Carlisle Property Market update

CARLISLE PROPERTY BLOG 28/09/20

House prices continue to increase as demand runs ahead of supply across the UK housing market.

The annual UK growth rate is +2.6%, up from +1% a year ago. ZOOPLA 28/09/20

The Carlisle market mirrors the national trend and in my mind is as strong as it has been in over 14 years.

37% rise in demand, year on year

Further COVID restrictions to support demand in near term. We have previously highlighted how the strength of the housing market is being driven by a once in a lifetime re-evaluation of housing in response to COVID and the lockdown. Households are prioritising space and location as well as factoring in a shift in working patterns. Less time spent meeting friends and family in public locations will re-enforce the importance of the home. We believe that a second spike in new cases and a tightening of restrictions announced by the Government will only serve to support this trend, primarily for those households in more secure financial positions. However, the housing market is not immune to any prolonged weakening in the economy and the impact of less Government support. ZOOPLA 28/09/20.

In Carlisle, 3 and 4 bedroom properties are in high demand. Prospective purchasers have internal space and good gardens high on their agenda. Fast broadband is very important to them also.

Demand from first time buyers weakens but existing home owner demand remains strong.

Reduced availability of mortgages at or over 90% LTV – as lenders meet increased demand at mid to lower LTVs – is a primary factor behind weakening demand.

Those home owners with strong equity is the strongest market.

Renters Reform Bill pushed into the long grass

It appears that the Renters Reform Bill – a key measure in the 2019 Conservative General Election manifesto – has been pushed into the long grass.

The pledge was for this Bill to include the scrapping of Section 21 eviction powers and the start of the concept of lifetime deposits transferable from one property to another when a tenant moves.

No date has been made available in Parliamentary business for the Bill to be introduced, although it was announced in the Queen’s Speech last December as being a measure that would be initiated in 2020. Letting Agent Today 25/09/20

Did the chancellor ignore the private rental sector?

There was no comfort for landlords in the chancellor’s support measures. Landlords own one or two properties and rental is often their sole source of income, make up the majority of landlords in the UK and many are facing hardship. Lack of support may mean many will exit the private rented sector which will cause enormous problems for tenants in the coming year.

If you are thinking of selling or investing in property, please feel free to get in touch for a free valuation or no obligation chat.

Best regards

Gordon

Carlisle Millennials Moving Back in with Mum & Dad?

Roll the clock back 20 years and any self-respecting late 20/early 30 something would never say on their first date that they lived with their mum and dad. It was seen as a sign of immaturity being tied to your mother’s apron strings with as a failure to leave the family home. Yet over these last two decades, the age of leaving home has been increasing steadily from 20 years and 11 months in the late 1990’s to 22 years and 7 months today.

However, as with all the stats, the devil is in the detail. Although the age of leaving home has only risen by 8% between 1997 and today, those that didn’t leave home in their early 20’s tended to stay much, much longer.

In 1997, 11.26% of 25yo to 34yo still lived at home with their parents, yet last year that had risen to 15.74%, an increase of 391,000  ‘stay at home’ Millennials

However, before we deride these Millennials for still being tied to their mother’s apron strings, I would say those very same Millennials (the mid 20’s to 30-year olds) have been pragmatic, being attracted to sacrificing independence in order to achieve their long-term life goals as they have seen rents rise and an inability to save for the mortgage deposit. All of this has seen the first-time buyer levels in this millennial age range rise for the last three years … so good news for everyone!

However, is all that about to change?

Just as mum and dads in Carlisle had thought their late 20 something/early 30 something offspring had flown the nest, Covid-19 has blown some Carlisle ‘chickadees’ back into the nest. Back in March, the lockdown saw many Millennials flee the big UK cities, with their constrained and poky shared HMO’s and flat shares, swapping their city centre private rented home for their parents’ Carlisle home.

Yet with lockdown lessening, it isn’t just remote workers who are unenthusiastic and disinclined to return to the big cities (fearful of a second lockdown) – many of these Coronavirus blow-ins are deciding to stay put too! A recent YouGov poll asked Millennials of private rented homes what their plans were and 1 in 6 tenants planned to hand their notice in on their rented home and fly back to the nest of mum and dad. The advantages are quite plain, especially as it could enable them to save for a deposit to buy their future home.

There are 34,323 households in Carlisle, made up of 12,373 single person households and 20,065 family households (the remainder being made up of shared houses etc.)

Yet how many of those Carlisle family households had non-dependent children before Covid-19?

3,177 Carlisle households have children that haven’t flown the nest

That’s 15.8% of Carlisle families whose kids are still to leave home … and it’s only going to get worse!

So, what does this mean for Carlisle homeowners and Carlisle landlords?

It will mean that Carlisle parents and their children will get to know each other better, build stronger relationships and it will enable their children, if they are wise, to save for their deposit for their first home purchase – who knows maybe in Carlisle, as working from home could become the norm.

Also, with remote working, many tenants are looking for properties with bigger gardens which could translate into greater demand for property with bigger gardens? It will also change the property needs of those Carlisle parents and potentially could mean instead of those parents moving down market, they could end up staying longer or moving up market?

Now of course these polls could be a load of hot air? What I do know is that this thing has not played out yet and only time will tell if this will make a concrete change to the way people live, rent and buy property.

These are interesting times and thank you for reading this. Do let me know your thoughts on this matter.

The 2,967 ‘Trapped Landlords’ of Carlisle

Going into lockdown in March, the Government proclaimed a ban on tenant evictions, pledging that no tenant in a private rented home, who had lost their wages due to Covid-19 would be kicked out of their private rented home until the late summer. Fast forward to August and the press were being briefed as late as Wednesday 19th August that this freeze in evictions in England and Wales would cease on the 23rd August. That was until just after 4pm Friday 21st August when Mr Jenrick, the Housing Minister, announced that the eviction ban would be extended for a further four weeks and also buy to let landlords must now give their tenants six months notice to gain possession.

Cue crocodile tears for all the 2,967 Carlisle landlords

Not so ‘snappy’ with piping your eye there. I know many Carlisle landlords became landlords between 2000 and 2009 because they preferred bricks and mortar to investing in the stock market or gilts/bonds market. All they were looking for was a small pension income to top up their meagre state pension. Not all Carlisle landlords are akin to the 21st Century Rising Damp version of Leonard Rossiter with his ‘Rigsby-esqe’ or even ‘Rach-manism’ wicked landlord ways. Official estimates suggest there are 1.8m to 2.1m landlords in the UK, the vast majority doing the right thing by their tenants, many of whom have helped their Carlisle tenants in financial trouble during Covid-19 by acquiescing to short-term rent reductions or rent-payment holidays.

Also, many Carlisle landlords have mortgages (in fact, if we added all the UK buy to let landlord’s mortgages, they would add up to £216.65 billion). The Government and the Bank of England have applied political influence on the mortgage companies to be a little more flexible and sympathetic on landlord’s mortgage interest payments, yet the mortgage interest is still adding up. The issue is, some tenants are in arrears with their rent, meaning landlords aren’t receiving their rent, which means many buy to let mortgages aren’t being paid either.

So, how many tenants are in arrears? The National Residential Landlords Association stated that just 3% of landlords recently surveyed reported tenants are in arrears. This was backed up recently when Goodlord stated…

3.72% of tenancies in the UK are in arrears, although interestingly ours stands at 5.5%

These are only slightly above the pre-Covid arrears levels, yet still a strain for the landlords involved. Also, the two-month notice period of the section 21 Notice has been extended to six months, meaning it will be March before any tenants are made to leave, even if the notice was issued now.

So, does this leave Carlisle landlords trapped?

With regard to the arrears, only 1 in 17 landlords rent their property through a limited company, meaning the rest (i.e. the vast majority) rent their property as a person, thus giving themselves unlimited personal liability should their rental portfolio fail (i.e. the mortgage company could make a claim on the landlords own assets, including their main residence, if the property was repossessed and the shortfall wasn’t made up). Also, if the building society’s and banks turn against the Government advice and are too lenient with landlords with buy to let mortgages, there could be situations where the rental properties are repossessed, meaning the tenant will be made homeless.

One thing that this does also remind me of is the 2008 Credit Crunch. There were an awful lot of Carlisle homeowners who were unable to sell their home in 2008/9, so they converted their Carlisle property into a buy to let investment. There are going to be an awful lot of Carlisle landlords who will also want to sell in the next six to nine months, yet are unable to do so until the middle of next year without having to take a hit on the value of their home. For those Carlisle landlords that can relate to that, maybe we should chat to consider your options so you can mitigate any losses?

It seems Carlisle landlords have been used to saving the Government from a PR disaster of homeless tenants on the streets at Christmas, the least we should do in the country is stop disparaging landlords and lift them up from their pariah status.

Carlisle landlords are housing 10,761 Carlisle people in private rented accommodation…

… and so it is my opinion that the contribution made by these Carlisle landlords should be recognised. My fear is always of a danger of a widening schism between the landlords and tenants. Truth be told, both need each other, and I hope the Government extend help to landlords as they have with tenants, otherwise the Government won’t have any homes to house the British people if all the landlords decide to sell up. It is especially important that the supply of private properties doesn’t drop in Carlisle going forward when you consider…

Carlisle needs an additional 2,228 private rental homes by 2029

In the meantime, the Government have bigger fish to fry sorting out the economy as a whole, so if you are a self-managing landlord or even a landlord with another agent in Carlisle, feel free to pick up the phone or make contact with me and we can discuss your options without any obligation. There is no need to feel trapped, there are options for you and it is better to consider them now, set the foundations and motions going in the right direction promptly before it becomes a bigger issue in the future.