Good little investment property in Burgess Hill.

Good Afternoon to my blog reading fans, I was just having a quick peek at what has come to market this week and found this little gem. On the market with Fox and Sons in Burgess Hill this lovely one bed flat is well priced at offers over £165,000. You can view the details by clicking on the link below.

http://www.rightmove.co.uk/property-for-sale/property-59187347.html 


Perfectly placed for young professional people, it is a stone’s throw from the town centre. Looking at the photos it looks very well presented and would appear to need no work doing to it. A conservative rental estimate of around the £735pcm mark would give a great gross yield of 5.3% at a purchase price of £165,000. The property is leasehold, so make sure you check out the service charges and ground rent carefully, as this will have an effect on any yield.

If you are considering a buy to let investment you are welcome to call in to my Martin & Co office on Keymer Road for a coffee and a chat, or email me if you have any questions.

Burgess Hill Property Market in Crisis : Who is to blame?

At the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Home-ownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation, so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in home-ownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change as, in 1997, the home-ownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

Move on another ten years to the 2007 figures, and this showed a slight drop in home-ownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

When we look at the Burgess Hill figures of home-ownership, looking back to 1991 76.93 % of Burgess Hill households were owned by the homeowner, whilst 6.75% of Burgess Hill households were privately rented. The 2011 census showed home ownership in Burgess Hill had dropped to 73.65% and private rented had increased to 13.37%. Much of the recent rise in the occurrence of private renting in Burgess Hill since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Mid Sussex Property Market Blog) artificially grew home-ownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Burgess Hill.

So if you want blame anyone blame the Grocer’s daughter from Grantham – Mrs. T! But before you do remember in the 1970s the UK was called the "sick man of Europe" by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9. If it hadn’t been for her we wouldn’t be where we are today.

26% of Haywards Heath people Rent - Is that Healthy?

Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter (that buzzed in the night) or you lived in a council house. In the latter part of the 20^th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting and as the rate of home-ownership is starting to drop substantially, and as we roll the clock forward to today there is no stigma at all to renting. Everyone is doing it. In fact, of the 33,477 residents of Haywards Heath, 8,764 of you rent your house from either the local authority/social provider (i.e. council house or housing association) or private landlords – meaning 26.17% of Haywards Heath people are tenants.

The idea of home-ownership is deeply embedded in the British soul; in fact 24,048 Haywards Heath people live in an owner occupied property (or 71.83%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year so first time buyers can buy their first home whilst recently changing the tax laws for buy to let landlords. To get votes, Thatcher (and everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate home-ownership the goal of British life.

So as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, home-ownership could be affecting your health! The UK, according to Bloomberg, is only the 21^st healthiest country in the world. Germany is at No.10 and Switzerland at No.4 and home-ownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).

In the Mid Sussex District Council area, 78.13% of homeowners who own their house outright said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 4.69% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types – 73.13% of Mid Sussex local authority/social tenants said they were in ‘very good’ or ‘good’ health and 8.89% were in ‘bad’ or ‘very bad’ health.

Whilst ‘private rented tenants’ in Mid Sussex, were the healthiest, as 89.49% of them described themselves in ‘very good’ or ‘good’ health and only 2.57% were in ‘bad’ or ‘very bad’ health.(Please note the health % don’t add up to 100% as there is a middle category of health – for people who have ‘Fair’ health)

I am not suggesting that low home-ownership rates in Switzerland and Germany are directly linked to health, nor do I expect Brits to all go to Berlin, Interlaken or Düsseldorf and realise how happy people are when they don't need to worry about all the stresses which accompany home-ownership. The numbers for Haywards Heath do go some way to back up the argument (and they are the same across the whole of the UK). Nonetheless I do think that substantially all of the upside to home-ownership in recent years has been a function of monumental rising house prices. Now that's come to an end, it's hard to see why anybody would want to buy?

Renting is here to stay in Haywards Heath and it’s growing incrementally each year. Even with the new tax rules for landlords, buy to let is still a viable investment option for most people in the town. There has never been a better time to buy buy to let property in Haywards Heath, but buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion, do your homework.

Rents in Haywards Heath rise by 2.9% in the last year.

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Haywards Heath property market - especially the tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Haywards Heath people are 1.5% better off in ‘real’ terms. Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Haywards Heath tenants have to pay for their Private Rental Properties in Haywards Heath (i.e. not housing association or council tenants) rose by 2.9% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Haywards Heath rose by 2.2% (where salaries only rose by only 0.2%) However, it’s not all bad news for Haywards Heath tenants, because in 2013 rents rose by 1.8%, (but salaries rose by 2.2%).

It must be noted that the private rents Haywards Heath tenants have had to pay for Haywards Heath property since 2005 are only 20.1% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

More and more, talking to 20 and 30 somethings who rent – it’s a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity. I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% home-ownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners. Yet home ownership has not always been the rule in the UK.  In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, and it’s a choice.  Haywards Heath rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Haywards Heath home is a dream for the majority of the 20 and 30 something’s of Haywards Heath have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why; demand for renting is only going in one direction – upwards.