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Crediton Buy-to-Let Market on the Rise as Returns Rise by 35.2% in 5 Years

Crediton landlords are becoming progressively more self-assured about expanding their rental portfolios; as Crediton rents rise, mortgage interest rates fall and demand for decent Crediton rental properties outstrips supply.

A number of reports nationally would suggest around a third of UK ‘portfolio’ landlords (i.e. landlords with more than one rental property) are actively looking to expand their rental portfolios in the next 12 to 18 months, that would locally mean …

81 Crediton ‘portfolio’ landlords are looking to add to their rental portfolio by the end of 2022.

The pandemic has had a substantial change to what we want from a home. Many people think that relates just to homeowners, yet nothing could be further from the truth as it also applies to tenants.

Homeowner or tenant, many of us have spent a lot of time away from places of work. Many office workers face the outlook of the combination of working from home as well as at the office, meaning a change in what people look for in their home. People (including tenants) are looking for larger properties, with extra rooms for office space and decent sized gardens or to be closer to outside green space.

So, let’s look at the ‘scores on the doors’ as to why Crediton landlords are on the up …

Crediton house prices are 17.5% higher than 5 years ago.

Because some Crediton first-time buyers are being priced out of the market due to these house price rises, they are being forced back into the rental market. Add the extra demand of the 1 in 10 Crediton house sellers who, in the last 12 months, have had to go into rented accommodation instead of buying, and this has created increased demand, meaning …

Rents today in Crediton are 11.5% higher than a year ago and 17.7% higher than 5 years ago. The average rent of a Crediton property today is £700 pcm.

In previous articles on the Crediton property market, I was talking about the lack of properties to buy – yet that issue is also there in the British rental property market. Now let’s look at the supply of rental properties.

Would it surprise you that the number of private rented homes in the UK has fallen in the last 12 months by just over 2.5%?

Why? One reason has been many ‘accidental’ landlords have used this housing market to sell their property for a good price. That means the supply of available rental properties has decreased. The perfect storm of increased demand and lower supply, and with many Crediton tenants competing for those larger Crediton homes, they may find Crediton rental prices pick up even more over the next year.

What about buy-to-let mortgages for Crediton landlords?

The banks all but withdrew from buy-to-let lending in the first lockdown. Yet, since last summer things have settled down and during 2021 there has been a mortgage price war.

Crediton landlords can borrow 60% of the value of their BTL property on a two-year fixed rate of 1.18% from Platform and even those with a 20% deposit (that’s borrowing 80%) can borrow that money at 2.49% 2-year fixed rate from The Mortgage Works. Those looking to fix for a little longer can get 1.44% from The Mortgage Works and 1.79% at 75% loan to value from Santander.

(It must be noted there are some fees to these mortgages, and you must take advice from a qualified mortgage advisor before deciding which mortgage is best for you).

So, is now the best time to invest in Crediton buy-to-let property?

If you are attracted to invest in Crediton buy-to-let, it’s vital to do your homework first – particularly if you are new to the game.

When estimating the expected rental returns on investment, capital growth and yields, many Crediton landlords look to what has happened with house prices and rental prices, yet past performance does not always deliver a future guaranteed return.

Smart Crediton landlords will speak with agents like myself and others in Crediton, prudently researching the Crediton property market to discover what types of properties are in high demand (and short supply) from tenants.

Whether you are a landlord of ours or not, please feel free to drop me a line via email or social media for no nonsense advice on the important matters to look out for before investing in Crediton buy-to-let.

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Crediton Homeowners Have Turned to the Rental Market to Cash In By £11,100 Each

Should you sell or should you buy in this most interesting Crediton property market?

I have calculated that at least 25 Crediton house sellers have rented a home to break their house chain in the last 12 months, although at a cost as they face paying many thousands of pounds in rent. 

There are a number of reasons behind this. One is because they cannot find another Crediton property to buy amidst a continuing shortage of new Crediton properties coming to the market. Although, there are others who have achieved such a high price for their home they have decided to cash in and are (hopefully for them) waiting for the Crediton property market drop?

Or will it drop? (More on that later).

Those selling their home have seen the… average Crediton home rise in value in the last 12 months by £11,100.

Yet, if they have had to go into private renting, they have paid for that privilege in the rent they have had to pay.

The average cost of a six-month rental agreement in Crediton is £3,972, meaning accidental Crediton tenants have pumped £99,294 into the Crediton rental market in the last 12 months.

The unevenness between the number of properties for sale and demand for them is at its widest since the early 2000’s. Whilst we have seen a slight improvement in the number of properties for sale in Crediton, there are still…

45% fewer homes up for sale today in Crediton, compared to August last year.

This serious shortage of Crediton property for sale is discouraging some hesitant Crediton homeowners from putting their property on to the housing market, anxious they will not be able to find their next home and will be left renting.

Yet some savvy Crediton homeowners are moving into a rented property as a way to navigate the shortage of properties to buy. If you have someone offering you top dollar for your Crediton home, whilst you will have the hassle of two moves, the increase in value of your Crediton home will more than offset the rent. 

Also, when you come to buy your next Crediton home, you will be chain free and in pole position to buy your ‘forever home’, rather than being overlooked for the home because you are sold stc and burdened with a chain.

Yet this trend has made life tougher for long-term Crediton tenants.

On average there were normally 6 to 10 properties available to rent in Crediton on Rightmove at any one time (pre-pandemic), today there are only 3 available.

To give you an idea of how this has affected the Crediton rental market, with heightened demand and lower supply, demand for rental properties has grown to such an extent…the average rent in Crediton has grown from £662 per month a year ago to £750 per month today.

Tenants are suffering from less choice and higher rents in the Crediton property rental market, with few indications it’s going to significantly ease on the run up to Christmas.

So, what is going to happen to the Crediton property market? 

Well, those of you that follow me know I regularly write about the Crediton property market in my property blog. If you would like some recent articles I have written about the future of the local property, either drop me a line and I will send you some links to those posts, send me a DM or contact me by telephone.

In the meantime, please do share your thoughts on the matter in the comments.

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£556,546 – ‘Wood’ You Pay That For a Crediton Semi-Detached House?

The value of an average Crediton semi-detached house has increased in value by £24,940 in the last 12 months, an increase in value of 9.5%.

Yet the costs of building a Crediton home have shot up even more in the last 12 months, meaning the price of Crediton new homes and any building works you do to your Crediton home in the coming months and years could be a lot higher.

The British house building profession is experiencing a building materials supply problem. Everything from cement to bricks, timber and roof tiles, plastic guttering, copper wire and pipe to insulation, even kitchen sinks have become scarce – and when people can find them, they are costly.

For example, looking at the timber industry, three-quarters of the UK’s building timber comes from abroad, so lockdowns around Europe put a restraint on the timber processing industries of Sweden, Lithuania and Latvia throughout 2020. In addition, building material supply chains were interrupted due to the application lockdowns imposed by their Governments, resulting in many sawmills in those countries restricting shift work to comply with their country’s social distancing rules. Some mills even stopped all work for eight weeks last year, meaning they were incapable of cutting, milling or treating timber, causing their existing stocks of building wood to run dry. 

Yet, whilst we were all in lockdown, everyone started doing DIY projects, so the public demand for building timber in the UK remained high, giving little opportunity for UK sawmills (let alone North-eastern Europe) to catch up and restock to the levels previously held before the pandemic.

Building timber costs 112% more than a year ago, steel RSJ’s are a lot more expensive because iron ore has gone up 120.1% whilst aluminium is up 56.8%, and copper is up 59.7%.

All the blame cannot be laid at the feet of the virus and lockdown. The ‘B’ word caused issues with supply at the start of the year. Building materials are a worldwide supply chain issue; this spring’s Suez boat crisis, when many boats were diverted around Africa (as the length of time the blockage was going to last was unknown), exacerbated the problem. All this has combined to make the cost of sending a 40ft container from China to Tilbury Docks £7,576 today, compared to £1,195 just before the crisis. Also, supplies of sand and cement are particularly low with massive demand from the large £98bn High Speed (HS2) rail project. All this combined is affecting many building projects, big and small, across the UK.

If an average Crediton semi-detached house had risen by the price of building timber in the last 12 months, today it would be worth £556,546, not the current £287,462.

RSJ (steel joists) take twenty weeks to arrive, compared with the typical five weeks, whilst plasterboard is being rationed with weeks of delays for the ‘good stuff’ and MDF wood, usually takes seven days to arrive; now it takes over a month. Roof battens need to be ordered a month in advance, whilst pre-lockdown they were commonly held in stock by every building merchant.

Demand for building materials has increased so quickly because many British homeowners are driving the explosion. Those people in safe jobs with little opportunity to spend money on foreign holidays and fancy restaurants decided to invest in their property and gardens. According to the Bank of England, this craving for home improvement has particularly exploded since the mature generation have started to be double jabbed (their savings accounts having increased by £180bn during the pandemic).

As I have explained in previous articles, these increases in the price of raw materials will fuel inflation, possibly affecting interest rates upward. An increase in interest rates will make a material difference to the value of Crediton property. To what extent? Please read my previous articles on the Crediton property market.

Please do share your stories of issues with builders and building materials over the last 15 months in the comments. I appreciate any stories you can provide to help others in Crediton.

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Crediton Buy-to-Let Landlords Owed £127,515 in Unpaid Rent Rogues or Saviours?

There is no getting away from the fact that the rise in the number of buy-to-let properties in Crediton has been nothing short of astonishing over the last twenty years. As a result, many in the press have said Britain is a broken nation, with many twenty and thirty-somethings unable to buy their first home. The press has named this group ‘Generation Rent.’

Crediton landlords have been accused of scooping up all the smaller Crediton properties for their buy-to-let property empires. Others blamed the Government (of both persuasions) for pouring petrol on the buy-to-let fire for giving landlords an unfair advantage with the way buy-to-let has been taxed in the past. Many have said these landlords have priced out Crediton’s ‘Generation Rent’. Many say they are rogues, and you can see why there is little sympathy for landlords, especially as…

Crediton landlords receive £6,923,904 a year in rent – easy money or what?

So, as we come out of lockdown, I want to make a stand for Crediton landlords and talk about the great work they have been doing during the pandemic.

Since lockdown, it has been (almost) illegal to evict a tenant from private rented property. Yet, in the last few weeks, this ‘ban on evictions’ has begun to be eased, making some commentators forecast a ‘tsunami of homelessness’ as landlords ready themselves to kick out the tenants who cannot pay their rent.

You might say they can afford it, yet I need to highlight an often-untold story in the massive numbers of Crediton landlords who have co-operated with their Crediton tenants to evade eviction.

The personal finances of some Crediton landlords and tenants have been ruthlessly strained during the last 16 months — something that is going to have ramifications on the back pockets of both landlords and tenants, as well as the attraction of being a buy-to-let landlord (more of that later).

55 Crediton tenants are in arrears with their rent to the tune of £127,515.

That’s money these landlords need to pay their mortgages with and even to live off themselves.

The eviction ban was imposed in March 2020 and the Government has expected private landlords to stand the cost of their tenant’s rent if they could no longer pay. It was estimated over 1 in 5 landlords with mortgages had requested a mortgage payment holiday in 2020. Thankfully, that now stands at 1 in 100 as most Crediton landlords with shortfalls in rent have been using their own personal savings to cover the mortgage payments.

I have seen so many landlords giving their Crediton tenants rent breaks and discounts to help them through these times. However, most landlords I talk to acknowledge that it is better to have a tenant paying something rather than a tenant paying nothing, hoping that total rent will start flowing as the economy recovers.

Going into the pandemic, 1 in 25 Crediton tenants were in arrears, yet that now stands at 1 in 11.

So, are we going to see lots of evictions? I would go as far as to rebuff the idea that we will see a rush to the courts of landlords to obtain possession orders now the eviction ban has been lifted. I have always viewed evictions as a last resort.  

Before the pandemic, it took about 12 months for courts to hear rental repossession cases, so this backlog will be nearer two years (if not more). Nonetheless, the threat of a County Court Judgement (CCJ) often makes tenants pay up as it will demolish their credit rating, making it very challenging for them to rent another home.

I feel for those Crediton tenants under furlough or reduced hours as they have the quandary of wanting to reduce their outgoings by moving to a cheaper rental property, yet whose rental deposits will be sacrificed to cover their rent arrears. However, some have said that because house prices have exploded during the last 16 months, Crediton landlords should write off their tenants’ arrears as a goodwill gesture.

The issue is, 97 Crediton landlords only have a single property for rent, so the arrears would have to be funded by their personal savings.

For them, the pandemic experience could be the incentive to sell up for good.

A National Residential Landlords Association survey found around a third of all landlords were now more likely to sell their buy-to-let properties altogether or sell some of them. This would mean fewer properties for tenants to rent, thus driving up the rent.

According to government and industry data, evidence suggests that a tenant who rents a property directly through a landlord and not through a letting agent is between two and three times more likely to go into arrears of 2 months or more. Is this because tenants know that private landlords who advertise directly for tenants on Gumtree and other platforms don’t carry out the checks letting agents do on them?

Many of those landlords are switching the management of their property to an agent, and for those landlords sticking with self-management of their property, there is circumstantial evidence they are starting to become a lot pickier when starting new tenancies. Even though illegal, spurning tenants on benefits is woefully all too common. I also worry there could be a stigma about renting properties to self-employed people because of the erratic nature of their income.

Looking into the future, I envisage a growth in the use of ‘rent guarantor contracts’, whereby the tenant is called upon to provide a 3rd party person to pay the rent if the tenant doesn’t. These are pretty common for student lets and those on certain benefits, and it wouldn’t surprise me if these are used more often for self-employed tenants and regular professional lets.

That is why I believe Crediton landlords should be celebrated … most of them have been saviours. These are my thoughts – what are yours?

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Your Great-Great Crediton Grandfather Would Have Only Paid £378 7s 7d for His Crediton Home in 1871

Would it surprise you even more when I said the ratio of house prices to wages are still lower today when compared to 1871? Yes, you read that correctly, as a proportion of average wages British house prices are 17.6% proportionally cheaper today than they were in 1871.

I wish to talk about the last 150 years of the British property market and later in the article, the Crediton property market. I will also touch on why, before the 1900s, buying a home in Crediton was considerably more expensive than today and why that changed.

So, let’s look at some interesting stats to get us started:

  • In 1871, each house was occupied by an average of 5.33 people (i.e. for every 100 houses, 533 people lived in them), whilst today that stands at 2.39 people per house
  • In 1871, there were 4.5 million properties in the UK, whilst today that stands at 27.9 million.
  • In 1871, the weekly average wage was 13s 8½d (68p), whilst today it’s £585.50
  • In 1871, only 20% of people owned their own home, whilst today its stands at 65%

I stated in the first part of the article it was more expensive to buy in the latter parts of the 19th Century than today. It may only be of historical interest, but back in 1871, the ratio of average house prices to average wages was 10.5 to 1 (i.e. the average house was worth ten and half times the average person’s wage), whilst today it stands at 8.8 to 1.

Interestingly, for the next 45 years, that ratio went on a downward trend relative to wages and only stopped falling after WW1, where the average house was worth only 2.2 times the average wage. This made houses more affordable and set the foundations for the homeowning passion we Brits have today.

So why did this happen, what can we learn from it and what does it mean for Crediton homeowners and Crediton landlords?

There are three significant drivers that made property a lot more affordable between 1871 and 1911: the Victorians built more property, made them smaller and people’s wages rose significantly.

  • In the 40 years between 1871 and 1911, the number of properties in the UK rose from 4.5 million to 8.9 million. To give you some perspective, there were 18 million properties in the UK in 1981. If the UK had grown by the same rate between 1981 and today that was experienced between 1871 and 1911, there would be 35.6 million households in the UK (and not the 27.9 million mentioned above).
  • In 1871, the average plot size of a property was 0.23 acres, yet by 1911, that was down to 0.06 acres (or a plot of 72ft by 40ft). This came about from building smaller types of property (i.e. a change away from larger Georgian detached houses towards the infamous rows of Victorian terraces), and a downshift in the average size of houses within each category.
  • The average value of property dropped by 26% between 1871 and 1911, whilst wages rose by 85% over the same time frame.

So, by 1911, the average Crediton property had dropped in value from £378 in 1871 to £281.

N.B. – you might have noticed I wrote £378 in a slightly different way in the title of the article. Up to 1971, a pound was split not into 100 pence but 240 pence. There were 12 pence in a shilling and 20 shillings (or 240 pence) in a pound. It was expressed in the form £sd and spoken as “pounds, shillings and pence”. I dropped that into the title as it’s the 50th anniversary this year of when the UK decimalised its currency (younger readers – do google the story – it’s a fascinating topic).

So back to the property market and at the end of WW1, four in five people still rented, virtually all from private landlords. Politicians were concerned about the poor living standards of people’s homes, and this led to the ‘homes fit for heroes’ 1919 Housing Act which delivered subsidies for local councils to build council houses. The average value of a Crediton property in 1922 was £442.

The 1930s – By 1930, the average value of a Crediton property stood at £558. With the country building a third of a million houses per annum, interest rates fixed at 2% and hardly any planning regulations, supply of property was outstripping demand, so the average Crediton home dropped ever so slightly in value to £516 by 1938.

The 1940s – With the bombing of many towns and cities and housebuilding being stopped because of the war, this created a perfect storm to increase house prices after the war. By 1947, the average Crediton home had risen in value to £1,725 because just as food was rationed during and after the war, so were building materials. Builders could spend no more than £350 on building materials for a new home (and that lasted until 1954).

The 1950s – The ’50s were all about building council houses – a quarter of a million of them each year. By 1959, the average Crediton home had risen steadily to £2,393.

The 1960s – This decade saw even more houses being built in the UK, with an average of a third of a million houses a year being built. Crediton is full of 1960’s council houses and now even more owner-occupied housing, meaning by the end of the decade Britain had as many homeowners as renters. The average Crediton house had risen in value to £4,389 by 1969.

The 1970s – We experienced the first boom and bust housing bubble in the early 1970s with house prices rising by over 30% a year in the early years of the decade (so the current 10% a year is child’s play!) but prices dropped in 1974. They recovered quickly in the following years, not because of increased demand but due to hyperinflation, making the average Crediton house price rise to £22,321 by 1980.

The 1980s – This was the decade of council tenants being able to buy their own homes, although not many people know it was an idea from Labour. They decided against the idea, but it was seized upon by the Tories, who made it the cornerstone of their 1979 election manifesto. The property market helped improve the economy, and by 1988, Crediton property values increased to £46,687 (only to drop by 32% a couple of years later).

The 1990s – The housing market crash of the early 1990s was painful for all, exacerbated by mortgage interest rates being raised to 15% on Black Wednesday (16 September 1992) and left there for 12 months. Unemployment went from 1.5m to 3m for the second time in ten years, and many of those homeowners who had taken out large mortgages in the late 1980’s housing boom could no longer afford the repayments because of the high interest rates, meaning repossessions went through the roof. The crash also made builders nervous, and they only built 150,000 houses on average a year in this decade. Yet, by the mid-1990s, things started to improve. So much so, the average Crediton home was worth £87,520 by the turn of the millennium.

The 2000s – The decade of cheap mortgages and the rise of Buy to Let, together with a severe drop in the number of new homes being built, contributed to the UK’s third big housing bubble since WW2. The average Crediton house price more than doubled to £234,374 by 2008, before the Credit Crunch brought the boom to an end, and a year later (2009), the average Crediton property had dropped to £208,170.

The 2010s – The property market started to come back to life in the early 2010s with property values steadily rising throughout the decade, yet builders were only building around 135,000 new homes a year. It also might surprise you that by 2015/6, the number of homeowners was starting to rise quite significantly, meaning today, as we enter the 2020’s decade, the average value of a Crediton property now stands at £283,115.

So, now we are back to 2021.

Yes, your Great-Great-Grandfather might have been able to buy their Crediton house for a shade over £378 in 1871. Taking inflation into account since 1871, that same Crediton house today would be £45,578.63, yet if his wages had increased by inflation at the same rate, the average wage today would be £81.91 per week, not the current £585.50 per week.

I appreciate there are plenty of other factors involved with this topic, such as the cost of renting, raising a deposit, changing lifestyles and the biggest point, the cost of borrowing money on a mortgage.

All this begs the question, what does the future hold for the Crediton property market?

It’s obvious since the mid-1980s, house prices have sustained a period of impressive growth (even withstanding a couple of property crashes). The Bank of England has gone on record to say that much of the rise in average house values, comparative to wages, between 1985 and now can be seen because of a sustained, dramatic and consistently unexpected decline in real interest rates and additionally concludes that: ‘An unexpected and persistent increase in the medium-term real interest rates will generate a fall in real house prices.’

Cheap mortgages and a lack of building have created this situation. So as long as interest rates don’t go back to their long-term average of the 5% to 7% range or the Government decides to increase building new homes to half a million a year (from the current 240,000 per year) … things will carry on as they are in the medium to long term.

These are my thoughts … I would love to hear any stories of your family buying property in the late 19th Century or early 20th Century and what they paid for it, together with the affordability of Crediton property and the future of it.

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23.6% of Crediton Landlords Could Be Fined £5,000 Each with New Energy Regs

… whilst possible new mortgage rules for Crediton homeowners would make it harder to sell their draughty old properties

As the UK has committed to a legally binding target to be carbon neutral by 2050, one of the biggest producers of greenhouse gasses are residential properties. To hit that target, every UK property will need to achieve a minimum grade of C on their Energy Performance Certificate (EPC) by 2035. The issue is that two thirds of UK’s homes (around 19 million households) are rated D or below.

To help the country hit its targets, in 2018 and again in 2020, the EPC requirements altered for buy-to-let landlords, meaning they couldn’t rent their property unless it had a minimum energy rating of ‘E’ or above.

And now for homeowners, the Government are considering forcing banks and building societies to publish the average EPC rating for all the homes they lend money on and if the banks and building societies don’t hit the Government EPC targets, they will be fined (meaning those homeowners with low energy efficient properties will have to pay much more for their mortgages).

So, let’s look at these two issues, first regarding Crediton landlords and their EPC’s, so you know what your lawful responsibilities are and what else landlords can expect in the future.

Since October 2008, all UK rental properties have required an EPC, yet from April 2018, the Minimum Energy Efficiency Standards (MEES) regulations regarding EPCs have also required all rental properties’ new tenancies and renewals to have a minimum EPC rating of ‘E’ or above. However, since April 2020, the MEES regulations have applied to all existing tenancies as well, meaning if your Crediton rental property doesn’t have a valid EPC rating of ‘E’ (or above), it is illegal to let out.

379 rental properties in Mid Devon are currently let out with a ‘F’ or ‘G’ EPC rating, making them illegal to rent out and each landlord liable for a £5,000 fine – they just don’t know it

The EPC lasts for 10 years and gives an energy rating of between A – very energy efficient to G – very energy inefficient. So, if you find yourself, as a Crediton landlord, with a rental property that has an EPC rating of below ‘E’, what are your options?

To start with, you have a responsibility by law to carry out the changes suggested in your EPC report to improve the energy rating of your property. The law states that landlords should spend up to a maximum of £3,500 on the energy efficiency improvements set out in the EPC. Yet, if by spending £3,500, that improves your EPC rating but doesn’t mean you reach the ‘E’ rating, whilst you will still be expected to improve the rental property and spend the money, you will be able to apply for a high-cost exemption via the PRS Exemptions Register and still let the property (even though you will have an EPC rating of F or G).

It must be noted that some properties are exempt from the MEES legislation. If your property is listed or protected and the improvements would unacceptably alter it, it is exempt from EPC requirements.

Once your EPC has been registered, it is then valid for ten years. Because the EPC regulations came into force in 2008, there will be some rental properties that had their initial EPC but not had it renewed on its 10th birthday. Now as a Crediton landlord, you do not need to get a new EPC if your EPC reaches its 10th birthday, unless that is, you are starting a new tenancy with new tenants. The issue is …

of 5,091 rental properties in Mid Devon, 1,204 of them have an EPC that is 10 years or older which has not been renewed.

If you are a Crediton landlord, your EPC is 10 years old (or older) and your tenant leaves, you will require a new EPC, because if you don’t, you will be fined £5,000. If all those buy-to-let landlords in our local authority area ignored that law, accumulatively they could be fined £6m.

Secondly, what about Crediton homeowners and the mortgage companies?

Under new legislation being considered, homeowners living in poorly insulated and draughty homes (meaning they would have a low EPC rating) could pay more for their mortgages and lose value from their Crediton homes under Government plans to prioritise mortgages on properties with high energy-efficiency ratings.

There are 8,521 properties in Mid Devon with a rating of ‘E’ or below

The Department of Business (DoB) wants to force mortgage providers to classify the energy ratings of their borrowers’ homes and put the average into a Government league table, which will be presented on the DoB’s website. Mortgage providers will then get time sensitive targets to improve their average EPC scores, punishable by fines, meaning this would increase the mortgage costs for those with low energy efficient homes.

Maybe it’s time you looked at your EPC certificate and find out how you can improve your rating? If you are a Crediton landlord or Crediton homeowner, and would like to chat about your legal position or would like a copy of your EPC emailing to you, don’t hesitate to drop me a line and I will be more than happy to discuss your personal circumstances further, without obligation.

So, is it right Crediton landlords should have to fork out to improve the energy performance of their rental property, yet they aren’t the ones benefiting? Also, should Crediton homeowners have to have higher mortgage payments in the future because they have a low energy efficient home?

Let me know your thoughts.

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A frank and honest view of the property market right now by George Clover

Here’s some background from me, I grew up and have been lucky enough to work in Mid Devon as an estate agent for the last 15 years.

A quick summary of the last 18 months goes like this. End of 2019 and all is well. It was a good (but normal) year for sales with prices increasing just ahead of inflation as usual. I think it’s safe to say that there was a consistent supply of properties of all types coming to the market and indeed a similar amount of properties being sale agreed. In a normal market, the supply and demand is balanced to create a stable and level playing field. January to March 2020 continued like nothing was happening, houses still coming on, still being agreed.

The news of the pandemic did little to surpress the market locally until lockdown hit in mid March. Clearly everything stopped. If you think back to that initial lockdown, it was a hard lockdown. The world stopped, the country stopped and the housing industry stopped. Very few deals where being progressed by solicitors, agents weren’t able to value (except virtually) and even if selling services were wanted, we couldn’t get out to take photos!

When the housing market “opened” in the middle of May, we had no idea what that market would look like. It was a surprise. May 2020 and we’re allowed to conduct estate agency business in a covid secure manner. It was new, but ok. The market was crazy. Straight back into plenty of listings, plenty of sales being agreed – but why? Initially the pent up demand from people being unable to buy due to lockdown caused a bit of a jump start but nothing really unusual, prices were still fairly similar to pre-lockdown and bids over the guide prices were rare.

At this stage the chatter started in the press about people fleeing cities. This wasn’t the case, it was simply that the usual buyers from all over the country hadn’t been able to search in person for their next home so it was busy. We saw many country homes going to local buyers.

The government also then announced the stamp duty holiday to stimulate the market. As we know, the whole process of moving house creates plenty of revenue for the country and therefore it was a welcome act. However, it was a countrywide, blanket approach. Did Devon need stimulating? Maybe it did, but maybe it didn’t. What this holiday of stamp duty did do was to bring forward properties to the market that maybe hadn’t planned to sell in 2020. This meant a bumper year for sales. Pricing in the summer and autumn was still fairly consistent. Life was getting back to normal but there were still plenty of properties to go around.

We then reached Christmas 2020. Lockdown again. This time, the lockdown slowed the market in a different way. We were still able to operate, people could buy and sell with a few restrictions but the housing market remained open. With home schooling, post Christmas lockdown, worries about when this will end, many decided to stay put. I mean, who wanted to have buyers in their mess of a house when the kids were causing havoc, winter isn’t the best time to sell either and as I mentioned early, many of the moves planned for Spring 2021 already happened in 2020!

So this led to a shortage of properties hitting the market. That’s a shortage of properties across the board. A pattern that’s replicated all over the country not just here. The housing market is all about supply and demand and right now, supply is low and demand is high. It isn’t (in my opinion) that all the good houses are being bought by people from outside the area because they’ve suddenly decided to move here, it’s that they would have moved here anyway and there’s less properties to go around and they do have deeper pockets than some locals. Combine that with all the local people that have sold or are waiting to sell when their net house comes up – it’s a recipe for prices to jump and over the guide price prices to be paid.

This is what we are seeing and not just the properties with land, village and town properties are going for more too. It’s not just the country/land market that its happening to. The frustration is there for all. There aren’t many properties coming on. Agents aren’t helping matters by only allowing sold/cash buyers to view which prevents more housing stock coming to the market because they fear they’ll agree a sale and have no-where to go and this behaviour will prolong this cycle. At Helmores, we’re allowing non-proceedable viewings from local people wherever possible for them to start the process of a move, it’s in all our interests to do this.

So what’s going to happen? The answer is that we don’t know but something has to give. Either more properties must come on, or less buyers be available. At the moment, it doesn’t look like the latter but my diary is filling up more and more for properties coming onto the market. I can’t promise they’ll be in budget, or equestrian dream homes but the more properties that are on the market, of any type, the better it will be for the market in general.

The thing is, we live in such a beautiful place, there’s always demand! Let’s hope that we gradually see more coming on and get back to that balance and everyone knows where they stand – at the moment it’s the Wild West (country). If anyone would like to hear more then please get in touch and I’d love to help you guys get moving!!

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Crediton Buy-to-Let Property Market Going into Crisis?

…as Crediton first-time buyers now only need a 5% deposit for a mortgage.

Crediton landlords, sell your property portfolios, your tenants will soon be leaving in droves as they buy their first home with the new 5% deposit mortgages backed by the Government’s new mortgage-guarantee scheme revealed in March’s budget! These 95% mortgages are to be supported by the Treasury, lessening losses for mortgage lenders should the borrower be incapable of repaying and get repossessed, as the Government want Generation Rent to turn into Generation Buy.

This sounds like the death knell for buy-to-let investment in Crediton as many tenants will soon be buying their first home – or is it?

It’s true that on first impressions it might look like many Crediton first-time buyers will now be leaving their rental properties in their droves with this new low deposit mortgage scheme. However, these potential Crediton first-time buyers are facing four big issues which will inhibit their ability to take advantage of the mortgage scheme, meaning many will continue to rent.

Firstly, the mortgage rate for 95% mortgages has increased. The lowest five-year fixed-rate mortgage with a 5% deposit today (with Barclays) is 3.45%, up from 2019’s best rate of 2.75%. That doesn’t sound a lot, yet it makes a massive difference to the monthly mortgage payments (as you will see below).

Secondly, due to pent-up demand post lockdown and the stamp duty holiday, this has increased demand for Crediton property, placing upward pressure on Crediton property prices which has made it problematic for first-time buyers to get on the Crediton property ladder. This has meant…

the average price of a Crediton first-time buyer property has risen from £227,786 to £233,033 in the last 12 months…

and in turn this means, Crediton first-time buyers have had to save an additional £262.35 for their deposit to keep up with the house price increase. That means…

the monthly payment on a 30-year mortgage for a Crediton first-time buyer has jumped from £883.42 per month in 2019 to £987.93 a month today, an increase of £104.51 per month.

The third issue is demand for Crediton first-time property from buy-to-let landlords is surpassing supply, adding further fuel to the fire of driving up prices. Finally, the fact that most Crediton first-time buyers are of the younger generation and it’s the younger workers that have been most at risk of unemployment or salary cuts during the economic crisis.

 5 Year Fixed Rate – 20195 Year Fixed Rate – 2021
Purchase Price£227,786£233,033
5% Deposit Required£11,389£11,652
95% Mortgage Borrowed£216,397£221,381
Annual Interest Rate2.75%3.45%
Mortgage Length (in years)3030
Mortgage Payment per Month£883.42£987.93
Sum of Mortgage Payments over whole mortgage term£318,031£355,656
Total Interest Cost over the whole mortgage term£101,635£134,274

You might say things will change in 2022 but would it surprise you that 95% mortgages have been available to first-time buyers since the summer of 2010 and were only withdrawn during the first lockdown in 2020?

Since 2010, even with ultra-low interest rates, the number of private rented properties in the UK has grown by 580,000 households from 3.8m households to 4.4m households and will continue to grow, let me explain why.

The notion that buy-to-let property is a strong long-term investment has not altered with the pandemic. Since 1930 with the all the crises we have had with WW2, the Oil Crisis, 3-day week and hyper-inflation in the 1970’s, Crediton property has been a hedge against inflation and in addition, delivers a decent income yield of 5% and upwards. Not bad when compared to the 0.5% with a savings account (if you are lucky).

It is a fact that those landlords that see buy-to-let investment in Crediton as a long-term strategy will win.

It is certainly the case that I am starting to see an exodus of the ‘amateur landlord’, leaving more professional landlords who see ‘landlord-ing’ as a business, not a game. Those long-term Crediton landlords can see through the present predicament as they have a long-term buy-to-let investment mindset.

Many Crediton landlords are intensely aware that demand for high quality private rental properties in Crediton is only going to flourish as a consequence of the pandemic; whilst not forgetting that demand presently exceeds supply. Also, those same Crediton landlords know that a responsible approach to their tenants with regard to condition and repairs, is a key to ensuring the rent keeps flowing in with minimal void periods.

Finally, even though Crediton house prices are, on average, on the up, there are still some bargains even in this market. By doing their homework and working with an agent like myself, these savvy Crediton landlords are paying reasonable prices, thus giving them a sturdier rental yield and the ability for future capital growth.

If you are a landlord, as my clients all know, I am here to help and guide landlords on their long-term investment strategy. I therefore extend this offer to all Crediton landlords, irrespective of whether you manage your property yourself or use one of my excellent competitor agents in Crediton, I am here to help.  

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Crediton Property Market: 2011-2021

A look back at the Crediton housing market over the last decade

With all of us completing the Census a couple of weeks ago, it made me realise profoundly that mine and my family’s life, which from our own point of view seems unique and delightful, makes us all into a series of statistics for the Census gatherers to pore over. To digest and regurgitate facts, figures and trends for those who are interested in the ever-changing social circumstances of these islands.

However, the information from the Census is vital to improving our lives – Governments can plan the future with the information it provides and we in turn can wonder about the lives of our past generations with the information provided therein historically if we so wish. 

Whilst the information from this Census won’t be published until March 2023, let us have a look at what has been happening in the Crediton property market since the last time we completed the Census in 2011.

Just to remind you, 2011 saw the wedding of Prince William and Kate Middleton, Mr Cameron was the PM, there was the last flight of the Space Shuttle and Game of Thrones premiered.

Whilst in the Crediton property market ….

  • The average price paid for a Crediton detached home in the last 12 months has been £382,700. The average value of a Crediton detached home has risen by 35.2% in the last 10 years or £95,200
  • The average price paid for a Crediton semi-detached home in the last 12 months has been £289,400. The average value of a Crediton semi-detached home has risen by 40.8% in the last 10 years or £79,600
  • The average price paid for a Crediton town house/terraced home in the last 12 months has been £189,100. The average value of a Crediton town house/terraced home has risen by 31.4% in the last 10 years or £54,200
  • The average price paid for a Crediton apartment/flat in the last 12 months has been £143,900. The average value of a Crediton apartment/flat has risen by 37.5% in the last 10 years or £42,500

New properties built in Crediton…

Irrespective of any dip in Crediton house prices or transactions when the Stamp Duty Holiday ends in the autumn, this is a trend that looks set to continue, with no sign that supply of new homes is anywhere near to keeping pace with demand for households.

There have only been 550 new properties built in Crediton in the last 10 years, that’s less than 6 a month. That means the population in Crediton has risen by 1.48 people for every new home built over that decade.

Nationally, the Country has only built just over 180k homes a year over the last decade 120k less than the national target of 300k. In the meantime, the population has grown by more than 4 million.

When looking locally at the size of new build property in Crediton, the average property is just over 900 sq. ft., which is 26% larger than a decade ago.

Rents in Crediton…

Whether you are a winner or loser in terms of rental values depends on whether you are a Crediton landlord or a Crediton tenant.

The average rent for a property in Crediton currently stands at £550 per month, whilst a decade ago, it was £458 per month

This means private rents have increased by 76p a month for the past ten years. Interesting, when compared to the national average of 98p a month whilst in London, rents have grown by £4.64 a month.

The next 10 years of the Crediton Property Market…

The next ten years will be just as fascinating. To try and predict would be a fool’s game.

For example, who would have believed what the Crediton property market has done in the last 12 months since the start of Lockdown 1.0. The number of transactions (i.e., people moving) in turn with UK house prices having risen so much in the last year … all during a worldwide pandemic and at a time of such mayhem and havoc in the UK and world economy, is nothing short of remarkable … the question is – is it sustainable?

Read these articles in the coming months and years and I will share with you what is happening to the value of your Crediton property, be you a Crediton homeowner or Crediton landlord.

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Devon First-Time Buyers Can Now Buy Using 5% Deposit Mortgages

Being a Devon first-time buyer in the last 12 months has not been an easy thing. Just before lockdown there were 400 ‘5% deposit mortgage’ deals and first-time buyers were able shop around to get the best deal. When the first lockdown hit, 5% deposit mortgages disappeared, meaning that as many Crediton would-be first-time buyers were about to buy their first Crediton home in 2020, the rug was pulled from under their feet.

Today, you can count on two hands the number of mortgage deals which allow a 5% deposit. Even worse, the number of hoops one has to jump through to get a 5% deposit mortgage is very high (plus you have to pay handsomely for the privilege, with mortgage rates of at least 4.15%).

In putting down a 5% deposit, you borrow the remaining 95% as a mortgage. These 95% mortgages (or Loan to Value) were very popular with Crediton first-time buyers before the Credit Crunch. Nearly 1 in 6 mortgages were 90% to 95%+ Loan to Value mortgages in 2007 (15.5%), yet as the Global Financial Crisis hit in 2008/9 that dropped to only 1 in 63 mortgages being in 90% to 95%+ range in 2010 – meaning many Crediton first-time buyers were unable to buy their first Crediton home between 2010 and 2015.

Yet in the recent budget, Rishi Sunak has vowed to back the building societies and banks so that they can offer more of these higher 95% Loan to Value mortgage deals.

Many people have said this will mean there will be a Crediton house price boom – especially as Stamp Duty is extended until September

This scheme is nothing new as a practically identical scheme was launched by George Osborne in the 2013 Budget with his Help to Buy Scheme. Nearly 1 in 5 houses sold in the year after that budget used this scheme, yet Osborne’s was only for first-time buyers and it was only for brand new homes (not second-hand homes). Whilst there is no doubt this caused an increase in house purchases, many commentators said it was a backdoor method to keep the country’s new homes builders afloat.

The big difference with this new 2021 scheme is that it is available for Crediton second-hand homes as well and is open to all Crediton owner occupiers moving home.

Yet, what will the banks mortgage interest rate charge be?

Although no building societies or banks have yet publicised what mortgage rates they will charge, all the High Street lenders including NatWest, Santander, HSBC, Virgin Money, Barclays, and Lloyds have stated they intend to offer these 95% LTV mortgages.

Under the Government’s mortgage guarantee to the banks, Westminster will guarantee 20% of any mortgage offered at 95% Loan to Value. In principle, that means that building societies/banks should be able to offer the low mortgage rates as those available to people wanting to borrow 75% Loan to Value.

At the moment the average five-year fixed rate mortgage is 3.6% with a 10% deposit, but if you have a 25% deposit, you can fix it for five years at 1.63%

However, don’t forget though that the banks will be charged a ‘still to be decided’ amount to use the Government guarantee. On the last Help to Buy Scheme, it was rumoured they were charged 0.9% of the mortgage borrowed, so this cost would have to be passed on to the first-time buyer. I would suspect the eventual rates Crediton first-time buyers will have to pay is in the region of 3%.

This new 95% mortgage/5% deposit scheme is only going to work if banks and building societies have sensible mortgage rates as it needs to help those Crediton first-time buyers it was intended to help, who are finding it hard work to get on the first rung of the Crediton housing ladder.

It all comes down to how anxious the banks and building societies feel about the true long-term effect of the pandemic once the furlough scheme ends in the autumn. Only time will tell.

Yet, to give you an idea of the difference the mortgage rates scheme will make on a typical Crediton terraced/town house …

The average price paid for a Crediton terraced/town house in the last 12 months was £189,000

Assuming a 35-year repayment mortgage and borrowing that amount on each scenario:

  • At the current best 95% LTV mortgage rate (i.e. 5% deposit) of 4.15% mentioned at the start of the article, that would cost £854 per month in mortgage payments
  • At the current average 90% LTV mortgage rate (i.e. 10% deposit) of 3.6% mentioned in the middle of the article, that would cost £792 per month in mortgage payments
  • At the best 75% LTV mortgage rate (i.e. 25% deposit) of 1.63% mentioned at the start of the article, that would cost £591 per month in mortgage payments

As you can see, quite a difference.

I have to applaud Rishi Sunak for this initiative, yet will it be ‘fields of clover forever’ for the Crediton property market with the new scheme? No, it won’t.

It will be a good boost to the Crediton (and UK as a whole) property market. Whilst the mortgage guarantee offers a small portion of security for the lenders, it does focus on the riskiest part of the housing market. Many lenders still have cold shivers of the Northern Rock 125% mortgage debacle from a decade ago and those memories still ring true today.

The fact is these types of mortgages will be a higher risk, even if the Government are underwriting them with their smaller deposits, which will come through in bank’s and building societies higher pricing for these mortgages. Also, the lenders are already at near full capacity trying to get hundreds of thousands of existing property sales and purchase deals through because of the Stamp Duty rush over the last 9 months. I await the rates in early April and will make comment again.

If you are a Crediton homeowner, potential Crediton first-time buyer or anyone involved in the Crediton property market and you would like to chat about anything I’ve covered in this article or any of my other articles on the Crediton property market, please don’t hesitate to drop me a line.