On 19 July 2016 the Office for National Statistics (ONS) released their House Price Index for May 2016.
The key figures relating to house price changes in the UK are as follows:
- UK average price up 8.1% to £211,230.
- England average price up 8.9 % to £227,000.
- South-East up 12.9% to £306,000.
A total of 16 properties have so far been reported as sold during May in Newbury RG14, for an average of £296,134. This is an increase of 9.9% against May 2015.
On 13 July the Council of Mortgage Lenders (CML) released their data on loans made in May 2016. Key points as follows:
- 27,500 loans to First Time Buyers, for a total of £4.3Bn – up 16% in number, 22.9% in value on May 2015.
- 4,400 loans to new BTL, for a total of £600 million – down 50.6% in number, 50% in value against May 2015.
- 11,900 loans to re-mortgage BTL, for a total of £1.9Bn – up 33.7% in number, 26.7% in value on May 2015.
SDLT, BREXIT and Landlords.
The figures for lending show a dramatic spike in BTL borrowing in March to beat the April SDLT increase. This is matched by a substantial increase in the number of properties advertised to rent through March/April/May – up to twice last year’s numbers.
Perhaps unsurprisingly, Newbury rents have remained virtually unchanged over the last 12 months. There is an increase in the average rent for a 2 bed apartment – due to the addition of the Racecourse and Parkway developments.
BREXIT – far too soon to get any useful data. In a town like Newbury the big fear is losing large numbers of good jobs – such as Vodafone. There is some anecdotal evidence of LLs selling up, but equally calls asking about the investment potential of good quality properties have not slowed.
So where does this leave Landlords? New landlords need to thoroughly do their homework – or find someone to do it for them. They should be considering BTL as a long-term investment, and either invest time in learning how to manage the property or find someone to do it for them.
Existing landlords should be aware that their yields are dropping- simply as a function of rising house prices/slowly rising rents. To maximise the value of their investment, they should regularly review the market and ensure that rents are close to market – a good tenant is often worth a discount, but this should be carefully considered. There are plenty of pitfalls that can cost an unwary landlord dearly – a local agent can help.
For a chat about the rental landscape in Newbury, give us a call on 01635 888 288.