27 Apr

Should the 51,245 home owning OAP’s of Liverpool be forced to downsize?

This was a question posed to me on social media a few weeks ago, after my article about our mature members of Liverpool society and the fact many retirees feel trapped in their homes. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house. Many feel trapped in their big homes (hence I dubbed these Liverpool home owning mature members of our society, ‘Generation Trapped’).

So, should we force OAP Liverpool homeowners to downsize?

Well in the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

Well, one of the biggest reasons OAP’s move home is health (or lack of it)

Looking at the statistics for Liverpool, of the 51,245 Homeowners who are 65 years and older, whilst 22,627 of them described themselves in good or very good health, a sizeable 18,471 home owning OAPs described themselves as in fair health and 10,147 in bad or very bad health.

19.8% of Liverpool home owning OAP’s are in poor health

But if you look at the figures for the whole of Liverpool City Council, there are only 423 specialist retirement homes that one could buy (if they were in fact for sale) and 3,402 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Liverpool downsizers could certainly afford to move but are staying put in bigger family homes because they can’t find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Liverpool population and specialist retirement properties for the ones who aren’t in such good health … we need to build more appropriate houses in Liverpool.

The Government’s Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offered tax breaks for downsizers. Who knows – but something has to happen?

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Liverpool is … more houses and apartments need to be built in the Liverpool area, especially more specialist retirement properties and bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

And a message to my Liverpool property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider doing up older bungalows – people will pay handsomely for them – be they for sale or even rent? Just a thought!

20 Apr

Liverpool rents rise by 13.1% since 2005

The Liverpool Property Market is a very interesting animal and has been particularly fascinating over the last 12 years when we consider what has happened to Liverpool rents and house prices.

There’s currently much talk of what will happen to the rental property market following Brexit. To judge that, I believe we must look what happened in the 2008/9 credit crunch (and what has happened since) to judge rationale and methodically, the possible ramifications for long-term investors in the Liverpool property market. You see, an important, yet overlooked measure is the performance of rental income vs house prices (i.e. the resultant yields over time). In Liverpool (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years. Today, they are 13.1% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 0.7% per annum. From a landlord’s point of view, increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

Turn the clock back to 2005, and we have a property being rented for say £900 a month and that is still being rented at £900 a month today, in Spring of 2017. While the landlord is not getting any less income, this £900 is no longer worth as much. Let me explain, in 2005, £900 may have bought a two-week 4* holiday in Italy. Yet, holidays have increased in line with inflation (which has been 38.5% since 2005), so our holiday would cost today £1,246 (£900 + 38.5% inflation = £1,246). Therefore, the landlord could no longer afford the same holiday, even though having the same amount in pound notes from their rental property.

This means when we compare rents in Liverpool to inflation since 2005, Liverpool landlords are worse off today, when they receive their monthly rental income, than they were in 2005 by 25.4% in real terms (rents increased by 13.1% since 2005, less the 38.5% inflation since 2005 – net affect 25.4% drop)

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Liverpool landlords may be content to accept that for a colossal increase in capital value.

Property values in Liverpool have risen by 18.2% since 2005

This equates to a 1.52% per annum increase over the last 12 years. Even more interesting that this includes the 2008/9 property crash, this will make those Liverpool landlords and investors feel a little better about the information regarding rents after inflation.

Moving forward, the prospects of making easy money on buy to let in Liverpool have diminished, when compared to 2005. Last decade, making money from buy to let was as easy as falling off a log – but not anymore.

It would be true to say, my rental income verses property prices study does lead to noteworthy thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Liverpool property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords. The clear majority of agents in Liverpool will be able to give a detailed analysis of past and anticipated investment opportunity (especially the awful effect of inflation) on your portfolio. However, if they can’t help – well, you know where I am, the kettle is on!

For more thoughts on the Liverpool Property market – visit the Liverpool Property Blog www.liverpoolpropertyblog.com

13 Apr

Only 168 Properties For Sale in West Derby

2017 has started with some positive interest in the West Derby property market.  Taking a snap shot of the West Derby property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale (in L12), compared to 12 months ago:





So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 168 properties for sale today compared with 219 a year ago, a drop of 23%.

Next, West Derby asking prices, compared to the same as a year ago, are 19% higher.

With that in mind, I wanted to look at what property was actually selling for in West Derby. Taking my information from the Land Registry, the last available six months property transactions for L12 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

So what does all this mean for the property owning folk of West Derby?

Well, with less property on the market than a year ago and asking prices 19% higher, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the West Derby property ladder, have much more price information about the West Derby property market at their fingertips than ever before.

Those West Derby people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few West Derby estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the West Derby property-market has an unassailable demand for property – there is one saying that always rings true – as long as the property is being marketed at the right price it will sell.

 If you want to know if your West Derby property is being marketed at the right price, send me a web link and I will give you my honest opinion.

9 Apr

Gidlow Road, Liverpool, L13 – Adding Value

I’ve noticed this new to the market two bedroom mid terrace house that could be converted in to a three bedroom house.

Adding an extra bedroom to a house is a great way to add value to a property as well as increasing the rental income achieved.

This property as a two bedroom house would achieve a rental income of between £5,400 and £5,700 but if converted to a three bedroom house would increase the income to approx £6,300.

Looking at the floor plan and the photos, then it should not cost to much to convert the upstairs bathroom to the additional bedroom and then convert the downstairs utility room in to a bathroom as there is already currently a toilet and basin in this room.

The property is currently on the market with Entwistle Green for offers in excess of £69,950 and if purchased at this price and you spend £5,000 on converting and cosmetics works, then you could generate a 8.4% yield. As always, with some good negotiating works, then this yield could easily increase to over 9%. Click here to view the property advert

If you would like any advice on this property or any other properties that you may be interested in, then contact me on adamr@liverpoolpropertyblog.com