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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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Only 1 in 15 Crediton Properties are Bungalows, Despite an Ageing Population. Why?

The bungalow is a building that has represented a more leisurely, gentler way of life since the early 1900’s. Bungalows have been sold as an aspiration for those about to retire, saving them the annoyance of having to climb stairs. With an ageing population, one would think they would be building more bungalows, yet nothing could be further from the truth. In fact, this could be one of the main issues that is holding back many mature homeowners moving home, thus creating a bottleneck in the Crediton property market for the younger families who are being held back and unable to move into the larger homes they so need to grow their families.

So, before I answer that question, let me share this fascinating fact about bungalows. The word ‘bungalow’ originated in India, not the UK. The name is derived from the Hindi word ‘baṅglā’ or the Gujarati word ‘baṅglo’, both of which seem to refer to a home occupied by a Bengali person. The colonial English started to use it for themselves in the late 1600s to describe the same sort of basic lodgings that sailors and staff of the invading East India Company used.

Anyway, back to the here and now in Crediton.

There are 239 Bungalows in Crediton. When you consider there are 3,489 properties in Crediton, that means only 6.86% of property in Crediton are bungalows.

To give you an idea of the age demographic of Crediton homeowners, there are 1,248 Crediton homeowners aged 65 years old (and over) and 1,225 Crediton homeowners aged between 50 and 64 years of age.

You can see demand for bungalows is only expected to grow.  Yet new homes builders are having to deal with soaring land prices meaning to get a profit from the site, they are under pressure to build more vertically than horizontally as with bungalows (as bungalows take up so much more land).

The last available data is from 2018 and only 1.6% new builds in the UK were bungalows, interesting when it was just over 7% in the middle of the 1990s. As British people are living longer, those existing Crediton bungalow homeowners will be living in them longer, thus creating even more of a bottleneck in the Crediton property market.

So, what is the answer?

Well with building land in Crediton at a shortage, maybe new homes builders should be forced under planning rules to reserve ground floor apartments to be set aside for older people to encourage them to move out of larger houses. I would challenge the long-held point of view that building more bungalows in Crediton is the pre-eminent way to urge growing numbers of mature ‘last-time buyers’ to move out of their under-occupied Crediton homes and free up their large homes (where their children have flown the nest) for younger Crediton families to grow.

With the new Planning Regulations due to be in place in a couple of years, local authorities could require builders to set aside a share of homes for mature residents, as they are already obligated to subsidise local community facilities or low-cost social housing in return for obtaining their planning permission to build in the first place.

Another option would be to convert all those empty shops in our town and city centres up and down the country into residential use. There is no need for planning permission to change offices to residential property and the Government are considering the same for shops (although I have heard of some horror stories of those office to residential developments making rabbit hutches look spacious) – so again, it comes down to the planning laws and making them fit for purpose.

There are no doubt consequences of not designing our housing stock for the 21st Century and beyond for older people.

The population of Crediton is set to grow by 1,463 to 9,162 by 2040.

As the UK population gets older in the coming decades, as life expectancy is set to grow from 81 years 2 months to 83 years 3 months by 2040, I fully appreciate the need for more Crediton homes to be built for families, yet one must ask if the planning authorities are focusing too much on new housing for the younger generation, when they in fact should be encouraging new homes builders to develop larger, ground floor two-bedroom homes and decent accessible transport links.

These are my thoughts, what are yours the good people of Crediton?

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Crediton’s Love (and Hate) Affair with the Semi-Detached House

The semi-detached house – the icon of middle-class aspiration, the pinnacle of liberalism yet at the same time compromised individuality, the ‘semi’ as it is colloquially termed is, for many Crediton homeowners, the highpoint of modern domestic bliss.

Britain’s gift to architecture is the humble ‘Semi-Detached House’. This type of property has been exported around the world with – the ‘Doppel Haus’ in Germany, the ‘Duplex’ in the USA, Canada and Australia. 

For those young, hip and trendy people living in your converted warehouses with strobe lighting and exposed brickwork, it might surprise you the semi is the dream home of an immense number of Crediton people. In fact, it is the most common dwelling type in the British Isles, with 8,060,657 semi-detached homes occupied by Brits alone (representing 31.68% of all occupied property) compared to 23.81% detached, 25.49% terraced and 19.02% flats.

In Crediton alone, there are 982 semi-detached houses meaning…

29% of properties in Crediton are semi-detached.

So, when did the semi-detached house first come into play? Many people think the semi-detached boom started with mass swathes of the suburban mock Tudor bay-fronted semis being built between the first and second world wars. The fact is actually that rich landowners in the post Great Plague (1665+) years wished to house their farm labourers as inexpensively as possible, yet making their grand estates look as imposing as possible.

And that’s the point of a semi-detached house. Only half the property is yours, yet you ‘feel’ like you own it all.

The next phase of the semi-detached story, and a phase that really pushed home the point, were many of the late Georgian houses built around the Kensington Gardens area in West London. Many upper-middle class Georgians were wanting something more than the classic Georgian terraced house yet couldn’t afford a large detached home. Therefore, architects took the humble semi-detached house to the next stage of its evolution by masquerading the building itself as one home by slipping its two front doors down opposite sides of the building, making it look like one home from the front, to complete the impression of total ownership.

By Victorian times, semi-detached houses fell out fashion as the railways were building many of them for their railway workers and they became associated with the lower working classes, but speculative builders continued building semi-detached homes for the new lower middle class, that is the reason why ultimately the country is full of semi-detached homes today.

The semi-detached house was saved from the annals of history by the Bedford Park development in Ealing (London). Referred to as the world’s first ‘garden suburb’ and started in the 1870’s, the architect of Bedford Park used influences of the Aesthetic Movement, the precursor to the Arts and Craft Movement to make the buildings look more pleasing on the eye. The architect also took reference from the style of properties from British history such as Queen Ann to be seen in such features as a sweep of steps leading to a carved stone door, rows of painted sash windows in boxes set flush with the brickwork and bright coloured brickwork with limestone stone quoins emphasising the building’s corner.

As the car enabled people to commute to work from further away, people wanted to get out of the big cities, thus giving rise to the interwar semi, with its mock Tudor fronted, rosemary tiled roof, oak beamed, herringbone brickwork and the leaded and stained glass windowpanes that we all recognise. It was Bedford Park that gave the green light for architects up and down the country to use old styles of building design to make their semi-detached houses look the part.

And now, in more modern times, the semi-detached house has gone from strength to strength.

527 of Crediton semi-detached houses have changed hands since 1995, many upwards of 5 times (and a handful even more).

The semi continues to appeal, both to big national builders and smaller Crediton developers, and most importantly to home buyers. The advantage of semi-detached houses over town houses/terraced houses or apartments is they afford access to their (typically bigger) gardens without having to pass through the house, and they have natural sunlight on three sides of the property, are easily extendable and quite often have a driveway.

And that’s at the heart of what a semi-detached house is all about, the schism or divide of the semi reveals the tension at the heart of owning your home, which on one side of the coin is a commodity/way to make money and on the other side, a vision to have your own castle, a piece of ground to call your own. It articulates both the craving for personal freedom and the inevitability of socio-economic life. What do I mean by that?

We may dream of owning a castle in many acres, with a drawbridge and moat, yet in real life we can only afford half a building plot sliced out by a volume national builder next to the A377.

I just love a semi-detached house! Style and substance combined.

What are your thoughts? Share your stories and opinions on the humble semi-detached house.

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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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Is Crediton Heading Towards a House Price Crash?

Crediton house prices rose by 5.0% last month, according to the Land Registry.

This means the annual rate of house price growth in Crediton has increased to 12.6%.

Looking at the national figures, many people were concerned the UK property market was overheating as spring saw annual growth of 9.9%, the highest rate of house price growth documented since June 2007 (when national house prices were rising by 10.8% p.a.). It was only a matter of a few months later the Credit Crunch hit, and the average value of a UK home plummeted from £190,032 to £154,452 in 18 months, a drop of 18.7%.

Government economic measures such as the Furlough Scheme and the Stamp Duty Holiday have so far shielded the Crediton property market from the worst economic recession since 1709.

So, the question is, can this growth in Crediton house prices continue, or is this the start of a house price crash?

One thing is for sure, looking at the number of For Sale boards going up and turning to sold just as quick, shows this market is not maintainable for the long term. Most of the Crediton people looking to move home have brought forward their home-moves from 2022/3 to this year because of the Stamp Duty Holiday and the lifestyle choice of wanting a bigger garden/office space at home.

Nonetheless, the doom-mongers in the press say there will be a second wave of house sellers that will flood the Crediton property market in the autumn and winter when furlough ends. They believe many of the 3.4m people still on furlough will be made redundant when furlough finishes at the end of September 2021 forcing them to move home.

This was the catalyst for the house price slump in 2008/9 mentioned above, when many Crediton homeowners dumped their homes onto the Crediton housing market.

After all, many Crediton homeowners lost their jobs and had mortgages paying 6% to 7% in interest payments.

However, the devil is always in the detail. The industry groups with the highest take-up rates of furlough are the hospitality (public houses) sector, where 70% of staff are furloughed. 65% of hotel staff are furloughed, and 44% people in the creative arts and entertainment industry are furloughed. Most employees in these sectors are in their 20’s and early 30’s and are tenants, not homeowners. This is going to be more of an issue for landlords than homeowners.

And of those furloughed homeowners who do unfortunately get made redundant later in the year, looking at the last four most recent house price crashes, buyers were wrestling with significant declines in mortgage affordability. For example, back in 1988, average mortgage rates were 13.9% before that crash and in 2007 (the Credit Crunch crash) 6.5%. Whilst today, they are under 2%, meaning the mortgages are a lot more affordable, and most Crediton homeowners who get made redundant will be able to ride out the storm better.

But surely, if Crediton house prices are rising, won’t Crediton homes become unaffordable?

Well, with low-interest rates, this means Crediton homes are still relatively affordable. In 1989, the house price to earnings ratio was 5.4 to 1 (i.e. the average house was 5.4 times the average UK salary), whilst today that stands at 8.8 to 1. It’s no wonder some people are concerned there will be a house price crash (as there was in 2008 when that ratio hit 7.5 to 1).

However, it doesn’t matter what the house price to earnings ratio is …. it is what percentage of your income is required to pay your mortgage.

In 1989, 74.6% of your income was required to service an 80% loan to value mortgage on an average UK home (i.e. you borrowed 80% of the value of your house on a mortgage). In the 1990s that percentage dropped yet rose steadily over the next decade and a half, so by the time we got to 2008, that was an equally eye-watering figure of 61.6% of your income to service an 80% mortgage.

Today, it’s only 35.9% of your income to service an 80% mortgage because of low interest rates.

So, if the issue is not the affordability of houses, what is the problem for Crediton homeowners?

Interest rates!

Bank of England interest rates will affect what people pay on their mortgage (higher interest rates normally mean higher mortgage payments). Interest rates are used to reduce inflation, so if inflation rises, interest rates also rise to bring inflation back under control.

UK inflation has just gone through the 2% barrier, and I believe by the end of this year or early next, it will touch 4% or 5%. In normal circumstances, this would trigger the Government (or now the Bank of England) to raise interest rates. Yet, we had a similar scenario in the late 1980s/early 1990s with a spike in inflation to 8.5% due to a shortage of raw materials and labour, but this was soon sorted out, and inflation dropped quite quickly thereafter.

In the coming year, a shortage of raw materials might be an issue. If there is a shortage of raw materials (supply problems are being found in key items such as timber, concrete, aggregates and steel), this will fuel construction and manufacturing costs upwards.

Next, will there be a shortage of labour? Some say it won’t be an issue (as unemployment will be higher), yet there are certain sectors of the economy that have an imbalance of trained staff of specialised jobs or people not wanting work in that type of job in the first place.

For example, many hospitality and dining establishments are reporting a shortage of staff because they were often filled with hard-working European migrants. I have read reports of London restaurants advertising for chefs and waiting staff, who would have received 1000+ enquiries for such jobs pre-pandemic to only be receiving applications that could be counted on two hands this summer. The hospitality and dining sector was hit harder than most, having to stop trading during the three lockdowns and working under firm restrictions. This led to the majority of staff being placed on furlough (as mentioned above, 7 in 10 are still on furlough), which has prompted some to ride out the pandemic in their own country.  

The question is – will they return? If not, to entice them back restaurants will have to increase the wages they pay to attract the staff, which in turn will mean they will have to put their prices up (i.e. inflation). If businesses have to put their wages up and the cost of raw materials continues to rise, prices for everything will rise, and at this point, higher interest rates will kick in.

But how will increased interest rates affect the Crediton property market?

Thankfully, 91% of all new mortgages being written are fixed interest rate mortgages and 78% of all existing UK mortgages are fixed-rate (compared to 32.8% in the credit crunch) … meaning we won’t have so many houses being dumped on the housing market like we did in the Credit Crunch, because on a fixed rate mortgage if interest rates rise – mortgages don’t follow suit.

And that’s the key … unemployment combined with high-interest rates caused many Crediton homeowners to put their property on to the market in 2008/9. Tied in with curtailed demand for property, because it was really difficult to get a mortgage (that’s why it was called the Credit Crunch) … we had an oversupply and subdued demand of Crediton homes – causing house prices to drop by 16% to 19% depending on what type of property you owned.

So, a good bellwether and indicator on what will (or will not) happen to Crediton property prices is the number of properties for sale at any one time.

There are only 49 properties available to buy in Crediton today, low when compared to the 14-year average of 97 properties for sale in the town, whilst at the height of the Credit Crunch, there were 213 properties for sale at one point in Crediton.

As we look to the future, if you want a crystal ball of what will happen to the Crediton property market … you won’t go that far wrong by getting yourself on the property portals and seeing how many properties are for sale.

These are my thoughts … what are yours?

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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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Will the Crediton Property Market Continue to Boom?

All the signs are that the Crediton housing market is sat on good foundations, yet one key hazard could still scupper the market.

‘UK Property Prices Rising at Record Levels’ is the headline of many newspapers. In the last few weeks, the Halifax reported they had grown by 6.5% in the last 12 months, whilst the Nationwide said 7.1% and not to be outdone, the Government’s own Land Registry said 8.6%. Nothing new there then you might think, don’t UK house prices always increase?

Actually, they don’t, as many Crediton homeowners will remember 2009, when they dropped by 19%. Also, some more mature Crediton homeowners will remember the early 1990’s where house prices dropped just over 40% over 4 years (after the 1989 property crash). So, the increase in UK house prices over the last 12 months has mystified all the forecasts made by most economists as …

house prices were forecast to drop during the pandemic because during the previous six UK recessions experienced since WW2, house prices have always fallen sharply in real terms.

Yet 2020 was different with house price growth increasing at its highest rate since 2014 as the substantial Government support programmes (including Bounce Back Loans, grants and furlough) has mollified the hit to household incomes. Add to that the pent-up demand from the Boris Bounce, all the people working from home wanting an extra room for an office and therefore needing to move, plus the stamp duty holiday, with the cherry on the cake of 0.1% Bank of England interest rates keeping borrowing affordable. This has meant …

Crediton property values are 9.6% higher than a year ago.

Yet the affordability of property is a big issue going forward. By the time of the height of the last property boom in 2008, the national ratio of average property values to earnings had risen from 5.1 in 2000 to 8.8 (i.e. the average house price was 8.8 times the size of the UK’s average person’s annual earnings). We then had the property crash in the proceeding years, and the ratio dropped to around late six’s/early seven’s. However, over the last few years, the ratio has been steadily rising and now with the recent growth in demand for property (the five reasons mentioned in the previous paragraph), the ratio has now smashed past nine. Looking locally …

the ratio of average property values to earnings in Crediton as a comparison was 5.1 in 2000, rising to 9.5 in 2008, dropping to 7.8 the year later when the Credit Crunch hit, and now currently stands at 9.4. 

So, are we heading for another house price crash? Maybe, maybe not – because the House Price to Earnings ratio only tells us part of the story. Another indicator of the property market is mortgage affordability, which measures the proportion of mortgage payments to average incomes. For all mortgage holders, in 2015, this stood at 24.13% and today it is only just above the national long-term average of 25%, demonstrating that property is still affordable.

Yet, the life blood of the property market are first-time buyers. The long-term average percentage of income which goes on mortgage payments for first-time buyers is 33%. Just before the 1989 property market crash, this stood at 54%. Whilst just before the 2008 property crash, it reached 49%. Today, it stands at 31.7% (and the reason it’s so low, even with record high property prices, is low interest rates because when mortgage interest rates are low, this permits people to afford larger mortgages, which enables them to bid up house prices).

So why aren’t more first-time buyers buying more homes? Well in fact they are buying more homes. At the turn of the Millennium, just over half of 25yo to 35yo were homeowners and by 2014, this had dropped to just a third, although since then it has increased to 41%. Now with the reintroduction of the Government backed 95% mortgages in April, this demand will continue further.

Once furlough ends, unemployment will doubtless rise in the following 12 months, yet the economy is more than likely to be in a boom phase, so by the spring/summer of 2021, the unemployment rate should start to fall.

So, does everything look great for the Crediton property market?

Before you get the Champagne out, there is a cloud on the horizon – the possibility of higher interest rates.

Undoubtedly, for the next few years, interest rates will not go up (and if they do – it will only be nominally). However, down the line it may be a different tale. Interest rates are used to control a number of economic factors, one being the currency and secondly inflation.

As many suggest, if we get an economic boom in the next 12 to 18 months, as we come out of lockdown, this will put upward pressure on the price of goods and services. Normally, when prices go up (inflation), to ensure that inflation doesn’t get out of control, interest rates are normally increased to dampen down the inflation.

So, will interest rates rise? Undoubtably they will. Crediton homeowners and buy-to-let landlords should seriously consider protecting themselves with fixed rate mortgages (yet 3 in 10 mortgagees are still on variable rate mortgages!). I believe we will see some inflation in the order of 3% to 5% in the coming 24 to 36 months, yet the interest rates won’t be enabled to bring it down. We had a similar case in the early 2010’s when we had a mis-match of demand and supply of goods, and inflation spiked to 5%, before returning back to its long term 2% average quite quickly thereafter.

The Chancellor will also encourage some inflation to reduce the ‘real’ cost of the Billions he has borrowed because of the pandemic, yet won’t want to see interest rates increase to take the cost of the borrowing upwards.

If you are considering moving home or buying/selling a buy-to-let property in Crediton in the next 12 to 18 months, and want a chat about your options, don’t hesitate to drop me a line.

Finally, these are interesting times ahead – I would love your thoughts on this matter. Please do share them in the comments.

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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!!