The 6 Reasons Southampton Rental Properties Could Inflation Proof Your Savings?

 

 ·       Inflation (and recessions) can be nerve racking for people and their hard-earned savings and wealth.

·        Yet there are six reasons which make investing in private rental properties a potentially wise investment in these changeable times.

·        This article looks at how investing in Southampton property could help you 'hedge' against inflation and protect your savings and wealth against the possible recession.

The cost-of-living predicament is threatening the budgets of many Southampton householders.

Inflation is running at 7.8%, yet the best savings rates in the market are only 2.75% (because of low Bank of England interest rates). This means that the value of people’s savings is falling fast.

To add insult to injury, the possibility of a recession on the horizon could add another nail in the coffin of people’s wealth and savings.

Looking back at the last recession (ignoring the 2020 Covid recession), the Stock Market (FTSE index) dropped 40.1% during the Credit Crunch (2008/9) - scarcely a soothing thought if you worry about a recession looming in the next couple of years.

A recession can have a catastrophic impact on household budgets, as a weaker economy characteristically means that salaries drop, and people get made redundant.

So, why do I suggest Southampton rental properties will help to

protect your wealth and hedge against inflation?

Southampton rentals aren’t perfect, yet in many ways, they go a long way to help – let me tell you why.

1. One of the most significant benefits of investing in residential property is to hedge against inflation. An ‘inflation hedge’ is an investment that defends against the decreased purchasing power of your money that results from the loss of its worth/value due to inflation.

The last time the UK suffered high and persistent inflation was the 1970s.

In 1973, the average British house was worth £9,942. In 1980, that same house was worth £23,287. If the same £9,942 had been invested instead in the stock market in 1973, it would have been worth £19,384 in 1980.

So how did that compare to inflation?

Neither property nor the stock market beat inflation in those seven years (as the goods and services of that £9,942 in 1973 had risen to £25,897 by 1980).

But investing in the stock market between 1973 and 1980, that stock market investor would have lost 25.2% of their investment in 'real terms’, compared with only 10.1% for property investors.

However, there was the bonus of seven years’ worth of rent!

To give you some idea of what that would be worth in today's figures (even if the rent didn't go up during that time frame) ...

The average Southampton landlord will earn £98,616 in rent over seven years.

    2.    Rental properties have repetitive, regular monthly income, whilst dividends from the stock market are dependent on there being profits which, in a recession, can be hit and miss.

3.    Existing Southampton landlords know that the rents their rental properties achieve don’t historically decline during recessions in the medium term.

 In 2008, Southampton rents dipped by 5.2%, yet they soon bounced back a year later.

And even if average rents do go down, every rent is fixed at the start of the tenancy. Also, it is infrequent for a tenant to negotiate a reduction in rent mid-tenancy even if average rents did drop.

4.      4. Property prices sometimes fall during recessions.

In the 2008 Credit Crunch recession, Southampton property values dropped 20.2%.

Dropping from £168,795 at the peak in November 2007 to £134,665 in March 2009 (before they started to rise again).

Yet as I stated above, the Stock Market dropped 40.1% with the Credit Crunch. Also previously, the Stock Market dropped 36% on Black Monday before the early 1990’s recession and 55.3% in 1974.

Which sort of drop would you prefer?

5.     5.    (Almost) guaranteed rental payments. Insurance can be taken out for rental payments (you can’t            get that on stocks and shares). Also, the government will cover most (or all) of the rent when                someone is made redundant and needs to apply for social security.

6.      For those Southampton landlords who take a mortgage, inflation can be a benefit. The first is the          effect of inflation on mortgage debt. As Southampton house prices rise over time, it reduces the             loan to value percentage of your mortgage debt and increases your equity. You will receive a                 lower interest rate when you re-mortgage in the future because of the lower loan to value                     percentage.

Also, as the equity in your Southampton rental property increases, assuming you fix your mortgage, your payments stay the same.

Finally, inflation also helps Southampton buy-to-let landlords because rents tend to increase with inflation. So as rents go up, your fixed-rate buy-to-let mortgage payments stay the same, creating the prospect of more significant profit from your buy-to-let investment. 

Yet, there are downsides to renting.

Rent arrears can be a worry though. However, during 2021, landlords who used a letting agent were, according to an investigation from Denton House Research, 272.5% less likely to be in arrears of two months or more. 

One of the biggest reasons is the more stringent tenant referencing that letting agents tend to do compared to landlords who do it themselves. At our agency, we like to reference tenants carefully for job security, stability, and any history of non-payment on rents, always liaising with previous landlords/agents to see if they were a good tenant.

That is why many tenants with a poor tenancy record are attracted to properties that are not through agents, as they know most (not all) DIY landlords don’t reference their tenants as thoroughly as letting agents do. Solid referencing is not a 100% guarantee you won’t get rent arrears or have your rental property trashed, yet it will go a long way to mitigate it.

One of the things about investing in Southampton rental properties is that buy-to-let investors have more control over their returns than stock market investors do. Buy-to-let provides long term stability and constant income to counterweight the massive swings seen in the FTSE stock market.

 

There is something reassuring about touching and feeling

your investment – the 'bricks and mortar’.

 

You must make your own decision when investing in the private rental market in Southampton. If you'd like to chat over the phone for five or ten minutes to discuss where I would be investing in the Southampton property market, don't hesitate to send me a message or pick up the phone.

How are you planning for the spectre of a potential recession?

 

Has the Southampton Property Market Peaked?

Should you buy now or wait for the bargains?

• Many commentators believe we have seen the peak of the Southampton property market.

• So, should savvy bargain hunters wait for Southampton house prices to fall?

• Or could postponing your house buying for any anticipated Southampton house price drop be a costly mistake?

Over the last two years, the Southampton property market has been a rollercoaster ride of hyperactive demand together with the new sport of getting your offer accepted when you compete with 30 other bidders.

 Yet there are clouds on the horizon that the Southampton property market could be at its peak.

Bank of England interest rates have increased four times in the last few months to try and combat inflation. Meanwhile many Southampton households are finding it tough to counter the most significant drop in real incomes in a single year since records began in the mid-1950s, all at the same time as gas, heating oil and electricity prices are predicted to rise again in the autumn.

Hence why some economists are predicting house price drops in the coming 18 to 24 months of 3% to 5%.

So, surely this is not the best time to buy a Southampton property – and surely savvy buyers should wait for Southampton house values to fall?

Is it realistic to see continued double-digit national house price growth? Certainly not.

The question is how far the Southampton property market will slow and whether the slowing will drop into modest falls.

Let me look at household income first.

At best, the outlook is gloomy as real household disposable income is set to drop by 2.4% in 2022/23, the largest drop since records began in 1956. This is despite the £17.6 billion of financial support for British households revealed in Rishi Sunak’s Spring 2022 Statement with the National Insurance thresholds, energy bill support package and duty cut on petrol. Without these changes announced by the Chancellor, real household disposable income would have fallen by an additional 1% in 2022/23.

Second, as interest rates increase, mortgage rates will increase in line, increasing mortgage costs, so surely that will curtail demand, meaning Southampton house prices will drop, and buyers should wait to catch a bargain?

Finally, with inflation on the rise, the real value of people’s savings will decrease quicker, and the value of their deposits will diminish, meaning Southampton prices will surely drop, and people should wait to buy?

 

Surely the Southampton property market has peaked and

buyers should wait for the bargains?

Well, I don't think so, and these are my reasons why.

I believe, subject to no significant shocks in the world economy, Southampton house price growth will be very slow in the next 18/24 months and go into low single digits (even the odd month dipping ever so slightly into the red), but not the 16% to 19% annual drop we saw in 2008/9.

 

Let me look at real household income. Every economist predicts growth in real household income in 2023/24 by around 1%.

If the two years are combined, the predicted effect on real household income in the next two years is a net loss of 1.4%, whilst in the credit crunch years 2010/11/12, the net loss was 2.7%.

I was looking at the increase in mortgage rates. 79% of owner-occupiers have fixed their mortgage costs and had their affordability stress-tested to Bank of England interest rates of 3% to 4% under the Mortgage Market Review rule changes in 2014. I believe the most significant impact of increasing interest rates will be at the point of taking on a new mortgage by first-time buyers (as opposed to servicing or the porting of an existing mortgage from one house to the next house).

The four successive Bank of England base rate rises, inflation and the rising cost of living are likely to bring more cautiousness over summer and autumn when it comes to people buying a property. Yet, there is still a massive imbalance of demand for property over the number of properties for sale to quench that demand.

The potency of the job market and the ongoing mismatch between the supply of properties (mentioned in last week’s article on the Southampton property market) on the market and demand for those properties will support property values.

Finally, the by-product of increasing inflation is that it makes buy-to-let more attractive. If there is a reduction in first-time buyers, this will be counterweighted by more landlords buying again, supporting the current level of Southampton properties.

 

But what if Southampton house prices do drop significantly?

So let’s assume that Southampton house prices do fall, irrespective of the reasons above, it will not inevitably help Southampton buyers.

If we have a house price crash, people tend to find their careers are at risk, and their salaries don’t rise as much. The younger generation (i.e. first-time buyers age range) often gets hit the toughest by recessions.

If first-time buyers wait until 2024 to buy and Southampton property values drop by 10%, that will prove more expensive.

In the last 2008/09 crash, lenders weren't offering 5% deposit mortgages. The lowest deposit mortgage that first-time buyers could get was with a 10% deposit and even then, they were hard to come by.

When writing this article, first-time buyers can obtain a 5% deposit mortgage for a fixed rate of 2.66% for five years.

 

The typical first-time buyer terraced house in Southampton

sells for £273,900.

 

So, if they were to buy now, on this mortgage deal, the first-time buyer would have to stump up a £13,695 deposit and their mortgage payments would be £952.68 per month.

Yet, let’s say property values in Southampton do drop by 10% in the next 18 months, the terraced house would now be worth £246,510, so a significant saving. Or is it?

Everyone believes interest rates will rise further, so let’s assume they go to 3% by the autumn of 2023. That means the mortgage rate for a 10% deposit mortgage will be in the early 5%’s, so let me assume 5.29% (because the banks tend to increase the gap between the base rate and the mortgage rate in recessions to allow for the extra risk).

The monthly mortgage payment on the 5.29% mortgage would be £1,161.06 per month, and you would need to double your deposit to £24,651.

So even if Southampton's house prices did drop by 10%, the first-time buyer would be £2,500 worse off a year in mortgage payments and would have to find double the deposit.

 

...and then there is the other cost of waiting.

You have two years’ worth of rent to pay. The average rent for a Southampton property is £1,167 per month.

If you waited a couple of years for Southampton house prices to drop by 10%, you would spend £28,008 in rent.

Choosing to buy a Southampton property makes even more economic sense if it is a long-term choice, as homeowners can ride out any house price drops.

Homeowners who plan to stay in a property can generally rely on getting their money back within six to ten years whilst not paying any rent.

Will Southampton prices go up, or will they go down?

Remember, George Osbourne said house prices would drop by 18% in May 2016 if we voted to leave the EU, whilst many economists said they would drop by 5% to 10% when Covid hit in March 2020.

And we all know what happened.

If you think you will be better off owning your own Southampton home rather than renting one, don't bother to wait for the suggested house price drop that may never happen.

These are my thoughts, what are yours? Let me know in the comments.

Southampton Property Market to Crash in 2022?

·   

•           According to some newspapers and pundits, the property market boom could soon be over with the increasing interest rates and inflation.

 

•        In this article, I share the 3 fundamental economic reasons why things are different to the last property market crash.

 

•        The insider’s way to find out if there will be a property crash.

 

•        … and 4 reasons why buy-to-let landlords are coming back into the Southampton rental market to protect their wealth and hedge against inflation.

 

With inflation and the cost-of-living crisis, some say this could cause property values to drop by between 10% and 20% in the next 12 to 18 months.

 

There can be no doubt that the current Southampton property market is very interesting. 

 

At the time of writing, there are only 971 properties for sale in Southampton (the long-term 15-year average is between 2,010 and 2,035), meaning house prices have gone up considerably.

 

According to the Land Registry …

 

Southampton property prices have increased by 12.4%

(or £26,500) in the last 12 months.

 

So, as Robert Kiyosaki says, ‘the best way to predict the future is to look to the past’. I need to look at what caused the last property crash in 2008 and how that compares to today.

 1. Increase in Interest Rates

 

One reason mentioned as a possible cause of a crash is the rise in the Bank of England interest rates, affecting homeowners' mortgages.

 

Higher mortgage rates mean homeowners will have to pay a lot more on their mortgage payments, leaving less for other household essentials. In 2007 (and the 1989 property crash), many Southampton people put their houses up for sale to downsize to try and reduce their mortgage payments.

 

Yet the newspapers fail to mention that 79% of British people with a mortgage have it on a fixed interest rate (at an average mortgage rate of 2.03%).

Also, just under 19 out of 20 (93.2%) of all UK house purchases in 2021 fixed their mortgage rate. 

 

So, in the short to medium-term (two to five years), most homeowners won't see a rise in mortgage payments for many years. Also, 27.8% of all UK house purchases were 100% cash (i.e. no mortgage).

 

Of the 932,577 house purchases registered since February 2021

in the UK, 259,205 were bought without a mortgage.

 

Yet some people say this will be a problem when all these homeowners come off their fixed rate. The mortgage lending rules changed in 2014, and every person taking out a mortgage would have been assessed at application as to whether they could afford their mortgage payments at mortgage rates of 5% to 6% rates, not the 2% to 3% they may well be paying now.

 

No pundit says the Bank of England interest rates will go above 2% with a worst-case scenario of 3%. If the Bank of England did raise interest rates to 3%, homeowners would only be paying 4.5% to 5.5% on their mortgages and thus well within the stress test range made at the time of their mortgage application.

 

This means the probability of a mass sell-off of Southampton properties or Southampton repossessions because of interest rate rises (both of which cause house prices to drop) is much lower.

2. House Price/Salary Ratio

 

Another reason being bandied about by some people for another house price crash is the ratio of average house prices compared to average wages.

 

The higher the ratio, the less affordable property is. In 2000, the UK average house price to average salary ratio was 5.30 (i.e. the average UK house was 5.3 times more than the average UK salary). At its peak just before the last property crash in 2008, the ratio reached 8.64.

 

The ratio now is 8.85, so some commentators are beginning to think we’re in line for another house price crash. However, I must disagree with them because mortgage rates are much lower today than in 2007. For example …

 

The average 5-year fixed-rate mortgage in 2007 was 6.19%

(just before the property crash), yet today it’s only 1.79%.

 

 

So, whilst the house price/salary ratio is the same as the last property crash in 2008, mortgages today are proportionally 71.1% cheaper.

 3.  Banks Reckless Lending

 

Another reason for a property crash in 2008 was the reckless lending practices in the run-up to that crash.

 

The first example of reckless lending was self-certified mortgages. A self-certified mortgage is when the lender doesn’t require proof of income.

 

In 2007, 24.6% of new mortgages were self-certified mortgages.

 

So, when the economy got a little sticky in 2008, the people that didn’t have the income they said they had to pay for their mortgages (because they were self-certified) promptly put their properties on the market.

 

The banks' second aspect of reckless lending was how much they lent buyers to buy their homes. Today, banks want first-time buyers to have at least a 10% deposit and ideally more. There are 95% mortgages available now (meaning the first-time buyer only requires a 5% deposit), yet they are pretty challenging to obtain.

 

Back in 2005/6/7, Northern Rock was allowing first-time buyers to borrow 125% of the value of their home. Yes, first-time buyers got 25% cashback on their mortgage!

In 2007, 9.5% of all mortgages were 95%, and 6.1% of mortgages were 100% to 125%.

 

Meaning that nearly 1 in 6 mortgages (15.6%) taken out in 2007

had a 95% to 125% mortgage.

 

When the value of a property goes below what is owed on the mortgage, this is called negative equity. A lot of Southampton homeowners with negative equity (or who were getting close to negative equity) in 2008 panicked because of the Credit Crunch and put their houses up for sale.

 

To give you an idea of what happened last year (2021) regarding mortgage lending, only 2.4% of mortgages were 95%, and 0.2% of mortgages were 100%. This is because the mortgage lending rules were tightened in 2014.

 

So why did Southampton house prices drop in 2008?

 

Well, in a nutshell, a lot more Southampton properties came onto the market at the same time in 2008, flooding the Southampton property market with properties to sell.

 

Meanwhile, mortgages became a lot harder to obtain (because it was the Credit Crunch), so we had reduced demand for Southampton property.

 

Prices drop when we have an oversupply and reduced demand for something. Southampton property prices fell by between 16% and 19% (depending on the property type) between January 2008 and May 2008.

 

So, what were the numbers of properties for sale in Southampton during the last housing market crash?

 

There were 2,619 properties for sale on the market in Southampton in the summer of 2007 (just before the crash), whilst a year later, when the Credit Crunch hit, that had jumped to 4,460.

 

This vast jump in supply and the reduction in demand caused Southampton house prices to drop in 2008.

 

Compared with today, there are only 971 properties for sale in Southampton, whilst the long-term 15-year average is between 2,010 and 2,035 properties for sale.

So, what is going to happen to the Southampton property market?

 

The Southampton house price explosion since we came out of Lockdown 1 has been caused by a shortage of Southampton homes for sale (as mentioned above) and increased demand from buyers (the opposite of 2008).

However, there are early signs the discrepancy of supply and demand for Southampton properties is starting to ease, yet this takes a while before it has any effect on the property market, so it will be some time before it filters through.

This will mean buyer demand will ease off whilst the number of properties to buy (i.e. supply) increases. This should gradually bring the Southampton property market back in line with long-term levels, rather than the housing market crash.

My advice is to keep an eye on the number of properties for sale in Southampton at any one time and only start to worry if it goes beyond the long-term average mentioned above.

But before I go, I need to chat about what inflation and the cost of living will do to the Southampton property market.

How will inflation and cost of living affect the

Southampton Property Market?

 

There is no doubt that cost-of-living increases will have a dampening effect on buyer demand. If people have less money, they won’t be able to afford such high mortgages. This will slow Southampton house price growth, especially with Southampton first-time buyers.

Yet, the reduction in first-time buyers is being balanced out by an increase in buy-to-let landlord's buying, especially at the lower end of the market.

This, in turn, will stabilise the middle to upper Southampton property market. This means the values of such properties (mainly Southampton owner-occupiers) will see greater stability and a buyer for their home, should they wish to take the next step on the property ladder.

So why are more Southampton landlords looking to extend their

buy-to-let portfolios, even in these economic circumstances?

 

I see new and existing buy-to-let Southampton landlords come back into the market to add rental properties to their portfolios. As the competition with first-time buyers is not so great, they’re not being outbid as much.

Yet, more importantly, residential property is a good hedge against inflation.

Firstly, in the medium term, property values tend to keep up with inflation.

Secondly, inflation benefits both landlords and existing homeowners, with the effect of inflation on mortgage debt. As Southampton house prices rise over time, it reduces the loan to value percentage of your mortgage debt and increases your equity. When the landlord/homeowner comes to re-mortgage in the future, they will receive a lower interest rate.

Thirdly, as the equity in your Southampton property increases, your fixed-rate mortgage payments stay the same.

Finally, inflation also helps Southampton buy-to-let landlords. This is because rents tend to increase with inflation. So as rents go up, your fixed-rate buy-to-let mortgage payments stay the same, creating the prospect of more significant profit from your buy-to-let investment.

Southampton Rental Homes Nightmare

 

•        Southampton needs 964 additional private rented properties per year to keep up with current and future demand from Southampton tenants.

•       Yet over the last 5 years, Southampton has lost 1,716 private rented homes.

•        What are the 5 reasons the supply of private rental properties in Southampton are falling? What does this mean for tenants and landlords in Southampton?

There has been a rise in demand for rental properties and an 8.9% fall in the number of Southampton private rented properties, which has caused Southampton rents to rise by 5.9% in the last year, a new all-time high. 

The National Residential Landlords Association asked the respected economics think tank Capital Economics, to carry out research on the UK rental market. It found that if the current trends in the property market in terms of growth of the population, Brits living longer, the lack of new homes building, the reduction in social housing (aka council housing), then demand for homes in the private rented sector needs to increase by 227,000 homes per year.

So, based on those numbers, Southampton needs to have an additional 964 private rented properties per year.

The problem is the number of private rented properties in Southampton has reduced from 32,141 in 2017 to 30,425 in 2021, a net loss of 1,716.

 

So, why has supply of private rented homes in Southampton reduced?

 

1.     Section 24 Income Tax

Section 24 was introduced in 2017 to level the playing field on the taxation of property between homeowners and landlords. Section 24 stops landlords from offsetting their buy-to-let mortgage costs against the profits from their rental property. Interestingly, no other kind of UK business is affected by the Section 24 taxation. In other words, whatever other form of business you might be in, be it butcher, baker or candlestick maker, every other business can offset their finance costs against their profits, except buy-to-let.

The issue caused by Section 24 Tax is that some landlords ended up paying more income tax than they really made in profit after paying their buy-to-let mortgages. Meaning on the back of rising Southampton house prices in the last five years, some Southampton landlords have sold their buy-to-let investments.

2.     3% More Stamp Duty for Landlords

When someone buys a property, they normally must pay a tax to the Government for the privilege. This tax is called Stamp Duty. Yet landlords must pay an additional 3% stamp duty supplement on top of that when they purchase a Southampton buy-to-let property. Evidence suggests some Southampton landlords have decided to hold off or scale back buying additional buy-to-let properties for their portfolio because of the thousands of extra pounds that landlords have to pay to buy the rental property.

3.     Holiday and AirBnb Lets

Some Southampton landlords are converting their long-term rental properties into short-term furnished holiday and AirBnB properties. Whilst the hassle, stress and service levels are much higher, these types of properties do tend to make more money and aren’t as heavily taxed as normal lets. When properties convert to short-term lets, it removes another Southampton property out of the general supply chain of long-term rental properties.

4.     Greater Legislation for Rental Properties

With more than 150 pieces of legalisation, and new laws being added each year, the burden on landlords is huge. On the horizon is the Renters Reform Bill which will remove the no fault evictions. Also, all rental properties with an Energy Performance Certificate (EPC) rating of below a ‘C’ will have to be improved (i.e., money spent on them) by the landlord. This could be more than £10,000 per property. Hence, why some Southampton landlords have been selling their rental properties with low EPC ratings in the last 18 months.

5.   Accidental Landlords Selling Up

There are some Southampton landlords who are classed as ‘Accidental Landlords’. In 2008/9, with a slowing property market and house price values dropping in the order of 16% to 19% (depending on the type of property) some Southampton homeowners decided to let their home out as opposed to selling it at a loss. Yet, with the price booms of the last 18 months, many decided to cash in on the higher property prices and sell - again taking another private rental property out of the system.

So, why is demand of private rented homes in Southampton increasing, even though more people own their home in Southampton than 5 years ago?

Even with better provision of affordable social housing and higher rates of owner occupation in Southampton (rising from 49.64% of homes in Southampton being owner occupied in 2017 to 51.46% in 2021), demand for private rental property continues to outstrip supply.

There are many reasons behind this including:

1.     1.    People are living longer, meaning not so many properties are coming back into the mix to be recycled for the younger generation.

2.     2.    Net migration to the UK has continued at just over a quarter of a million people a year since 2017, meaning we need an additional 115,000 households to house them alone.

3.    3.     For the last two years, one in six of the owners of properties that have been sold have moved into rented accommodation instead of buying on because of the lack of properties to buy.

 

So, what is the outcome of the imbalance between supply and demand on Southampton rental properties?

 

Quite simply - Southampton rents have rocketed. They are 5.9% higher today than the spring of 2020 … and that’s on the back of rents being 6.3% higher in spring 2020, compared to spring of 2019.

The severe shortage of housing in the private rented sector is pushing up rents in Southampton as demand continues to grow. Many Southampton people are finding it hard work to find appropriate accommodation at a reasonable rent, and with mounting numbers of tenants predicted to continue, this situation will only get worse unless more houses are built.

My heart goes out to those Southampton tenants struggling with the cost-of-living crisis, only to then be hit by higher rents.

Yet, these higher rents are now enticing new landlords back into the Southampton buy-to-let market because of the higher returns.

With higher inflation, property investment has been seen in the past a safe harbour to invest one’s money in. With the bonus of rising yields (because of the increase in rents) together with the nervousness of the Bank of England to increase interest rates too much because of the issues in Eastern Europe, this could be the start of a second renaissance in the Southampton buy-to-let market.

If you have concerns about the issues in legislation and taxation, then the advantage of employing a letting agent, with the choice of property, what you pay for it and how it’s managed, will go a long way to mitigate them.

If you are considering getting into the Southampton buy-to-let market for the first time or expanding your property portfolio (whether you are a client of mine or not) please do not hesitate to give me a call and we can discuss these matters further.

21,957 Southampton Terraced Houses Why are they so popular?

 

The terraced house is one of the most familiar styles of home in Southampton (and the UK as a whole).

20.8% of Southampton people live in a terraced home, interesting when compared with the national average of 22.7%.

So, what is it about the humble terraced/townhouse us Brits love so much? In this article, I look at the history of the terraced house, how it relates to Southampton and what the future holds for terraced homes.

A terraced house is a property built as part of a continuous row of three (or more) properties in a similar and uniform style.

The reason the British call them 'terraced houses' and not 'row houses' came about because 18th century British architects borrowed the phrase 'terrace' from 'terraced gardens’. Terraced gardens were known for their uniform nature (in looks, style and height etc.), so the architects decided to name them the same way as opposed to a ‘row house'. In fact, in most countries, they are called 'row houses'.

 The terraced house originated in the Low Countries of Europe in the late 1500s.

Terraced houses were first built en-masse in the UK after the Great Fire of 1666 with the rebuilding of London.

They became fashionable for the landed gentry in the early Georgian era with chic and stylish terraces appearing in London's Mayfair and Bath with its Queen Square (the forerunner of the famous Royal Crescent) and were sometimes built around a garden square.

However, it wasn’t until the early 1800s that the terraced house turned out to be the solution to the increasing population of the towns as more and more people were attracted to towns and cities for work.

The terraced house fell out of favour with the upper-middle classes in the late Victorian age (1870’s onwards) as they wanted more privacy and space. They moved to live in detached houses or semi-detached villas, as the terrace house had started to become associated with the lower-middle and working classes.

With all these terraced houses being built, their quality of construction and design dropped as builders tried to squeeze more profit. The biggest issue was that most of the terraced houses built in the early to mid-Victorian age (1840s to 1870s) were made back-to-back with no rear garden, causing unsanitary conditions. Therefore, the Public Health Act of 1875 was introduced to regulate the building of terraced houses with design and standards.

These new building standards in the Act improved the terraced house’s ventilation and, more importantly, required the house to have a toilet (frequently built outside). To meet these new building standards, the designs of these new houses created the well-known landscape of ‘grid' streets lined with two-storey terraces serviced by a pedestrian path between them, the name of which is a hotly debated topic. The various names for the pathway include alleyway/jitty/cut/ginnel/snicket/passageway/ten foot/five foot witchel/ lonnin/vennel.

As a Southampton resident, why not say what you call them in the comments.

As we entered the 20th Century, the terrace house continued to be popular, albeit with some new architectural additions.

The advent of Arts and Craft architecture with stain glass windows, Tudor style cladding, ornate porches, and elaborate chimney stacks.

After the First World War and the introduction of the Housing and Town Planning Act 1919 (which made local councils build council houses), the Victorian terraced rapidly became associated with overcrowding and slums (especially those back-to-back terraced houses built before 1875). Many of the back-to-back terraced houses were knocked down between 1930 and 1960 in what is known as the slum clearances.

Private builders started building the iconic suburban semi-detached houses with more extensive gardens, and local authorities decided to build high-rise blocks after World War II. Yet after the partial collapse of Ronan Point in 1968, the popularity of high-rise tower blocks waned.

Since the early 1990s though, the terraced house has steadily come back into favour as building land prices have increased by 322% in the last 30 years.

Many private builders have started to build modern three-storey townhouses in rows of five to seven. This terraced 'townhouse-style' allows three and four bedrooms on a land footprint that would have usually only accommodated a smaller two-bed property.

So, let's look at some interesting stats on Southampton terraced houses.

·       There are 21,957 terraced houses in Southampton (broken down as 13,682 privately owned terraced houses, 4,022 terraced council houses and 4,253 in the private rented sector)

·       19.4% of terraced houses in Southampton are in the private rented sector, which is just above the national average of 19.1%

·         The most expensive terraced house in Southampton ever sold was on Oxford Street, Southampton for £772,000 in 2010

·         The cheapest Southampton terraced house sold in the last two years was on Radcliffe Road, Northam, a terraced house for £96,000

·         Terraced houses in Southampton sell for an average of £280 per square foot

I hope you found that thought-provoking?

So, why is the terraced house, be it a red brick Victorian house or a more modern three-storey townhouse, still popular today in Southampton?

They are typically well built, cheaper to maintain (especially the older terraced houses), comparatively spacious, and in good locations. Many terraced houses have been improved and extended through the inventive use of rear gardens/yards and converted roof spaces; their unpretentious design remains adaptable enough for 21st century living; what isn't there to like about them?

These are my thoughts; tell me your thoughts about the humble yet versatile Southampton terraced house.