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Post lockdown, the need for Luton families who want bigger homes has meant Luton homebuyers must now pay considerably more to trade up to that larger home…

 

One thing that has come out of lockdown has been the inexorable movement of Luton households wanting to upsize to a larger home. Often considered to be first time buyer properties, the smaller 1st step on the property ladder one and two bedroom properties are selling quite well, yet demand for those properties on the 2nd and 3rd step rungs on the Luton property ladder (i.e. the three or four bedroom homes) has been even greater.

This demand has been driven by Luton buyers looking for more living space, especially those looking for an area or room to work from home (be that a bedroom, reception room or even an outbuilding converted into a study).

The average asking price of a 3 bed Luton home is £294,500, whilst for a 4 bed Luton home it stands at £410,900

As you can see, quite a jump for an extra bedroom! The heightened contest for 2nd and 3rd step Luton homes for that extra bedroom has pushed demand to a record in October for those looking to take the next step up the ladder. Historically, as a family and its household income grow, the need for more space has permanently been the No.1 reason for moving home, yet now there is a new need for additional space to facilitate people working from home. This means not only do we have growing families wanting larger Luton homes, there are also the people needing the same larger homes for space for a home office. Therefore, looking at the current stats, as you can see, the Luton property market is doing quite well…

55.4% of all 3 bed and 52.4% of all 4 bed homes

in Luton are sold (subject to contract)

 

Roll the clock back to pre-Covid and ask any Luton homeowner who had enough bedrooms for their children if they wanted an additional bedroom, and most homeowners would say that was very much a ‘nice to have’, yet not a ‘must have’. With us all being cooped-up over the spring this year, demand for additional rooms is at a high, with those presently looking for their next larger Luton home are probably going to find that only offers close to (if not sometimes over) the asking price will be accepted.

Even though no properties sold during lockdown, putting the Luton (and UK) property market on hold for many months, many more people buying their next Luton home will have more than made up for it since lockdown was lifted as the portals have stated if the UK property market remains at its existing trajectory, then the number of properties sold YTD by the end of October 2020 will be greater than YTD October 2019.

Yet all these properties sold are causing another issue. Just because a property becomes Sold Subject to Contract (SSTC) doesn’t mean the property is actually “sold”. Before going into Covid, it was taking approximately 19 weeks between agreeing a sale price (and instructing lawyers) to completing the sale. Yet, because we are nationally running at 140% to 150% of properties SSTC (than where we normally are at this time of year), many of my estate agents colleagues are having to manage expectations with buyers and sellers, and tell them that the date they are going to move will take a little longer.

The elephant in the room is that the temporary stamp duty holiday ends on the 31st March 2021

It sounds an age away, yet trust me, nothing could be further from the truth.  Adding an extra month for the additional homes in the bottleneck means even if the sale of your Luton home was agreed today, that would take us to the 3rd week in March ... that’s cutting it very close for the stamp duty holiday.

It is so fundamental for buyers and sellers of Luton homes to work meticulously with their estate agent, solicitor and mortgage lender. For example, there are less staff in the local authorities to do the local searches, bank staff are working from home meaning mortgages are taking much longer to get approved, and conveyancer/solicitors are snowed under with work. Therefore, if you get a document that needs filling in, are asked to provide documents, pay disbursements or questions need answering, do it immediately and without delay. A day here and day there will snowball and could mean you miss the stamp Duty holiday … and that could cost you thousands and thousands of pounds.

The bottom line is that we haven’t seen this sort of pressure on the UK property market since 1987, when dual-MIRAS was abolished. Now, as we are slowly starting to come out of Covid, with many legal and banking staff working remotely or still on furlough, the perfect storm has occurred with unprecedented demand from buyers looking to move post lockdown. The best advice I can give is, as soon as you put your property onto the market, find a solicitor that has the capacity to work with you, then instruct that solicitor to start work immediately to prepare the paperwork, so once you have a buyer, things can move more smoothly and quickly. The last thing you want is to lose out on saving thousands of pounds by missing the stamp duty holiday by a whisker.

The Luton property market is an enigma and chock-full of contradictions.

 

Notwithstanding an economic recession and forecasts of property values dropping, nobody seems to have informed the Luton homeowners selling their homes and those Luton people looking to buy them. As I have discussed in many recent articles on the locality, the Luton property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.

 

However, before we talk about the banks and surveyors, let’s look at what is happening in the Luton property market now.

 

Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: UK property prices are rising, although

 

The average value of a Luton home dropped by 1.5%

in the year to June to £257,200

 

Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Luton property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.

 

Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ - as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.

 

Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell - yet some over-enthusiastic Luton buyers are paying over the odds for certain types of properties.

 

So, let’s look at what is happening to the Luton property market (Luton plus 3 miles) by house type and the number of bedrooms…

 

 

 

Number of Luton properties
on the market

...and of those -
how many are Sold STC

% Sold STC
compared to those for sale

Detached House

829

439

53.0%

Semi Det House

1221

735

60.2%

Terraced/Town House

1118

554

49.6%

Apartment

861

334

38.8%

Bungalows

313

197

62.9%

 

And when we look at the number of bedrooms …

 

 

Number of Luton properties
on the market

…and of those -
how many are Sold STC

% sold STC
compared to those for sale

Studio/1 bed

439

175

39.9%

2 beds

1093

564

51.6%

3 beds

1783

988

55.4%

4 beds

794

416

52.4%

5+ beds

264

130

49.2%

 

 

As you can see, the best performing type of property in Luton is the bungalow and the best-selling properties when it comes to bedrooms are 3 beds.

 

These are quite impressive figures for the Luton property market, yet some of the banks are having none of it

 

They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage). 

 

It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages - and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).

 

One small note to Luton landlords - I am also hearing that some overzealous Luton buy to let landlords who are over-egging the potential rental figures on their buy-to-let purchase in order to obtain the mortgage, are also being reined in by the banks.

 

 

 

Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).

 

The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Luton property.

 

If you would like a chat about any aspect of the Luton property market - please do send me a message or pick up the phone.

With only around 1 in 5 Luton house sellers actually selling their home in the last month, Luton sellers and buyers will need to continue to be pragmatic if the surprisingly strong current levels of activity in the Luton property market are to be sustained.

 

To start, we had the once in a lifetime event of the credit crunch in 2008, we then had another once in a lifetime event with the Brexit vote in 2016 and now the mother of all ‘once in a lifetime’ events, Coronavirus in 2020 – three once in a lifetime events in the space of 3 Olympic Games!

 

The doom-mongers forecast that the British property market would drop like a lead balloon on the scale of the 1989 housing crash (where property values dropped by 30.87% in a couple of years) but would be nothing compared to the tsunami that was Covid. Yet in the first 100 days of the property market coming out of lockdown, behavioural and economic changes mean that many Luton homebuyers are now even more dedicated to moving home and the Luton property market is doing quite well.

 

Going into lockdown, the effect on activity in the Luton property market during those two months was expectable and predictable as it was placed in suspended animation during April and May. When the Luton property market re-opened in mid-May, nobody predicted what happened next. Of course, many of us in the property industry estimated some release of pent-up demand from the Boris Bounce, yet nobody anticipated such a ricochet in activity in the Luton property market.

 

This is particularly interesting when one considers GDP dropped by 20.4% in Q2 2020 (fascinating when compared to notable historic times when it dropped by 13.8% in WW2 and 16.7% in WW1), yet amidst the largest contraction in the UK economy ever in a single quarter, what wasn’t expected was an increase of potential property buyers and property sellers wanting to move post lockdown.

 

Some have cited this boost to the property market on a number of factors. Firstly, we have had the Stamp Duty Holiday, others have pointed at the never seen before 0.1% Bank of England base rates making mortgages cheap, then we had the furlough scheme which protected so many jobs and finally, the pent-up demand from the Boris Bounce.

 

Yet, when one actually talks with Luton buyers and sellers, whilst all of them cite one or two of the above reasons, all of them mention and talk about how the lockdown has made them re-evaluate and reconsider how they want to live, their work-life balance and where they want to live. This is also reflected with tenants changing their requirements when looking for a property to rent (so Luton landlords - be aware of this).

 

Demand for apartments in the centre of Luton has eased off, whilst demand for property with a good-sized garden or other outside space has increased. One question we get asked all the time is also the broadband speeds, although they are quite decent in Luton (the average broadband in our local Council area being 67.3 Mbps download and 12.2 Mbps upload).

 

So, with record numbers of Luton properties coming on to the market - is it boom time for Luton homeowners?

 

Of the 766 properties that have come onto the market in Luton over the last month, only 144 of them have agreed a sale

(a percentage of 18.7%)

 

That means around 4 in 5 Luton people that have placed their property onto the market have not found a buyer yet.

 

Yes, the Luton property market is good, yet the number of people who have placed their property on the market has also gone up. Luton estate agents have never been so busy putting property on the market and I feel sorry for the chap who is putting up all the for-sale boards – his wife hasn’t seen him in daylight for weeks!

 

But that does mean you are in competition with so many other properties on the market (the number of properties coming on to the market typically at this time of the year is about a third to half less). The Stamp Duty boost ends in March 2021, so that means you need to have found a buyer by November at the very latest. By overegging your asking price, to test the market, might mean you will lose out on this hiatus and could end up missing the boat!

 

The prices being achieved for the Luton properties that have been selling have been fair and realistic and have stood up much better than many were originally predicting.

 

Yet as the country looks forward, given the ambiguous nature of the outlook for the British economy and the possibility that Covid-19 may be with us for a little while yet, I must implore Luton property sellers to be realistic with their asking price so a greater number of you who want to make the move, are able to do so.

 

 

 

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 Luton had thought their late 20 something/early 30 something offspring had flown the nest, Covid-19 has blown some Luton ‘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’ Luton 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 77,462 households in Luton, made up of 21,062

single person households and 46,212 family households

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

 

 

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

 

7,749 Luton households have children

that haven’t flown the nest

 

That’s 16.77% of Luton families whose kids are still to leave home … and it’s only going to get worse!

 

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

 

It will mean that Luton 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 Luton, 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 Luton 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.

 

 

The 1st July 1948 heralded a new dawn in how property was built, as the Town & Country Planning Act 1947 came into force, meaning no property could be built without the say so of the local authority. Now, Boris Johnson has announced a substantial change to that, by in effect, ending planning permission.

 

The decision of what gets built (and what doesn’t) will be removed from Luton Borough Council and replaced by Westminster governed ‘Zoning Commissions’. The anticipated reform will give presumptive building rights to any piece of land outside areas of outstanding natural beauty, green belt and national parks, although in the press release there was mention of protection for the countryside.

 

Travel to Europe and it’s common to see out of place haphazard development of new households or commercial buildings, surrounded by open countryside ... so, I hope these new regulations protect us against that.

 

The principles of the planning rule changes are a departure away from looking at each planning application as a standalone application to a ‘zone-system’ of planning. Land will be divided into three classes: 1st for growth, 2nd for protection and 3rd for renewal. Anyone applying for planning permission to develop homes, offices and shops on land zoned for growth, will automatically be granted planning permission; whilst land zoned for renewal planning permission will be granted in principle while Government officers perform checks. Local authorities have until 2024 to designate areas for the three classes and once agreed, planning departments will have little or no say over individual applications that fit the rules.

 

Interestingly, these changes come on top of new planning regulations coming into force this September which gives implied rights to demolish any office building and replace with a block of flats, and the right to build extra floors/storeys on your home.

 

The Housing Secretary has specified the motive behind the changes to the planning system is not to make planning permissions easier to get (although 88% of planning applications are approved by local authority’s already). Instead, they have been done to make the planning process quicker, less expensive and less likely to be held up by special ‘interest’ groups.

 

78% of planning permissions in Luton Borough Council

were approved last year (compared to the national average of 88%)

Noteworthy, the planning rules were changed in 2016 to turn disused shops and office space into residential homes (called ‘permitted development’ rights), yet these new regulations about to be announced by Boris will take that right even further. This is important because in 2019, there were 241,340 new households created in the country, yet 29,260 of those households came from turning disused shops and office space into residential homes (i.e. the planning permission rule changes made in 2016).

My concern is that the new planning rule changes do not make shop or redundant space into the new 21st Century ghettos. An RICS report in 2018 showed a massive difference between the conversion of office blocks with planning permission and those without (i.e. permitted development). What was interesting is that only 1 in 5 properties met the national space standards, a non-legally binding suggestion on the minimum size of home, minimum dimensions of bedrooms, natural light, storage & floor to ceiling height, whilst 3 in 4 of office block conversions that did obtain planning permission met the standard.

These planning changes cannot be a charter for cowboy builders or developers, otherwise your children or grandchildren could end up renting one of these sub-standard homes, thus stealing human dignity from thousands of youngsters who will end up renting these homes.

 

So, what does this all mean to Luton homeowners and Luton landlords? If you have been reading my articles you will know that one of the most important factors holding back the Luton property market is the lack of new properties being constructed and when they are, the lack of infrastructure surrounding them.

 

Since 1995, only 3,742 properties have been built in LU1 to LU4

 

Yet, these new planning changes will also introduce a new method of taking a lot more money off landowners and builders, as the Government will take a larger share of uplift in land value (i.e. the increase in value from farmland to building land) to finance infrastructure around the development. This would mean new housing developments would come with upgraded roads, GP surgeries, primary schools and shops that these new communities need to be viable. Also, communities will be asked to decide on their own standards on style and design for new developments in their area, allowing residents a greater say on the development in their locality.

 

Like all things, the devil is in the detail. All of us in Luton cannot deny that we need to build more homes to keep up with the ever-growing population and the fact that people are living longer. This new planning system should lead to more housebuilding, which in turn would increase the supply of property for those trying to get on the property ladder. Also, in the proposed legislation is the new ‘First Homes’ scheme, which would allow key workers, first time buyers and people who live or work in the Luton area to purchase their new home at 30% less than its market value and when they come to sell it, that 30% discount would be passed on to the new buyer (if they also met the criteria).

 

With regard to what can be built and where, Luton people will have a say upfront (i.e. between now and 2024 when the zoning rules are drawn up) but once the zoning has been established, then ‘nimbyism’ will become a thing of the past and hopefully we can construct the Luton homes we are proud of for our children and for Luton generations to come. 

 

Please do let me have your thoughts on this matter.

 

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