Generation Rent (Forever) – 1,928 Haywards Heath Tenants have no intention of ever buying a property to call home.

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts, those were the days (not), but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Mid Sussex (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Mid Sussex property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Mid Sussex. Whilst these are important factors and barriers to home-ownership, I also believe there has been a generational change in attitudes towards home ownership in Mid Sussex (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Mid Sussex population choose to be tenants as it better suits their plans and lifestyle. Local Government in Mid Sussex (including the planners – especially the planners), land owners and landlords need an adaptable Mid Sussex residential property sector that allows the diverse choices of these Mid Sussex 20 and 30 year olds to be met.

Looking at Haywards Heath, if we applied the same percentages to the current 5,022 Haywards Heath tenants in their 2,293 private rental properties, 1,928 tenants have no plans to ever buy a property – good news for the landlords of those 881 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

So then, does that mean the other third will be buying in Haywards Heath in the next 12 months?

Some will, but most won’t, in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.

The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Haywards Heath, we will in fact need an additional 983 private rental properties over the next eight years (or 123 a year) meaning the number of private rented properties in Haywards Heath is projected to rise to an eye watering 3,276 households.

Burgess Hill First Time Buyers borrow £22.1m in the last 12 months

Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Mid Sussex property market, not just from your point of view, but also from every player’s point of view. For example, over the last 12 months, 461 properties have sold (and completed) in Burgess Hill, worth £159.1m. Interestingly the number of properties changing hands in Burgess Hill has also dropped when compared to a decade ago.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Mid Sussex buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Mid Sussex property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.  

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months;

Q4 2015 - £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 - £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 - £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 - £827m buy-to-let mortgages vs £1.42bn for first time buyers.

 

When looking at the figures for Burgess Hill itself, first time buyers have borrowed more than £22.1m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the Mid Sussex economy as a whole. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

Rightmove announced nationally that new seller inquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look again at Burgess Hill, at this moment in time there are 193 properties for sale, compared to 89 properties a year ago. All this will be welcome news among Burgess Hill first-time buyers with a combination of a proportional reduction in new investors and landlords.

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.

With 3,118 people in Private Rented Properties in Burgess Hill - Should you still be investing in Burgess Hill Buy to Let?

If I were a buy to let landlord in Mid Sussex today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Mid Sussex property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Mid Sussex property prices do drop, the downside to that is that first time buyers could be attracted back into the Mid Sussex property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Mid Sussex landlord, almost a blessing in disguise.

Let’s look at Burgess Hill as an example. Burgess Hill has a population of 30,276, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me.

Yields will rise if Mid Sussex property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Mid Sussex landlords add to their portfolio. Rental demand in Mid Sussex is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Mid Sussex landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I got chatting to a couple in their mid/late twenties the other day at an exhibition I was attending. Both have decent jobs in Burgess Hill and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

So, as 10.3% of Burgess Hill people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Burgess Hill – because what else are you going to invest in?  The stock market?  At least with property – it’s something you can touch - there is nothing like bricks and mortar!