Southampton Millennials Moving Back in with Mum & Dad?

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Roll the clock back 20 years and any self-respecting late 20/early 30 something would never say on their first date that they lived with their mum and dad. It was seen as a sign of immaturity being tied to your mother’s apron strings as a failure to leave the family home. Yet over these last two decades, the age of leaving home has been increasing steadily from 20 years and 11 months in the late 1990’s to 22 years and 7 months today.

However, as with all the stats, the devil is in the detail. Although the age of leaving home has only risen by 8% between 1997 and today, those that didn’t leave home in their early 20’s tended to stay much much longer.

In 1997, 11.26% of 25yo to 34yo still lived at home with their parents,

yet last year that had risen to 15.74%, an increase of 391,000

‘stay at home’ Millennials

However, before we deride these Millennials for still being tied to their mother’s apron strings, I would say those very same Millennials (the mid 20’s to 30-year olds) have been pragmatic, being attracted to sacrificing independence in order to achieve their long-term life goals as they have seen rents rise and an inability to save for the mortgage deposit. All of this has seen the first-time buyer levels in this millennial age range, rise for the last three years … so good news for everyone!

However, is all that about to change?

Just as mum and dads in Southampton had thought their late 20 something/early 30 something offspring had flown the nest, Covid-19 has blown some Southampton ‘chickadees’ back into the nest. Back in March, the lockdown saw many Millennials flee the big UK cities, with their constrained and poky shared HMO’s and flat shares, swapping their city centre private rented home for their parents’ Southampton home.

Yet with lockdown lessening, it isn’t just remote workers who are unenthusiastic and disinclined to return to the big cities (fearful of a second lockdown) — many of these Coronavirus blow-ins are deciding to stay put too! A recent YouGov poll asked Millennials of private rented homes what their plans were and 1 in 6 tenants planned to hand their notice in on their rented home and fly back to the nest of mum and dad. The advantages are quite plain, especially as it could enable them to save for a deposit to buy their future home.

There are 105,350 households in Southampton, made up of 35,131 single person households and 57,929 family households

(the remainder being made up of shared houses etc.)

Yet how many of those Southampton family households had non–dependent children before Covid-19?

8,501 Southampton households have children

that haven’t flown the nest

That’s 14.6% of Southampton families whose kids are still to leave home … and it’s only going to get worse!

So, what does this mean for Southampton homeowners and Southampton landlords?

It will mean that Southampton parents and their children will get to know each other better, build stronger relationships and it will enable their children, if they are wise, to save for their deposit for their first home purchase - who knows maybe in Southampton, as working from home could become the norm.

Also, with remote working, many tenants are looking for properties with bigger gardens which could translate into greater demand for property with bigger gardens? It will also change the property needs of those Southampton parents and potentially could mean instead of those parents moving down market, they could end up staying longer or moving up market?

Now of course these polls could be a load of hot air? What I do know is that this thing has not played out yet and only time will tell if this will make a concrete change to the way people live, rent and buy property.

These are interesting times and thank you for reading this. Do let me know your thoughts on this matter.

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 – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

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


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/offices/southampton

The 14,406 ‘Trapped Landlords’ of Southampton

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Going into lockdown in March, the Government proclaimed a ban on tenant evictions, pledging that no tenant in a private rented home, who had lost their wages due to Covid-19 would be forced out of their rented home until the late summer. Fast forward to August and the press were being briefed as late as Wednesday 19th August that this freeze in evictions in England and Wales would cease on the 23rd August. That was until just after 4pm Friday 21st August when Mr Jenrick, the Housing Minister, announced that the eviction ban would be extended for a further four weeks and buy to let landlords must also now give their tenants six months’ notice to gain possession.

Cue crocodile tears for all the 14,406 Southampton landlords

I know many Southampton landlords became landlords between 2000 and 2009 because they preferred bricks and mortar to investing in the stock market or gilts/bonds market. All they were looking for was a small pension income to top up their meagre state pension. Not all Southampton landlords are akin to the 21st Century Rising Damp version of Leonard Rossiter with his ‘Rigsby-esqe’ or even ‘Rach-manism’ wicked landlord ways. Official estimates suggest there are 1.8m to 2.1m landlords in the UK, the vast majority do the right thing by their tenants, many of whom have helped their Southampton tenants in financial trouble during Covid-19 by acquiescing to short-term rent reductions or rent-payment holidays.

Also, many Southampton landlords have mortgages (in fact, if we added all the UK buy to let landlord’s mortgages, they would add up to £216.65 billion). The Government and the Bank of England have applied political influence on the mortgage companies to be a little more flexible and sympathetic on landlord’s mortgage interest payments, yet the mortgage interest is still adding up. The issue is, some tenants are in arrears with their rent, meaning landlords aren’t receiving their rent, which means many buy to let mortgages aren’t being paid either.

So, how many tenants are in arrears? The National Residential Landlords Association stated that just 3% of landlords recently surveyed reported tenants are in arrears. This was backed up recently when Goodlord stated…

3.72% of tenancies in the UK are in arrears,

although interestingly ours stands at 0.34%

These are only slightly above the pre-Covid arrears levels, yet still a strain for the landlords involved. Also, the two-month notice period for a section 21 Notice has now been extended to six months, meaning it will be March before any tenants are made to leave, even if the notice was issued now.

So, does this leave Southampton landlords trapped?

With regards to arrears, only 1 in 17 landlords rent their property through a limited company, meaning the rest (i.e. the vast majority) rent their property as an individual, thus giving themselves unlimited personal liability should their rental portfolio fail (i.e. the mortgage company could make a claim on the landlords own assets, including their main residence, if the property was repossessed and the shortfall wasn’t made up). Also, if the building society’s and banks turn against the Government’s advice and are less lenient with landlords with buy to let mortgages, there could be situations where the rental properties are repossessed, meaning the tenant will be made homeless.

I am particularly concerned about the fate of the

4,047 self-managing Southampton landlords (i.e. they don’t use an agent)

They should seriously consider taking out rent guarantee insurance to protect themselves against any potential defaulting tenants (so many don’t). Reasonably priced rent guarantee insurance products, even on existing tenancies are still available to landlords via agents, even in these Covid-19 times (whether you are a client of mine or not do not hesitate to pick up the phone and have a chat or send me an email). Whilst the policies aren’t inexpensive - they do give you peace of mind with the rental payments.

One thing that this does also remind me of is the 2008 Credit Crunch. There were an awful lot of Southampton homeowners who were unable to sell their home in 2008/9, so they converted their Southampton property into a buy to let investment. There are going to be an awful lot of Southampton landlords who will also want to sell in the next six to nine months yet are unable to do so until the middle of next year without having to take a hit on the value of their home. For those Southampton landlords that can relate to that, maybe we should chat to consider your options so you can mitigate any losses?

It seems Southampton landlords have been used to saving the Government from a PR disaster of homeless tenants on the streets at Christmas, the least we should do in the country is stop disparaging landlords and lift them up from their pariah status.

Southampton landlords are housing 61,713 Southampton

people in private rented accommodation…

…and so, it is my opinion the contribution made by these Southampton landlords should be recognised. My fear is always of a danger of a widening schism between the landlords and tenants. Truth be told, both need each other, and I hope the Government extend help to landlords as they have with tenants, otherwise the Government won’t have any homes to house the British people if all the landlords decide to sell up. It is especially important that the supply of private properties doesn’t drop in Southampton going forward when you consider…

Southampton needs an additional 10,820 private rental homes by 2029

In the meantime, the Government have bigger fish to fry sorting out the economy as a whole, so if you are a self-managing landlord or even a landlord with another agent in Southampton, feel free to pick up the phone or make contact with me and we can discuss your options - without any obligation. There is no need to feel trapped, there are options for you, and it is better to consider them now - set the foundations and motions going in the right direction promptly before it becomes a bigger issue in the future.

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 – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

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


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/offices/southampton

1,729 Southampton Properties Sold in Stamp Duty Holiday Bonanza

 

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On the 8th of July 2020, the Chancellor announced the first £500,000 of any property bought was exempt from stamp duty until 31st March 2021. This also included buy to let landlords (although they would still need to pay the additional 3% stamp duty level for second properties). Talking to many of you Southampton homeowners, I know lots of you are bringing forward your home moving plans to take advantage of this tax cut. Also, many Southampton portfolio landlords are looking to save paying the tax by bringing their portfolio purchases forward.  Yet how do you ensure you sell and buy your Southampton property whilst the tax cut applies (a saving of up to £15,000 of stamp duty on your next Southampton home?).

The biggest issue whenever you are selling your Southampton property is the properties that you are in competition with. Plenty of Southampton homeowners have jumped onto the stamp duty holiday bandwagon since the announcement and there are 18% more properties for sale in Southampton than there were during lockdown. The number of properties for sale in Southampton can split down into type…

• Detached Southampton homes up 13%

• Semi-detached Southampton homes up 9%

• Terraced / town houses Southampton homes up 21%

• Apartments in Southampton up 23%

So, now you know what you are up against, what do you need to know?

The most important factor is the time issue. It currently takes on average 17 to 19 weeks between a sale price being agreed and the keys being handed over, meaning you need to have found a buyer before the end of November or early December to enable you to complete the sale by the 31st March 2021. That means you really need to have placed your property on the market by the end of September and early/mid-October at the very latest to take advantage of the stamp duty Holiday. Don’t get me wrong though, you could put your Southampton property on the market after that date, yet the price you will be able to achieve for your property could be affected.

There are 3,631 properties on the market in Southampton,

of which 1,729 have sales agreed on them

Talking of price, or more specifically the asking price. There is a window of opportunity for Southampton homeowners to take advantage of this stamp duty tax cut, yet don’t let local estate agents curry favour with you by tempting you with a high initial asking price to win the right to put their for sale board outside your Southampton home.

A Which report stated in 2017 that many estate agents routinely over inflated the asking prices of the properties they brought to market. One might ask why this is an issue for Southampton property sellers, as surely, they can just reduce their asking price at a later date? The excellent report proved that those estate agents who on the face of it appear to be doing you some kindness by endeavouring to get more for your home with a suggested higher asking price, the property often ended up selling for much less than similar properties that were realistically priced properties from day one and also, they ultimately took longer to sell!

This Which report compared the original asking price with final selling prices for 370,000 properties to ascertain how many estate agents had reduced the initial asking price of properties in order to sell them. Which found that 70,300 (19%) of all 370,000 properties sold had to be reduced by at least 5% in order to get the property sold, whilst the other 81% (299,700) had no or very minimal reductions to get them sold.

Of the 299,700 sold properties that weren’t reduced or reduced by less than 5%, the average initial asking price was £261,000, yet they eventually sold for an average sale price of £260,000. For those 70,300 homes whose asking prices were reduced by over 5%, whilst the average listing price was £266,000, their eventual sale price was only £241,000, a loss of £20,000 each. Even worse, those properties with the heavy price reductions (5% or more) took an average of nine weeks and one day longer to sell (when compared to the other properties with no or minimal reductions). 

What that means is by over inflating your initial asking price of your Southampton home, it will cost those Southampton homeowners an extra nine weeks to find a buyer and they will lose out on the final sale price by some considerable margin (meaning you will also probably lose out on the stamp duty holiday).

Assuming your asking is price is realistic, you aren’t out of the woods yet. Other things that will help you get the best price for your Southampton home in the best possible time (and thus save you money with the stamp duty holiday) are …

• Everyone searches on the portals for their next home. Photos are therefore very important (a picture speaks a thousand words). If the weather isn’t good on the day of the photoshoot, ask the agent to revisit when the sun is out (and even tell them to hold off marketing the property until those pictures are perfect)… as you only get one go at being ‘new to the market’, with all the excitement and interest that causes. 

• Employ the services of a solicitor at the same time as instructing the estate agent. Bringing together the legal paperwork of the property you are selling. By doing so, you will save weeks between the sale agreed and completion. Also, solicitors will be really busy, juggling many property transactions at the same time in the next 200+ days. Anything you can do to get a head start on others can only help your cause.

• Kerb side appeal. Look at your property from across the road. Does the front door need painting? Could a tonne of gravel spruce up your driveway? Maybe adding some hanging baskets and planted pots will help to make a home stand out for the best reasons?

The final piece of advice I can give you is if you are planning to sell your Southampton home, make sure your Southampton estate agent can show you proof of similar Southampton properties and what they actually sold for to back up their suggested asking price. If the asking price isn’t realistic, the chances are you end up losing many thousands of pounds and wasting everyone’s time. If you would like to chat about selling your Southampton home, please do not hesitate to pick up the telephone.

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 – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

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


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/offices/southampton