The tightrope of being a Mid Sussex buy-to-let
landlord is a balancing act many do well at. Talking to several Mid Sussex
landlords, they are very conscious of their tenants’ capacity and ability to
pay the rent and their own need to raise rents on their rental properties (as Government
figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does
however suggest many landlords feel more assured than they were in the spring
about pursuing higher rents on their Mid Sussex buy-to-let properties.
During the summer months, historic evidence
suggests that the rents new tenants have had to pay on move in have increased. June/July/August
is a time when renters like to move, demand surges and the normal supply and
demand seesaw mean tenants are normally prepared to pay more to secure the
property they want to live in, in the place they want to be. This is
particularly good news for Mid Sussex landlords as average Mid Sussex rents
have been on a downward trend recently. So look at the figures here; rents in Mid
Sussex on average for new tenants moving in have risen 0.9% for the month,
taking overall annual Mid Sussex rents 0.9% lower for the year
However, several Mid Sussex landlords have
expressed their apprehensions about a slowing of the housing market in Mid
Sussex and I believe, based on this new evidence, they may be exaggerated.
Before we get the Champagne out, the other
side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Mid Sussex as well as the Mid Sussex buy-to-let
landlords). I believe the Mid Sussex
property market has been trying to find some form of balance (one might even
say equilibrium) since the New Year.
According to the Land Registry property values in Mid Sussex are 6.14%
higher than they were 12 months ago, rising by 4.01% last month alone!
Source; HM Land Registry and Denton House Research.
Yet, I would take those figures with a pinch
of salt as they reflect the sales of Mid Sussex properties that took place in early
Spring 2017 and now are only exchanging and completing during the summer months.
The reality is the number of properties that
are on the market in Mid Sussex today has risen by 9.32% since the New Year and
that will have a dampening effect on property value increases. As tenants have
had less choice, buyers now have more choice and that will temper Mid Sussex
property prices as we head towards 2018.
Be you a homeowner or landlord, if you are
planning to sell your Mid Sussex property in the short term, it’s important,
especially with the rise in the number of properties on the market, that you realistically price your property when you bring it
to the market. It is so crucial as the short-term balance of
the local property market see-saw slips more towards the buyer with the
increase in the number of properties for sale. Everyone has
access to every property on the market now through the likes of Rightmove and
Zoopla and they will compare your home with other property like yours.
However, even with this uplift in the number
of properties for sale in Mid Sussex, property prices will remain stable and
strong in the medium to long term. This is because the number of properties on
the market today is still way below the peak of summer of 2008. In Burgess Hill
for example, there were 393 properties for sale compared to the current level
of 211 (if you recall, prices dropped by nearly
20% in Credit Crunch years of ‘08 and ‘09).
Compared to 2008, today’s lower supply of Mid
Sussex properties for sale will keep prices relatively high and they will
continue to stay at these levels for the medium to long term.
Less people are moving than a few years ago,
meaning less property is for sale. Fewer properties for sale mean property
prices remain relatively high and this is because of a number of underlying
reasons. Firstly, buy-to-let landlords tend not sell their properties as often
than owner-occupiers, consequently removing the property out of the housing
market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years
ago (meaning it costs more to move). Next, there is a dearth of local authority
rental housing so demand for private rented housing will remain high. Then we
have the UK’s maturing owner occupier population, meaning these older people
are less likely to move (compared to when they were younger). Another reason is
the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only
building 145k a year!) and finally, the new mortgage rules introduced in
2014 about how much a person can borrow on a mortgage has curtailed demand.
Some
final thought’s before I go – to all the Mid Sussex homeowners that aren’t planning
to sell – this talk of price changes is only on paper profit or loss. To those
that are moving, most people that sell, are buyers as well, so as you might not
get as much for yours, the one you will want to buy won’t be as much, (swings
and roundabouts as Mum used to say!)
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