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.

Haywards Heath Property Values rise by 0.3% month on month.

I do like to have a coffee at Café Rouge on Broadway in Haywards Heath. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the blog about the Haywards Heath property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Haywards Heath she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Haywards Heath property values increased by 0.3%. The year on year figures showed the value of residential property in Haywards Heath has increased by 8.8% in the year to the end February 2016, taking the average value of a property in the council area to £261,300.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

·         January 2016  - a rise of 1.2%

·         December 2015 - a rise of 0.8%

·         November 2015 - a rise of 0.3%

We have talked in many recent articles about the lack of properties being built in Haywards Heath over the last 30 years. This lack of new building has been the biggest factor that has contributed to Haywards Heath property values still being 272.14% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Haywards Heath is the fact that people aren’t moving home as much as they used to. This means fewer properties are coming onto the market for sale so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market, thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would be purchasers and the number of properties coming on to the market for sale is causing pressures in Haywards Heath (and the rest of the UK).

So what of the future of the Haywards Heath property market and this man’s daughter? I firmly believe the property market in Haywards Heath and the country as a whole is changing its attitude about home ownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to home ownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

What would Brexit mean to the 10,100 Haywards Heath Property owners?

I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, but if we as a country were to unshackle ourselves from chains of Brussels (the first topic), could we inadvertently effect the second topic and make UK house values drop?

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc. in Central London. But we are in Haywards Heath, not Marylebone, Mayfair or any part of Zone 1 London.

Now on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity, and the ‘out’ camp will appeal the 20 somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real. The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic steadiness, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.

But again, we are in Haywards Heath and central London is 39 miles away. We are hometown to St Francis Rangers FC, Richard Osman and Natasha Bedingfield, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Haywards Heath property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 10,100 property owners of Haywards Heath?

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s election, property values in Haywards Heath increased by 2.96%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Haywards Heath property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Haywards Heath (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market, but then two thirds of landlords buy without a mortgage so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate; talk to your mortgage broker now, because they can only go in one direction!

So in reality, if I really knew what will happen I wouldn’t be a letting agent in Haywards Heath, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Haywards Heath and the country as a whole makes, over the long term it won’t have a major effect on the Haywards Heath property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash. We can even go back nearly a century with the 1926 post General Strike slump in property prices.

Today, property prices are 272.14% higher than 21 years ago in Haywards Heath and are 8.8% higher than 12 months ago. So, make your own decision on 23^rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Haywards Heath property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Haywards Heath to live in either to buy or rent … and until the Government allow more properties to be built – the Haywards Heath property market will be just fine, even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!