Only 38.1% of Burgess Hill Rented Property have Children living in them.

A few weeks ago I was asked a fascinating question by a local Councillor who, after reading the Burgess Hill Property Blog, emailed me and asked me – “Are Burgess Hill Landlords meeting the Challenges of tenanted families bringing up their families in Burgess Hill?”

What interesting question to be asked.

Irrespective of whether you are tenant or a homeowner, to bring up a family, the most important factors are security and stability in the home. A great bellwether of that security and stability in a rented property is whether tenants are constantly being evicted. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice for no reason.

Some “left leaning Politicians” keep saying we need to deal with the terrible insecurity of Britain’s private rental market by creating longer tenancies of 3 or 5 years instead of the current six months. However, the numbers seem to be telling a different story. The average length of residence in private rental homes has risen in the last 5 years from 3.7 years to 4 years (a growth of 8.1%), which in turn has directly affected the number of renters who have children. In fact, the proportion of private rented property that has dependent children in them has gone from 29.1% in 2003 to 37.4% today.

Looking specifically at Burgess Hill compared to the National figures, of the 1,343 private rental homes in Burgess Hill, 512 of these have dependent children in them (or 38.1%), which is interestingly (although expected) more or less in line with the National average of already stated 37.4%.

Even more fascinating are the other tenure types in Burgess Hill;

   32.7% of Social (Council) Housing in Burgess Hill have dependent children

   48.3% of Burgess Hill Owner Occupiers (with a Mortgage) have dependent children

                                     7.6% of Owner Occupiers (without a Mortgage) have dependent children.

 

Although, when we look at the length of time these other tenure types have, whilst the average length of a tenancy for the private rented sector is 4 years, it is 11.4 years in social (council) housing, 24.1 years for home owners without a mortgage and 10.4 years of homeowners with mortgages.

Anecdotally I have always known this, but this just proves landlords do not spend their time seeking opportunities to evict a tenant as the average length of tenancy has steadily increased. This noteworthy 8.1% increase in the average length of time tenants stay in a private rented property over the last 5 years, shows tenants are happy to stay longer and start families.

So, as landlords are already meeting tenants’ wants and needs when it comes to the length of tenancy, I find it strange some politicians are calling for fixed term 3 and 5 year tenancies. Such heavy handed regulation could stop landlords renting their property out in the first place, cutting off the supply of much needed rental property, meaning tenants would suffer as rents went up. Also, if such legislation was brought in, tenants would lose their ‘Get Out of Jail card’, as under current rules, they can leave at any time with one months’ notice not the three or six month tenant notice suggested by some commentators.  

Finally, there is an extra piece of good news for Burgess Hill tenants. The English Housing Survey notes that those living in private rented housing for a long period of time generally paid less rent than those who chopped and changed.

What will the 0.25% Interest Rate do to the Haywards Heath Property Market?

I had an interesting chat with a Lindfield landlord who owns a few properties in the town. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Haywards Heath Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the town to manage his Haywards Heath properties) yet after reading my blog on the Haywards Heath Property Market for a while the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Haywards Heath property market and I would also like to share these thoughts with you.

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre-credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Haywards Heath, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Haywards Heath, of the 17,516 people who have a job, 760 are in the manufacturing industry and 1,048 in Construction meaning;

4.3% of Haywards Heath workers are employed in the Manufacturing sector and 6% of Haywards Heath workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Haywards Heath economy, is the Financial Services industry. Financial Services in Haywards Heath employ 1,845 people, making up 10.5% of the Haywards Heath working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private Bonds. Now that won’t do much to the Haywards Heath property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages  which will have a huge effect on the Haywards Heath property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Haywards Heath property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent under supply of housing (something I have spoken about many times in my blog and the specific effect on Haywards Heath). The severe under supply means that Haywards Heath property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades; investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.

27.4% Of Mid Sussex Homes Are One Person Households.

I was having an interesting chat with a Mid Sussex buy to let landlord the other day when the subject of size of households came up in conversation.  For those of you who read my Brexit article published on the morning after the referendum, one of the reasons on why I thought the Mid Sussex property market would, in the medium to long term, be OK, was the fact that the size of households in the 21^st Century was getting smaller – which would create demand for Mid Sussex Property and therefore keep property prices from dropping.

Looking at the stats going back to the early 1960’s, when the average number of people in a home was exactly 3, it has steadily over the years dropped by a fifth to today’s figure of 2.4 people per household. Doesn’t sound a lot, but if the population remained at the same level for the next 50 years and the we had the same 20% drop in household size, the UK would need to build an additional 5.28 million properties ( or 105,769 per year) .. When you consider the country is only building 139,800 properties a year it doesn’t leave much for people living longer and immigration. Looking closer to home in the Mid Sussex District Council area, the average number of occupants per household is 2.4 people

When we look at the current picture nationally and split it down into tenure types (i.e. owned, council houses and private renting, a fascinating picture appears.

The vast majority of homeowners who don’t have a mortgage are occupied by one or two people (81% in fact), although this can be explained as residents being older, with some members of the family having moved out, or a pensioner living alone.  People living on their own are more likely to live in a Council house (43%) and the largest households (those with 4 or more people living in them are homeowners with a mortgage – but again, that can be explained as homeowners with families tend to need a mortgage to buy. What surprised me was the even spread of private rented households and how that sector of population are so evenly spread across the occupant range – in fact that sector is the closest to the national average, even though they only represent a sixth of the population.

When we look at the Mid Sussex District Council figures for all tenures (Owned, Council and Private Rented) a slightly different picture appears:

1 person households in Mid Sussex	2 person households in Mid Sussex	3 person households In Mid Sussex	4 person households in Mid Sussex	5+ person households in Mid Sussex
27.47%	35.40%	15.85%	15.12%	6.16%

But it gets even more interesting when we focus on just private rental properties in Mid Sussex, as it is the rental market in Mid Sussex that really fascinates me. When I analysed those Mid Sussex District Council private rental household composition figures, a slightly different picture appears. Of the 6,719 Private rental properties in the Mid Sussex District Council area,

·         31.5% of Private Rental Properties are 1 person Households

·         34.6% of Private Rental Properties are 2 person Households

·         16.8% of Private Rental Properties are 3 person Households

·         11.6% of Private Rental Properties are 4 person Households

·            5.3% of Private Rental Properties are 5+ person Households

     As you can see, Mid Sussex is not too dissimilar from the national picture but there is story to tell. If you are considering future buy to let purchases in the coming 12 to 18 months, I would seriously consider looking at 2 bed apartments/houses. Even with the numbers stated, there are simply not enough 2 bed apartments/houses to meet the demand. They have to be in the right part of Mid Sussex and priced realistically, but they will always let and when you need to sell, irrespective of market conditions at the time, will always be the target of buyers.