels are set in London, and many of the locations mentioned in the books can be found in Notting Hill. The plaque at 33 Pembridge Road commemorates Woolf's time spent living in the neighbourhood and her important contribution to literature.
45 Lansdowne Road
The fourth stop on the tour is at number 45 Lansdowne Road, which is the former home of poet W.B. Yeats. Yeats lived in Notting Hill for two years, from 1909 to 1911. He was attracted to the area because of its bohemian atmosphere and diverse population. Yeats is best known for his poems "The Lake Isle of Innisfree" and "When You Are Old". He also wrote many plays and essays and was a key figure in the Irish Literary Revival. The plaque at 45 Lansdowne Road commemorates Yeats' time spent living in the neighbourhood and his important contribution to Irish literature.
60 Golborne Road
The fifth stop on the tour is at number 60 Golborne Road, which is the former home of artist Banksy. Banksy lived in Notting Hill for two years, from 1997 to 1999. He was attracted to the area because of its vibrant street art scene. Banksy is best known for his stencilled graffiti art, which often features political or social commentary. He has become one of the most famous artists in the world, and his work can be found all over London. The plaque at 60 Golborne Road commemorates Banksy's time spent living in the neighbourhood and his important contribution to street art.
Notting Hill is a truly special place, and it's easy to see why so many famous people have chosen to live there over the years. The area has a rich history, and its diverse population and vibrant atmosphere make it a unique place to live. If you're ever in London, be sure to take the Notting Hill Blue Plaque Tour! It's a great way to learn about the area and see some of the most important sites in British history.
Which period has the most valuable homes?
Victorian? Georgian, Elizabethan? Newbuilds?
Have you ever wondered what effect the age of a property has on its value? What is the
difference, say, between a 4-bedroom Victorian house and a comparable Georgian one? Come
to that, what are the most and least valuable periods for property? And what about new
builds? Are they more valuable?
A few years ago, Halifax carried out a survey to answer just these types of questions, comparing the
prices paid for different period properties of similar sizes and locations. Clearly, it is not possible to be
100% accurate with comparisons of these kinds, as many of the older properties are unique, however,
it does give you a rough idea of how it all works:
Medieval (1000-1500) +20%
Tudor (1500-1558) +31%
Elizabethan (1558-1603) +32%
Jacobean/Carolean1/Cromwellian (1603-1660) +34%
Restoration/William & Mary/Queen Anne (1660-1714) +24%
Georgian/Regency/William (1714-1837) +18%
Victorian (1838-1901) +8%
Edwardian (1901-1919) +2%
End WWI to end WWII (1919-1944) +4%
Post War (1945-1959) +0%
Sixties (1960-1969) -2%
Seventies (1970-1979) -3%
Eighties (1980-1989) +3%
Nineties (1990-1999) +8%
Present (2000 +) +12%
New Builds - Much like a new car, they often have a one-off premium when first occupied, which can
run up to 25%.
From these statistics, it is clear that, despite the draughts, the high maintenance costs and the
planning restrictions, we are still in love with period property. And, the older the better, although
unsurprisingly, it is starting to lose its shine when it comes to medieval-style accommodation. In
contrast, newer properties carry a premium for the first few years until they start to look dated, at
which point their values dip slightly for between 30-40 years before they come back into fashion.
What is a little surprising is that there is not more of a premium for Georgian and Victorian properties,
although this may be explained by their relative abundance. There are plenty to choose from and that
puts a cap on their premiums. A Tudor or a Jacobean house, on the other hand, is more likely to be a
one-off.
The biggest surprise in the survey is that there is a premium to be paid on thin-walled and dated-
looking Eighties properties (+3%). I would have expected their prices to be more closely related to
seventies stock (-3%). Mind you, beauty is in the eye of the beholder and so my surprise may just be
down to my personal preferences.
It will also be interesting to see, with rising energy costs, whether newer, better-insulated homes will
generate increasing premiums when compared to older stock. There’s no doubt that many people
who are buying properties as a buy-to-let investment and with new energy
efficiency requirements coming in for the sector in 2025, it’s likely to be an increasingly important consideration.
Getting onto the housing ladder in Notting Hill
First-time buyers (FTBs) have been struggling for some time to get onto the housing ladder in Notting Hill. Now, with food, energy and mortgage costs surging, it’s getting harder. Nationwide has just published some new research which reveals the true extent of the issue.
Their survey of 2,000 aspiring FTBs found that of those who were planning on buying in the next year or so, as a result of the rising cost of living, 70% had been forced to delay their purchases. Most said they would put it on hold for around two years, but 19% said it could be for more than three years.
With the average deposit for FTBs around £61,000 (source: Barclays), it is, unsurprisingly, one of the biggest barriers to entry to the housing market. And, in the current inflationary climate, 88% of FTBs said their ability to save it had been severely impacted. 38% went further, saying they were now having to raid their savings rather than adding to them. Many have responded by trying to cut down on their expenditure. Below are some of the key areas where they are making savings:
47% have reduced everyday spending
43% have cut back on going or eating out
37% have reduced their household bills by shopping around
36% have sold some of their possessions
35% have cancelled unused subscriptions
23% have moved to a savings account that rewards homebuyers (e.g. Lifetime ISA, Help to Buy ISA etc)
21% are now using cashback deals
20% are also using a savings or budgeting app
17% have taken on an additional job
12% are putting off starting or adding to a family
The situation is also making FTBs consider moving to new areas, with 69% now willing to do so in order to get a bigger property. It also means many are having to buy far later in life. Even though most hope to own their first property by the age of 27, 30% admit that is unlikely and 33% of those interviewed had already passed that point. The average age of an FTB, however, is 32.
Under the circumstances, putting off a purchasing decision may appear to be a wise decision, but there are some good reasons why they shouldn’t:
1) Mortgage rates are already rising and are likely to climb even higher in the next year or two. Buyers will therefore make substantial savings if they lock in a low 5-year rate before they do.
2) What’s more, if the economy goes through a sticky patch, as seems likely, lenders are likely to become more cautious, limiting their exposure to the housing market by pricing out the riskier borrowers from their mortgages – i.e., FTBs.
3) Demand in the rental sector is already substantially outstripping supply and rents are rising. The cost-of-living crisis and delays in purchases by FTBs will push them even higher, making it far harder, moving forwards, to save for a deposit.
4) Although the economic conditions will soon have an effect on house prices, they are still expected to keep on rising, just at a slower pace, pushing them further and further out of reach.
5) Whatever happens in the short-term, people always stay longer than they expect in their homes and, in the longer-term, house prices always rise.
If you are a first-time buyer and want some advice, why not give us a call at Homesite. We have plenty of experience in helping FTBS get on the property ladder and we have lots of exciting properties for you to see.
Timings for buying a new home
Finding and buying a new home always take a little longer than people expect. The timings will also vary wildly, depending on individual circumstances.It is also makes a huge difference if you have Timings for buying a new home, to keep things on track.For most of us, though, it takes somewhere between 3 and 6 months. Below are the key stages and some rough guide times.
Step 1:mortgage in principle – 24 hours
Before you fall in love with an area or a house you can’t afford, find out how much you can borrow – which you can do by getting a mortgage in principle (MIP). This will also put you in much a better position when dealing with both estate agents and sellers, as they will take you more seriously, especially if you make an offer.In order to get one, you will need to provide a lender with some basic details about your income, expenditure, and debts. They can sometimes even be done over the phone and will last between 60 and 90 days. If you have a property to sell, in the current climate, you will also need a proceedable offer on it before you can make one of your own.
Step 2: finding your dream home - 6 to 26 weeks
Armed with your MIP, you can then focus your search more precisely on areas and properties that suit both your needs and your budget. Putting an exact timetable on this is difficult, as it depends on a wide range of factors. Clearly, it’ll be much quicker to find a terraced Victorian house in an area that is full of them, rather than something more unusual, such as a waterfront property in a remote area. It is also dependent on how much you are prepared to compromise (or adapt) your wish list, especially if you are pushing at the limits of your budget.And don’t just concentrate your search on the portals. As your local agent, we at Homesite can not only offer plenty of help and advice, we can also sometimes let you know about properties before they even come onto the market.
To give you an idea of what’s involved - according to research, on average, we look at 38 properties – 28 online and 10 in person - before finding ‘the One’. And when we find it, we tend to fall in love pretty quickly –within 480 seconds, to be precise.
Step 3: making an offer (and having it accepted) - 1 hour to 1 week
You might be lucky and have your first offer accepted.Normally, however, it takes a bit of toing and froing and some rejigging of finances before a deal is struck and it’s celebration time. Mind you, you may want to keep your champagne on ice, as there are still quite a few hoops to jump through.
Step 4a: conveyancing - 4 to 12 weeks
If you don’t already have a solicitor, you now need to appoint one to do your conveyancing. This will involve him or her doing various different checks on your new property, from any planning and building control issues, to flooding, boundaries, ownership details and the status of any leases. Most of the basic searches only take a few days, but local authority ones can vary between 2 and 42 days and getting information from freeholders can be very slow at times. In addition, the process will often uncover issues that need dealing with and these can extend the timetable to varying degrees, depending on their complexity.
(Step 4b: mortgage offer - 2 to4 weeks)
At the same time as doing your conveyancing, you should also request a formal mortgage offer on your property. This will entail quite a bit more paperwork than an in principal mortgage and will also involve a mortgage valuation of the property.
(Step 4c: survey - 1 to 4 weeks)
The mortgage valuation is solely for the benefit of the lender and so buyers are recommended to carry out their own surveys. The timetable depends on the availability of both the seller and the surveyor, but a report can normally be done within a few days. The report, though, can sometimes highlight things that need fixing and negotiating with the seller over any resulting price reductions will extend the buying timeline.To avoid any unnecessary delays, it is recommended that a buyer instructs a survey as soon as their offer is accepted.
Step 5: exchange to completion - 4 weeks
Some of the biggest delays are caused by chains – trying to keep multiple sales on track and ready to exchange and complete at the same time can prove very tricky. To give you an idea of what’s involved, it takes up to 60% less time to purchase a house that is not involved in a chain. Once you do exchange, completion can, in theory, be on the same day but mostly is normally within 4 weeks.
Step 6: moving in
Now you can finally uncork that champagne.
If you’re thinking of buying (or selling) a home, just give Homesite a call and we can set you off on the right path
Insider tips from builders
We hear so much about building projects from the homeowner’s perspective, so wouldn’t it be interesting to get the builder’s viewpoint for a change? They're not always an easy bunch to pin down, but fortunately for us, Direct Line Insurance has recently carried out a survey in the area.
According to the 100 builders they quizzed, it's home extensions that are the most popular trend in home improvements, with the average one costing around £35,000. Given that the difference between the average two and three bed properties in London is around £160,000, it’s not much of a surprise. What was more of a surprise was that the builders claim that over 70% of projects are completed within the agreed timeframe and budget, although they did admit that 26% of projects ended up being more expensive than the original quote and 35% ran over time. Maybe I've been watching too many episodes of Grand Designs, but every project Kevin McCloud comes across seems to run hugely over budget and are never even vaguely close to completing on time.
One thing we all agree on is that what homeowners want most is extra space and light. So, on top of all those new extensions, our builder friends are also busy removing walls and adding sliding glass doors and skylights.
Now for the bad bits. If you are thinking about doing a loft conversion – beware! Despite being one of the cheaper types of extensions, 36% of the builders claim they are the most likely home improvement to go wrong. Bathrooms (26%) and kitchens (19%) are next in line. Being on the upper floors and with all that water, bathrooms are not where you want any problems, but before you panic, it doesn’t necessarily mean they leak.
Probably the most useful feedback from the survey is the builders’ top tips on how to get the best out of them, which include:
- Agree a quote beforehand - set aside a strict budget, but don’t forget to allow a contingency in case of any overspend
- Agree on a realistic time frame upfront, but bear in mind that it may be affected by external factors, such as the weather
- Make sure you understand exactly what is involved in the project and be completely honest about any previous work that’s been done in the past that may affect the current job.
- Maintain regular contact with the builders throughout the project period
- Make sure you have a contract in place that covers the responsibilities for all parties and never hand over payments upfront
- Always use the same workforce from start to finish to ensure consistency
- Ensure the builders are working exclusively on your project and that they commit to working on it every day and don’t just turn up when it suits them
- Check your builder has the right insurance in place before any work begins
Most of all, they recommend you plan everything in as much detail as possible and you must get three competitive quotes.
How have house prices in Notting Hill, London performed over the decades?
At Homesite, we know that people often buy investment properties with an eye on long-term gains rather than just a quick profit. We thought therefore, we’d take a look at how the housing market performs over decades rather than years, and the results make for some very interesting reading.
According to a report from Nationwide, the last full decade (2010s), was a fairly mixed period. At 33%, they had the weakest growth since the 90s (21%), yet it was also a period of low inflation and interest rates. In contrast, average prices rose by an eye watering 180% in the 80s. However, inflation was far higher - interest rates hovered between 10%-15%, then peaked at 18.63% before the market eventually crashed spectacularly in 1989.
Despite tailing off over the last couple of years, London was the top performing region in the 2010s, with house prices rising at twice the UK average (+66%). London’s immediate surroundings, Slough, Guildford, Crawley, Chelmsford etc, were the next best performers – rising by 54%. On the whole, the further north you went, the worse the performance. Scotland’s house prices rose by just 8%, the North by 11%. Yorkshire, the Northwest, and Wales came next at 17%, although Northern Ireland did the worst at 2%.
Affordability is key to a fully functioning housing market and there was a very mixed picture during the 2010s. Although prices were up 33%, wages rose by just 20% during the same period. Some of this was offset by historically low interest rates (and mortgages).
Even so, the effect rising prices are having on first-time buyers (FTBs) has been well documented, especially when it comes to deposits. Nationwide’s chart shows the typical time it would take an FTB to raise a deposit if they set aside 15% of an average area income.
London, unsurprisingly, represents the biggest challenge - at the end of the last decade, it would have taken just over 10 years to save a 20% deposit. Now it takes 15 years. In the North, the time taken has actually come down, slightly, from 5.5 years to a smidgen over 5 years. The West Midlands is, appropriately, somewhere in the middle at just under 8 years, up from just under 7. It should be noted that most people now buy with their partners, resulting in a higher combined income and far shorter savings periods.
In contrast, mortgage affordability has improved, with mortgage payments representing a lower percentage of FTBs’ take-home pay, with average mortgage interest rates around 2.4% during the 2010s compared to 5% in the previous decade. Only in London and the Outer Metropolitan areas have mortgage payments grown as a percentage of income.
One thing is very clear - over the last four decades, despite plenty of bumps in the road, including some quite serious ones, prices have always risen, making houses an exceptional investment over the longer term. Affordability, though, can bounce between negative and positive territory and, moving forwards any significant rise in the base rate could impact on affordability and have a knock-on effect on house prices.
If you’re looking for an investment opportunity, please do register with our team