Cambridge Landlords could be fined £3,708,000 per year

“Who would want to move to Cambridge in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Newmarket and this was the earliest he could do. 

It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.

For those Cambridge landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.

Our landlord from Newmarket wanted to know how much of a real issue was ‘Right to Rent’ in Cambridge. I was able to tell him, the last available figures (from a couple of years ago) show that 1,236 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Cambridge City Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £3,708,000 to the landlords of the City.

It doesn’t sound a lot when you think there are 145,818 residents in Cambridge City Council area, and of those, 105,337 people (or 72.24%) were born in the UK. But Cambridge is a cosmopolitan city as the country of birth of the residents in the Cambridge City Council area can be split down as follows:

·         UK                                                                         72.24%

·         Ireland                                                                    0.91%

·         Europe                                                                   11.40%

·         Africa                                                                      2.28%

·         Middle East and Asia                                                8.85%

·         Americas and Caribbean                                          3.23%

·         Australia and Pacific region                                     1.02% 

 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 16,618 Europeans in the area necessarily have the right to live in the UK either.

In a nutshell, Cambridge landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....

·         UK Passport

·         EEA Passport/Identity card

·         Travel document or Permanent Residence Card showing indefinite leave to remain

·         Paperwork from Home Office stating their Immigration status

·         Certificate of registration or naturalisation as a British citizen.

 

I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.

So what did our landlord do?

Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Cambridge Property Blog for a while and because of the knowledge we impart to the landlords of Cambridge, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £60 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.

Will the young people of Cambridge ever own their own home?

I had the most interesting chat with a mature couple (in their early/mid 50’s) from Chesterton the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Cambridge property market and how they had bought their first property in the city just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.

Their son, like many 20 to 30 year olds in Cambridge, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Cambridge is huge. There are in fact 13,862 private rental properties in Cambridge at the last count, impressive when you consider there are 7,727 council houses in the city. However, let us not forget 27,673 properties are owner occupied (13,142 with a mortgage).

Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.

 

Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the late £140,000’s in the Orchard Park area of Cambridge (meaning a modest deposit of £7,500 would be required).

When it came to affordability, I was able to tell them that when they bought their first house in Cambridge in 1988, the ratio of house prices to salary was 6.87 to 1 in Cambridge ... and here was the surprise for both of us, today’s ratio is only 5.02 to 1!

I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.

Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.

So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£7,500 in Cambridge as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.

Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you by the right property, at the price, in the right location. One source of information on such matters would be the Cambridge Property Blog ... http://cambridgeproperty.blogspot.co.uk/

Cambridge House Price Monopoly: How do Prices vary?

 

Well as the nights draw in, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me! Interestingly, the game was originally invented at the turn of the 20^th Century (in 1903) and the game was initially called ‘The Landlord’s Game’!  Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.

So whether you are a homeowner or landlord in Cambridge, what would a Monopoly board look like today in the city? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Cambridge today.

Initially, I have focused on the CB1 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Cambridge today would be Gunhild Court, with an average value £172,600 (per property) and Whitechapel Road would be Bliss Way, which would be worth £188,700. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at CB1, Park Lane would be St Barnabas Road at £984,200 and Mayfair would be Lynewode Road at £1,307,200. However, look a little further afield from the CB1 postcode, and such roads as Millington Road in Newham would claim the Mayfair card at £1,985,500! Also, I can’t forget the train stations (my favourite squares), and over the last 12 months, the average price that property within a quarter mile of the station sold for was £371,300.

So that got me thinking what you would have had to have paid for a property in Cambridge back in 1935, when the game originally came out?

·         The average Cambridge detached house today is worth £572,080 would have set you back 1,035 Pounds 1 shillings and 3 old pence.

·         The average Cambridge semi detached house today is worth £384,800 would have set you back 696 Pounds 4 shillings and 4 old pence.

·         The average Cambridge terraced / town house today is worth £374,660 would have set you back 677 Pounds 17 shillings and 5 old pence.

·         The average Cambridge apartment today is worth £291,600 would have set you back 527 Pounds 11 shillings and 9 old pence.

If that sounds like another currency, you must be in your 20’s or 30’s, because it was back in February 1971, that Britain went decimal and hundreds of years of everyday currency was turned into history overnight. On 14th of February of that year, there were 12 pennies to the shilling and 20 shillings to the pound. The following day all that was history and the pound was made up of 100 new pence.

Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Cambridge property market, you should consider the Cambridge property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.

As I reminded a soon to be first time landlord from Impington the other week, Buy to let in Cambridge (as in other parts of the Country) is very different from owning your own home. When you become a Cambridge landlord, you are in essence running a small business – one with important legal responsibilities.
On that note, I want to remind landlords of the recent and future changes in legislation when it comes to buy to let. This year, rules have changed about tenant deposits, Carbon Monoxide detectors and early in the New Year, landlords will have responsibilities to do Immigration checks on all their tenants. Failure to adhere to them will mean a minimum of heavy fines in the thousands or in some cases, prison ... it's a mine field!

That's why I write the Cambridge Property Blog, Where it has an extensive library of articles like this one, where I talk about what is happening in the Cambridge property market, what to buy (and sometimes not) in Cambridge and everything else that is important to know as a Cambridge landlord.

The Cambridge Property Market and £1,300,000,000,000,000,000 in loose change

The 5^th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8^th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Cambridge, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Cambridge friends and Cambridge landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest. That is why more and more 40 and 50 year old Cambridge landlords have been investing some of that cash into Cambridge bricks and mortar, as they search for a low risk investment opportunity.

Buying a Cambridge buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.
 

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Cambridge house prices have been extraordinarily robust, increasing by over 1886.3% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

..  but before you go out and buy any old Cambridge property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.

Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Cambridge and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in a Victorian terrace on York Street in the east of the city within walking distance of Mill Road with its fascinating array of restaurants and shops .. a decent two bed terrace, 61 sq metres inside (656 sq ft in old money) sold in September 2005 for £208,500. In the summer, it only obtained £207,500, a drop of 0.48% or 0.05% a year – a disappointing result.

 

I cannot stress enough the importance of doing your homework. One source of information and advice is the Cambridge Property Blog where I have similar articles to this about the Cambridge property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Cambridge .. you are missing out! .. http://cambridgeproperty.blogspot.co.uk/

Cambridge vs Peterborough – the East Anglian Property Market battle

Many landlords have been asking me my thoughts on the Cambridge property market recently, and in particular, what is happening to property values. My calculations show property values in Cambridge quite interestingly grew in the month of September by 0.2%.  When one looks at the annual growth, Cambridge values are 8.2% higher (when comparing Sept 14 to Sept 15), impressive when you consider the annual growth of property values was only 7.7% per annum in May.  On the other hand, there are signs that the fundamental growth of property values in Cambridge has now peaked, despite those average property values being above levels recorded in 2007 (just before the 2008 crash).

Whilst the Cambridge headline rate appears to be better, i.e. the year on year (Sept 14 to Sept 15) growth rate of 8.2% is obviously better than the 7.7% in May 14 to May 15), this impressive rise of Cambridge property values masks the underlying truth in what is really happening to local property values in the City.  Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,

·         September 2015               0.8% rise

·         August 2015                       1.4% rise

·         July 2015                              1.3% rise

·         June 2015                            0.7% rise

·         May 2015                             0.4% rise

·         April 2015                            0.6% rise

·         March 2015                         0.2% rise

This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Cambridge property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Cambridge property values are still running ahead of salaries and average property values are 8.7% above the levels recorded in 2007.

 

Talking to fellow property professionals in the city, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.

Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Cambridge Synchronised Swimming team at the Parkside Swimming Pool!  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s. Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Cambridge property values are 8.2% higher than a year ago (as mentioned above), Peterborough property values are 4.5% higher than a year ago.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Cambridge Property Blog where I have similar articles to this about the Cambridge property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Cambridge….. you are missing out!
http://cambridgeproperty.blogspot.co.uk/

Values of Cambridge Terraced Houses smash through the £400/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let’s are taxed.

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Cambridge, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Cambridge rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Cambridge have risen by 233.23%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive South, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Cambridge. However, whilst the figure of 233.23% is an average for the area, certain areas of Cambridge have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

If you recall in an earlier article, my research reveals that Cambridge apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

So what should you be buying in Cambridge, and more importantly, how much?

·         The average apartments in the City are currently selling for approximately £431 per square foot.

·         Terraced houses in Cambridge are currently obtaining, on average, £351,300 or £401 per square foot,

·         An average semi in Cambridge is selling for £364,500 (and achieving £357 per square foot). 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Cambridge houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. In the meantime, if you would like to read more articles like this, then can I suggest you visit the Cambridge Property Blog?  http://cambridgeproperty.blogspot.co.uk/

Cambridge Buy To let –Freehold House or Leasehold Flat?

Well my Cambridge Property Blog reading friends, as seems to be all the rage with Jeremy Corben asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Cambridge landlord last week. Nice chap, lives in Impington, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Cambridge?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what Cambridge tenants want in the area of Cambridge they want! The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Cambridge are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Cambridge leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Cambridge apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.

 

So what do the numbers look like? Well since 2003, the average freehold property in Cambridge (detached, semis and terraced) has risen from £249,867 to £574,709, a rise of 130% whilst the average Cambridge leasehold property (flats and apartments) has gone up in value from £129,943 to £329,535, a greater rise of 154%. 

I was really interested to note that of the 11,170 rental properties in the City of Cambridge Council area that the Office of National Statistics believe are either let privately or through a letting agency, 5,468 of them (or 49%) are apartments. However, there are only 15,085 apartments in the whole council area (be they owned, council rented or privately rented), which represents 32.3% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Cambridge’s leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Cambridge apartment block, every terraced house or semi is different. Like I said at the start, the definitive answer though is to research what Cambridge tenants want in the area of Cambridge they want. Demand for city centre apartments, near the nightlife and transport links can be popular and can offer the Cambridge landlord very good yields with minimal voids. However, Cambridge terraced houses and semis, whilst not always offering the best yields (although sometimes they can), they do offer the Cambridge landlord decent capital growth.

My advice to the prospective landlord as it is to you is do your homework.  One such website, which only talks about the Cambridge buy to let Property Market, is the Cambridge Property Blog. Another source of info many Cambridge landlords use is me! What many Cambridge landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Cambridge, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)

Cambridge Tenants Pay 40.2% of their Salary in rent

 

I had the most interesting chat with a local Cambridge landlord the other day about my thoughts on the Cambridge property market. The subject of the affordability of renting in Cambridge came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.  

Therefore, I thought I would do some research into the Cambridge property market and share with you my findings.  Cambridge tenants spend on average over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Cambridge is £1,259 per month.  When the average annual salary of a Cambridge worker, in the lower quartile, stands at £37,512 per year, that means the average Cambridge tenant is paying 40.2% of their salary in rent. I doubt there is much left to save for a deposit towards a house after that, and that my Cambridge Property Blog reading friends is such a shame for the youngsters of Cambridge.

 

You see one of the reasons for rents being so high is property prices being high. As I have mentioned before, there is a severe lack of new properties being built in Cambridge. It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level. Also, Cambridge people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Winter 2007, there were over 1,400 properties for sale in Cambridge and since then this has steadily declined year on year, so now there are only 342 for sale in the City.

Back in Winter 2007, there were over 1,400 properties for sale in Cambridge and since then this has steadily declined year on year, so now there are only 342 for sale in the City.
 
So, the planners in Cambridge haven’t allowed enough properties to be built in the City and existing Cambridge homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy. This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Cambridge to match demand, these are the reasons houses prices in Cambridge have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the East region as a whole.

 

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45. It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time. With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent. This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties.

It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany. That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted, is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Cambridge and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Cambridge tenants as wages will start to rise and good news for Cambridge landlords, especially as property values in Cambridge are now 7.8% higher than year ago!

How EU Migration has changed the Cambridge Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Cambridge Property market.

Before we look at Cambridge though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants. To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

 

In Cambridge, migration has risen over the last few years. For example, in 2007 there were 4,074 migrant national Insurance cards (NIC) issued and the year after in 2008, 3,934 NIC cards were issued. However, in 2014, this had increased to 4,948 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Cambridge property market; it couldn’t fail to because of the additional 39,929 working age migrants that have moved into the Cambridge area since 2005. However, it has not been the main influence on the market. Property values in Cambridge today are 27.79% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the East have only grown on average by 1.03% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Cambridge property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Cambridge property market, then for more articles like this, please visit the Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/

4 bedroom terraced house for sale just shy of Cambridge offering a minimum yield of 5.5%.

So typically I find for you properties situated directly within Cambridge city itself but today I am taking you just outside of Cambridge into a picturesque village called Bottisham. Bottisham is a great little village literally a stones throw out of Cambridge so perfect for the commuter looking for cheaper rent. The village is situated in between Cambridge and Newmarket so offers an abundance of local amenities including great schooling and restaurants as well as local shops etc.

This property is up for sale with Purple Bricks with a guide price of £389,950 and is in amazing condition inside and out meaning that it would be ready to let instantly to a variety of potential tenants. With Cambridge one side offering Cambridge's air port and Newmarket on the other offering Stable hands, Jockey's etc. from the race courses and a variety of veterinary personnel from the near by veterinary school you would fill this property with ease advertising rooms at a minimum of £450 per room pcm.

So if you do your homework correctly and find the right set of tenants you would make a minimum yield of 5.5% - For full information and further pictures please see the following link: http://www.rightmove.co.uk/property-for-sale/property-55552097.html

Too little too late New House Building in Cambridge

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.

The Conservatives have pledged to build over 1 million homes by 2020.  I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely it’s right to give normal Cambridge families back the hope of a secure home, be that rented or owned? As a city, we need to exert pressure on our local MP Daniel Zeichner, so they can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Cambridge City Council area, in 2006, 750 properties were built. In 2010 that figure dropped to 300. However, whilst the number of new homes being built in the council area has increased ... in 2013 it was 480 and in 2014, it had increased to 1300 properties built ... we need double that amount to even keep up with the population growth of 1,512 people per year into the area, let alone alleviate the chronic housing shortage for the existing locals.

 

The outcome of too few homes being built in Cambridge means the working people of the city are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties.  I know of many Cambridge youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Cambridge business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Cambridge businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Cambridge landlords, who own the 13,862 rental properties in the city. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Cambridge!

Moving forward, those Cambridge landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1^st October 2015 (with some imposing penalties including loosing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?

More than ever, the days of buying any old property in Cambridge and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Cambridge property market, is the CambridgeProperty Blog