Southampton Homeowners £3,044,549,600 Windfall Since 2014

  

In the latest, and most recently published, set of UK mortgage data (for the month of November 2019) 18,470 pound-for-pound re-mortgages were made (i.e. the borrower went from one rate to another with no additional borrowing).

However, since the 1970’s, the British have seen their homes as cash cows and cash machines, with many homeowners re-mortgaging at the end of their mortgage’s introductory term (usually after the initial two, three or five years) to avoid being passed on to their mortgage lender’s more expensive standard variable rate.

For some borrowers re-mortgaging allows them an opportunity of raising additional cash whilst for others it enables them to follow interests and activities; such as big holidays, home improvements, new cars, debt consolidation or financially helping family members (e.g. paying off credit cards or helping with house deposits).

Interestingly, in November 2019 alone (the most recent figures) an eye watering £957,856,700 was borrowed on top of existing mortgages by 18,610 UK homeowners re-mortgaging and borrowing, on average, an additional £51,470. Therefore, one has to ask, are we borrowing too much? Looking at these numbers, one might think we are over-extending ourselves, yet as regular readers of my blog about the Southampton property market will know – I like to drill down and look at the historical figures. Back in 2006, just before the crash, British homeowners were actually borrowing in excess of £5bn per month over and above the re-mortgage amount – much more than the £1bn we experienced in November!

Looking at statistics from the Bank of England for the UK as a whole, even with the data mentioned above, British property owners have increased the equity in their homes by just over £270 billion since 2010 compared with a £275 billion withdrawal during the 2000s. This reveals that the last decade (the 2010’s) is the first since records began in which Brits have increased their equity. This is partly due to the fact that the number of housing transactions crumpled during the Credit Crunch, and many homeowners chose to reduce their mortgages, rather than continually increasing them - even if their property started going up in value after 2013.

So, what has happened in Southampton regarding mortgages and does it match the national picture? Well interestingly…

Southampton homeowners have injected just over three billion pounds into their Southampton properties over the last six years; overturning a trend stretching back to the 1970s.

Considering the exact figures, it can be seen whilst the total value of mortgages has increased slightly since 2014, as a percentage this has gone down, meaning Southampton homeowners and Southampton landlords have increased their equity since 2014 by £3,044,549,600 (one might call it a windfall?).

It can quite clearly be seen that the financial insecurity sparked by the Credit Crunch crisis has created a generation of Southampton homeowners/landlords who are savers and improvers rather than movers and excessive borrowers, using excess cash to invest in their property and pay down debt, as can be seen on the graphs and table.

As the percentage of mortgages (the loan to value) has decreased since 2014 from 16.20% to 15.26% in Southampton, this is good news for every Southampton homeowner and Southampton landlord because, irrespective of whether the ‘Boris Bounce’ is short or long lived, it shows the Southampton property market is in a better state than ever before to ride out any storm that it might encounter because less people will be in negative equity or have prohibitively high mortgages.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH


If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email.


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir

LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton

Southampton Landlord’s £37m Tax Bill

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I am asking Royston Smith, Caroline Nokes and Alan Whitehead the Conservative and Labour MP’s covering Southampton to remind the Chancellor and Prime Minister to use their persuasive skills to highlight and take a more holistic approach and attitude to the private rented sector and tackle issues which affect a Southampton landlords’ capability and capacity to strategically run an effective buy-to-let business.

For the last thirty years, the Government have passed responsibility of housing the masses from local authorities (i.e. council housing) to the estimated 1.5 million British buy-to-let landlords.

However, since 2015/16, Southampton landlords have faced increasing tax burdens as each year goes by, with the removal of mortgage interest rate relief on income tax (Section 24), the introduction of the 3 percent surcharge on stamp duty, and the reduction of the letting relief on capital gains tax.

My research has calculated the total income tax contribution by 9,710 Southampton private landlords in the tax year 2015/16 was £25,344,104

However, the eradication of higher rate mortgage interest relief (also known as Section 24) announced in 2015 by George Osborne has been estimated to add a further £1.9 billion nationally to landlord’s tax liability. Whilst raising money from landlords is an easy target, and the tax receipts attractive, it does make the landlords financial burden even heavier.

And by 2021/2, when the full extent of the Section 24 relief kicks in, that income tax liability will rise to £37,002,392 for those Southampton landlords

This doesn’t even take into account additional liabilities such as Capital Gains Tax, the 3% additional duty on top of the prevailing Stamp Duty Land Tax and VAT.

Ambiguity and a lack of certainty is the foe of all investment, which has been seen with Brexit. Now, just as things are starting to get rosy in Q1 with the pent-up demand released with the ‘Boris Bounce’, the last thing we need as a ‘collective’ property industry is for the Government to see us landlords as a constant cash cow. This new Tory government must acknowledge the value the majority of private landlords offer by housing in excess of 9.45 million people in the country.

Westminster needs to take a balanced approach to the significant issues of possession (especially with the impeding removal of section 21 evictions), taxation and all rental properties needing to be at least an ‘E’ energy efficiency rating, to connect the value the private rented sector offers the country by effectively housing over a fifth of the population and avoid unintentional consequences by making renting a private rented property harder for tenants … because, it’s not financially viable to buy (or retain) a buy-to-let property with the way things are going against the landlord.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH


If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email.


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir

LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton

Southampton Property Market … the Rollercoaster of the last Decade

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Ah the 2010’s, the tens, the teens - I am not sure what we are supposed to call the decade that has just gone. No matter what it was called, the last decade was a tough one, so does it really matter that we never really got around to giving it a name? Some might say, whatever one calls it, coming to an end is the most fundamental job any teen (and I refer to all humans) could possibly do!

The last two decades have certainly been tumultuous. At least for this decade we have just started we can say, in a few decades time, things like “That style is so ’20s” and fellow humans will essentially know what you are talking about. If you come of age in this decade, you will be a ’20s child and we will discuss ’20s politics and ’20s style and all the things that hadn’t been created on the 31st December 2019; the time that two nameless decades ended and how finally there was something everyone in the UK could agree on: the name of the decade. Hey - it’s a start!

So, what has happened to the local Southampton property market in the last nameless decade?

The average Southampton property has risen in

value from £209,900 to £290,900 in the last 10 years

… meaning each Southampton homeowner has seen a profit of £155.77 per week for those last ten years. Rolling the clock back to the start of the last decade January 2010, and the economy (and housing market) were recovering from the Credit Crunch and the worldwide financial crisis. A decade on and things feel a little different. If you bought a Southampton home over the past 10 years, things have certainly changed.

Southampton property values rose 38.6% on

average over the last decade

yet taking inflation into account, they only rose in real terms by 5.5 per cent.

Compare that to a 42.5% rise in the ‘80s, a 13.2% drop in the ‘90s and rise of 62.8% in the 2000s in real terms. So, in real terms after inflation, there has been essentially hardly any house price growth in Southampton in the past decade.

On average, 1.12 million homes were sold each year last decade, although that was 26.4% less than the decade before (the noughties) when an average of 1.52 million properties were sold annually.

So, what are the underlying issues in the Southampton (and wider UK) property market when, in real terms, property isn’t that much more expensive than a decade ago?  Whilst the newspapers tell us first time buyers can’t get on the housing ladder and the housing market is in gridlock - what is the problem? Well I am a firm believer in the adage ‘bad news sells newspapers’ because the truth is something completely different as 32.7% of homes last year were bought by first time buyers compared with only 22.8% in 2009.

Yet, there are still issues; mainly a persistent lack of not building enough new homes which curtails the supply and choice of property; but stagnated wages, stiffer mortgage rules and homeowners not moving as much as previous generations are all contributing to the problem. In the UK, the number of homeowners who moved in 2019 was around 14% higher than in 2009, yet this was still just under 50% lower than the average for the noughties. It’s all up and down like a rollercoaster!

My thoughts for the future are based primarily on what will happen to interest rates. Throughout the last decade, the Bank of England base rate was 0.5% at the start and was cut to 0.25% in the Summer of 2016. Even with the increase to its current level of 0.75% in the Summer of 2019, it has made borrowing money on a mortgage very cheap indeed. Nonetheless, bank/mortgage rates will rise again and I am concerned about the effect upon the housing market. Now it won’t be as bad as previous times when mortgage rates went up in the 1970’s and 1980’s (with mass repossession) because the tougher mortgage rules introduced in April 2014 will have ensured borrowers were stress tested on their affordability if interest rates shot up.  Most borrowers have been stress tested on their affordability to mortgage rates of up to 6% - 6.5%, which would obviously squeeze household disposable incomes yet stop people losing their homes due to repossession. Whilst I am not giving advice, just personal opinion, if you are one of the 29.3% of homeowners who isn’t on a fixed rate – maybe you should seriously consider doing so?

The 2020’s will be an interesting decade – and if you want to be kept up to date with what is happening in the Southampton (and wider UK) housing market – follow me and this blog to read similar articles to this one.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH

If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email. 

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton  

Will There Be a ‘Boris Bounce' For the Southampton Property Market?

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The Halifax announced in early January that there was a Boris Bounce in the national property market as they stated national property values soared 1.7% in December 2019 - the biggest rise since the 1.9% month on month rise in February 2007 (a few months before the Global Financial Crisis aka the Credit Crunch).

Get the flags out - all hail Boris as the Conservatives gain their landslide general election triumph - the Boris Bounce is here … or is it?

The Halifax (as well as the Land Registry and other house price indexes) use data of property that has sold and completed (completion being when monies and keys of homes sold are transferred). The Halifax data was based on properties that completed in December 2019, and as anyone who has sold or bought a Southampton property in the last 10 years knows, the time it takes from agreeing a buying price to handing over the money is many weeks. In fact, the average length of time between sale agreed and completion in the country is running at 19 weeks, meaning the figures mentioned by the Halifax are for sales agreed in July / August 2019. This growth relates to what was happening to the property market in Summer 2019.

One of the most important things for the property market is confidence. Interestingly, Rightmove reported a 28% surge in buyer enquiries between the 13th December and 18th December. After a couple of years of Parliamentary hold-up, the confidence following this general election is unquestionably a much needed boost for the economy (and ultimately confidence), so much so, shares in the new homes builders Barratt jumped 14% and Persimmon 12% the day after the election, showing a property sector anticipation that the property market is about to move forward as suppressed demand for people moving home is liberated. 

Looking at the previous elections, I decided to look at what happened to property values in Southampton in the 12 months after each election, with some interesting results. 

So, with past experience, a general election generally has a good effect rather than a worse effect on the Southampton property market.

Looking at the rest of 2020, my intuition tells me in the better areas of Southampton, it will likely be a seller’s market, as they will have more influence to ask for higher asking prices from Southampton property buyers that have placed plans to move on hold for far too long - and this could push up Southampton property values more promptly in the short term.

Yet, as more Southampton properties come on to the market in the usual spring rush, we could see Southampton home buyers having more choice and thus, as supply increases yet demand remains the same, buyers will get more power to negotiate a better deal. Irrespective of that, there is still the all-encompassing issue that I have spoken about many times in my blog of not enough homes being built to keep up with the number required, meaning negotiating power and prices being inflated.

The bottom line is, the Southampton housing market will get a slight boost from the general election. The threat of a Jeremy Corbyn government obstructed some Southampton landlords to build their buy to let portfolio in the later parts of 2019, so as long as sellers remain realistic with their pricing and present their properties in the best light, 2020 in the Southampton property market should be a year of ‘steady as she goes’.

P.S .One final thought - remember what I said about the Halifax price Index being 5/6 months behind the times - don’t be alarmed when they announce in the March/April/May a reduction in property values - like I said before - this will be the prices achieved in the later parts of 2019 i.e. not what is happening right now.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH

If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email. 

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton