Southampton OAPs are Getting Jobs and Downsizing Properties to Beat the Cost-of-Living Crisis

Southampton OAP retirees have to make tough choices with the onset of the cost-of-living crisis.

 

Growing inflation, unpredictable financial markets and the high cost of living mean many former retired Southampton people are returning to work in what has been dubbed the ‘great unretirement’. Some are even bringing forward their downsizing house move.

Looking at the changing job market, July saw the most significant month-on-month rise in OAPs working since records began in the 1990s when 1 in 23 of all the UK’s OAPs went back into employment.

That now means ….

 4,106 Southampton over 65s are in gainful employment

 (i.e., 1 in 8 of them).

As a backdrop, the number of working 65-year-olds and above has been increasing since the mid-nineties when 1,765 Southampton OAPs were employed. Yet, July's figures were the largest monthly jump on record by quite a distance.

Looking at the changing property market, I have been speaking to many Southampton OAP homeowners who are having to bring their downsizing plans forward several years to survive the cost-of-living crisis. The money generated from the downsizing will cover their housekeeping and massive energy bills.

So why would someone want to downsize? Mostly, their homes are too big for their needs as their children have flown the nest decades before. The government classifies a property as under-occupied if it has two or more spare bedrooms.

 

How big is the under-occupation issue in the UK?

 

Of the 4.52 million British homes owned by those aged 65 and over, 3.04 million have at least two spare bedrooms (i.e., under-occupied). Looking locally…

12,824 of the 29,791 Southampton OAPs have two or more spare bedrooms.

 You might ask why this is important.

Well, to start, it's holding back Southampton families that need the bedrooms and space these larger houses offer if the older occupants won't move on. Also, these larger homes cost more to run in terms of energy bills and other things such as building insurance and council tax.

 

From October (even with the recent energy bill cap) it will cost on average £354 per month in gas and electricity alone for a large Southampton 4-bed detached home (where occupants are home all day).

 

So why are there so many mature homeowners in their 70s, 80s and even 90s still living in houses that are too large for their day-to-day requirements? There are several reasons for this. One is the obvious emotional attachment to the family home they have often owned since the 1970s and 1980s. The second is to escape the hassle and costs of the house move, and finally, the small number of suitable Southampton properties for them to buy to attract them to make a move.

The growing energy bills have provoked many of those mature Southampton homeowners, who maybe can’t or do not wish to get a job, to re-evaluate their home life strategy. I am seeing an ever-increasing number of mature Southampton homeowners downsizing (or, as I prefer, rightsizing) to diminish their monthly expenditures.

So how much could mature Southampton homeowners gain by downsizing?

The numbers are intriguing when looking at the average difference between the sale price and the subsequent purchase price of the average downsizer.

Southampton downsizers could unlock an average of £175,400 per household.

Not only will Southampton homeowners earn this lump of cash for their extended retirement, but they will also save themselves around £176 per month in lower energy bills, buildings insurance and council tax bills.

So, what are the options for mature Southampton homeowners?

Waiting 12 months to make a move might mean you are putting your Southampton home on the market as every other OAP homeowner puts their home on the market, meaning the dynamics of the local property market will probably be a lot different. Thus, the equity you release on the downsize could be much lower.

Yet some of you will be worried about finding your next home. Not to worry.

At our agency, we do things differently than many other Southampton estate agents. We can find you a buyer, then put everything on ice and go and find you a property to buy. We guarantee you won't be made homeless if you or we can't find another home for you to move to.

We call it peace of mind!

If you would like a chat about this, without any obligation, feel free to call Belvoir on 02380018222 or email me brian.linehan@belvoir.co.uk.

Southampton Tenants' Spiralling Energy Bills are About to Become Southampton Landlords’ Problem

 

As gas and electric bills rocket for Southampton tenants, Southampton landlords who do not start to make energy efficiency upgrades face lengthy void periods and will have to discount their rents. This is irrespective of the Government's plans to change the rules on renting properties with low Energy Performance Certificate (EPC) ratings.

Until six months ago, out of the thousands of tenants I have shown around Southampton properties in all my years as an agent, I can count the number of tenants who have requested to see the EPC of the rental property on the one hand. Now, it’s the first question tenants ask.

The better the EPC rating, the lower the gas and electric bills.

Southampton tenants are leaving their poor EPC-rated properties which are too expensive to run and moving into higher-rated EPC rental properties.

The average heating bill for the 25,247 Southampton tenants will rise from £67.61 per month to £175.78 per month. 

And their hot water bill will rise by £37.47 per month and lighting by £24.02 per month. Each Southampton tenant will have to find an extra £169.67 per month for their gas and electric bills.

To give you an idea of the extent of the money being spent by Southampton tenants on heating alone (ignoring hot water or lighting), last year it was £20,482,820.46, and by 2023, it will be £53,255,333.20 a year.

Yet these stats don’t tell the whole story.

It is a legal requirement for every rented property to have an EPC which rates a property on its energy performance (like those washing machine or fridge ratings, albeit for a property). A is the best rating, and G is the worst.

Whilst the law states property cannot be rented with an EPC rating lower than an E in England and Wales, there are exceptions to this, meaning Southampton rental properties are still being let legally with an F and G rating. Although legislation for a minimum E rating EPC requirement in Scotland was scheduled in 2020, it never passed through the Scottish Parliament because of the pandemic. 

Let me show you the average saving in energy bills between the EPC rating of an average Southampton rental property.

 

·      A Southampton rental property with a D rating will cost £38.50 more per month than a C-rated property

·      A Southampton rental property with an E rating will cost £67.66 more per month than a D-rated property

·      A Southampton rental property with an F rating will cost £97.16 more per month than an E-rated property

 

Both Westminster and Holyrood governments now propose introducing a minimum EPC of band C for all new tenancies from 2025 (and 2028 for existing tenancies).

Irrespective of this new potential legislation, those Southampton landlords with low EPC ratings will now need to seriously consider making those energy efficiency upgrades to ensure their Southampton rental properties continue to appeal to tenants.

I can see Southampton rental property’s energy efficiency ratings filtering into rental prices over the winter months.

Southampton rental properties with low EPC ratings will probably rent for between 4% to 10% less than higher energy proficient properties.

This means Southampton landlords could have to accept between £54.80 and £137.00 per month less for an average Southampton property with a low EPC rating compared to a high-rated EPC rental property.

Any Southampton rental property with a lower EPC rating will also take longer to find a tenant, especially during the winter. This means some Southampton landlords will have the prospect of void periods early next year.

I have seen more Southampton rental properties coming onto the market in July and August, so if this trend continues, this will give Southampton tenants much more choice. With the increased supply of rental properties, I certainly believe some tenants could decide to offer less on Southampton rental properties with low EPC ratings.

So, what are the options?

Why Aren’t Liz and Rishi Courting Southampton’s Generation Rent?

 

With the cost-of-living crisis beginning to hit, the 20 and 30-somethings of Southampton urgently need the help and support of the Government to help them get on the property ladder.

For the last few weeks, we have listened to the debates and hustings of Liz and Rishi. Between them, they have told us how they are going to stop building on the green belt, slash taxes, outbid each other on the number of refugees they are going to deport and push back against WOKE culture wars, but what are they doing for the 20 to 30-somethings of Southampton?

Dubbed ‘Generation Rent’ by the press, desperate to get on the property ladder, this is an open goal for any candidate to obtain more votes to become the next Prime Minister.

 

Yet only 16% of the c.200,000 Tory membership is aged 18 to 34 whilst 47% of members are aged between 55 and 74.

Therefore, it's not a surprise that neither Liz nor Rishi aren’t speaking daily about the cost of petrol for the daily commute, rising childcare fees or the lack of opportunities for first-time buyers to purchase their own properties.

(For balance, 16% of Labour’s members are 18 to 34, 20% for the Lib Dems and 16% for the SNP).

Everyone is feeling the effect on their household budgets with the rise in energy bills. Yet, it is the younger generation (i.e., Generation Rent) that are having to cope with the frenzy of rising energy costs the most.

Whilst increasing energy prices will affect all households across the country, younger (and less affluent) households are more prone to be disproportionately affected than those on the lowest incomes (i.e., Generation Rent).

In the financial year ending in 2020, the least well off 25% of households spent 5.59% on energy compared to 3.9% for the average UK household. With 2023 energy bills set to be triple those figures, energy bills for those in the lower quartile will rise to around 16.8% of their household budget.

And let's look at the housing element of the ‘Generation Rent’ household budget.

 

The average rental of a Southampton property in the summer of 2020 was £1,144 PCM; by the summer of 2021, it was £1,238 PCM, and today, it is £1,332 PCM.

Overall, Southampton rents are 7.6% higher than a year ago and 16.4% higher than two years ago.

This is the fastest annual rate of rental growth since records began in 2006. This increase in rents isn’t standard. Before 2020, I would have expected to see this level of rent growth over a seven-to-ten-year period – not two years. Good news for Southampton landlords, yet not so for Southampton tenants.

Why have rents increased so much in Southampton?

It comes down to fewer rental properties and existing Southampton tenants not moving as much.

 

There are 1,716 fewer rental properties in Southampton than five years ago, leaving 30,425 private rental properties in Southampton.

 

9 out of 10 rentals come onto the market because the existing tenant is moving. Yet, because there are fewer Southampton rental properties and the asking rents for those are much higher than their current home, many Southampton tenants are not moving, exasperating the issue even further.

Today, I looked on Rightmove, and there were only 318 properties available to rent. I would have expected that to be over double that pre-pandemic.

Neither candidate has been silent on the topic of homeownership for the young.

Rishi Sunak said he would stop building on the greenbelt. This, however, would not help Generation Rent massively.

Liz Truss has pledged to help more renters buy their first home by stating she will ensure tenant’s rental payments could be used as part of mortgage affordability assessments. This is important as the mortgage payments can be 10% to 20% lower than the rental payments.

 

Tied in with new relaxed mortgage affordability rules announced by the Bank of England in early August, this is undoubtedly a step in the right direction to help Generation Rent.

 

Truss also plans to scrap the red tape holding back housebuilding and give local populations more say on developments. However, when Boris Johnson suggested something similar a few years ago, the policy was quietly dropped after the Liberal Democrats used this against them resulting in the Tory’s resounding by-election defeat in 2021 in Chesham and Amersham.

So, by the end of the first week of September, we will know who the Prime Minister will be. Whoever gets the job has a gigantic task on their hands. I wish them luck and ask them not to forget the younger generation and their aspiration to be homeowners.