Huge drop in Sales transactions – what does it mean for a Bournemouth property owner?

Property transactions have dropped over 30% in the last year across the UK after the numerous impacts on the property market. Is it any surprise with the changes to Stamp Duty, BTL tax changes, and of course the economic uncertainties with the likes of Britexit and the falling pound? But what does this mean for the home owners and property investors of Bournemouth?

There are just over 2,600 properties currently on the market for sale in Bournemouth, which is almost exactly the same as there were last year – so no change there. What we are seeing however is that time on the market is increasing – around 6% of an increase on last year taking the average time to sell up to 170 days. In real terms on a local level – we are seeing a number of higher valued properties sitting on the market for longer whereas the smaller 2-3 bedroom properties are still selling well. What this shows is that fewer people are looking to upsize and would rather sit and wait with money in the bank to see what happens with the market.

How the Governments Housing “White Paper” will affect the Bournemouth Property Market

“Fixing Our Broken Housing Market” – the catchy title given to the long awaited government document outlining the key strategies and plans to increase supply and create a more efficient housing market in line with the aspirations and requirements of all households. But what exactly is the plan? And how will this change the Bournemouth property market going forward?

The 94-page document presented yesterday had already picked up wide criticism for the continued delays – originally due to be published on 23rd November. And with the release, the criticism didn’t stop there. Across the industry the document has been slammed as being nothing more than vague statements of long term government aspirations rather than a strategy of action for the issues currently present in the market.

So what are the headline proposals?

- Ensuring each part of the country has an up to date development plan to create the proposed new build target and holding local authorities to account.

- Simplifying the planning process to make it easier for developers to get started, as well as increasing capacity to get decisions made faster.

- Making more land available from public sites and Brownfield land – however maintaining and strengthening the protection of Green Belt.

- Ensuring infrastructure is provided in the right place at the right time by coordinating Government investment and through the targeting of the £2.3bn Housing Infrastructure Fund.

- Backing small and medium-sized builders to grow, including through the Home Building Fund;

- Encouraging more institutional investors into housing, including for building more homes for private rent, and encouraging family- friendly tenancies with the possibility of an incentivised 3-year tenancy.

- Supporting housing associations and local authorities to build more homes.

- Making renting fairer for tenants.

- A crack down on empty homes.

- Doing more to prevent homelessness and rough sleepers.


The government has always sang the same song about getting more people into the housing market by encouraging and helping first time buyers. This presentation however seems to concede this aspiration is one step too far and instead shows a shift of focus into the rental sector to improve standards and be ‘fairer’ to tenants.

So how will this announcement affect the Bournemouth property market?

Well in my opinion there seems to be a distinct lack of detail on how they will implement their proposals – so it is very difficult to tell. The Bournemouth market has a very strong rental market, and the shift in focus towards rental properties can only be a good thing to improve standards and increase housing supply levels. There continues to be high levels of development in and around the town, and making the planning process easier and more efficient will only help in getting projects started and completed sooner.

What I do struggle with however is the actions that have been taken by the government of late has been anything but pro-rental. In fact the Stamp Duty increase on Buy To Let and second homes, coupled with the incoming changes to mortgage interest relief has only discouraged property investment and increase local homelessness as landlords looking to evict and sell their properties. Then of course we have the proposed removal of tenant fee’s which will impact the professional agents who look to offer protection to tenants and increase standards in the sector. Perhaps that is one of the reasons the 94-page document make little to no mention of private landlords and agents despite the core focus being a shift to the rental market.

It will be interesting to see what, if any, affect these proposals will have on the Bournemouth market. I think it would be safe to assume there will be little impact in the near future, however quite possibly further opportunities in the longer future for further development and growth of the rental market.


All the Best


Luke

7.3% yield on this great 3 bedroom ground floor flat in Bournemouth

Now, when I see a great Buy To Let deal in the market I like to let you guys know first no matter what agent is selling the property. Well we have just taken on a large 3 bedroom ground floor flat in Luckham Road, Bournemouth which has huge return potential for those looking to rent the property out - so I thought it would be worth sharing with you even though it’s one of my own (I won’t be too biased – promise!)

This ground floor flat comes recently refurbished and pretty much ready to let out straight away for the investment buyer. It is a spacious property where all 3 bedrooms are doubles and comes with a large garden making it a perfect family home.

The best FREE resource for property investors to get great deals

One of the most popular strategies for property investors when buying, is to buy below market value (BMV) or find properties to which they can quickly add value to before renting the properties out. This allows investors to do 2 things. Firstly it allows you to be protected against any fluctuating property prices and prevent the dreaded negative equity. Or secondly you could re-mortgage further down the line and take money out to reinvest or buy a new car etc. So what if I said I have a FREE resource for everyone to use to actively find them these great deals?

There are a number of reasons why someone would want to sell their property Below Market Value. Maybe they are going through a divorce or the seller has debt issues or even bereavement. We call these people ‘distressed sellers’ and one thing most of them have in common is they want to move quickly. There are of course other reasons for selling BMV such as selling an un-mortgageable property etc. and you would need to approach these differently as the motivation is different (e.g. they do not necessarily need to sell fast and price may be more of a consideration).

Why NOW is the best time to buy Bournemouth property!

I often get asked by aspiring property investors – when is the best time to buy property? There is, as you may have noticed, a huge amount of negative press at the moment aimed at property investors. Stamp Duty increases, mortgage interest relief restrictions, the impact of losing tenant fee’s… Everything seems to have come at once and it is very easy for potential investors to be put off. But is now really a bad time to invest in Bournemouth property? Or could NOW be the perfect time?

There are a lot of properties hitting the market over the last few months from landlords looking to sell and avoid the tax changes to mortgage interest rate relief - which could even see some landlords paying tax on profits they are not even making! That alone is enough to make anyone want to sell up.

South West property prices take a tumble, but Bournemouth still on the increase!

The Land Registry has today released the property price data from March, and it shows a surprising picture. As you know, March was the last month for investors to complete on purchases before the increase of Stamp Duty on the 1^st April. With this in mind, it was predicted to be a heated month of property transactions and inflated property prices – but what actually happened was transactions tumbled by over 5% and prices across the UK fell by 0.5% - the greatest tumble in over 6 months.

The South West, having seen a high annual growth of 6.7% as at the end of February, saw one of the biggest property price tumbles in the UK – a huge drop of -0.9% in monthly property prices. This however had no effect on the property prices in Bournemouth which has seen yet another month of consecutive property price increases, +0.7% on last month which continues to exceed property price forecasts made before the start of the year. This brings the average price of a property in Bournemouth to £196,262 which is an annual growth of 7.9% compared with March 2015.

As the property market slows down, Bournemouth Landlords realise the true cost of the Stamp Duty changes

From the 1^st April 2016, Stamp Duty has increased for the purchase of investment properties and additional homes. As many of you will know, this change has increased the cost of Stamp Duty by 3% of the overall purchase price of the property affecting tens of thousands of buyers. It’s no surprise then that we saw huge increases in volume of transactions in the months leading up to the change as investors looked to complete their purchases before the tax changes came into effect. But what is the true cost of this tax change? Is it still worthwhile investing in Bournemouth property?

I have been speaking to a number of buy to let landlords over the last few weeks about this very subject. Yes, many landlords have been put off by the recent tax attacks on landlords, not just the increase on Stamp Duty. Having said that, when you look a bit closer at the figures and work out the true cost of the changes, you might be just a little surprised. 

Dorset house prices dip, but Bournemouth continues to rise!

According to the Land Registry House Price Index, February saw a stutter in the overall property market. The UK as a whole dropped 0.2% in the month of February despite the increase in demand from private landlords looking to complete purchases before the Stamp Duty increase took effect. Despite the strong demand and historic price jumps month on month, even Dorset stumbled with a -0.1% drop in prices.

The South in particular, along with London, has seen huge increases in property prices over the last few years. So it’s interesting to see some areas dropped in value despite the increased demand to buy at the start of the year from property investors. But despite the average property price dropping in Dorset as a whole, Bournemouth has certainly continued strong, growing in value for another consecutive month at +0.5%

Bournemouth landlords - What group of tenants should you target?

When planning to invest in property, there are a number of considerations you need to make; where to invest, how much to invest, how the investment will be funded, expected return on investment etc. But really, all of things result from the number 1 question you should be asking – who is my target market.

When businesses are formed, it is best practice to write up a business plan. The business plan can vary greatly in what it contains, but in essence it states what the business does, how much it plans to make, and who is going to buy the product/service. For the majority of property investors, only the first two elements are focused on – what you do (let out a property or room) and how much you plan to make (working out the gross/net yield). Far too often, the final element is only focused on once the property has been purchased – who is going to buy (who is the tenant). By then it’s too late.

Is it time for Bournemouth landlords to sell up?

Since the budget two weeks ago I have had a number of blog readers call and message me regarding some of the changes and how they will affect them going forward. It’s great talking to you all, and please do continue to get in touch if there is something on your mind that you wish to discuss. I did want to share one of the big questions I have had asked quite a lot however, and that is whether it is time for Bournemouth landlords to hang up their boots and sell up.

Landlords have been coming under increasing attacks over the last few years, and the latest budget didn't fail to pack another few punches. The Stamp duty tax increase of 3%, the capital gains surcharge of 8%, the reduction interest you can offset against tax coming next year. It almost seems as if landlords are on par with bankers to be the most disliked group of people. But why is that?