The Boston property market and the Governments budget promise to build 300,000 more homes.

In what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 351 ‘net additional dwellings’ in the last 12 months in the Boston Borough Council area, a decent increase of just 106% on the 2010 figure.

The figures show that 98% of this additional housing was down to new build properties. In total, there were 345 new dwellings built over the last year in Boston. In addition, there were 18 additional dwellings created from converting commercial or office buildings into residential property and a further two dwellings were added as a result of converting houses into flats.

While these all added to the total housing stock in the Boston area, there were 14 demolitions to take into account.

Net additional dwellings in Boston in the last 12 months
New build Conversions Change of use Demolitions Net Additions
345 2 18 -14 351

I was encouraged to see some of the new households in the Boston area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had re-utilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Boston housing crisis.

Back in the autumn budget, Theresa May and Philip Hammond set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of home-ownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.

The Boston property market and Hammond’s budget promise to build 300,000 more homes.

In total there were 351 ‘net additional dwellings’ in the last 12 months in the Boston Borough Council area, a decent increase of 106% on the 2010 figure.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8.

The figures show that 98% of this additional housing was down to new build properties. In total, there were 345 new dwellings built over the last year in Boston. In addition, there were 18 additional dwellings created from converting commercial or office buildings into residential property and a further two dwellings were added as a result of converting houses into flats.

While these all added to the total housing stock in the Boston area, there were 14 demolitions to take into account.

Net additional dwellings in Boston in the last 12 months
New build Conversions Change of use Demolitions Net Additions

345

2 18 -14

351

It is encouraging to see some of the new households in the Boston area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had re-utilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Boston housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

BTN Housing Blog

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is:-

“Just where are the Government going to build all these new houses” ?

Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of home-ownership for all.

However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and local housing prices should continue to steadily increase.

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Boston Wages Outstrip House Price Growth by 2.05% since 2007

A recent report by the Yorkshire Building Society stated that 54% of the country has seen wages rise faster than property prices in the last 10 years.

The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of our blog know, we always like to find out what has actually happened locally in Boston. To talk of North and South is not specific enough. Therefore, to start, we looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Boston Borough Council, some interesting figures came out…

 

  Boston East Midlands Nationally
2007  £20,670  £22,360  £23,920
2008  £19,406  £23,410  £24,960
2009  £19,214  £23,930  £25,506
2010  £20,592  £24,430  £26,088
2011  £18,996  £24,346  £26,010
2012  £20,758  £24,778  £26,432
2013  £21,377  £25,116  £26,931
2014  £22,396  £25,152  £27,097
2015  £21,372  £25,532  £27,508
2016  £21,580  £26,088  £28,132

boston blog 185

Salaries in Boston have risen by 4.4% since 2007 – interesting when you compare that with what has happened to salaries regionally ,an increase of 16.67%, and nationally, an increase of 17.61%.

Next, we needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Boston are 2.35% higher than they were in the middle of 2007 (not forgetting they did dip in 2008 and 2009). Therefore…

Wages in the Boston area have increased at a higher rate than property values to the tune of 2.05% … meaning, Boston is in line with the regional trend

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Boston landlords as they need to be aware of this when making their buy-to-let plans for the future.

If more Boston people are buying, then demand for Boston rental properties will drop, and vice versa.

As we have discussed in a few articles in the blogs recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Boston property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeowner-ship has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Boston people, home ownership isn’t a realistic goal.

Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Boston tenants and decent law-abiding Boston landlords. Whatever has happened to salaries or property prices in Boston in the last 10 or 20 years … the demand for decent high-quality rental property keeps growing.

If you are a landlord and are wanting to know a little more about the current demand for rental property, where to invest or indeed the recent changes in legislation or the law which is going to be affecting the EPC ratings then get in touch as we’d love to help you. All of our advice and help is free and given to help you make informed decisions about your investment and portfolio.

Give us a call today on 01205 352019

Boston Rents To Rise Quicker Than Boston Property Prices In Next 5 Years

The next five years will see an interesting change in the Boston property market.

Our recent research has concluded that the rent private tenants pay in Boston will rise faster than Boston property prices over the next five years, creating further issues to Boston’s growing multitude of renters. In fact, my examination of statistics forecasts that:-

 By 2022, Boston rents will increase by 21%, whereas Boston property values will only grow by 17%.

Let us explain why we have come to those conclusions:

Over the last five years, property values in Boston have risen by 16.7%, whilst rents have only risen by 7.1%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Boston tenants will have fewer properties to choose from, which will push rents higher.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is still the ban on letting agent fees which is still to come into force, probably in 2018.

When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

As we have mentioned in previous articles, the number of properties on the market in Boston remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why we believe property values in Boston will only be 17% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Boston people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands, because they have no money, with the average rent for a Boston rental property currently standing at £655 per month …

Over the next five years, I predict the average rent in Boston will rise to £793 per month

These are interesting times. There is still money to be made in buy to let in Boston – Boston landlords will just need to be smarter and more savvy with their investments. If you are looking for such advice and opinion to help you meet those investment goals please give the Boston Lettings Department a call on 01205 352019 or visit our website http://www.hillandclark.co.uk/

 

“How far do people go when moving away from or to Boston?”

For the majority, the response is not very far.

It is much more common for homeowners and tenants in Great Britain to move across town than to the next town or county. Until now, it’s been hard to say how many homeowners and tenants moved from, and to, relatively far away to buy or rent their new home. However, we carried out some research and requested some statistics from the Royal Mail. What came back was fascinating!

Using statistics for the 12 months up to the middle of Autumn 2016, 295 households moved out of Boston (PE21), moving an average distance of 50.47 miles.  The greatest distance travelled was 303 miles when someone moved to St Ives.

Considering there were 538 property sales in PE21 in the year and countless tenant moves, the numbers seems consistent – once you find a town you like, you tend to want to settle down and if you do move, you might only move to a different neighbourhood, or for better transport links or, to be closer to the school you want to get your children into, but the likelihood is you won’t travel far.

We then turned my attention to people moving into Boston.

Using the same statistics for the 12 months up to the middle of Autumn 2016, 212 households moved into Boston (PE21), moving an average distance of 46.96 miles. The greatest distance travelled was 357 miles when someone moved from North Kessock in Scotland to Boston.

We have looked at the data of every person moving into Boston and these have been plotted on a map of the UK. Looking at the map below, it shows exactly where most people come from, when moving into Boston. As you can see, there are a high proportion of people moving from London and the South.

article 170 map

So, what does all this mean for the landlords and homeowners of Boston?

When an agent markets a property for rent or let, it is vital to know the tenant or property buyer well, that the properties they are letting/selling fit those tenants/buyers, so they almost sell themselves. These days that means not only knowing how many bedrooms, reception rooms etc., a property offers but the budget buyers and tenants want to spend on a property in that area as well as where they come from.

The estate and lettings industry loves the mantra “location, location, location”. We say it might be helpful to factor in where, and how, far people are moving from, so the property can be sold or let more easily.

Many say knowledge is power and whilst we enjoy writing our blogs on the Boston property market, we also use the information to help our clients buy, let and sell well. So for example, the information gained for this article, will enable our teams to be more efficient in where to direct our marketing resources to ensure we maximise our clients’ properties sale-ability or rent-ability.

Hard Brexit could cause 2,800 properties to be dumped onto the Boston Property market

With the government still reeling from the results of the general election the job going into negotiations over has potentially become much harder. As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Boston and the rest of the UK. No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.
Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Boston … but nothing could be further from the truth.
Of the 63,736 people who are resident in the Boston Borough District Council area, 54,027 were born in the UK, 1,169 were born in EU countries from West Europe and 6,655 were born in EU countries from the former Soviet States in East Europe – the rest coming from other countries around the world.
The rights of these EU citizens living in the Boston area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Boston will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.
So, what would a hard Brexit do to the Boston property market. It could mean that every EU citizen would have to leave the UK.
In the Boston Borough area, 529 of the 1,169 Western European EU citizens own their own home and (so they would all need to be sold) and 5,260 of the 6,655 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.
Hard Brexit and mass EU Migration would mean c. 2,800 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Boston property values and rents, causing negative equity for thousands of Boston homeowners and many buy-to-let landlords would be out of pocket.
While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.
All we ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Boston (and UK) property market has been built on high levels of homeownership and more recently in the last 10-15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Boston (and the surrounding area) to get work and provide for their families. Many Boston people have invested their life savings into buying a buy to let property.
Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK … politics aside – a hard Brexit is in no one’s interests.