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In Britain, there are 27,071,500 households, of which 17,044,450 are owned, which are worth a total of £3,925,865,212,950 (£3.92 trillion). Over the last 5 years, an average of 86,096 properties sell each month, meaning just over a million UK households move home per year. Therefore, the average British homeowner moves every 16 years 5 months.
These statistics refute a common hypothesis that British neighbourhoods are becoming more fleeting and transitory. On the face of it, they appear to show that, once you have succeeded to buy a property you can call home, there isn’t much motivation to move again.
So, aren’t people moving home so much?
Could it be put down to a certain sense of complacency or apathy to moving home? Whereas we might love our home in Luton, most of you (including myself) still want to ‘better our lives’ with a bigger house, better area etc, which typically requires us to climb up the Luton property ladder.
Yet with Luton house prices having risen by 206.2% in the last 20 years, the cost of going up the next rung on the Luton property ladder is prohibitive.
Everyone harks back to the 1980’s, when we had an upbeat booming property market as a backcloth, Brits moved home every eight years; so now with the average at just over 16 years this equates to each British homeowner moving around three to four times in their adult lifetime. Maybe we should all call our homes ‘Dunroamin’ and be done with it!
Or does it?
We have all heard the phrase ‘lies, damn lies and statistics’ … well the stats mentioned above hide some amazing features of the British property market. When homeowners get into their 50’s and 60’s, their tendency to move home drops like a stone. The average length of time a homeowner without a mortgage moves home is 24 years and 7 months (and just under 7 out of ten outright homeowners i.e. without a mortgage are 65 years old or older).
Yet, homeowners with a mortgage move on average every 10 years and 11 weeks.
So, whilst I cannot determine who has a mortgage and who doesn’t, I can look at how quickly people move home in Luton. I have looked at the last 50 property sales in Luton, and I have found some interesting findings.
On average Luton homeowner only move every 15 years
and 48 weeks.
Nothing interesting about that you might say, when compared to the national average ... yet the devil is in the detail.
There appears to be a two-speed Luton property market … look at the top 25% of Luton home movers, and then the next slice … these Luton people are moving home really quickly, yet the gap for the next two slices widens tremendously.
- Top 25% quickest Luton home movers move every 3 years & 43 weeks
- The next 25% quickest Luton home movers move every 13 years & 28 weeks
- The next 25% quickest Luton home movers move every 20 years & 43 weeks
- Whilst top 25% slowest Luton home movers only move every 25 years
When looking at the properties that fall into the later bands (i.e. the ones that don’t move/sell so often), they tend to be the larger properties where the homeowners have lived for 25/30 years plus.
The lesson we all should learn is that once people get into their 50’s and 60’s, their propensity to move home drops considerably. This means the properties on the lower rungs of the Luton property ladder do appear to sell quickly (as they are occupied by younger homeowners) yet once Luton people get older, their tendency to move diminishes. This puts a roadblock on the younger generation wanting to buy the larger Luton properties these mature homeowners live in.
What is holding the older generation back from selling and downsizing to free up homes for families that desperately need them? Some of it will be apathy, some of it will be holding on to the home that they brought their family up in, yet the bottom line is…
46.5% of the homes owned in Britain have
two or more spare bedrooms.
As a nation, we need to rethink how we can encourage older homeowners to sell their large homes to release them to the younger families that desperately need them. Some suggest tax breaks, yet the Government won’t be in the mood to give huge tax breaks as the measures to protect the economy over the last 12 months will ultimately need to be paid back.
One thing I do know, we as a Country have seen (and will continue to see) a lot of demographic change together with an increasing elderly population, so it’s not just about how many homes we build, but whether we are building the right kind of homes the older generation will want to move into.
Interesting times ahead for the Luton property market!
If you have a Luton property to sell or let in the coming weeks, months or years and would like to know how this and other factors will affect you and your property ... without obligation, don’t hesitate to give me a call or drop me line.
Author: Taylor Kay
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Over the last six months, the Luton Property Market has been flourishing. As soon as an estate agents ‘For Sale’ flag went up, neighbours would be checking out Rightmove to see the internal pictures and compare the asking price to their own home (go on .. admit you do that too – every Luton homeowner does). Flabbergasted by optimistic asking price tags, those same Luton homeowners stand open-mouthed to see a sold slip added to the board a few weeks later.
Property values in Luton are 4.7 per cent higher than a year ago.
The newspapers are full of stories of this mini property market boom, which has been fuelled by the Stamp Duty Tax cut, which ends on the 31st March 2021. Not only has it pushed up values in Luton, but it has also theoretically brought forward house moves from 2021 into 2020.
The most up-to-date transaction figures (i.e. the number of people moving home) endorse it too. In the UK, 137,200 property sales/transactions took place in December, the highest number of sales/transactions in December since 2006 (when it topped 149,200 transactions, only for it to fall to 32,700 transactions in December 2008 at the height of the Credit Crunch).
The exact figures from the Land Registry for Luton won’t be available for another six weeks or so, yet in December 2019, 251 properties changed hands in Luton. Looking at anecdotal evidence of for sale board changes, my database and the portals, I believe we will end up around 338 to 351 Luton property sales/transactions for December 2020.
So, how does all this compare to other years?
The number of UK transactions continued to be relatively stable between November 2019 and March 2020. That decreased by around half in April/May 2020 compared to April/May 2019, triggered by economic impacts relating to the public health restrictions introduced. Since the first lockdown was lifted in the late spring, sales/transactions have increased steadily upwards each month, mirroring the relaxing public health restrictions for the property market during the summer and autumn of 2020 and introducing Stamp Duty Tax Holidays.
Before we all get the Champagne corks flowing, what the December national figures (and the corresponding provisional Luton stats) don’t tell us, is that April to December 2020 transactions ended the year 13.7 per cent down compared to April to December 2019 transactions — the lowest since 2012. Don’t get me wrong, 13.7 per cent is impressive given that we are in the middle of a recession and even more remarkable considering there was a 48.7 per cent fall in transactions in 2008 (compared to 2007) when the Credit Crunch hit.
The biggest question though, is, how much of the urgency since the summer to buy property can be credited to the …
- existing pent-up demand that built up in 2018/9 and was starting to be released in the ‘Boris Bounce’ in January/February 2020
- new demand from home workers looking for bigger properties
- people moving out of the big city centres
- the Stamp Duty Tax cut
— or a mixture of all four?
Nobody can categorically know whether the UK property market would have ricocheted as quickly without the Stamp Duty Tax cut.
Talking to many buyers, sellers, agents and solicitors in the Luton property market over the last three or four months, the anecdotal evidence I have collated from those people seems to imply that the outbreak of activity in the Luton property market has mainly been put down to the lifestyle factors (bigger house with office space etc) and pent-up demand, meaning the Stamp Duty Tax Holiday is seen as the icing on the cake for most people. Yet, there will be some buyers, whose motivation has been purely to save money on the tax duty. Overall though, in the vast majority of house purchases, this allows us to be reasonably hopeful about what will happen once the Stamp Duty Tax Holiday is withdrawn on the 31st March.
However, some newspapers are preaching a story that the property market will collapse without a Stamp Duty Tax Holiday extension. Nobody can argue that a phased withdrawal from the Stamp Duty Tax Holiday would be better than some homebuyer’s sales falling through, when the tax holiday finishes in late March. Even if your motivation isn’t to save money on the tax holiday, it could be the motivation of a buyer in your chain – meaning it becomes your issue. Nobody knew in July, when the tax holiday was announced, that we would get another two national lockdowns with the inevitable delays from remote working by solicitors, mortgage providers and local authority search departments. My advice to all people currently sold subject to contract is to ask the question, “What if we don’t complete the sale by the end of March?”. Better to sort it now than have a nasty surprise in the last week of March.
All property taxation is long overdue for reform, from Stamp Duty to Council Tax. When Margaret Thatcher tried to change local Rates to Poll Tax in the late 1980’s, those who are old enough can remember the Poll Tax Riots, hence the nervousness of any party since to make any changes. There is no way the Government will abolish Stamp Duty when it raises between £11bn to £13bn a year, yet with all the upheaval we have experienced in the last year, there could be an appetite to change the way property is taxed.
The Government has already spent £271bn on interventions due to the pandemic and needs every penny so that it can start to repay those debts over the coming decades.
I have a feeling most Luton property buyers and sellers would compromise on the price they pay for their next home to cover the cost of the Stamp Duty Tax after April, rather than lose the chance of owning the forever home they longed for during the first lockdown.
Therefore, don't be alarmed when we see property values ease slightly in Q3 2021 when the price paid for property reflects the lower price to account for the Stamp Duty that will need to be paid from the 1st April.
If you are a Luton homeowner or Luton buy to let landlord and you would like a chat about where you and your Luton property stands in the current Luton property market, don’t hesitate to give me a call or drop me a line.
Author: Taylor Kay
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What does this mean for Luton property owners?
With most Luton families home schooling their children in lockdown and the forthcoming Stamp Duty Holiday deadline on the 31st March 2021, less Luton properties have been coming onto the Luton property market since the new year. This has prompted a 17% drop in the supply of Luton homes for sale compared to November 2020.
For the past couple of decades, like clockwork, Luton estate agents’ busiest times for putting property onto the market is the new year to Easter rush, with a smaller flurry of new properties coming onto the market in the mid/late summer. Yet, since the ending of lockdown 1.0 in the late spring 2020, nothing has been normal about the Luton property market.
Throughout the summer, the number of properties coming onto the market in Luton steadily rose to its peak in November and the number of properties then becoming sold subject to contract (stc) rose even higher (and whilst statistics don’t exist for the properties sold stc, anecdotal evidence suggests there were just under 50% more Luton properties sold stc in the last six months of 2020, compared to the same 6 months in 2019).
However, back to the number of properties for sale…
the peak of the number of Luton properties on the market in autumn was 1,521 – that now stands at 1,261.
The first lockdown caused many Luton homeowners to want to move with the need for extra space to work from home and in some cases larger gardens. This was further exacerbated by Luton home movers also trying to take advantage of the Stamp Duty Holiday to save themselves money on this tax.
This meant many more Luton properties came onto the market (more than a “normal” year) in the last 6 months of 2020. However, those Luton home movers motivated to move for the extra space/save money on the tax, did so in the summer/autumn and have already placed their home on the market (and are probably by now sold stc rushing to get their house purchases through before the deadline on the tax savings).
So, how does Luton compare to other property markets, and what does this reduction in Luton properties on the market mean to Luton homeowners and landlords?
There are 8% less properties on the market today in Luton, compared to 12 months ago.
When I compared that to the national picture, according to Zoopla, there are 12% less properties on the market today (compared to a year ago).
However, the complete opposite is taking place in London. There are currently 47,900 apartments for sale in London compared to January 2020, when there were only 32,600 – a massive rise of 46.9% … all the more interesting when there are only 15.1% more London semi-detached houses for sale and 1.8% more London detached homes over the same 12-month period. The jump in London apartments for sale is being pushed by an upsurge of London up-sizers eager to trade their city living apartment up to suburban houses, and a small handful of panicky London buy to let investors who are wanting to exit the London property market following falling rents for apartments. Looking closer to home, there are…
3% more apartments for sale in Luton than a year ago, whilst there are 22% less detached homes.
So, whilst there are some differences between the supply of individual types of property in Luton (e.g. apartments vs detached houses), the overall reduction in the number (i.e. supply) of properties for sale can only mean one thing, when there is a reduction in the supply of anything and demand remains stable, this will mean continued upward pressure on Luton house prices in the short term (although I suspect there will be some downward pressure on Luton apartments with that level of increase in supply – maybe some interesting ‘opportunities’ for all you Luton landlords?).
Will overall demand for Luton property continue to be stable?
Lockdown 3.0 will probably cause another wave of Luton people who want to move home (thus increasing demand). The last property crash (the Credit Crunch in 2009) was caused by a huge increase in the supply of properties for sale when people lost their jobs and interest rates were much higher. People couldn’t afford their mortgages and so dumped their homes onto the market all at the same time – causing an oversupply of property for sale and hence house prices dropped.
Compared to the 1,261 properties for sale in Luton today, at the height of the Credit Crunch in January 2009, there were an eyewatering 2,306 properties for sale in Luton.
It was this increase in the level of property for sale in Luton (mirrored across the whole of the UK) that caused property prices to drop between 16% and 19% (depending on the type of property) in Luton over the 12 to 14 months of the Credit Crunch. So, as long as there is no sudden change in the demand or supply of properties and interest rates remain at their current ultra-low level – the medium-term prospects for the Luton property market look good.
If you are a Luton homeowner or a Luton buy to let landlord and want to chat about the future of the Luton property market – do drop me a line.
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Most people pay Stamp Duty Tax when they buy a property, house, apartment or other land and buildings over a particular price in the UK. The Chancellor, Rishi Sunak (quickly followed suit by the Welsh and Scottish Governments), announced last July that Stamp Duty was partially being suspended on all English property transactions up to £500,000 (£250,000 in Wales and Scotland) - a Stamp Duty Holiday.
That meant only 1 in 8 English buyers would pay any Stamp Duty Tax on their home purchase (if it was over £500,000), saving any buyer up to £15,000 in tax on the purchase. The problem is the property needs to have been purchased and bought by the 31st March 2021. Complete the transaction a day later, and those buyers will have to pay Stamp Duty.
The issue is local authorities are snowed under with local search requests, mortgage companies and conveyancing staff are working from home, so property transactions are taking much, much longer. This means many Luton (and UK) buyers who have currently sold (subject to contract) will miss out on the stamp duty saving.
Most (not all) estate agents have been warning the buyers and sellers in their property chains that some deals might not make the 31st March 2021 deadline and pleasingly, most people aren’t moving because of the Stamp Duty Holiday (they are moving because they need extra space because of the pandemic). However, it only takes one person in the chain not to be ‘singing off the same hymn sheet’ for the whole chain to collapse … so keep in touch with your estate agent.
A campaign by one of the national newspapers and an online petition to extend the stamp duty holiday has meant the topic could be debated in Parliament in the next few weeks, after 100,000 home buyers and sellers signed that petition, asking for an additional six-month Stamp Duty Holiday. The home buyers and sellers are worried the property market will collapse after March 31st when the Stamp Duty Holiday is removed.
The last time British home buyers were conscious of upcoming Stamp Duty changes, it distorted the number of properties sold. The bigger question though is, did it change the overall number of people moving home?
In November 2015, the then Chancellor, George Osborne, announced in his Autumn Statement that buy to let landlords would have to pay an additional 3% in Stamp Duty (over and above owner occupiers) for all property bought after the 1st April 2016. As shown in the graph below, this caused a surge in property buying (which we have seen since this summer with the Stamp Duty Holiday), with many Luton buy to let landlords completing their property purchase in March 2016, as they dashed to complete their property purchase before the tax increase.
In the 3 years of 2015/6/7, the average number of Luton properties sold (transactions) per month was 227 per month, yet in the month before stamp duty was changed in March 2016, transactions rose to 422, an uplift of 85.9% from the average or an extra 195 transactions in that month alone. Yet, look at the months of April and May, the property transactions numbers slumped, meaning in those two months combined, there were 134less transactions.
So, if the Stamp Duty Holiday isn’t extended, what will that mean for the UK and Luton property market?
London and the South East seem to be particularly exposed to the removal of the Stamp Duty Tax break because it has such a high proportion of property priced between £300,000 and £500,000. These areas benefit from the highest tax savings relative to house price.
Yet, with the average value of a Luton home at £254,900, the stamp duty cost if the sale is delayed after the 31st March 2021 is £2,745 – a figure that shouldn’t break the bank
So, if the Stamp Duty Holiday isn’t extended – it might not be such the nightmare scenario as some people believe.
My advice to all buyers and sellers is to be constantly talking to your estate agent, your solicitor and your mortgage broker. With your estate agent to ascertain if they have asked every person (or asked the other agents in the chain to ask the question), “What if we don’t meet the stamp duty deadline?” With your mortgage broker and solicitor to give them all the information they need to ensure there are no delays with any information they request from you.
One final thought, some mortgage providers allow insurance policies to be purchased by your solicitor in case your searches (from the local authority aren’t back in time) … the cost of those will be much lower than the cost of the stamp duty ... again, speak with your solicitor. Irrespective of whether you are a client of mine or not, if you would like a chat about anything mentioned in this article, don’t hesitate to contact me.
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When William the Conqueror invaded our fair shores in 1066, like all good kings, he needed to buy loyalty and raise cash to build his castles and armies. He did this by feudal law system and granted all the faithful nobles and aristocrats with land. In return, the nobles and aristocrats would give the King money and the promise of men for his army (this payment of money and men was called a ‘Fief’ in Latin, which when translated into English it becomes the word ‘Fee’… as in ‘to pay’).
These nobles and aristocrats would then rent the land to peasants in return for more money (making sure they made a profit of course) and the promise to enlist themselves and their peasants into the Kings Army (when requested during times of war). The more entrepreneurial peasants would then ‘sublet’ some of their land to poorer peasants to farm and so on and so forth.
The nobles and aristocrats owned the land, which could be passed on to their family (free from a fee i.e. freehold), while the peasants had the leasehold because, whilst they paid to use the land (i.e. they ‘leased it’ which is French for ‘paid for it’), they could never own it. Thus, Freehold and Leasehold were born (you will be pleased to know that in 1660 the Tenures Abolition Act removed the need of Freeholders to provide Armies for the Crown!).
4.3 million properties in the UK are leasehold
… and 7,695 properties in Luton are leasehold. By definition, even when you have the leasehold, you don’t own the property (the freeholder does). Leasehold simply grants the leaseholder the right to live in a property for 99 to 999 years. Apart from a handful of properties in the USA and Australia, England and Wales are the only countries of the world adhering to this feudal system style tenure. In Europe you own your apartment/flat by using a different type of tenure called Commonhold.
The average price paid for leasehold properties in
Luton over the last year is £165,876.
The two biggest issues with leasehold are firstly, as each year goes by and the length of lease dwindles, so does the value of the property (particularly when it gets below 80 years). The second is the payment of ‘ground rent’ – an annual payment to the freeholder.
Looking at the first point on the length of lease, the Government brought in the Leasehold Reform Act 1967, which allowed tenants of such leasehold property to extend their lease by upwards of 50 years. However, this was very expensive and as such only kicked the can down the road for half a century (when the owner would have to negotiate again to extend another 50 years – costing them more money, time and effort).
Ground rents on most older apartments are quite minimal and unobtrusive. The reason it has become an issue recently was the fact some (not all) new homes builders in the last decade started selling houses as leasehold with ground rents. The issue wasn’t the fact the property was sold as leasehold nor that it had a ground rent, it was that the ground rent increased at astronomical rates.
Many Luton homeowners of leasehold houses are presently subject to ground rents that double every 10 years.
That’s okay if the ground rent is £200 a year today, yet by 2121, that would be £204,800 a year in ground rent, meaning the value of their property would almost be worthless in 100 years’ time. One might say it allows for inflation, yet to give you an example to compare this against, if a Luton leasehold property in 1921 had a ground rent of £200 per annum, and it increased in line with inflation over the last 100 years, today that ground rent would be £9,864 a year.
This is important because the majority of leasehold properties sold in Luton during the last 12 months were apartments, selling for an average price of £160,468.
So, without reforms, the value of these Luton homes will slowly dwindle over the coming decades. That is why the Government reforms announced recently will tackle the problem in two parts.
Firstly, ground rents for new property will effectively stop under new plans to overhaul British Property Law. Under the new regulations, it will be made easier (and cheaper) for leaseholders to buy the freehold of their property and take control by allowing them the right to extend the lease of their property to a maximum term of 990 years with no ground rent.
Secondly, in the summer, the Government will create a working group to prepare the property market for the transition to a different type of tenure. Last summer the Law Commission urged Westminster to adopt and adapt a better system of leasehold ownership – Commonhold. Commonhold rules allow residents in a block of apartments to own their own apartment, whilst jointly owning the land the block is sitting on plus the communal areas with the other apartment owners.
These potential leasehold rule changes will make no difference to those buying and selling second-hand Luton leasehold property.
Yet, if you are buying a brand-new leasehold property, most builders are not selling them with ground rent (although do check with your solicitor). The only people that need to take any action on this now are people who are extending their lease. If you are thinking of extending the lease of your Luton property before you sell to protect its value, your purchaser may prefer to buy on the existing terms and extend under the new (and better) ones later (meaning you lose out).
Like all things – it’s all about talking to your agent and negotiating the best deal for all parties. Should you have any questions or concerns, feel free to pick up the phone, message me or email me and let’s chat things through.