‘Generation Rent Forever’ 3,516 Boston Tenants have no intention of ever buying a property to call home

Who can remember the 1970’s and 1980’s with headlines of 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts – but at least people could afford to buy their own home.

“So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?”

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Boston and UK housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Boston property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Boston. Whilst these are important factors and barriers to home-ownership, I also believe there has been a generational change in attitudes towards home ownership in Boston and in fact the rest of the Country.

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Boston population choose to be tenants as it better suits their plans and lifestyle. Local Government in Boston, land owners and landlords need an adaptable Boston residential property sector that allows the diverse choices of these Boston 20 and 30 year old’s to be met.

This means, if we applied the same percentages to the current 9,156 Boston tenants in their 3,370 private rental properties, 3,516 tenants have no plans to ever buy a property – good news for the landlords of those 1,294 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Boston in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly un-affordable for younger generations.  So, if we applied this rise to Boston, we will in fact need an additional 1,444 private rental properties over the next eight years (or 181 a year) … meaning the number of private rented properties in Boston is projected to rise to an eye watering 4,814 households.

NAEA and ARLA launch Propertymark

The Association of Residential Letting Agents (ARLA) and National Association of Estate Agents (NAEA) are moving into a new era, altering their emphasis from industry facing licensing to consumer protection with the launch of Propertymark.

The organisation speaks with a single voice and unites the interests of all its audiences.

For over fifty years, ARLA and NAEA have represented the professional property sector to key audiences within the industry, media and to policy makers. Consumers however have had little awareness of either organisation. Having listened to our members, and, given the significant challenges the industry is facing, it is clear, now more than ever before, the public needs far better understanding of how to choose a property agent that has the consumer’s interest at heart.

The new focus unifies the two organisations, as ARLA Propertymark and NAEA Propertymark.

David Cox, ARLA Propertymark Chief Executive, and Mark Hayward, NAEA Propertymark Chief Executive, said: “Having a home is the most important issue for consumers and our members are there to protect and guide people with their property transactions. At present customers don’t know where to go for advice or can’t be sure if they are dealing with a professional.  We are changing this. We will reach out to customers directly so they recognise Propertymark and understand that by using a Propertymark Protected agent they and their money are safe.

“Propertymark is a stamp of approval for consumers when they seek professional property expertise in buying, selling, renting, leasing, or valuing a property. It stands for protection for the consumer, and offers the highest standards and qualifications among property professionals. Propertymark Protected agents have opted for regulation in an unregulated sector, and provide reassurance for consumers as well as protection against rogue operators.”

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MD of Hill & Clark Property Professionals, Mr Paul Clark, agreed saying “As a responsible and professional agent dealing with all matters relating to property across the Lincolnshire area which includes property management, lettings, sales, block management and commercial, we are delighted to learn that there is a clear focus on ensuring that customers are able to do business with well trained, professional and more regulated agents.

We are one of the few agents in the area that are fully licensed and regulated with qualified members of both the NAEA and ARLA in all of our offices so we can give sound and professional advice to our clients. We understand that you wouldn’t book a foreign holiday without using an ABTA agent as the traveller knows this gives them peace of mind and protection – this should be the same in Estate Agency and we support the move for all agents to become licensed in the future so this news from ARLA and the NAEA is well received by us as a company”

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Boston first time buyers borrow £44.6m in the last 12 months

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Boston property market. Over the last 12 months, 928 properties have sold and completed in Boston, worth £144m. Interestingly the number of properties changing hands in Boston has also dropped when compared to a decade ago.

When we consider the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Boston buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Boston property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

Q4 2015 – £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 – £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 – £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 – £827m buy-to-let mortgages vs £1.42bn for first time buyers

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When looking at the figures for Boston itself, first time buyers have borrowed more than £44.6m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Boston economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at Boston, at this moment in time there are 384 properties for sale, compared to 300 properties a year ago. All this will be welcome news amongst Boston first-time buyers with a combination of a proportional reduction in new investors and landlords.

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.

Is there a change in attitude from the younger generation towards letting?

With 9,156 people in Private Rented Properties in Boston – Should you still be investing in Boston Buy To Let?

If I were a buy to let landlord in Boston today, I might feel a little bruised by the assault made on my wallet after being ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Boston property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Boston property prices do drop, the downside to that is that first time buyers could be attracted back into the Boston property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Boston landlord, almost a blessing in disguise.

Boston has a population of 40,878, so when I looked at the number of people who lived in private rented accommodation, the numbers still surprised me …

Boston – Accommodation Type and the Number of Occupiers
Owned outright Owned with a mortgage Shared ownership (part owned and part rented) Social rented (aka Council Housing) Private rented Living rent free
10,165 13,728 416 7,048 9,156 365
24.9% 33.6% 1.0% 17.2% 22.4% 0.9%

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Yields will rise if Boston property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Boston landlords add to their portfolio.

Rental demand in Boston is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Boston landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

“Many of the what would be potential buyers in this age bracket were now planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property.”

Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters. Does this finding contradict the Governments announcement only this week that first time buyers “have their noses pressed up against Estate Agents windows wanting to buy but not being able to”

So, as 22.4% of Boston people are in rented accommodation and, as that figure is set to grow over the next decade, now might just be a good time to buy property in Boston – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch – there is nothing like bricks and mortar!

152 Boston Households Occupied by OAP Renters

Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older, meaning 4.39% of OAP’s are living in private rented property.

It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant?  In retirement, selling up could make financial sense to the mature generation in Boston, potentially allowing them to liquidate the equity of their main home to enhance their retirement income.  I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Boston?

The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home.  Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.

Funding retirement is important as the life expectancy of someone from Boston at age 65 (years) is 18.4 years for males and 20.6 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females).  The burdens of financing a long retirement are being felt by many mature people of Boston.  The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.

So, what of Boston?  Of the 5,051 households in Boston, whose head of the household is 65 or over, not surprisingly 3,648 of households were owned (72.22%) and 1,088 (21.54%) were in social housing.  However, the figure that fascinated me was the 152 (3.01%) households that were in privately rented properties.

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Anecdotal evidence, by talking to both my team and other Boston property professionals is that this figure is rising.  More and more Boston OAP’s are selling their large Boston homes and renting something more manageable, allowing them to release all of their equity from their old home.  This equity can be gifted to grandchildren allowing them to get on the property ladder, invested in plans that produce a decent income and while living the life they want to live.

These Boston OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent.  Many landlords will also include gardening in the rent! Renting is also more adaptable to the trials of being an OAP – the capability to move at short notice can be convenient for those moving into nursing homes, and it doesn’t leave family members panicking to sell the property to fund care-home fees.

Boston landlords should seriously consider low maintenance semi-detached bungalows on decent bus routes and close to doctor’s surgeries as a potential investment strategy to broaden their portfolio.  Get it right and you will have a wonderful tenant, who if the property offers everything a mature tenant wants and needs, will pay top dollar in rent!