Haywards Heath Private Rents Hit £16.51 per sq. foot.

As I am sure you are aware, one the best things about my job as an agent is helping Mid Sussex landlords with their strategic portfolio management. Gone are the days of making money by buying any old property to rent out or sell on. Nowadays, property investment is both an art and science. The art is your gut reaction to a property, but with the power of the internet and the way the Mid Sussex property market has gone in the last 11 years, science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is that is a great way to judge a property from the point of view of the tenant; what space they get for their money. Now of course, location has a huge influencing factor when it comes to rents (and hence rent per square foot). Like people buying a property, tenants also have that balancing act between better/worse location, more vs. less money and size of accommodation (bigger and more rooms equalling more money) and where they live (location) verses making ends meet.

Interestingly, I know there are a lot of you in Mid Sussex who like to see my statistics on the Mid Sussex property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot on the values. Looking at Haywards Heath as an example, the current AVERAGE figures are being achieved (and I must stress, these are average figures, so there will an enormous range in these figures), but on average properties in Haywards Heath split down by type are achieving;

•          Haywards Heath Detached Property - £430 / sq. ft.
•          Haywards Heath Semi Detached Property - £388 / sq. ft.
•          Haywards Heath Terraced Property - £381 / sq. ft.
•          Haywards Heath Apartments - £355 / sq. ft.

So, the rental figures:

The extent of space you get for your rent is replicated in the space you get for your money when buying a property. The average size of rental property in the Haywards Heath area is 817.32 sq. ft. (interesting when compared to the national average of 792.1 sq. ft.)This means the average rent per square foot currently being achieved on a Haywards Heath rental property is £16.51 per sq. ft. per annum.

So, what we can deduce from this?  Well the devil is always in detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite clear from data that there is relationship between the average £ per sq. ft. figures on property values and average £ per sq. ft. on rental figures as a property grows in size. However, something quite intriguing happens to those figures, in terms of what the property will sell for and what it will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Haywards Heath property doesn’t mean you will double the value of it, in either value or rent. This is because the marginal value increases diminish as the size of the property increases. In layman’s terms subject to a few assumptions, double the size of the house doesn’t mean double the value. What really happens is a doubling of the size gives only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part, when it came to the rental figures, double the size of the house meant only 20% to 45% in increase in rent.

In a future article, I will be discussing the actual added value an extension can bring, but in the meantime, in an overall and sweeping statement, most of the time it makes sense to extend if you are going to live in the property as long as the extension is proportionate to the property, but if you are going to rent it out, possibly not.

With Burgess Hill Annual Property Values 1.4% Higher, This is My 2018 Forecast.

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that, these are my thoughts on the Mid Sussex property market, using Burgess Hill as an example.

With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 2.3% in Mid Sussex, which has contributed to maintain a decent level demand for property in 2017. Interestingly an impressive 503 Burgess Hill properties were sold in last 12 months, whilst the number of properties for sale in the town has remained limited, therefore providing support for Burgess Hill house prices. This means that Burgess Hill property values are 1.4% higher than a year ago.

However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.

In terms of what will happen to Burgess Hill property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.

Nevertheless, the bottom line is Burgess Hill homeowners and Burgess Hill landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the last 8 years, the Central London property market has been in a world of its own (Central London house prices have grown by 89.6% in those last 8 years, whilst in Burgess Hill, they have only risen by 48.1%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.

Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. As the UK economy and the UK housing market are intertwined, it all depends on how we deal as a country with the Brexit issue. However, we have been through the global financial crisis reasonably intact, I am sure we can get through this together as well?

Oh, and house prices in Burgess Hill over the next 12 months? I believe they will end up between 0.4% lower and 1% higher, although it will probably be a bumpy ride to get to those sorts of figures.

Youngsters unable to buy their first home in Mid Sussex – Are the Baby Boomers and Landlords to Blame?

Talk to many Mid Sussex 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Burgess Hill for example, say for £18,000 in first quarter of 1977, today it would be worth £395,589, a windfall increase of 2097.7%.

But to blame the 60 and 70 year olds of Mid Sussex for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don't believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Mid Sussex who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Mid Sussex society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago; but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Mid Sussex buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Mid Sussex house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Mid Sussex buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Mid Sussex property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Mid Sussex housing market is because of these landlords. Yet, I believe landlords have been undervalued with the homes they provide for people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes; homes that were provided in Mid Sussex by these buy to let landlords.

One side of the argument is that 380 homes are being bought up by buy to let landlords each year in the Mid Sussex District Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 2,659 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.