16 Nov

One in 125 rental properties in the Liverpool area will be illegal in 2018

As the winter months draw in and the temperature starts to drop, keeping one’s home warm is vital. Yet, with the price of gas and electricity rising quicker than a Saturn V rocket and gas, oil and electricity taking on average 4.4% of a typical Brit’s pay packet (and for those Brit’s with the lowest 10% of incomes, that rockets to an eye watering 9.7%), whether you are a tenant or homeowner, keeping your energy costs as low as possible is vital for the household budget and the environment as a whole.

For the last 10 years, every private rental property must have an Energy-Performance-Certificate (EPC) rating.  The property is given an energy rating, very similar to those on washing machines and fridges with the rainbow coloured graph, of between A to G (A being the most efficient and G the worst). New legislation comes in to force next spring (2018) for English and Welsh private landlords making it illegal to let a property that does not meet a certain energy rating. After the 1st of April next year, any new tenant moving into a private rented property or an existing tenant renewing their tenancy must have property with an energy performance rating of E or above on the property’s EPC and the new law will apply for all prevailing tenancies in the spring of 2020. After April 2018, if a landlord lets a property in the ‘F’ and ‘G’ ratings (i.e. those properties with the worst energy ratings) Trading Standards could fine the landlord up to £4,000.

Personally, I have grave apprehensions that many Liverpool landlords may be totally unaware that their Liverpool rental properties could fall below these new legal minimum requirements for energy efficiency benchmarks. Whilst some households may require substantial works to get their Liverpool property from an F/G rating to an E rating or above, my experience is most properties may only need some minor work to lift them from illegal to legal. By planning and acting now, it will mitigate the need to find tradespeople in the spring when every other Liverpool landlord will be panicking and paying top dollar for work to comply.

Whilst there is money and effort involved in upgrading the energy efficiency of rental property, a property that is energy efficient will have greater appeal to tenants and other buy-to-let landlords/investors and this will enable you to obtain higher rents and sale price (when you come to sell your investment).

So, how many properties are there in the area that are F and G rated .. well quite a few in fact. Looking at the whole of the Liverpool City Council area, of the 48,290 privately rented properties, there are ..

1,424 rental properties in the F banding

510 rental properties in the G banding

That means just under one in 25 rental properties in the Liverpool and surrounding area has an Energy Performance Certificate (EPC) rating of F or G. From April next year it will be illegal to rent out those homes rated F and G homes with a new tenancy.

Talking with the Energy Assessors that carry out our EPC’s, they tell me most of a building’s heat is lost through draughty windows/doors or poor insulation in the roof and walls. So why not look at your EPC and see what the assessor suggested to improve the efficiency of your property? I can find the EPC of every rental property in Liverpool, so irrespective of whether you are a client of mine or not, don’t hesitate to contact me via email (or phone) if you need some guidance on finding out the EPC rating or need a trustworthy contractor that can help you out?

9 Nov

Liverpool Homeowners Are Only Moving Every 16 Years (part 2)

In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 29 years. The biggest reason being that confidence was low and many homeowners didn’t want to sell their home as Liverpool property prices plunged after the onset of the financial crisis in 2008. However, since 2009, the rate of home moving has increased (see the table and graph below), meaning today:

The average period of time between home moves in Liverpool is now 16 years.

This is an increase of 80.90 per cent between the credit crunch fallout year of 2009 and today, but still it is a 30.77 per cent drop in moves by homeowners, compared to 15 years ago (The Noughties).

Average Length of Time (In Years) between Home Moves in the Liverpool City Council Area

1995     –           17.20                                        2006     –           10.25

1996     –           16.59                                         2007     –           10.38

1997     –           16.00                                        2008     –           18.39

1998     –           15.21                                        2009     –           29.17

1999     –           15.10                                        2010     –           25.92

2000     –           14.12                                        2011     –           26.33

2001     –           13.63                                        2012     –           27.86

2002     –           11.16                                         2013     –           21.05

2003     –           8.93                                          2014     –           17.85

2004     –           9.45                                          2015     –           17.22

2005     –           12.25                                         2016     –           16.12

So why aren’t Liverpool homeowners moving as much as they did in the Noughties?

The causes of the current state of play are numerous. In last weeks article I talked about how ‘real’ incomes and savings had been dropping. Another issue is the long-term failure in the number of properties being built. Only a few weeks ago in the blog, I was discussing the draconian planning rules meaning house builders struggle to locate building land to actually build on.

Back in the 1960’s and 1970’s, as a country, we were building on average 300,000 and 350,000 households a year. The Barker Review a few years ago said that for the UK to stand still and keep up with housing demand (through immigration, people living longer, a just under 50% increase in the number of households with a single person since the 1980’s and family makeup (i.e. divorce makes one household now two)) we needed to build 240,000 households a year. Over the last few years, we have only been building between 135,000 and 150,000 households a year.

Finally, as the UK Population gets older, there is no getting away from the fact that a maturing population is a less mobile one.

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

Well, if Liverpool people are less inclined to move or find it hard to sell a property or acquire a new one, they are probably less likely to move to an improved job or a more prosperous part of the UK.

Many of the older generation in Liverpool are stuck in property that is simply too big for their needs. The fact is that, in Liverpool, nearly five out of every ten (or 45.6 per cent) owned houses has two or more spare bedrooms; or to be more exact …

44,729 of the 98,043 owned households in the Liverpool area have two or more spare bedrooms.

So, as their children and grandchildren struggle to move up the housing ladder, with those young families bursting at the seams in homes too small for them i.e. overcrowding, we have a severe case of under-occupation with the older generation – grandparents staying put in their bigger homes, with a profusion of spare bedrooms.

Regrettably, I cannot see how the rate of properties being sold will rise any time soon. Many commentators have suggested the Government should give tax breaks to allow the older generation to downsize, yet in a recent White Paper on housing published just weeks before the General Election, there was no reference of any thoughtful and detailed policies to inspire or support them to do so.

This means that there could be an opportunity for Liverpool buy to let landlords to secure larger properties to rent out, as the demand for them will surely grow over the coming years. As for homeowners; well those in the lower and middle Liverpool market will find it a balanced sellers/buyers market, but will find it slightly more a buyers market in the upper price bands.

Interesting times ahead!

2 Nov

Liverpool Home Owners Are Only Moving Every 16 Years (Part 1)

As I mentioned in a previous article, the average house price in Liverpool is 4.91 times the average annual Liverpool salary. This is more or less the same as the last peak of 2008, when the ratio was 4.92. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Liverpool) property prices might drop like a stone. The point is – they haven’t.

Now it’s true the market for Liverpool’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Liverpool property price growth has slowed, but the lower to middle Liverpool property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Liverpool people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…

The Total Number of Property Sales Per Annum in the Liverpool City Council Area Since 1995

1995       –              5,635                                    2006       –              9,459

1996       –              5,842                                    2007       –              9,344

1997       –              6,061                                    2008       –              5,271

1998       –              6,374                                    2009       –              3,324

1999       –              6,864                                      2010       –            3,740

2000       –              6,866                                    2011       –              3,682

2001       –              7,115                                    2012       –              3,480

2002       –              8,686                                    2013       –              4,606

2003       –              10,857                                   2014       –             5,430

2004       –              10,259                                  2015       –              5,630

2005       –              7,917                                    2016       –              6,013

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Liverpool housing market following the 2016 Brexit vote has seen the number of property sales in Liverpool and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes – for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.

But coming back to today, looking at the property sales figures in the Liverpool area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week I will be discussing how these (and other issues) has meant the level of Liverpool people moving home has slumped to once every 16 years.

26 Oct

Liverpool Wages Outstrip House Price Growth by 19.04% since 2007

 I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Liverpool. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Liverpool City Council, some interesting figures came out…

 Salaries in Liverpool have risen by 20.81% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) – interesting when you compare that with what has happened to salaries regionally (an increase of 15.77%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Liverpool are 1.77% higher than they were in mid 2007 (not forgetting they did dip in 2008 and 2009). Therefore…

Wages in the Liverpool area have increased at a higher rate than property values to the tune of 19.04% … meaning, Liverpool is in line with the regional trend

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to all buyers. It is also vitally relevant for Liverpool landlords, as they need to be aware of this when making their buy-to-let plans for the future. If more Liverpool people are buying, then demand for Liverpool rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Liverpool property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit simultaneously, meaning for many Liverpool people, home ownership isn’t a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Liverpool tenants and decent law-abiding Liverpool landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Liverpool in the last 10 (or 20) years … the demand for decent high-quality rental property keeps growing. If you want a chat about where the Liverpool property market is going – please read my other blog posts on www.liverpoolpropertyblog.com or drop me note via email, like many Liverpool landlords are doing.