For most Locks Heath people, a mortgage is the only way to buy a property. However, for some, especially Locks Heath homeowners who have paid off their mortgage or Locks Heath buy to let landlords, many have the choice to pay exclusively with cash. So the question is, should you use all your cash, or could a mortgage be a more suitable option?

Well, looking at the numbers locally…

4,316 of the 13,753 property sales in the last 7 years in Fareham were made without a mortgage (i.e. 31.4%)

Interesting when compared with the national average of 31.9% cash purchases over the last seven years. Next, I wanted to see that cash percentage figure split down by years. As you can see from the graph, this level of cash purchases vs mortgage purchases has remained reasonably constant over those seven years…

Next, if you are going to go for a mortgage, the next question has to be whether you should fix the rate or have a variable rate mortgage. In the last Quarter, 90.57% of people that took out a mortgage, had a fixed rate mortgage at an average interest rate of 2.27%. Although what did surprise me was only 65.79% of the £1.429 trillion mortgages outstanding in the whole of the UK were on a fixed rate. The level of mortgage debt compared to the value of the home itself (referred to as the Loan to Value rate – LTV) was interesting, as 61.9% of people with a mortgage have a LTV of less than 75%. Although, one number that did jump out at me was only 4.33% of mortgages are 90% and higher LTV – meaning if we do have another property slump, the number of people in negative equity will be relatively small.

Next, looking at the actual number of properties sold, it can be clearly seen the number of house sales has dipped slightly in 2018…

So those are the numbers… let us have a look at the pros and cons of taking a mortgage, with specific focus on Locks Heath buy to let Landlords.

Taking a mortgage will help a landlord increase their investment across more properties to maximise the return, rather than putting everything into one Locks Heath buy to let property. This will enable the Landlord to ensure if there is a void in the tenancy, there should still be rent coming from the other properties. The flip side of the coin is that there is a mortgage to pay for, whether or not the property is let.

The other great motivation of taking a mortgage is that landlords can set the mortgage interest against the rental income, although that will only be at the basic rate of tax by 2021 due the recent tax changes. Banks and Building Societies will characteristically want at least a 25% deposit (meaning Locks Heath Landlords can only borrow up to 75%) and will assess the borrowing level based on the rental income covering the mortgage interest by a definite margin of 125%.

A lot will depend on what you, as a Locks Heath Landlord, hope to attain from your buy to let investment and how relaxed you would feel in making the mortgage payments when there is a void (interestingly, Direct Line calculated a few months ago that voids cost UK Landlords around £3bn a year or an average of £1000 per property per year). You also have to consider that interest rates could also increase, which would eat into your profit… although that can be mitigated with fixing your interest rate (as discussed above).

So, with everything that is happening in the world, does it make sense to buy rental properties? Now we help many newbie and existing Landlords work out their budgets, taking into account other costs such as agent’s fees, finance, maintenance and voids
in tenancy. The bottom line is we as a country aren’t building enough property, so demand will always outstrip supply in the medium to long term, meaning property values will keep rising in the medium to long term. That’s not to say property values might fall back in the short term, like they did in 2009 Credit Crunch, the 1988 Dual MIRAS crash, the recession of the early 1980’s, the 1974 Oil Crisis, the early 1930’s Great Depression… yet every time they have bounced back with vigour. Therefore, it makes sense to focus on getting the best property that will have continuing appeal and strong Tenant demand. And to conclude, buy to let should be tackled as a medium to long term investment because the wisest Landlords see buy to let investment in terms of decades – not years.

I have reached number 18 on my countdown of the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Is it your street?

As we go full steam ahead into 2019, it’s certain that the Locks Heath housing market in 2018 was a little more restrained than 2016 and 2017 and I believe this will continue into 2019. Property ownership is a medium to long term investment so, looking at the long-term, the average Locks Heath homeowner, having owned their property since the Millennium, has seen its value rise by more than 198%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historical gain in Locks Heath property values has come from the growth in Locks Heath property values, while some of it will have been enhanced by extending, modernising or developing their Locks Heath home.

Taking a look at the different property types in Locks Heath, and the profit made by each type, makes interesting reading..

However, we can’t forget there has been just over 60% inflation over those 18 years, which eats into the ‘real’ value (or true spending power of that profit)… so if we take into account inflation since 2000, the true spending power of that profit has been lower.

So the ‘real’ value of the profit, after inflation, in Locks Heath has been £8,178 per year – still nothing to sniff at.

I wanted to show you that even though we had the 2008/09 Credit Crunch property market crash where, depending on the type of Locks Heath property, property values dropped between 15% and 20% in 18 months… Locks Heath homeowners over the long term are still better off than those renting.

Moving forward, the question I get asked time and again is what will happen in the future to the Locks Heath Property market?  Irrespective of what is happening in the World, Europe or even Central London, the biggest factor over the medium to long term to ensure that this level of house price growth is maintained in Locks Heath is the building of new homes both locally and in the country as a whole. Whilst we haven’t had the 2018 stats yet, Government sources suggest this will be nearer 180,000 to 190,000, a decrease from the 2017 figure of 217,350 new households being created. When you consider that we need to build 240,000 households to equal demand (immigration, people living longer, higher divorce rates and people co-habiting later in life etc)… demand will outstrip supply and unless the Government start to spend billions building council houses this trend will continue for years (and decades to come).

Another factor is that whilst Locks Heath Landlords have been hit with higher taxes to enable them to actually be a Landlord most, in every national survey, still intends to increase their portfolio in the medium to long term. The youngsters of Locks Heath see renting as a choice, giving them flexibility and options that being tied to a home cannot give… thus meaning demand will continue to grow and Landlords will be able to enjoy increased rents and capital growth, although those very same Locks Heath buy to let Landlords will have to work smarter in the future to continue to make decent returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Locks Heath in 2018, most Locks Heath buy to let Landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Locks Heath buy to let Landlord, ensure that continues?

Since the 1990’s, making money from investing in buy to let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be so easy. Over the last ten years, I have seen the role of the forward thinking agents evolve from a person collecting the rent to a more all-inclusive role; I call it, ‘strategic portfolio leadership’.

Whether you are a Landlord of ours or not, without any cost or commitment, we can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice feel free to drop me a line.

It’s now commonly agreed amongst economists and the general public that the dramatic rise in Locks Heath property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down – yet in the last 12 months, people have still been moving, buying and selling in Locks Heath at levels similar to the last six years – something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Locks Heath property market, and more specifically, who is moving and why in Locks Heath.  In the last twelve months most of the property sales in Locks Heath involved detached properties, which sold for on average £429,900.  Semi-detached properties sold for an average price of £308,700, while flats fetched approximately £154,800.

In Locks Heath, in the homeowner sector in 2018 (i.e. owner occupation), 79 households moved within the tenure (i.e. sold the home they owned and bought another one) and 15 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).

Locks Heath Home Movers in 2018
Moved from Owner Occupation to Private Rented	29
Moved from Private Rented to Owner Occupation	37
Owner Occupation to Social Housing	4
Straight to Owner Occupation	15
Left Owner Occupation (i.e. Household Ended)	19
Owner Occupation to Owner Occupation	79

What does this mean for Locks Heath buy to let Landlords?  Well, looking at the graph, it appears bad news for Landlords. There were 37 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 29 Locks Heath households moved to the private rented sector from owner occupation… which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 39 new households in the Locks Heath private rental sector were created

…and it will continue to grow at those levels for the foreseeable future.

I have one final thought and opportunity for you Locks Heath property investors. 19 owner occupied households in Locks Heath sold in last year where the homeowners had passed away.  These properties can be a potential goldmine and offer great returns.  The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top money).  These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market the Locks Heath housing market is in decent shape for the medium to long term.  If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned… and returned with vengeance.  Like I say to anyone buying a property, be they a first time buyer, Landlord or homeowner… property is a long game… and if you play the long game, you will always win (although isn’t that true in most aspects of life?).

We have reached number 19 on our countdown of the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Are we in your street?

A few months ago I wrote an article on the Locks Heath Property Blog about the length of time it took to sell a property in Locks Heath and the saleability of the different price bands (i.e. whether the lower/middle or upper local property markets were moving slower or quicker than the others).  For reference, a few months ago it was taking on average 62 days from the property coming on the market for it to be sold subject to contract (and that was based on every Estate Agent in Locks Heath)… and today… 108 days… does that surprise you with what is happening in the UK economy?

Well, a number of Locks Heath Landlords and homeowners who are looking to sell in the coming months contacted me following that article to enquire what difference the type of property (i.e. Detached/Semi/Terraced/Apartment) made to saleability and also the saleability of property by the number of bedrooms).  As I have said before, whether you are a Locks Heath Landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time… but anything you can do to mitigate that is helpful to everyone.

So I did some research on the whole of the Locks Heath property market and these were my findings… to start with by type (i.e. Detached/Semi/Terraced/Apartment):

As you can see, the star players are the terraced/town house and semi-detached variants of Locks Heath property, whilst apartments seem to be sticking in Locks Heath.

Next I looked at what the number of bedrooms does to the saleability of Locks Heath property..

As you can see the one and five bedroom properties seem to be taking the longest time to sell.

And to answer the question in the title….. it is three bed properties!

So, what does this mean for Locks Heath buy-to-let Landlords and homeowners?

There is no doubt that there is a plethora of properties on the market in Locks Heath compared to 18 months ago…  it is not because more houses are coming on to the market, it is because they are also taking a little longer to sell.  This makes it slightly more a buyer’s market than the seller’s market we had back in 2014/5/6.  Therefore, in some sectors of the Locks Heath property market, it is much tougher to sell, especially if you want to sell your Locks Heath home fast.

Therefore, to conclude, on the run up to the New Year, if you are looking to buy and plan to stay in the buy to let market a long time, perhaps take a look at the Locks Heath properties that are sticking as there could be some bargains to be had there(?).  Want to know where they are?  Drop me a line and I will tell you a nifty little trick to find all the properties that are sticking.

The Locks Heath housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash.  There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country.  Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in the area, the market has certainly changed for both buyers and sellers alike (be they Locks Heath buy to let Landlords, Locks Heath first time buyers or Locks Heath owner occupiers looking to make the move up the Locks Heath property ladder).

Locks Heath House Values are 4.97% higher than a year ago, and the rents Locks Heath Tenants have to pay are 1.5% higher than a year ago

When we compare little old Locks Heath to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back…

Since 2006, Locks Heath House Values are 57.84% higher, yet the rents Locks Heath tenants have had to pay for their Locks Heath rental property are 26.4% higher

… which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Locks Heath Tenants are 15.6% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values.  I particularly want to bring to your attention to the dip in Locks Heath house values (in red) in the years of 2008 and 2009… yet as Locks Heath property values started to rise after the summer of 2009, see how Locks Heath rents dipped 6/12 months later (the yellow bars)….  Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Locks Heath property.

However, maybe an even more interesting point is for the long-term Locks Heath buy to let Landlords.  The performance of Locks Heath rental income vs Locks Heath house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Locks Heath Landlords have benefited from decent capital growth over the last decade, with the new tax rules for landlords, now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Locks Heath buy to let portfolio.  More and more I am sitting down with both Locks Heath Landlords of mine and Landlords of other agents who might not be trained in these skills – to carry out an MOT style check on their Locks Heath portfolio, to ensure your investment will meet your future needs of capital growth and income.  If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose?  30 minutes of time against peace of mind – the choice is yours.

As the memory of a glorious summer starts to dwindle some interesting statistics have come to light on the Locks Heath Property Market which will be thought provoking for both homeowners and buy to let Landlords alike.

Over the last 12 months 193 households have changed hands in Locks Heath, interesting when compared with the 10-year average of 199 households per year.

Yet, for the purpose of this week’s article, I want to discuss the pricing of the current crop of Locks Heath’s property sellers and the prices they are asking for their homes and the prices they are achieving (or not as at the case may be).  It is so important for all property owners to know the real story, so they can judge for themselves where they stand in the current Locks Heath housing market, thus enabling them to make suitable and informed decisions… and that is why, in my blog about the Locks Heath Property Market, I pride myself in telling the people of Locks Heath the real answers, not just the ones they want to hear.

The national average of homes selling at or above the asking price currently stands at around 10%, so around 90% go below the asking price – but by how much?  Well according to Rightmove, in the Locks Heath area, the average difference between the ‘FINAL asking price’ to the price agreed is 3.1%… yet note I highlighted the word FINAL in the last statement.

You see some Estate Agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a greater chance to secure the property on that agent’s books, as opposed to a competitor.  This practice is called overvaluing. Now of course, each homeowner wants to get the most for their property, it is quite often their biggest asset – yet some agents know this and prey on those house sellers.  You might ask, what is the issue with that?

Well, you only get one chance of hitting the market as a new property.  Everyone has access to the internet, Rightmove and Zoopla etc, and your potential buyers will know the market like the back of their hand.  If you have a 3 bed semi that is on the market for a 3 bed detached house price those buyers will ignore you.  Your Locks Heath property sticks on the market, potential buyers will keep seeing your Locks Heath property on Rightmove each week, then start to think there is something wrong with it, dismiss it even further, until you as the house seller have to reduce the asking price so much (to make it appear inexpensive) to get it away.  According to our own research, the average house buyer only views between 4 and 5 houses before buying – so don’t assume viewers will come round to your optimistically priced (i.e. overvalued) property, thinking they will knock you down – no quite the opposite!

So how widespread is overvaluing in Locks Heath? The results might surprise you…

39.3% of properties in Locks Heath, currently on the market, have reduced their asking price by an average reduction of 5.2% (which equates to £18,700 each)

So, all I ask is this… be realistic and you will sell at a decent price to a decent buyer.  First time, every time, enabling you to move on to the next chapter of your life.

We’ve reached number 20 on our list of The Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Did your street make the cut?

For help with any aspect of the sale or letting of your property please contact us on 01489 885500.

For more articles about the local property market please visit The Locks Heath Property Blog.

I have been asked a number of times recently what a hard Brexit would mean to the Locks Heath property market.  To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press.  However, it’s obviously a topic that you as Locks Heath buy to let Landlords and Locks Heath homeowners are interested in… so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world.  I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories!  Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market.  If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Locks Heath (and national) property values were unfounded.  Although the growth of property values in Locks Heath has reduced since the referendum in the summer of 2016.

Now, it’s true the Locks Heath property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015).  But before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

Fareham and Locks Heath House prices have risen by 11.94%

since the EU Referendum

 …and yes, in 2018 we are on track (and again this is projected) to finish on 2,052 property transactions (i.e. the number of people selling their home) which is less than 2017.  But still higher than the long term 12 year average of 1,959 transactions in the local council area.

So it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt that could be a different game.  Yet how likely is that?

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal).  If trade barriers are imposed on a hard Brexit imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro.  In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch.  Nationally, in most locations including Locks Heath, property values dropped in value by 16% to 19% over an 18-month period.  Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market.  One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks.  The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income.  Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan.  Meaning all the major possible stumbling blocks have been mostly weeded out of the system.

So, what next?

A lot of Locks Heath homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Locks Heath.  For Locks Heath Landlords, Locks Heath Tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Locks Heath buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

Brexit, No Brexit, Hard Brexit… in the whole scheme of things, it will be another footnote to history in a decade.  We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009… whatever happens, happens.  People still need houses and a roof over their head.  If property values drop, it is only a paper drop in value… because you lose when you actually sell.  Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

Growth in UK property values as well as in Locks Heath seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.