11 Jan

Youngsters unable to buy their first home in Liverpool – Are the Baby Boomers and Landlords to Blame?

Talk to many Liverpool 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Liverpool for say £12,000 in first quarter of 1977, today it would be worth £181,874, a windfall increase of 1415.62%.

But to blame the 60 and 70 year olds of Liverpool for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don’t believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Liverpool area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Liverpool society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago … but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Liverpool buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Liverpool house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Liverpool buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Liverpool property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Liverpool housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Liverpool homes they provide for Liverpool people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes … homes that were provided to Liverpool by these buy to let landlords.

One side of the argument is that 2,505 homes are being bought up by buy to let landlords each year in the Liverpool City Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 17,533 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.

10 Jan

1 Bedroom Apartment – Princess Gardens, Liverpool, L3 6AA – Tenant in Situ with 7% Gross Yield!

I have just been scrolling through Rightmove looking for some good deals, and noticed there is a big shortage of properties in the City Centre at the moment, however this apartment in Princess Gardens has caught my eye!

The property is a modern one bedroom apartment with a tenant in situ. It is currently being marketed at £98,750, which is an excellent price compared to similar properties in this area.

This development lies in the heart of the business district of Liverpool City Centre; however, is set slightly back so to stay away from all of the hustle and bustle of the busy road it sits on, Pall Mall. Due to this fantastic location, generous room sizes, and great condition, this property will attract young professionals and I would expect it to let out very quickly!

The apartment briefly comprises of a hallway, an open plan lounge/dining area complete with a fully fitted kitchen, one double bedroom and a bathroom. The property is secure and benefits from fob intercom entry, and secure allocated parking.

This property is currently tenanted until 06/08/18, securing an impressive income of £6,900 per annum. This figure secures an excellent gross yield of 7%! This property truly is a fantastic investment for anybody looking for a low maintenance investment with immediate return and a very high potential for capital growth!

Click here to view the property.

If you want any information or advice on this property or any other properties, then contact me on adamr@liverpoolpropertyblog.com

4 Jan

Liverpool Apartments are 19.5% more affordable than 10 years ago

My research shows that certain types of Liverpool property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Liverpool property values plummet like a lead balloon and the Liverpool property market had reached a peak with the prices for Liverpool property hitting the highest level they had ever reached.  Between 2008 and 2010, Liverpool property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Liverpool property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Liverpool flat/apartment stood at £136,811 and today, it stands at £145,611, a rise of £8,800 or 6.4%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Liverpool apartments are 19.5% more affordable than in 2007. Looking at it another way, if the average Liverpool apartment (valued at £136,811 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £172,341 (instead of the current £145,611).

The point I’m trying to get across is that Liverpool property is more affordable than many people think.  Liverpool first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Liverpool first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Liverpool 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Liverpool (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting – meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Liverpool 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Liverpool will continue to rise.

Therefore, everyone in Liverpool has a responsibility to ensure that an adequate number of quality Liverpool rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Liverpool tenants on the finish and specification of their Liverpool rental property.

I have perceived that in the past, what a tenant wanted from their Liverpool rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Liverpool tenants’ expectations are becoming more discerning as each year goes by.  I have also noticed the length of time a tenant remains in their Liverpool property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Liverpool landlords not to keep the rental payments at the going market rates  – maybe a topic for a future article for my blog?

The bottom line is this … Liverpool landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Liverpool rental properties over the next five, ten and twenty years –  e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Liverpool private rental property market is important, and I frequently liaise with Liverpool buy-to-let investors looking to spread their Liverpool rental-portfolios. I also enjoy meeting and working alongside Liverpool first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.