Only 295 Council Houses in the Haywards Heath and Mid Sussex area left – opportunity or problem?

The ‘Right to Buy’ scheme was a policy introduced by Maggie Thatcher in 1980 which gave secure council tenants the legal right to buy the council home they were living in with huge discounts. The heyday of council ‘Right to Buys’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. However, in 1997, Tony Blair reduced the discount available to tenants of council houses and the numbers of properties being bought under the Right to Buy declined.

So what does this mean for Haywards Heath homeowners and landlords? Well quite a lot in fact!

Looking at the overall figures, 6,445 council properties were bought by council tenants in the Mid Sussex District Council area between 1980 and 1998. Big numbers by any measure and even more important to the whole Haywards Heath property market (i.e. every Haywards Heath homeowner, Haywards Heath landlord and even Haywards Heath aspiring first time buyers) when you consider these 6,445 properties make up a colossal 15.1% of all the privately owned properties in our area (because in the local authority area, there are only 42,658 privately owned properties).

Haywards Heath first time buyers and landlords can now buy these ex-council properties second hand (or as the PC brigade like to call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received. The council discount was repayable if the first owner sold within a stipulated time period - usually 5 years.

Now let us all be honest, some (not all), but some ex-council properties lack the vital KSA that some landlords crave. The new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up the exteriors of their new homes to make them more appealing to buyers, and if you don’t believe me why do show homes exist? Going on the exterior looks of a modern property might be a theoretically good way of choosing a Haywards Heath buy-to-let property, but in a challenging market, some Haywards Heath investors are finding a more no-nonsense down to earth approach brings the largest returns.

Yes, the modern stuff being built in Haywards Heath is lovely, but too many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live because remember the first rule of buy to let property - you aren’t going to live the property yourself. What an ex-council property lack in terms of KSA, they more than make up for in other ways.  Tenants more worried about how close the property is to a particular school or family members for child care matter to them far more than the look of a property. 

Whilst ex-council properties tend to increase in value at a slower rate than more modern properties, that is more than made up in the much higher yields – and those built between the wars or just after are really well built. Tenant demand for such properties is good since Haywards Heath property values are so expensive, a lot of people can’t get mortgages to buy, so they will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Haywards Heath properties in the 80’s and 90’s, means that today’s younger generation who would have normally got a council house to live in themselves, now can’t as many were sold ten or twenty years ago.

So to Haywards Heath landlords I say this; don’t dismiss ex-council houses and apartments – but remember the 1st rule of buy to let (see above). However, those very same Haywards Heath landlords should go in with their eyes open and take lots of advice. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property.

Egg-cellent yield in the heart of Burgess Hill!

Happy Easter to all my blog reading friends! Having a spare 5 minutes I was looking through what has come to the market this week. I found this fantastic 2 bedroom flat in Burgess Hill that would make a perfect home for any tenant who commutes and wants be close to the town centre. On the market with our friends at Carnaby’s, you can view the details by clicking on the link below.

http://www.rightmove.co.uk/property-for-sale/property-58466426.html

The property is located in a prime position ideal for commuters as it is just round the corner from the mainline train station, and as such properties like this are in high demand. Looking at the photo's there wouldn't seem to be a great deal of work required to get it ready for tenants. A conservative rental estimate of £795 pcm would give a whopping gross yield of 5.7%. 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, just round the corner from this property, or email me for local property advice.

7.6% rise in Burgess Hill Property Values adds weight to the town’s Housing Crisis.

Burgess Hill’s continuing housing shortage is putting the town’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the town.   In fact, I was talking to my parents the other day at a family get together; the subject of the Burgess Hill Property market came up in the conversation (as I am sure it does at many family parties in Burgess Hill) after the weather and politics. My parents said it used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year and you would save for a pension. But now things seem to have changed.

Back in the autumn, George Osborne, used the autumn statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses). If you look at the graph below (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960’s.

 

How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Burgess Hill house building figures, in the local authority area as a whole, only 380 properties were built in the last 12 months, split down into 280 privately built properties and 100 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Burgess Hill property values have continued to rise, meaning they are 7.6% higher than 12 months ago, rising 0.6% in the last month alone.

I was taught at school (all those years ago!), that it’s all about supply and demand, this economics game.  The demand for Burgess Hill property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Burgess Hill home buyers and Burgess Hill landlords alike). You see Burgess Hill’s economy is quite varied, meaning activity is expected to remain relatively strong into the early summer of 2016, especially as some Burgess Hill buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules next week.

In addition the issue of supply, well we have spoken about the lack of new building in the town holding things back, but there is another issue relating to supply. Of the existing properties already built, the concern is the number of properties on the market and for sale. The number of properties for sale in January in Burgess Hill was 101, whilst 12 months previous that figure was 11. Four years ago, it stood at 273, a massive drop!

With demand for Burgess Hill property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing, now is a good time to be a homeowner or landlord in Burgess Hill.